Whether you are just starting your self-insured claims program or have decided it is time for a switch to a new third party administrator (TPA), the selection of the new TPA is one of the most important decisions you can make in the administration of your self-insured program.
Employers switching TPAs often ask questions of potential new TPA partners that address the issues they have had with their current TPA. Employers frequently make the mistake of not asking the new potential TPA partner about areas where the current TPA performs well.
Areas that need to be explored with all potential TPAs before selecting the next TPA include:
- Obtaining a copy of the TPA’s Best Practices to confirm their claim handling standards
- Obtaining a list of the current clients and former clients to contact for their impression of the TPA’s abilities
- Verifying the TPA has a claims office in each state where you have business locations
- In large states, verifying the claims office(s) are located near your business locations
- Verifying the TPA will assign dedicated adjusters to your account in areas where your claim volume is large enough to occupy all of one or more adjusters, and will assign a designated adjuster to handle all claims in locations where you have inadequate claim volume to keep one adjuster busy
- Determining the claim reserving authority the adjusters will have
- Determining the claim settlement authority the adjusters will have
- Confirming the experience level of each of the dedicated or designated adjusters
- Determining the frequency of the claim file reviews by the claim supervisors and the extent of the directions and guidance provided by the supervisors
- Confirming the licensing of each adjuster and each claims office
- Establishing the claims intake process
- Establishing the maximum number of claims that will be assigned to each adjuster
- Establishing who the legal defense firm(s) will be when defense counsel is needed
- Establishing who the medical triage company will be
- Establishing who the medical management company will be when medical management is needed
- Establishing who the pharmacy benefit manager will be
- Establishing who will provide the medical fee schedule reviews
- Determining the capabilities of the claims management system used by the TPA
- Determining whether your claims management system can be integrated with the claims management system of the TPA and who will be responsible for maintaining the systems integration
- Verifying that the TPAs claim management system will be able to provide all the data and claim management reports needed to manage your claims programs
- Determining who will be responsible for correction of data errors that occur
- Determining the security measures the TPA will take to protect the confidentiality of your data and financial information
- Determining the nature and extent of the financial data available on each claim file
- Determining if the TPA data system will allow the creation of ad hoc reports
- Verifying the TPA will allow annual independent claim file audits to verify compliance with Best Practices including the prevention of claim leakage
This list provides just some of the areas that need to be considered when selecting a new TPA. By addressing these issues during the TPA selection process, further problems with the new TPA can be reduced, if not eliminated.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.