Best Practices in TPA Medical Management

TPA Medical Management Critical for Cost Containment

 

The third party administrator (TPA) who handles your workers’ compensation claims needs to be especially strong in their medical management skills.   The top tier TPAs will have their own medical management division overseeing and controlling the medical cost of your claims and working in conjunction with the workers’ compensation adjusters.

 

The most effective ways to control your medical cost include:

 

  • Telephonic nurse case managers
  • Field nurse case managers
  • Senior nurse reviews
  • Utilization reviews
  • Medical bill reviews
  • Prescription management
  • Physician review
  • On-site clinics
  • Injury triage
  • Wellness programs
  • Preferred provider networks

 

 

Nurse Case Managers

 

Nurse case managers are experienced nurses who are utilized to coordinate and manage the medical care for an injured employee.  There are two primary types of nurse case managers, telephonic case managers (TCM) and field case managers (FCM).  Both TCM and FCM will:

 

  • Coordinate the medical care
  • Consult with the physician on treatment options
  • Prevent over utilization of medical treatment
  • Monitor the employee’s medical recovery
  • Provide frequent updates to the adjuster and employer on the employee’s medical progress
  • Coordinate the employee’s return to work, either light duty or full duty
  • Facilitate communication between the employee, employer and physician
  • Manage the medical rehabilitation of the employee

 

The primary difference between the TCM and the FCM is the location of their work.  The TCM will work from his/her office and perform all activities on the workers’ compensation claim by telephone and e-mail.  The FCM will often meet in person with the injured employee and will accompany the employee to medical appointments when appropriate.  While not a strict division of injury assignments, the FCM is more often utilized on severer injuries.

 

 

Senior Nurse Review

 

With the senior nurse review, a highly experienced nurse provides continuous oversight of medical care. This provides for identification of recovery obstacles early in the life of the claim. Through continuous monitoring of the medical care, the senior nurse reviewer can also verify the quality of medical care if the recovery time exceeds the normal disability duration guidelines.  When a senior nurse reviewer is involved in the workers’ compensation claim, the medical management provider will also have physicians with whom the senior nurse reviewer can consult.

 

 

Utilization Review

 

The medical management company should provide utilization review services.  A utilization review is an independent confirmation of the necessity for medical services.  There are 3 types of utilization review.  They are:

 

  1. Pre-certification Review – an experience nurse will collect all the medical information including the symptoms, diagnosis, test results and the reason a physician is requesting a specific medical service.  The nurse will compare the medical information against the normal criteria for a specific treatment.  If the nurse concurs, the medical service is approved.  If the nurse determines the medical care is not necessary, the matter is referred to a physician for a peer review, and acceptance or denial of the requested medical service.
  2. Concurrent Review – is a review of the medical necessity while it is in progress.  This type of utilization review is often used during hospital stays, or on-going multiple outpatient visits, for example: physical therapy.
  3. Retrospective Review – After a medical service has been completed, but before a payment is made for the service, the nurse reviews the reasons for the service and the necessity for it.  If the medical service was not needed, the retrospective review gives the adjuster justification and documentation as to the reason the medical provider is not compensated for the medical service.

 

 

Medical Bill Review

 

The medical management company reviews and verifies the accuracy of the medical bill diagnostic codes and the medical bill charges. The medical bill charges are compared to the medical fee schedule established by the state.  When there is no fee schedule, the medical charges are compared with what is customary, reasonable and necessary

 

 

Pharmacy Benefit Manager

 

A pharmacy benefit manager provides a network of pharmacies to provide medications at the best possible price.  The pharmacy benefit manager will also monitor the utilization of prescription drugs to prevent the overutilization of drugs through premature fill request, excessive dosages, multiple providers, multiple pharmacies and multiple drugs used for the same purpose.

 

 

Physician Review

 

When an injured worker is not responding to the medical care within the range of normal recovery time, a physician review is often appropriate.  The physician review is a peer review by a specialist who will evaluate and document the medical necessity of the past, current and future medical treatment.  The physician review provides an in-depth evaluation of the medical necessity of the treatment being provided to the injured worker.  The review process can strengthen the return to work program by verifying the appropriateness of an injured worker being on modified duty work. The review process can also be used to evaluate the accuracy of an impairment rating provided by the employee’s medical provider.

 

 

On-site Clinics

 

On-site (employer’s work site) medical clinics staffed by RNs, nurse practitioners and physician assistants have proven they can curb the fast-rising cost of medical care for both personal and work-related injuries and illnesses. The on-site clinic provides the medical care making it convenient for employees who do not have to leave work for care.  Employees are referred to off-site medical facilities only if the injury or illness is beyond the scope of the medical professionals in the on-site clinic.

 

 

Injury Triage

 

Injury triage is the process of having an experienced nurse evaluate the injured employee’s medical needs through the use of algorithms, software and an in-depth interview of the injured employee.  Based on the information obtained, the triage nurse makes decisions on the appropriate level of medical care needed.  While triage nurse can be utilized any time in the course of the workers’ compensation claim, it is most effective when it is conducted immediately after an injury.  The triage nurse directs the employee to the most appropriate medical provide within the in-network of service providers. This prevents the employee from over utilizing medical care while ensuring the employee obtains the medical care needed.

 

 

Wellness Programs

 

A wellness program is a company sponsored effort to improve the health of employees.  A complete wellness program will include nutrition and health education, physical fitness, health screenings and behavior modification.  An employer benefits from a wellness program through both lower cost of health insurance and lower cost in the workers’ compensation benefits.  Additionally, a wellness program will result in lower absenteeism and a corresponding increase in productivity.

 

 

Preferred Provider Networks

 

A preferred provider network is an organization of doctors, hospitals, diagnostic facilities and other medical providers who have agreed with the insurance company or self-insured employer to provide medical services to injured employees covered by workers’ compensation insurance. In exchange for the insurer or employers sending a volume of business to them, the medical providers agree to a pre-determined reduction in their normal charges for services. The reduction in cost can be substantial for the insurer or employer.

