Matt Williamson | ESPN Insider

With a dozen games in the books for the 2013 season, I think we know an awful lot about theKansas City Chiefs. First off, the obvious: This is the most improved team in the league, and Andy Reid is the leader for Coach of the Year honors through Week 13. The Chiefs are heading to the postseason, most likely as the fifth seed overall in the AFC, and I would pick them to win their first-round matchup if they visit the Cincinnati Bengals or Indianapolis Colts. The arrow is pointing in the right direction for this organization as a whole. But they are also a rung below the top teams in the NFL right now.

While things are very promising for the Chiefs looking at the big picture, they have now lost three in a row, including two to division rival Denver. This team is much different right now than what we saw earlier in the season, when their defense was dominant and the offense leaned heavily on Jamaal Charles and asked little from Alex Smith and the passing game. But we know that this formula is difficult to sustain in the modern NFL, and that is proving to be true for Kansas City as the 2013 campaign wears on.

With a second loss to the Denver Broncos in the club's rearview mirror, let's run through a "State of the Chiefs" as we look ahead to the final four games and the playoffs. Can Kansas City get back on track and be a legitimate Super Bowl contender?

The Chiefs' defense is still strong, and loaded with good players at every level, but they are no longer dominant. Injuries -- and facing the Broncos twice and the Chargers once over a three-game stretch -- have had something to do with that decline, as Kansas City has allowed a whopping 103 points in three games since their Week 10 bye.

Justin Houston missed this game, and he and Tamba Hali missed much of the contest against the Chargers (and it was no coincidence that San Diego started racking up points when both elite edge pass-rushers were injured). However, the fact is that Kansas City's once-great pass rush was beginning to fall off before those injuries. The Chiefs had 35 sacks in the first seven games, but just two in the past five.

No one gets to Peyton Manning. The Chiefs got sporadic pressure on him in Week 13, but failed to register a sack in either meeting against the Broncos. And in the latter contest, they had the advantage of extreme crowd noise to aid them. While the health issues with Houston and Hali is a factor, it is Kansas City's defensive line that has really slipped in this capacity of late. Dontari Poe was one of the most dominant inside forces in the league against the run and pass during the first half of the season, but he has fallen off noticeably. Mike DeVitomissed time with an injury, and his return on Sunday could be a good sign, as he could also help spell Poe and limit the second-year player's snaps to keep him fresher.

The Broncos played a high percentage of 11 Personnel (1 RB, 1 TE) on Sunday, and the Chiefs matched that personnel grouping with a four-man front that consisted of two defensive linemen along with Hali andFrank Zombo, who replaced Houston. Behind that four-man front that included two OLBs, Kansas City usually lined up Eric Berry, a safety by trade, as a linebacker next to Derrick Johnson. On the back end, the Chiefs used three cornerbacks -- Brandon Flowers, Sean Smith and Marcus Cooper-- along with safeties Quintin Demps and Kendrick Lewis.

This was an active and aggressive group early in the game, forcing two interceptions and putting their team in excellent position to win. But Manning feasted on Cooper, who isn't playing nearly as well as he was to start the season. Denver did a great job at consistently getting Cooper in one-on-one situations, often against Eric Decker, and Manning attacked the rookie without mercy. Lewis also left this game with an injury and was replaced by Husain Abdullah, who was a liability as well. Manning was especially effective in attacking the Chiefs' secondary deep.

Fortunately, the Chiefs won't face Manning again -- at least during the regular season -- but the future Hall of Fame signal-caller showed that there are weaknesses to be exploited in this pass defense. The Broncos also averaged 4.3 yards per carry, and stuck with their running game, totaling 31 running attempts even though Knowshon Moreno was not fully healthy. The Chiefs' defense allowed touchdown drives of 95 and 92 yards in the losing effort.

But maybe this wouldn't have been a loss if Kansas City's receivers hadn't dropped so many passes at crucial times. I am usually quite critical of Alex Smith, but simply put, he played an outstanding game on Sunday. In fact, Smith has played very well of late -- he has a 7-to-2 rate of touchdowns to interceptions during the Chiefs' three-game losing streak -- and it appears as though Reid is now putting more on his plate, asking him to make more demanding throws deeper downfield. Smith is responding to that challenge very well, and he was on point in this game.

But what sticks out most from Sunday's clash are the drops -- often deep downfield -- from Smith's targets. Donnie Avery was the biggest culprit in this capacity. Avery has been a hit-or-miss player, and drops have plagued him quite throughout his career. To me, the Chiefs' biggest offseason priority needs to be finding a major upgrade to Avery as the No. 2 wideout oppositeDwayne Bowe.

Bowe is playing much better now than early in the season, and Reid has done a nice job of utilizing Dexter McCluster in numerous ways, particularly out of the slot. I also am high on rookie Travis Kelce, who should team well with Anthony Fasano to make up a formidable pair of tight ends next year, but an upgrade over Avery is a must.

This upgrade could come via free agency with a player such as Jeremy Maclin, with whom Reid is obviously very familiar, or even Decker himself perhaps. Drafting a wide receiver in the first round should also be strongly considered, though their most recent first-round WR (Jon Baldwin) didn't pan out. This team just doesn't have enough guys that consistently beat strong man coverage, so a big investment here is vital.

Kansas City won the special teams battle Sunday, and got a 108-yard kickoff return for a touchdown from Knile Davis. They were also fortunate enough to start with excellent field position after the Manning interceptions early in the game. However, the offense managed only 21 points, and while this unit is trending upward from where it was early in the season, that isn't good enough overall against Denver's defense that played an average game in all capacities.

Even after Branden Albert left the game with injury -- with Donald Stephenson replacing him at left tackle and the struggling Eric Fisher in at right tackle -- Denver still didn't pressure Smith much, and didn't record a sack. Of course, Charles was his usual brilliant self and Denver wasn't dominant by any means in stopping the run, but the Chiefs got away from Charles and their rushing attack more than they should have during the second half.

It also should not be overlooked that Smith once again was a potent and intelligent runner with the football, finishing the game with a whopping 11.5 yards per carry. To compete with the best teams in the NFL, Kansas City's offense still needs to produce more points in such a situation. But in this instance, I blame the dropped passes more than anything.

This is an organization on the rise. I still have my doubts as to whether Smith is the long-term answer for a Super Bowl-caliber team, but I am more open to the idea now than a few weeks ago, and am excited to see what he does for the remainder of the season. Moreover, I'm interested to see what Smith can do if the Chiefs fortify his receiving corps this upcoming offseason. Unfortunately, it is unlikely that the exceptional fan base in Kansas City will be able to host a playoff game, and I only forecast the Chiefs to win one playoff game.