Although the goal is to oftentimes avoid disputes at all costs, the bottom line is they do happen.
With that said, what happens when a business owner and a third-party administrator do not see eye-to-eye on a matter. Is there room for it to be resolved or is it destined to become a long-running dispute. Oftentimes a review by a independent third party can give clarity to the situation.
Here is an example of one such case:
A big transportation business felt that its claims situation were not being handled in an aggressive enough fashion, hence the fact that adjusters were ultimately increasing their workers compensation expenses. As the unhappiness with the situation grew, the business was put out to bid, while they also switched TPAs.
With that scenario in front of them, a MD and a single senior claim analyst poured over more than a dozen claims (20 in all) in each of three offices (Texas, California and Massachusetts), discovering there was an issue when it came to the Massachusetts issue.
Lack of Experience and Disorganization
As it turned out, the adjuster in the Massachusetts claims did not have the necessary experience, not to mention was disorganized.
Among the administrative issues at hand were problems like not having the proper amount of supervisor oversight, insufficient investigation, untimely 3-point contact, no recorded statements to speak of, and claimants were being paid too much as a result of the “average weekly wage” being miscalculated.
It also turns out IME’s were overused and medical causality was not put in place before the claim payment. To boot, pre-existing conditions were not recognized by the adjusters or nurses that led to higher than necessary reserves. Lastly, nurse case management was being delivered too late to be effective. The client, however, felt the NCM was “too expensive” but the issue at the end of the day was that it needed to be brought in earlier.
With all this in mind, new triggers were put in place so when an employee does not return to work within two days a nurse case manager is immediately brought into the picture.
Also, the TPA enhanced their training program to ensure nurses were going over files for pre-existing conditions and completeness of medical records.
As part of the new process, the employer retained a part-time medical director to look at and analyze claims if an employee had not gone back to work within two weeks.
IME’s were not requested until the medical director had chance to review the file, insured complete medical records were obtained and crafted a custom letter seeking specific medical information.
More Monitoring and Management Needed
As the review moved on, it was found that the employer had insufficient staff to monitor or manage the TPA; there were 3,000 claims annually at more than 500 locations with just a single person, who was not an actual risk manager, assigned to workers comp.
It was suggested that the employer hire a risk manager and choose 11 people (one for each region) to serve as WC Managers (WCM) which was what in turn happened.
As part of the process, onsite training was undertaken for the new WCMs. The TPA took part in the training to meet the WCMs then did a “national rollout” offering new “panel cards” so employees could choose network physicians.
The TPA met with each locale to open communication channels. A meeting was set up with the client, TPA and broker on weekly conference calls for the next year until all suggestions had been put into motion.
To keep team members accountable, they were provided with an “Implementation Action Plan” to each participating member following the conference call.
When all was said and done, losses decreased some 25% for the past three years and continued.
Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.
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