How to Manage Third Party Administrator Compliance with Service Instructions

A set of Service Instructions (SI) is usually created at the beginning of a program and is a negotiation between client, sometimes with a broker or agents help and the third-party-administrator (TPA). This document is important because it personalizes claim handling and TPA services to meet your needs as the client. While the TPA is responsible for adhering to the SI, the only person measuring their compliance is you. Non-compliance can lead to adverse financial effects and service failure so, it’s important to manage. SI are usually not set in stone and can be amended throughout the life of the contract.

Managing compliance of SI and maintaining a positive relationship with your TPA requires a balance of prioritizing areas tagged for improvement and understanding the roles and responsibilities of each person involved in your program. To effectively manage compliance, first establish a baseline of performance by conducting an audit tailored around your SI and your TPA’s best practices.

Prioritize deficiencies and request an action plan for improvement from your TPA. Your TPA must clearly understand they are accountable for adhering to your SI and their own best practices. Decide the frequency of future audits depending upon results. If there’s a lot of work to be done, quarterly audits may be in order moving ideally toward an annual audit. Spot check files on a daily basis to monitor weaker areas. Work with the adjuster, particularly on new files to ensure requirements are met and the adjuster has complete information to do the job well.

For example, if a recorded statement is required, provide the employee’s telephone number. Continue to address trends with the appropriate person. If progress is not made, request a change of adjuster and possibly in supervision. Properly handled files close more quickly and cost less than mishandled claims and that’s the bottom line.

It’s your TPA’s job certainly to know their business; but, it’s your money the TPA is spending. If your program size warrants hiring a seasoned claim professional to set the bar and hold the TPA accountable, the associated cost will likely be money well spent, paying for itself over time.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.

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