Enhancing Claims Outcomes Through Quality Audits

Quality audits are a key part of effective workers’ compensation claims management, giving insurers a structured way to evaluate how third-party administrators (TPAs) handle claims. Beyond oversight, they help identify gaps, reinforce best practices, and highlight opportunities to improve outcomes and reduce future risk.

“Audits should include claims across varying levels of complexity and incurred values to provide a more comprehensive view of overall performance,” said Ryan McDermott, Claims Director at Safety National. “Evaluating a diverse mix of claims allows for a better understanding of how the TPA operates as a whole, rather than drawing conclusions from a narrow subset of claims.”

Here, we review how a typical audit may be measured and how actionable feedback can lead to better long-term collaboration between claims stakeholders.

Quality Beyond Measurements

Beyond the numerical data, a quality claims audit involves evaluating how each claim is handled from start to finish. This includes understanding the adjuster’s strategy and the reasoning behind their decisions that can help achieve the best possible outcome for an injured worker. The excess workers’ compensation carrier involved may consider how well the claim is documented and the effectiveness of communication throughout the process. A strong audit can reveal whether a thoughtful plan of action is in place.

Excess claims managers are often familiar with the most challenging claims, giving them deep insight into jurisdictional differences and the direction that might be necessary for treatment. When treatment deviates from expectations, a medical management team can be instrumental in mitigating medical issues and steering the claim toward the best possible outcome. Claims managers should be able to review and articulate to a TPA whether proper investigation has taken place, whether the right questions are being asked, and if there is any potential for subrogation. This type of audit oversight is a priority for a claims team.

Performance Indicators and Prioritization

Performance indicators in an audit should reflect both the outcomes and the processes that lead to those outcomes. The focus is not solely on the end result, but also on how the claim was managed along the way. Factors such as timeliness, adjuster leadership, and appropriate reserving are all important indicators of success. With proper guidance, an adjuster can prevent delays. Additionally, well-established reserves are critical to an organization’s financial health. The goal is not just to measure results, but to ensure consistency in these practices, which develops stronger adjuster habits and leads to more positive outcomes for injured workers.

Tempering Expectations and Providing Feedback

There is a distinction between reviewing day-to-day claims operations and yearly TPA audits. Annual audits are often viewed as compliance exercises, rather than as collaborative tools, to achieve quality outcomes. The purpose of these reviews is to identify successful claims practices that can be shared with other adjusters. Audits are intended to provide meaningful, actionable feedback to adjusters, not to find fault. The goal is to support adjuster development. Communicating the value of this feedback is important; noting that changes are achievable and, in doing so, adjusters are strengthening all stakeholder relationships. The process should be seen as an opportunity to collaborate, not solely as an audit.