 

Employers should select one medical management partner that can provide expertise in all of these areas rather than multiple medical management partners.  A medical management partner that covers all of these areas can integrate the medical cost control services eliminating duplication of services and eliminating gaps in medical cost control.

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, 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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. 

 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional about workers comp issues.

You May Be Doing The Right Thing And Still Paying Too Much Workers Comp

 

Wrong Job Classification Codes Costs Employers Money
 
Employers who have a complete safety program, proper medical management of their workers’ compensation claims and a strong return-to-work program can overpay for their workers’ compensation insurance if they (or their insurance broker or their insurance company) make a simple mistake.  The use of the wrong classification code(s) for their business is a simple mistake that has cost a lot of employers excessive workers’ compensation premiums.
 
The National Council on Compensation Insurance (NCCI) is the insurance data and rating bureau used in 38 states to set insurance rates.  The 12 other states either utilized a modified version of the NCCI classification codes or have their own classification codes. The NCCI has over 700 classification codes to describe the work done by businesses.  Some states that use their own classification codes, and not the NCCI codes, have in excess of a 1,000 codes. [WCx]
 
 
Class Codes Are Job Definitions Used by Insurance Company
 
Classification codes are basically a list of job definitions used by the insurance company underwriters to describe your business and to place your business in a group of businesses that do the same type of work.  The classification codes are a four digit number with a job description definition assigned to each number.  The classification codes are used by all insurers writing business in the state.
 
Classification codes are used for several reasons including:
 
·         Employers within the same industry have similar exposure to risk of loss
 
·         The cost of workers’ compensation can be fairly distributed among employers
 
·         Large employers with many different types of operations and many different types of employees would be impossible to rate accurately if every employee or every occupation was individually rated
 
·         The classification of employers promotes safety, as the employers knows they are being compared to other employers in the same business
 
Every Code Assigned Rate Used to Calculate Premium
 
Every classification code will have an assigned rate that is used to calculate the workers’ compensation premium.  Improper classification of a business can result in the wrong rate being used to calculate the premium. 
 
 
3 Occurrences to Select Wrong Code
 
Insurance Broker
 
The errors in classification codes occur most often with the insurance.  Unless the broker is both very well versed in the 700+ classification codes AND has a very good understanding of the nature of your business, the broker may select the wrong classification code.  The wise broker will ask the prospective client various questions designed to establish the types or work performed by the employer and the exact nature of the employer’s business.  Based on the answers provided by the employer, the broker will assign a classification code for the business. [WCx]
 
 
Insurance Company
 
A second point in the process where the employer may receive the wrong classification code is when the insurance company underwriter reviews the new coverage application.  If the underwriter concludes the broker used the wrong classification code, the underwriter will change the classification code to the code the underwriter believes is a better match in describing the nature of the insured’s business.  Of course, the underwriter can make the wrong selection as well, resulting in the employer being charged the wrong amount for the workers’ compensation insurance.
 
 
Insurance Company Auditor
 
A third point where the wrong classification code can be assigned to the employer is when the insurance company performs a premium audit after the policy period has ended.  If the insurance company auditor reviews the policy application information and determines a different classification code should have been used, it again can be changed.
 
 
Hire Premium Auditor If You Have Concerns
 
If you as the employer have any concerns about whether the correct classification code is being used, you can hire an independent premium auditor to verify the accuracy of the premium you are being charged.  As premium auditors normally work on a percentage of the savings basis, the employer who is concerned that an incorrect classification code (or other errors have been made in the calculation of the work comp premium) should hire an independent premium auditor.  For assistance in locating a premium auditor, please contact us.
 
 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, 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

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

How Your Carrier or TPA Should Process Claims Intake

 

It is pretty hard to be proactive on your injury claims if you struggle to get the claim to your carrier/TPA.  Several Carriers now have a complete, customizable system to make this task easier on you the employer. 

 

In the past, if an injury occurred you would pick up the phone, call the carrier or your agent, and give them the pertinent information over the phone.  From there, those people would complete the injury report and the job would be complete.  Nowadays, the need for information has become more and more prevalent.

 

 

Different Ways Carriers/TPAs Should Accept Claims:

 

 

  1. Email the claim info to the intake center

 

We live in a world of electronic communication.  This form is not only faster, but more efficient.  Carriers give their insured’s forms to complete, and then they can scan and email them to the intake email address.  This also gives the employer a copy of the information, so they can keep it on file. This is a fairly failsafe option, and very common in the insurance world.  [WCx]

 

 

  1. Fax an injury report to the carrier

 

If email is not your thing, most carriers will supply you with forms to complete and fax to your intake center.  This is a fairly easy task, but it can lead to some problems.  Because they can be written out by hand, faxing can make the print hard to read for the carrier employee to input into their system.  Even worse is when the employer does not complete all of the necessary fields.  This stalls the claim, because the carrier employee has to call the employer and confirm the information that they need for claim setup. Submitting claims via the fax machine is no longer the preferred option.  Carriers make it an option, but rarely will they prefer fax over the other electronic forms of communication.

 

 

  1. Call the injury details in to your carrier or agent

 

Even in today’s electronic world, calling in the claim is still a very popular option.  Calling the claim in is a bit more labor intensive for the employer, but there is comfort in actually talking to someone.  If requested, carriers will give you a dedicated phone line to call which goes right to their intake center.  Top carriers/TPAs will offer adaptable call scripts to ensure questions specific to your business are answered every time.

 

.

  1. Submit the injury report via the internet

 

Most carriers can provide the employer with a secure website in order for the employer to report the claim.  This way the employer sees exactly with the intake employee would see from the carrier side, and if you do not have all of the information that the page needs you can always save your work and come back to it once you have the information that is needed.  This eliminates a phone call, being placed on hold, and repeating information to the intake employee.

 

 After you submit the claim you will receive a tracking number that is verification the claim was received and will be assigned to an adjuster.  This has become a common form of injury claim reporting and it has proven to be efficient. 

