Anatomy of an Employer Dispute with Their Third-Party Administrator

Success Story: A large transportation company thought their claims were not handled aggressively enough and poorly performing adjusters were driving workers up comp costs. The dissatisfaction had grown to such proportions that they put the business out to bid. They did, in fact, change TPAs.

Resolution: One MD and one senior claim analyst reviewed 20 claims in each of three offices (TX, CA and MA) and found there was a problem with the MA office. The adjuster handling their claims in that office was inexperienced and disorganized. There were administrative quality issues such as lack of supervisor oversight, insufficient investigation, untimely 3-point contact, no recorded statements being taken, and claimants were being overpaid because the “average weekly wage” was miscalculated. IME’s were overused and medical causality was not established prior to claim payment. Pre-existing conditions were not recognized by the adjusters or nurses resulting in higher than necessary reserves. Nurse case management was being brought in too late to be effective. The client, however, thought the NCM was “too expensive” but the problem was really that it needed to be brought in earlier.

We set up new triggers so when an employee does not return to work within 2 days a nurse case manager is immediately assigned. The TPA enhanced their training program to ensure nurses were reviewing files for pre-existing conditions and completeness of medical records. The employer retained a part-time medical director to review claims if an employee had not returned to work within two weeks. IME’s were not requested until the medical director reviewed the file, insured complete medical records were obtained and crafted a custom letter requesting specific medical information.

The employer had insufficient staff to monitor or manage the TPA; there were 3,000 claims annually at over 500 locations with only one person, who was not an actual risk manager, assigned to workers compensation. We suggested the company hire a risk manager and select eleven people (one for each region) to serve as WC Managers (WCM) which was quickly done. Onsite training was done for the new WCMs. The TPA participated in the training to meet the WCMs then did a “national rollout” providing new “panel cards” so employees could select network physicians. The TPA met with each location to open communication channels.

We met with the client, TPA and broker on weekly conference calls for the next 52 weeks until all suggestions had been implemented. To keep team members accountable, we sent an “Implementation Action Plan” to each participant following the conference call.

Result: Losses down 25% for past 3 years and continuing.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: RShafer@ReduceYourWorkersComp.com
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