Breezing Through the TPA Selection Process OR Having a Nightmare
If you hire the right Third Party Administrator (TPA) to administer your workers’ compensation claims, the operation of your self-insurance program will be a breeze. If you hire the wrong TPA, the administration of your workers’ comp program will be a nightmare. Here are some suggestions on what to ask the TPA candidates in your Request for a Proposal (RFP) before you contract with them to handle your workers’ comp claims.
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- Do you have an office in each state where my business(s) are located? If the TPA does not have a location in a state where you do business, their adjusters will be un-licensed to handle your claims in that state (a few states do not require the adjuster to be licensed). Also, it could cost your company money by the adjuster not knowing the state specific requirements.
- Where are the TPA claims offices? The claim offices need to be in the same metropolitan area(s) where your offices are. If they have an office in the same state, but 200 miles away from your business location, it will make attending board hearings and settlement conferences an issue.
- What are the Best Practices followed by your company? If the TPA does not have a published set of Best Practices that they are willing to provide to you, do not expect consistent high quality if you hire that TPA.
- Who are your current clients?A reference list allows you to contact both present and former clients of the TPA to ascertain what their ability is and what their reputation is for service, claim knowledge, and claim results.
- What is your claim intake process?The state-of-the- art is to have electronic transmission of the Employer’s First Report of Injury to the TPA, but you also want the ability to email claim reports and, in emergencies, to telephone claims reports to the TPA.
- What is the maximum number of indemnity claims you assign to one workers’ comp adjuster?In states with multiple state forms to be filed on every claim or in states where the workers’ comp board is actively involved in every claim, 125 indemnity claims is a full load for an experienced adjuster. If the state has minimal paperwork and minimal workers’ comp board involvement, 150 indemnity claims is a full load.
- Can my company have a designated adjuster in the claims offices where we have less than enough claims to keep one adjuster busy? Can we have dedicated adjuster(s) in the claims offices where we have more than enough claims to keep one adjuster busy? You want your work claims being handled by the lowest possible number of adjusters. The adjusters who handle claims for no other company will strive to give you their best service, as they know your judgment is critical to their success.
- What is the experience level of each of the adjusters in your offices?In addition to the number of years they have been an adjuster, what technical qualifications do they have? In addition to the number of years the adjuster has been working, has the adjuster taken any other training in order to improve themselves and the work product they deliver?
- Will we be allowed to select our own adjuster(s) from among those on your staff?The TPA may resist this request as they do not want to offend other clients and they want to control their resources to their benefit. However, you should make this a condition of your contract, as it is better for you to select the best adjuster available then to be given the adjuster no other company wants.
- Who will control the litigation when a workers’ comp claim is disputed?You want to be able to hire the best defense attorneys around, not for the adjuster to select a golfing buddy/attorney.
- What is the claim management information system used your company?You want to know if it is the state of the art, or was in last updated for Y2K.
- Will your claim management information system integrate with the computer claims system our company is already using?If not, you will have to operate on duplicate systems which is both time consuming and adds additional cost to managing your program. You want the TPA’s system to be flexible enough to work with your existing system without having to replace your claims system.
- Will my company be provided with on-line access to claim information?It is a lot easier to review the file notes and supporting documentation than to play telephone tag with the adjuster trying to find out what is happening on a particular file.
- If we see data errors in your claim management system, for instance a wrong location code, will we be able to correct them, or will we have to advise your company to correct the errors?Regardless how hard they try, the TPA will make mistakes in data input. If you can correct them without going through a complicated process or having to wait on the TPA to correct them, your data integrity will be much more reliable.
- Who is responsible for maintaining the interface between your claim management system and our company’s computer claims system?It is your choice whether your company or the TPA is responsible for the transfer of data. You want to establish the protocol on this before the TPA starts handling claims.
- Will my company be able to run ad hoc reports from your claim management system? The ability to generate computer reports to answer questions you have about performance or financials makes life a lot easier than trying to find the information in a menu of reports which may or may not be on point.
- What security measures does your company take to protect the confidentiality of the information in your claim management system?Access to your claim information should require multiple levels of account and user identification.
- What financial information will we be able to see on each claim?At a minimum you should see the total reserve for medicals, indemnity and expenses, the total paid already for medical, indemnity, and expenses, and the amount remaining/not spent in each reserve type. The better claim computer systems will also breakdown expenses into legal expense, rehabilitation expense and other expenses.
- At what dollar level will your adjusters consult with our company before settling a claim?While you should ask the question in your RFP, the correct answer from the TPA is “at the level your company determines you want to be notified.” Your company should provide the direction, supervision, and control of the high dollar exposure claims. The precise dollar level depends on your comfort and faith in the abilities of the TPA’s adjusters and supervisors.
- How often does your supervisors review the open workers’ comp claims and provide direction and supervision to the adjusters? This is a trick question, with the correct answer depending on the level of experience and ability of the adjusters. At a minimum, the supervisor should review each open file every 90 days, with some exceptions for payment of death benefits only or open for lifetime medical only. (workersxzcompxzkit)
Will you grant total access to our claim auditors?You should include in your RFP the requirement that your company will be allowed to audit all or any part of the claim handling by the TPA. Every claims program should have a file quality review at least every other year to be sure the TPA is following the best practices agreed to.
Bonus Question: Describe your internal quality control system and explain how it will benefit our company. Provide an example of how your QC system improved the process. The system should be a proactive system that catches problems before they happen, and it should reward excellent adjuster performance and knowledge.
Bonus question: Describe your internal quality control system and explain how it will benefit our company. Provide an example of how your QC system improved the process. The system should be a proactive system that catches problems before they happen, and it should reward excellent adjuster performance and knowledge. \Author Rebecca Shafer, Risk Consultant/Attorney, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
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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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