 

 

  1. Submit the claim information using intake software

 

As popular as website reporting has become, the new wave is giving the employer the software needed to report the claim direct and right into the new claim system the carrier uses.  Almost all carriers/TPAs use a type of claims software to handle their claims and intake process. To make themselves more integrated with their insureds they have allowed employers certain access to this software, including the ability to report a new claim.  This process has many benefits It has decreased phone calls for both parties, and it allows the employer to see into the claim and some of the claim notes to find out whatever info the employer is looking for, be it wage information, injury reports, loss runs, reserves, and the like.  The employer will not have access to the entire claim due to HIPPA privacy laws involving medical records, but they will have a lot of access for the most part.  This is the current trend, and more and more carriers are marketing this as a way that can separate them from other carrier competition. [WCx]

 

 

  1. Key points to remember when submitting a claim

 

No matter how you choose to report the claim, you have to be sure of a few things prior to reporting.  Make sure you have all of the information the carrier needs, including date of birth, social security number, claimant address, injury details, wage history if applicable, the last day worked, the return to work date, if you have light duty work for this employee, the employer address and contact person, contact person information such as phone number and email address, type of injury, and so on.  Without all of this information submitted with the claim, the adjuster will have to contact the employer to obtain it.  No matter how insignificant the injury, these are all facts the adjuster will need in order to do a proper investigation into a claim.  A lot of times the insignificant claims are the ones that can turn into more severe claims when conditions warrant.

 

 

  1. Key points to look for from your Carrier / TPA

 

  • 24 / 7 reporting
  • Escalation Procedures for Critical Claims:  Critical losses require immediate attention, ensure your carrier/TPA has established procedures for once the claim intake is complete.
  • Immediate Distribution of Confirmation Letter: Necessary for you to confirm and acknowledge the information delivered during intake.
  • Integration with the Claims Management Process:  The intake process has to be integrated with the claims management process for the system to run on an optimal basis.  Any breakdown in this structure will lead to less than perfect results.

 

 

Summary

 

Having a streamlined claims intake process is not only beneficial to the employer, but also to the carrier as well.  By being able to have the information they need, the adjuster handling the claim can hit the ground running and work on ways to be proactive on the claim rather than being slowed down chasing information.  The first days in a claim are often the most vital, and any steps you as the employer can take are the most important.  You will see claim expense savings sooner by being thorough rather than by being complacent about the whole process. 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, 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

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

 

Understanding Key Differences Between Insurance Agents and Insurance Brokers

Employers often wonder does the workers compensation agent or broker work for them or does the agent/broker work for the insurance company?  If an issue develops with the workers compensation insurance company, will the agent/broker be there to assist you, the employer in resolving the issue, or will the agent/broker repeat what the insurance company says?

 

 

As both insurance agents and insurance brokers sell insurance to the public, many people use the terms “agent” and “broker” interchangeably.  They think of them as one and the same. There are some subtle, but important differences between an agent and a broker. [WCx]

 

 

The insurance broker is an independent business that sells insurance products for various companies. The insurance agent can be either an independent agent or a company agent.  The independent agent, like the broker, will sell insurance policies for multiple companies. While the company agent, also referred to as a captive agent, sells insurance policies for a single insurance company.

 

 

Both the agent and the broker act as intermediaries between the client (the employer) and the insurance company.  They are both responsible for the proper processing of the application for insurance, the various forms and collecting, and submitting the premium to the insurance company. Large domestic and multi-national companies use insurance brokers to handle their insurance needs which are complex, with multiple types of insurance.

 

 

The difference between an independent agent and a broker is a matter of degree.  A pure agent will sell the insurance policy and perform the administrative functions.  The broker in some states will have a different license than the insurance agent, representing more experience, more education or both.  Brokers often offer a wider variety of insurance products.  Brokers will often have the expertise to analyze employer business needs and make recommendations on how to provide the coverage needed.  Brokers cover the cost of the higher level of expertise by adding an administrative fee to the workers compensation policy in the form of a higher premium. If they place sufficient volume with an insurance company, the commission they receive is higher from the insurance company. In all states, insurance agents and brokers need to be licensed.

 

 

A good agent or a good broker will educate the client ( the employer) any time there is a question or a concern about what  insurance coverage is needed. By providing you with information, they will guide in making the best decision for your company. The good agent or broker will never make the decisions for you, but give the information to make the best decision for your company.

 

 

The independent agent and the broker will place your insurance business with the insurance company(s) that can best provide your company the workers compensation or other insurance products that are right for the company. The insurance contract is arranged by the agent or broker or between your company and the insurance company.  The agent or broker is not a party to the contract.

 

 

Often the greatest difference between an agent and a broker can be seen when a dispute arises between the employer and the insurance company.  The captive agent is an employee or agent of the insurance company and will toe the company line.  The independent agent and the broker represent the client, the employer. In all situations the insurance policy language will prevail.  When the insurance policy is ambiguous and does not clearly address the situation between the employer and the insurer, the independent agent and the broker have the responsibility and the obligation to represent the interest of the employer.

 

 

Brokers and independent agents run into trouble when they allow loyalties to shift to the insurance company because of concern for maintaining business relationships with the insurer.  Brokers and agents should work in the best interest of the client, the employer, even when it could be to their own detriment.

 

 

Whether a captive agent, independent agent or broker, they each have a duty of due diligence and attention to the suitability of the insurance policy they are arranging for you.  Each should be looking out for the employer interest and using their expertise to provide your company with the workers compensation insurance coverage that is right.

 

Author Rebecca Shafer, JD, President of Amaxx Risk 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. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20% to 50% www.WCManual.comContact: RShafer@ReduceYourWorkersComp.com.

 

 

Our WORKERS COMP BOOK:  www.WCManual.com

WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

 

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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact info@reduceyourworkerscomp.com.
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Six Things An Employer Should Tell the Adjuster About the Workers Compensation Claim

Let me first point out this article is written from the Claims Adjuster’s point of view. This will point out a disturbing new trend in the world of insurance where the employer is not being honest about injury details or other information surrounding the injury. Not all of you will fall in to this category, but some unknowingly may. So take that in to consideration, and I hope it impacts you to change the way losses are handled.

