Three Top Reasons to Change Your Insurance Co Claims Administrator or TPA

The top reason you should switch your claims administrator (a TPA or insurance company claims administrator) is because they aren’t doing a good job.

My experience is that the more you pay, the more you get and that the problem in these situations is more likely with the risk management department (sorry team, but that’s the truth) than the TPA; however, that’s just a generality, but it’s a generality with 20 years of experience.

BUT, how will you KNOW they aren’t doing a good job? You will review your files. Well, YOU won’t review your files, you will hire someone to review them unless you are very experienced at reviewing file and have reviewed them for many companies. You will need an MD and a senior claims expert.

1- Poor Outcome – Return to work not achieved and insufficient medical review are examples of poor outcomes. Claims were paid when not compensable, compensability has not been recognized by adjusters and no resources are available to recognize such situations. If resources are available, they are not utilized on YOUR account. This is not an isolated incident, but has been found multiple times. You have your own medical advisor and the TPA makes it very difficult to utilize this internal company resource. Poor outcome can be caused by many factors including high staff turnover, poor management, poor internal systems and lack or internal training programs.

2- Intolerable Working Relationship / Poor Communication – the relationship with the adjusters has broken down and you have replaced the adjuster with another, perhaps you have done this many times, but for some reason the relationship is a negative one and never seems to improve. The supervisor can’t seem to remedy the situation.You’ll examine your own role in this type of situation, and get independent verification that you are not causing the problem. You will benchmark your losses to make sure it’s adversely affecting your loss experience.

3- Too expensive – value not in proportion to cost. You pay for a more experienced team, with many resources, but the outcome of the claims is still poor. You have verified this several times with an independent auditor, your broker, and an MD serving as your medical advisor. You have benchmarked your Cost Per Employee and Cost Per Claim and have determined that the costs are significantly higher than industry average.

In any switch, I would likely move PART of the business to see if you are pleased with the service you get from another provider. My experience is that the more you pay, the more you get. Generally the problem in these situations is more likely to be with the operations within the company than the TPA; however, that’s just a generality, but it’s a generality with 20 years of experience. Problems with claims administration tend to be isolated to individual offices rather than being system wide.

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Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.

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