5 Benefits to Choosing an Unbundled Claims Approach

Both unbundled and bundled claims approaches can provide early intervention in claims, medical management, and better return-to-work outcomes, but many large organizations choose to unbundle their claims due to the particular benefits this approach can offer. When unbundling claims, organizations can have more control over their claims administration efforts, which can include benefits like setting exact guidelines with their chosen third-party administrator (TPA), developing measurable performance standards, and keeping a watchful eye on the people managing those claims.

“An unbundled claims approach and a large deductible policy go hand-in-hand because a key goal of both is the close management of claim outcomes in hopes of lowering the total cost of risk,” said Tanya Parker, Assistant Vice President of Client Engagement at Safety National. “Using a TPA for all claims management may provide the focused approach necessary to reach those goals. TPAs also tend to focus on claims holistically as opposed to the perception that a bundled carrier’s claims team may be more focused on claims impacting their exposure.”

Some of the benefits of an unbundled claims approach include:

1. Greater Flexibility

Flexibility in a claims program structure can offer more vendor selection options. Bundled carriers are not always flexible about allowing a choice of defense counsel, surveillance vendor, or managed care provider. In an unbundled program, an employer can select the best vendor for each service.

2. Cost Transparency

An unbundled program offers greater transparency for companies to identify how much money they are spending on their providers versus having these ambiguously hidden in their claim costs. Unbundling can also reduce the charges or fees that an organization pays for “runoff” claims if they change insurers.

3. Increased Oversight

Unbundling allows an organization to participate in the claims administration process with a carrier advocating for them in claims outcomes. With the number of involved parties, this allows for more supervision over claims, which can lead to better claims outcomes.

 4. Better Technology

Most TPAs are investing significant resources to improve their technology and, in turn, are developing more robust programs and applications. With the increasing use of artificial intelligence (AI) and automation, these tools can help improve insights, identify trends, and enhance decision-making.

5. Tax Benefits

When claims handling fees are built into the insurance program, the claims handling portion of the premium is taxed like insurance premiums. By running claims through a TPA instead, insureds may void the tax on the claim expense portion of their insurance bills.