 

 

Over the years I have investigated workers compensation losses and have heard bizarre stories of personal injury and the circumstances surrounding accidents. If someone asks me if I have seen everything in workers comp, I have to answer an emphatic no Chances are a bigger and more unbelievable instance has yet to cross my desk, and it will be my job as the adjuster to determine what happened. For those employers without the luxury of video surveillance, I have to go by witness accounts ( if there are any) and attempt to piece the circumstances of the injury together.

 

 

 

Sometimes this is a difficult task. Given the job environment in recent years, I have noticed a new trend where employers are being dishonest with me about the details of an injury. This is probably happening for many reasons, but in any case it is never acceptable nor helpful. The carrier is on your side and needs to hear the truth. Below I discuss a few questions I ask on claims where I have heard questionable responses in the past.

 

 

  1. What do you know about the injury details?

Every employer has a designated person to call a claim in to the carrier. This person’s name is at the bottom of the report. The first phone call I make after getting the claim is to this person. Today, we will call her Sally. I call Sally and ask her if this is all that is known about the injury. She says yes, and that all details are included in the injury report she completed.

 

 

That may be correct, but I know the report is missing information. So I rephrase the question about the exact timeline of events. Who was injured? Did the worker tell someone? Did the worker go to the clinic alone or did someone drive? Do you know about any prior injuries to the claimant’s knee ( for example)? Keep in mind one and two word answers do not assist in creating my report. If you the employer do not know the particulars about the injury then be clear on that at the outset. I will attempt to find someone who is. Perhaps this will be a floor supervisor, field manager, or you can direct me to the appropriate person.

 

 

  1. Are there any witnesses?

I can name countless times where an employer reports to me there are no witnesses to an injury. Then I interview the claimant who provides several names as witnesses. Next, I talk to those individuals and ask about their account of events,  and more times than not they have seen something or arrived shortly after the accident after hearing the claimant’s calls for help. If there are witnesses, I will learn about it from the claimant and others interviewed.

 

 

Perhaps the employer did not ask about witnesses at the time of reporting and was not aware of any. Maybe the internal injury questionnaire does not have the space to write witness names no witnesses.  In some cases, the employer may intend for the claim to sound less substantial.

 

 

Whatever the case may be, if there are known witnesses, name them. The employer should know the employee will be ready to list as many witnesses as they can remember to substantiate the claim. In the end, finding out there are witnesses makes us question the validity of the employer not the claimant. It makes us question you. And in the case where the employer’s internal report does not have a space for witnesses, that should be immediately added as it will help in any claims going forward.

 

 

  1. Why was the claim not called in a timely manner?

Sometimes I get a claim with an injury date months earlier or even a year. Maybe this is an error. But if someone approaches you as an employer and reports being hurt, a claim should be immediately filed. Do not wait and see if they are actually injured or not. Do not wait to see if they file it under personal insurance to avoid a WC claim. Do not let it sit on a desk for 3 months or more. Call in the claim.

 

 

The employer needs to call it in because I will question the claimants about dates. If the claimant reports telling the boss on that date a year ago then again four more times. And that was all before the paperwork is filed, then that is not going to behoove you to the carrier. In fact, the employee also will be displeased , and it is going to make them that less motivated to return to work in the first place.

 

 

Maybe the report was completed on the injury date and was sent to your agent or broker. That works well, if the agent calls the claim in to us. Agents receive a lot of paperwork from their clients. They do not know the priority of addressing various documents. Maybe the claim was sent to the wrong agent. Or the wrong person at the agency got your fax, and there was no confirmation call to the carrier. Just call it in, and if it is sent to your agent, follow up with them. The sooner the claim reaches the carrier the better.

 

 

  1. Do you know of any outside activities the claimant is involved in?

I like to ask employers this question to see how much they know about their employees. In one case, an employer revealed the injured worker helped coach his son’s soccer league. So I conducted some surveillance and recorded the claimant coaching and standing for long periods of time on the sidelines coaching. That kind of tip proves very helpful in a case and investigation. However, if you as an employer cannot be sure about a tip, then tell us. Even a lead can be helpful, because we can investigate the tip. The bottom line is we trust what the employer tells us as we do not know the claimants at all, so answering questions in the most honest and complete way is critical to the success of our investigation.

 

 

  1. Were the guards in place?

For those employers with moving machinery, just admit if the guard was off at the time of injury. The employee is going to tell us either way. The guard is there to protect workers, so the worker is fully aware if it is missing. Maybe this leads to a design flaw that our subrogation department can investigate so we can recoup claims dollars spent on this injury.

 

 

I know a lot of employers remove or modify machine guards in order to be more productive or in order to have the machine fit whatever kind of material you are working on for your client. Please only have those machines do what they are supposed to do. Modifying the guards can lead to very serious injury, and the costs associated with that loss are far more than any profit you can attain by changing the functionality of machinery. Not to mention the potential impact it has on the life of the worker who may lose a finger or hand, or worse. I have seen a lot of severe injuries from this. And if you do not think it will happen to you as an employer, the only advice I can give you is that every person I talk to that had this type of injury involving a guard removal or modification told me the same thing: “I have done it like that a million times before and never had any problems until now.”

 

 

  1. Did you complete an internal accident report and investigation?

As an employer if you have internal reporting or accident investigations then I commend you. You are on the way to becoming more proactive at handling losses. We discuss frequently about reporting, trends, and identifying injury areas.. If you are not internally reporting, then that is okay also. Although, the employer will find it beneficial to do so in the end.

 

 

For employers who do not do any type of reporting, please do not tell me you do and then provide me nothing. I will want to see that report to get its information,  and I will keep asking for it to put it in my file. If you did not do one, just tell me you do not have one. I will keep calling and emailing until the employer finally tells me there is not an internal report. This does not assist in creating my report. (WCxKit)

 

.

