Many self-insured employers choose to outsource their workers' compensation claims handling to a Third-Party Administrator (TPA) instead of creating their own internal operation. Selecting the right TPA to meet the organization's needs is critical to their risk management success since TPAs will be coordinating essential functions like managing loss reserves, facilitating claims investigations, issuing claims payments and settlements, coordinating medical management and organizing transitional work.

When making this decision, self-insured employers must consider certain criteria to best evaluate and select a TPA that will partner with them to provide the best claims outcomes. There are several effective fact-finding questions to ask the TPA during the evaluation process that can help determine which company is the best fit for their organization.

Capabilities

First and foremost, employers must find a TPA that can meet their company's individual needs, which can vary by type of business and location. Jurisdiction expertise is also a critical component, since states vary. Many states have extremely complicated regulations, so the insured must confirm that the TPA has the appropriate expertise by state. Questions that can help uncover the TPA's ability to handle the employer's specific business include:

  • Do you have the appropriate resources to handle all jurisdictions applicable to my company?
  • Can you provide references within my jurisdiction to support your capabilities?
  • Do you have the capabilities to handle my company's various business operations?
  • Can you handle all of my company's claims so that I do not need to enlist multiple TPAs?
  • Are you approved by my insurance carriers?
  • Are you following best-practices procedures and can you provide claims-handling results to prove it?
  • What quality assurance processes do you have in place to guarantee consistent results between offices and adjusters?

Claims System

A TPA's system is very important to the entire process. Effective claims management requires a system that is easy to access with enough info readily available when the employer asks for it. In addition, poor and inaccurate data can cause major headaches if it ends up in the employer's financial reports. Questions that can help evaluate claims systems include:

  • How can you ensure that your claims system will provide clear, accurate data?
  • Does your claims system meet my company's financial data reporting requirements?
  • Does your claims system meet my company's analytic needs for benchmarking, stewardship reports, etc.?
  • What measures do you have in place to help prevent data breach?

Personnel

Personnel issues often play a large role in the overall claims outcomes that an employer receives from their TPA. The employer will want to ensure that they will be working with an experienced adjuster who can make informed decisions as opposed to an adjuster using automated responses based on decision trees. In addition, caseloads, employee turnover rate, supervision and other personnel issues can all factor in to the employer's experience with their TPA. Questions that can help identify troublesome factors in this area include:

  • Would my company be issued a dedicated account manager or team?
  • Who would be my key contact that could provide information and answer questions?
  • How do your adjusters make decisions on their cases? Are they educated and capable of making flexible decisions based on circumstances or do you use an automated response process?

Choosing the right TPA takes time and due diligence. However, is worth the effort to find the best fit for an employer's industry, jurisdiction and ability to meet risk management needs. Considering that a TPA plays a large role in an employer's workers' compensation claims outcomes and costs, it is one of the most important decisions that an employer can make.

Tim Stanger is Vice President-Claims at Safety National, where he currently oversees the Large Casualty claims unit that encompasses deductible workers' compensation, auto, general liability and Texas non-subscription claims. In addition, Tim oversees TPA relations, state and SCHIP compliance.

 

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