Are You Asking the Right Questions When Choosing a TPA?

Third-Party Administrators (TPAs) can provide tremendous cost-saving benefits to a self-insured employer through outsourced claims management. “Choosing the right TPA to meet the organization’s needs is critical to their risk management success,” said Tim Stanger, Vice President of Partner Relations at Safety National. “They can facilitate essential functions such as managing loss reserves, facilitating claims investigations, issuing claims payments and settlements, coordinating medical management and organizing transitional work.” When selecting the TPA that best fits your needs, it is important to consider the following criteria.

Capabilities

Your company’s business type and location may vary, making jurisdiction expertise a must-have when choosing a TPA. 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, and can you provide supportive references?
• 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

An effective claims management system requires easy access with enough info readily available when your company asks for it. An experienced TPA will have checks in place to avoid inaccurate financial reporting. 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.?

Personnel

Personnel issues often play a large role in the overall claims outcomes that your company receives from a TPA. You want to be certain that the TPA is working with an experienced adjuster who can make informed decisions. 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?

Thinking Beyond the Fee

While estimates show that fees only represent eight percent of total claim costs, often too much emphasis is placed on TPA fees during the decision-making process. Many fail to realize that paying higher fees for lower caseloads and more experienced adjusters can significantly reduce overall risk costs. Rather than focusing on the eight percent, insureds should focus on the remaining 92 percent – the other aspects of the claim that come into effect. This includes evaluating if the TPA can ensure:

• Effective medical management
• Timely disposition of claim issues
• Return-to-work or settlement success
• Transparency of third-party vendor use in the claims process
• Ability to minimize leakage and avoid over expenditures due to mistakes, judgment errors, ineffective litigation management, penalties and fines
• Measures in place to prevent fraud
• Transparency of managed care capabilities, including bill review, PPO and case management