Summary

In the world of workplace injuries a lot of people on the outside think that the carrier has to worry only about the injured worker’s honesty. Sadly the carrier has more to be concerned with in the claim. It is a combination of the two other parties involved in the claim. I have had cases where the claimant has not been honest. I have had claims where the employer has not been honest. In any case, the truth will prevail. If all parties are honest in the beginning, it makes handling the claim that much easier for everyone involved.

 

 

Contributed to Work Comp Roundup by an Ajuster who wishes to remain anonymous however he works for a major carrier.

 

Author Rebecca Shafer, JD, President of Amaxx Risk 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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.

 

ABC’s of WORK COMP:  www.WCManual.com

 

 

WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:   www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE:  Workers Comp Resource Center Newsletter

 

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.

 

©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

 

Five Ways to Control Skyrocketing Workers Compensation Claim Costs

Average claim life continues to increase due to the injury severity and increasing medical treatment costs. While employers continue their involvement in processing claims to reduce costs, insurance companies/TPAs also must do all they can to save on the costs of handling and controlling claims. Here are five ways to reduce WC costs.

 

 

1- Do not sign a contract for services with one national company/vendor

In an effort to control cost, insurance companies go to independent medical examinations (IME) or medial case management vendors for bids. The low bidder receives a non-compete contract from the insurance company/TPA for the life of the contract.

 

 

Good idea? Unfortunately low service costs are not the only criterion helping to resolve claims. These companies must proactively provide services in handling claims to resolution based on the TPA/insurance company’s criteria. If the vendor has no competition, how hard will they work in assisting you to resolve issues given they have a contract for a year – bought and paid for?  (WCxKit)

 

 

2- Be aggressive with medical bill cost containment (per jurisdiction)

Bigger TPAs/insurance companies have internal cost containment departments, otherwise known as “medical bill review” or “medical fee reduction.” Smaller places use an outside vendor for these services. There are a number of good vendors who do utilization review/cost containment at a reasonable cost. Whatever the name, their role is to reduce the costs of medical bills — procedure code by procedure code, depending on the TPA/insurance company’s participating medical network(s).

 

 

Often what is missed is some providers/clinics are open to agreeing to a lower fee. If a popular physical therapy clinic in your area nets many of your claimants, it is worth a phone call to negotiate a 10 percent under fee-reduction price in exchange for “preferred provider” status. (Check jurisdiction and legal counsel.) Think long-term. Any reduction is worthwhile especially for the price of a phone call.

 

 

3- Stay on top of your claims by being proactive

Some claims remain open due to adjuster laziness. This is especially true when the case is in litigation. By proactively handling the file and using negotiation skills, claims may be resolved months earlier instead of lingering from litigation date to litigation date without any aggressive attempts at resolution. Become involved and stay involved until the case is resolved. Prioritize your files and stay on top of them and before you know it the claim is ready to be closed.

 

 

4- Use telephonic nurse case management

When a worker is off work, every day of lost wage is an expense. You want to do everything possible to bring the worker back to the job as quickly as possible. Telephonic nurse case management (TNCM), as opposed to on-site nurse case management (NCM), gets the same result, for a quarter of the price. Cases needing a nurse usually demand more follow-up, easily done by phone. The nurse calls the employer, the claimant, talks to the treating doctor’s nurse, gets hospital records, etc. A TNCM frees the adjuster to work on other tasks the file needs, such as background checks, ISO searches, vendor assignments, etc. (WCxKit)

 

 

NOTE: The Utilization Review Accreditation Commission (URAC) is an umbrella organization responsible for certifying Nurse Case Managers (NCM); Triage Nurses (TN); Telephonic Case Management (TCM); Field Case Management (FCM); Utilization Management/Utilization Review (UM/UR); and Peer-to-Peer Review. To maintain quality control all these entities need URAC certification. URAC has stringent protocols for education, credentials, and training for these services.

 

 

5- Watch your Leakage

Leakage is the biggest animal in the “reducing claim cost” jungle. Unnecessary costs, expenses, and errors in payments add up to astronomical amounts of money — often unrecoupable. Audit your files, do file reviews, and make sure to resolve leakage when found and stop it from happening.

 

 

Summary

Claims costs are up across the board. By implementing a few proactive steps at a time, an employer working with the TPA/insurance company can stop the bleeding and keep costs as low as possible.

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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com .

 

Our WC Cost Reduction Guidebook: www.WCMANUAL.com

WORK COMP CALCULATOR: http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:  http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP: http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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.

 

©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

 

Four Useful Tips Can Go a Long Way in Managing Workers Comp

When you have a high-exposure file that turns out better than you had expected and costs come in way under what you had budgeted for, it is easy to see the cost-savings that are associated with that loss. If you saved $50,000, that’s a nice lump of savings for your balance sheet. 
 
But those little savings you make throughout the course of a year add up as well. It’s difficult to see it in the short-run, or by the month, but looking at it over the course of a year, it can really add up to a nice savings in your budget. We discuss some ways those little savings can add up below. (WCxKit)
 
 
1-Using quality vendors to get better results:
Sometimes the better vendors just cost a bit more than others. This is usually due to the fact that they have better talent working for them, and there are associated costs included with that. However, if these more expensive vendors get your workers back to you ready for work quicker, then you save again on the wage loss issue. This means that these vendors have already paid for themselves if you weigh their costs versus the cost of wage loss for your injured worker.   Talk with your carrier about who the best vendors are in your area for IMEs, surveillance, and nurse case management. Don’t shy away from them just because their costs are a tad higher than their competition. They can save you money in the long run by providing you with excellent service, and by getting those injured workers back to work quicker than their counterparts.
 
 
2-Enhanced communication with your TPA/Carrier:
Lack of proper communication can lead to increased claims expense. If the adjuster doesn’t know that you have light duty work available, they may not be pushing hard enough to get work restrictions for your injured worker. Maybe the adjuster doesn’t know you have a dedicated medical clinic and/or physical therapy facility and failed to direct the injured party to treat at those clinic locations. 

