Changing TPAs can be expensive, requiring collaboration and intervention between many departments. And if it occurs mid-term, outside of a renewal period, it can also cause the carrier to conduct a collateral review or charge a fee. Transitioning to a new TPA can benefit an insured, but certain regulatory and compliance issues may limit a change to renewal periods only.
“Insureds and their brokers should not let the business relationship with the TPA deteriorate to the point where separation is the only perceived acceptable outcome,” said Tim Stanger, Vice President – Partner Relations. “Changing to another TPA does not magically erase potential issues associated with staffing, unmet expectations and ineffective communication. What really matters is having strong partnerships that can leverage the relationship to facilitate amicable resolutions. Before contemplating a TPA change, an insured should collaborate with their carrier and give that process a chance to resolve the issue. However, the key is to engage with the carrier early, long before the relationship has deteriorated to the point where reconciliation is unlikely.”
Insureds should anticipate these potential issues before considering a mid-term TPA change.
1. Primary Coverage
An unbundled carrier allows flexibility in their TPA selection. However, that selection can be limited to TPAs approved by the carrier since claims are technically administered on behalf of the carrier, regardless of a deductible retention.
2. State Compliance
When a TPA is designated, compliance issues can arise during required filings with the states. States will not take ownership of determining the correct TPA to communicate with on claims. Additional preclusions include mandatory electronic data interchange (EDI) submissions (requiring data from one source), compliance with administrative rules that often result in fines and penalties, and designated medical networks’ specific notice and posting requirements.
3. Carrier Data Compliance
Carriers have specific data compliance requirements. This includes Unit Statistical Reporting to various state agencies and bureaus, Mandatory Insurer Reporting to the Centers for Medicare & Medicaid Services (CMS) for Medicare compliance, and EDI (loss run) feeds. More than one source submitting data creates opportunities for mistakes and, ultimately, non-compliance. Some states restrict TPAs based on the carrier, and some have restrictions on insured access to claims data.
Issues can arise if the previous TPA fails to forward claim reports, correspondence and phone calls to the new TPA, creating the potential for a default judgment, fines, penalties, or simply harming the communication process.
Multiple stakeholders are involved in the claims process, including injured employees, doctors, vendors and attorneys. Having two TPAs would require every stakeholder to remember which TPA is involved with the applicable claim. There would also be a requirement for two escrow accounts, which could impact the timing of collateral release and may jeopardize accurate aggregate tracking.
6. Data Integrity
Two different TPAs would create the potential for discrepancies in pay codes, loss-cause coding and more, and may result in two different claim reviews and two loss runs for the same policy term.