Picking the right third-party administrator (TPA) takes time. Failure to pick the correct one can result in increased costs to a workers’ compensation program. There are many important factors to consider beyond a TPA having the right price. In the first part of this series, we looked at selecting a TPA on how they make initial contact with the injured employee and other parties following a work injury, and the methodology of their initial claim examination. Additional factors that need to be considered also include a deeper dive into how losses are reported, claims are assigned, and coverage is verified.
Nothing Succeeds Like Success…
Leading TPA’s success comes from the division of labor into four areas:
- Loss Reporting: Prompt loss reporting is a key aspect when it comes to timely loss notification. Prompt reporting has three advantages:
- Immediate contact with all parties involved in a workers’ compensation claim results in reduction of claimant representation, and litigation. Contact with all parties includes the employee, employer, witnesses, other interested stakeholders;
- Prompt investigation: This includes several different items to consider immediately after a work injury. This includes making sure the employee receives medical care and treatment, identifying witnesses, preserving physical evidence, and getting information about the injury from the employee; and
- Reduction of overall cost per claim: This promotes efficiency in any program.
- Claim Assignment: An effective assignment process helps to ensure proper handling of claims at the appropriate technical level. The claim assignment process may include gathering additional information beyond what is available in the First Report of Injury. It includes other aspects such as making sure the proper forms are filled with the state industrial commission and asking the right questions. TPAs can practice a team approach by:
- Distributing the work to the most appropriate level of technical expertise; and
- Obtain the highest possible efficiency possible by effective internal communication, use of regular file reviews, and communication with the insured.
- The Assignment Procedure: Upon receipt of a First Report of Injury, a four-step process must be initiated to promote best in class services:
- Supervisory evaluation of the First Report of Injury to ensure it is properly classified. Examples include “medical only claims,” claims involving lost time; and catastrophic injury claims;
- Supervisory review and direction to the appropriate claim handler. Claim management teams should have specialized units for various claims and situations. The examination of fraud can also take place in these units;
- Creation of a Central Index Bureau referral for lost time claims and medical-only as required. It is important to know the claims history early in the process; and
- Case management services should be utilized as appropriate. (It should also be noted the claim classification and technician assignment can change throughout the life of the claim if a significant change in complexity level occurs.
- Coverage Verification: This starts with confirmation of the client’s self-insured It also must include verification of a client’s policy of insurance, limits of coverage, and effective dates. Coverage issues are recognized, investigated, and addressed with the carrier before it becomes an issue after a work injury.
Best in class service starts with paying attention to details and ensuring all of the “i’s are dotted, and t’s are crossed.” It also includes making sure that claim handlers work as a team and have the resources to success. This results in claims that are handled in an effective manner.
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: http://blog.reduceyourworkerscomp.com/
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