Maybe the injured worker took vacation time or sick pay for their time off of work, and they didn’t tell the adjuster that so they got paid twice-once by your company and once by the Carrier. Although most times the adjuster will catch this, sometimes they do not. This leads to an overpayment that the carrier must try to recoup, and if they fail to do so the cost of that ultimately gets pushed to you in the result of a higher premium due to increased claim costs. Whatever the event may be, you need to be in regular contact with your adjuster.   

Perform claims reviews and ask the adjuster on each claim what their plan is for getting the claim resolved.  The more you discuss the claim, the more ideas you both can come up with, and that may be what is keeping your worker off of work. By working together, you will save costs. Most adjusters would prefer too much communication versus not enough, plus this will keep the adjuster on their toes and they will be keeping a close eye on your claims, preventing one from falling through the cracks which will further waste claims dollars.

 
 
3-Using the other departments your TPA/Carrier has to offer:
Most Carriers/TPAs have multiple departments that will work with you to reduce your exposure. Loss prevention, ergonomics, dedicated adjusters to your account, medical/nurse resources, medical bill review, etc.   All of these services may be provided free of charge by your Carrier/TPA, and the end result of utilizing these services will be lower claim cost to you. Implementing the action plans that these departments come up with is designed to lower your costs. So talk with your Carrier/TPA and find out what resources they have to help you reduce cost. They will be happy to work with you, and you will be happy since your claims expense will decrease over the course of a year.
 
 
4-Utilizing a 3rd party company for all of your RX needs:
Pharmacy costs are constantly rising. Almost every injured worker comes out of their doctor's appointment with a prescription for some medication in their hand. There are a lot of 3rd party pharmacy companies out there willing to work with you to reduce these costs if you funnel your injured workers to their pharmacy programs. Find out what kind of pharmacy management program they provide. The best sell their services unbundled.  Look for prospective as well as retrospective elements of the cost control program. This can lead to huge cost savings, even on the minor claims, and will help the most with the more severe claims, since those injuries usually require prescriptions that cost more, and they length of the prescriptions last longer. This is a significant way to reduce your costs, and you will see large savings at the end of the year. (WCxKit)
 
 
Summary:
There are a lot of ways to reduce your costs. Not only in the larger higher exposure claims, but in the small minor claims as well. If you think about it, every little savings you can make can add up to a lot by the end of the fiscal year. Remember there are ways to cut costs on every claim, no matter how insignificant the claim may be at the time. You have to think both ways, in the short term and long term. Whatever it may be, the end result is you saving money, and that is never a bad thing
 

Author Rebecca Shafer
, JD, President of Amaxx Risk 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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
 

ABC's of Workers Comp Management:  www.WCManual.com
 WORK COMP CALCULATOR:  www.LowerWC.com/calculator.php

 
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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Five Signals Your TPA is Doing a Great Job

pic7In the world of insurance, it is hard to tell if your carrier or third-party administrator (TPA) is doing a good job if you do not interact with them often. Of course, the goal is to have as little interaction with them as possible — if you do not have to file any claims that is a good thing.

 

 

But, accidents will eventually happen. Property damage happens. Workers get injured. Customers get injured. So how can you tell if your carrier or TPA is doing a great job and looking out for your bottom line?  (WCxKit)

 

 

5 Ways to Tell Your TPA Is Looking Out for Your Bottom Line:

  1. Ask your injured workers when they return to work how their interaction went.

Your injured worker should have had plenty of interaction with their adjuster during the course of the file. The amount of interaction depends on the severity of the injury, but they should at least be able to name their adjuster and give some feedback on how the claim went.

 

 

If your injured employee’s claim was denied, you may not get a truthful answer. But, for a normal, routine claim that was accepted and uncomplicated, the worker’s responses should be a good indicator of how their claims process went.

 

 

A sample of questions you might ask a recently returned worker:

Was the adjuster helpful?

Did he or she explain you worker’s rights as defined by the Comp Act?

Did he or she explain your medical condition to you?

Did the adjuster return phone calls promptly?

Did the adjuster listen to your questions and answer them to your satisfaction?

 

 

Any negative responses to these questions is usually a good indicator of how your carrier is doing while handling your claims. A lot of negative responses from your workers could indicate it is time to explore using another carrier or TPA.

 

 

  1. Ask your agent what they hear about your carrier or TPA within the industry.

If you have a good-sized agency, or broker, that handles your insurance needs, it should be more than familiar with their clients’ companies. If you ask for an unedited opinion, chances are they will give it to you. Agents hear a lot about the pros and cons of certain carriers and TPAs from other clients. Issues an agent speaks of may or may not be of importance to you, but, the more information you have the better.

 

 

Ask your agent about these factors to learn about your carrier or TPA:

What is the carrier’s reputation with other agents?

What does your agent hear about the carrier or TPA’s litigation response; do they deny and fight every claim, or accept and pay out on every claim? (either is bad – there should be a balanced approach)

How are their reserving practices? Do they constantly bump or stair-step reserves? Do they inflate reserves in an effort to raise premiums?

How are their adjusters? Do they return calls and help agents with questions or are they impossible to reach?

How is the carrier’s local management? Are they knowledgeable and experienced?

Does your carrier/TPA write a lot of businesses like yours, similar in size?

Does this carrier/TPA only like to write very large national accounts or do they prefer lower-level, local markets?

How are your TPA’s underwriters? Are they usually accurate or do they have to do a lot of work when submitting a premium estimate?

 

 

All of these questions will give you a feeling about how your business fits in with the other businesses your carrier/TPA writes for. A smaller company that uses a carrier/TPA that prefers large national accounts may find their business needs are not tended to when you need them.

 

 

  1. Ask for a meeting with your carrier/TPA management and the team of adjusters assigned to your account.

The best option is a team handling your account within your immediate community. If it is a major road trip to meet with your insurance team, question if they are the right fit for you; if it’s a flight, question it even further. Some businesses want that local presence so they can physically meet with them when issues arise. Some businesses do not really care about the location, as long as their needs are met immediately. It is your choice. Consider TPAs that will provide a dedicated unit ON SITE at your location if you wish; yes, there is a price for such a high level of service, but the overall value may have an excellent ROI. Short-sighted companies concerned only with today’s price rather than total price might want to reconsider the price-first approach.

 

 

Every Carrier/TPA knows who would be handling your claims if any were to happen, so meet with this person. Get to know him or her and find out about their industry experience. Find out if you mesh with them or not. If you get a good vibe, then there should not be a lot to worry about. But, if you walk away feeling less than confident, you already know you should start shopping around before it is too late. Check their “grades” — the best TPAs score their adjusters.

 

 

  1. Ask for your business peers thoughts.

This will not apply to everyone, but typically if you are a niche business and know your competition, ask your peers about their experiences. Ask how their claims were handled and if they were satisfied. All business competition aside, most managers run into the same people from their competition at certain events, trade shows, etc. If you are amicable with any of them, it will not hurt to ask. It is almost like a test drive. If your competitors had bad experiences with certain carriers/TPAs, chances are you would as well. This can save a when it is your turn to file a claim with your Carrier/TPA.

 

 

  1. Do your research.

Most Carriers/TPAs will have websites that show their capabilities, office locations, new technology, agent relationships, etc. Do some searching around to see who you like.

 

 

Some things to look for include:

Who has cutting-edge technology for claim handling?

Who has invested time and effort into research and hiring practices to ensure they have the best of the best in staffing adjusters and counsel?

Who has local offices in your area?

Which agents are partnered up with your carriers/TPAs of choice?

Is your carrier/TPA involved in local charities and in giving back to their community?

 

 

Not all of these items may play a factor in learning if you have the right carrier/TPA for your business needs, but it cannot hurt to find out the answer to some of these questions. (WCxKit)

 

 

The goal is to not ever have to file an insurance claim. But, as we all know, that is unlikely. You will have to cross paths with your carrier/TPA at some point. Making sure you have the right one who will take care of your needs when you need it the most is worth the effort. Ask around; do your research, and take time to meet with your prospective team of insurance professionals. This will help you know you made the right choice, and not a choice you will regret when you need help or have questions about your insurance needs.

Author Rebecca Shafer

, JD, President of Amaxx Risk 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. Rebecca is the author of Manage Your Workers Compensation Program. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.

 

Our WC Book: www.WCManual.com

WORK COMP CALCULATOR: http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:  http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP: http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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.

 

©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

 

Know 8 Costly Mistakes Workers Comp Adjusters Make

 
It is not easy being an adjuster – worried claimants, demanding plaintiff attorneys, state forms, overly concerned employers, totally unconcerned employers, constant phone calls, tons of emails, mediations and hearings, medical providers who do not report, and medical providers billing above fee schedule all make for a stressful job with too many things to do. In such an environment, it is easy to make mistakes – mistakes that cost the insurer money. These costs are passed on to the employer in the form of higher workers compensation premiums.
 
 
8 costly mistakes the adjuster can make:
1. Failing to Investigate
It is way too easy for the adjuster to rationalize that if the employer reported the work comp claim, then it must be compensable. Monday morning claims (that usually happen away from work over the weekend) and claims that were not reported when they occurred are two of the most common types of work comp claims that need to be thoroughly investigated. But often there is no investigation. The failure to investigate results in payment of work comp claims that were not owed and should not have been paid.(WCxKit)
 
 
2. Not Recognizing Subrogation
Work comp adjusters are trained in workers compensation claim handling. The work comp adjuster is usually not trained to handle liability claims and therefore will often not recognize a third-party liability situation where there is a right of recovery from another party. Every work comp adjuster should learn to ask, “What caused the injury?” and, “Was anybody else involved?” This is such an issue that some insurers have set up a separate subrogation department with staff trained to recognize liability situations and opportunities for recovery of the amount paid on the workers compensation claim.
 
 
3. Letting the Defense Attorney do the Adjuster's Job
When the employee's attorney files for a hearing or a mediation and the adjuster has not properly investigated the claim or does not have the claim file properly organized, defense attorneys and their paralegals will not have a word of complaint – they will simply charge their hourly rate. If the claimant's recorded statement was never taken, no problem, they will take a deposition. If medical records are not organized, they will be put into order by whoever the treating physician was or by the chronological occurrence date. Of course, the paralegal or junior partner, who does what the adjuster should have done, will bill the insurer for time spent doing the adjuster's job.
 
 
4. Not Reading the Medical Reports
A work comp adjuster will often scan the treating physician's report but skip reading the diagnostic records, nurse's notes, and various other additional documentation, especially in long, complicated cases with extensive medical information. This can be a costly mistake because buried deep in the medical documents will be information on pre-existing medical conditions or intervening causes – such as another accident. This information will change who is responsible for medical care and the amount of time an employee is away from work.
 
 
5. Ignoring Unofficial Information
The employee with the “severe back injury” is seen at the bowling alley by one of his co-workers. The co-worker tells a supervisor, who tells the work comp coordinator who tells the adjuster. The adjuster has read the medical report in which the claimant told the orthopedic doctor he could not bend over. The adjuster dismisses the information from work comp coordinator as gossip or hearsay and has “too much other work to be chasing rumors.” The claimant stays off work and perfects his bowling game while the adjuster continues to pay medical bills and weekly indemnity checks.
 
 
6. Failing to Direct the Defense Attorney
Often the overworked adjuster will give the claim to the defense attorney and say, “You handle it.” The proper course of action is for the adjuster to work in partnership with the defense attorney. In this situation the adjuster advises the defense attorney on when to litigate and when to settle. Many defense attorneys will go through the motions of depositions and hearings, and after months or years recommend the claim be settled. The adjuster should have discussed the claim early on with the defense attorney and instructed the defense attorney to defend or settle the claim. Too often unnecessary legal cost is incurred because the adjuster did not specify a course of action on the claim.
 
 
7. Not Utilizing Medical Case Management
Different insurers and different third-party administrators have varying guidelines on when the adjuster should utilize medical case management. Neither the extreme of using a nurse case manager on every work comp claim (unless a senior nurse reviewer is utilized on all claims) nor the extreme of never utilizing medical management should be the adjuster's norm. The wise adjuster will save the insurer money by bringing in a nurse case manager on every surgical intervention, every compound fracture, and every hospitalization. When the adjuster does not have medical management involved in the file, the medical providers practicing defense medicine will have optional medical procedures performed that would have been avoided with a nurse case manager controlling the medical care.
 
 
8. Working on Autopilot
It takes a minute of the adjuster's time    each week    to verify employee's medical treatment and return-to-work status. It is easy to put indemnity checks on autopilot –they are computer issued each week without the adjuster's approval. What often happens is the employee returns to work while the indemnity checks continue to go out. Some honest employees will return the overpaid indemnity benefit, but many will keep the extra money rationalizing it is for their pain or inconvenience. Other examples of autopilot on the claim file is placing the claim on a "long diary," with the adjuster figuring everything will be resolved by the time the adjuster sees the file again on their diary (calendar).
 
 
If you see your workers compensation adjuster making any of these mistakes, politely bring it to their attention. Advise the adjuster not to allow an insurer to make unnecessary payments on your claims.
 

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. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
 
 
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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Understanding the HIGH Cost of Selecting the LOW Price Work Comp Proposal

The Executive Director of a governmental pool could not understand why the cost of the pool's workers compensation claims was significantly higher than the workers comp claim cost of a second governmental pool operating in the same state. The Executive Director had an inkling the claims handling was not as good, but a claims file audit two year earlier found the claim handling to be good with few exceptions.
Due to the high cost of premiums, pool members were withdrawing from the pool and joining the other pool in the state.   The decline in membership in the pool was jeopardizing the existence of the pool. In desperation, the Executive Director sent out a Request for Proposal to various claim file auditors. The claim auditor from two years ago responded with a proposal with the lowest price, significantly lower than the other audit proposals. The Executive Director did something he had never done before, he excluded the low bid proposal. 
After interviewing several of the claim file auditors, the Executive Director selected an auditor who demonstrated a keen understanding of the cost of workers compensation. The claims auditor compared the claim handling guidelines of the third party administrator (TPA) with the claim files. The auditor was dismayed by the total lack of compliance by the TPA with their own claim handling guidelines. (WCxKit)
During the course of the claim file audit, the auditor interviewed the Executive Director, the claims manager at the TPA and several of the workers comp adjusters. The reasons the governmental pool had higher than average cost for workers compensation became clear to the auditor. The high cost of claims related directly to decisions the Executive Director had made.
Three years earlier, when the pool was looking to replace the prior TPA, the Executive Director had selected the current TPA because their claims handling proposal had been nearly $250,000 per year lower than the average bid from other TPAs bidding for the business. (The prior TPA had also been chosen based solely on having the lowest price). The claim auditor from two years earlier who had been chosen solely on price quoted had not done an in-depth review of the files and had overlooked various mistakes in the claim file handling.
The TPA, who had bid the job at a flat price for the program, had each workers comp adjuster handling from 175 to 225 files at any one time, a workload the adjusters could not properly handle. If the TPA hired additional adjusters to handle the claims, the TPA would lose money on the program. The low price proposal the Executive Director had accepted did not have any provisions in regards to the number of claims each adjuster would be assigned. (The executed claims handling contract was also silent in regards to the overall claims handling service standards).
The workers comp adjusters had low morale due to their overworked situation. The adjusters did not have time to properly investigate the claims, the adjusters were too busy to assist the pool members on early return to work for the employees, and the adjusters were not working with nurse case managers to control the medical treatment. Most of the workers comp claims were out of control.
The end result of the Executive Director's short term thinking of price only in selecting the TPA was much higher payments on the workers comp claims and a loss of pool members due to the overpayment of claims (resulting in increased pool premiums). The Executive Director saved nearly $250,000 per year by selecting the lowest cost TPA over the average bid of other TPAs. An actuarial study using National Council on Compensation Insurance data estimated that the workers comp claims payments for claims occurring during the year 2007 were nearly $1.7 million higher than the average for other workers in the same NCCI job classification codes. The cost for short term thinking of price only in selecting the TPA? Nearly $1.5 million a year.
The second claims auditor included in his proposal not only a review of the claim files, but also a review of the claims management process. As a result of the claims audit, the following recommendations were made to the Executive Director:
1.     The Executive Director should meet with the current TPA, advise the workload of the adjusters was unacceptable and renegotiate the remaining year of the three year contract to provide for proper staffing by the TPA at a profitable level
2.     The Executive Director should put out for bid the claims handling before the current contract is up by utilizing “21 Questions to Ask in Your RFP for a TPA.”
3.     The next TPA should have experience handling governmental pools and be willing to provide contact information for all their governmental pools.
4.     When the final 3, 4 or 5 TPA candidates are chosen for the next claims handling contract, comparisons should be made of:
·       the average value of closed indemnity claims;
·       the average number of days open for the closed indemnity claims;
·       the percentage of claims that went into litigation;
·       the average settlement cost of litigated claims;
·       the amount spent on expenses and the ratio of expense cost to claim cost.
5.     The nurse case management should be selected as carefully as the TPA whether provided by the TPA or handled as a separate contract. (WCxKit)
The Executive Director selected the easy way of making a choice of a TPA using only the price for the TPA services. This resulted in an immediate, short term price savings, but a much higher total cost in the long run. When selecting any service provider, an in-depth investigation into the services that will be provided should be made prior to making a decision. A balance between price and quality of service should be reached prior to the start of the service contract.
For those of you who have read to this point, when you speak with Senior Management, trying to sell them on selecting the "best" service, with the most cost-effective outcome, refer to it as "value." The Total Loss Costs  will ultimately be lower if you choose the service that provides the best "value."

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
 or 860-553-6604.

  Join WC Group:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

 
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.

©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact
Info@ReduceYourWorkersComp.com.

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