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Paula Woolworth, senior vice president of account management and managed care for third-party administrator GAB Robins, and a former risk manager for a major apparel manufacturer, spoke with Managing Editor Cyril Tuohy about how risk managers can know when they need a TPA to handle their claims. The following is the second part of a transcript of Woolworth's responses.

Certainly, we get asked a plethora of questions during the request for proposal process. Among the items that should be important in selecting a TPA:

Another issue is a TPA's data capabilities for IT reporting. With what frequency do you get data errors by the carriers or any regulatory reporting agency?

I would probably also always want to take a look at the resumes of the key people working on my account. I or another executive also may offer our resumes so clients they know there's a senior executive manager working with them for issues that might come up. Clients need to know that there's somebody in the home office that they can reach out and touch. Depth of experience track records are standard and traditional areas you want to look at.

What are the TPAs critical financial processes, such as escheat management? Large-loss pre-funding? Flexibility in banking options and banks? Reconciliation processes of the escrow or imprest funds? What are the issues usually welling up in invoicing and how responsively are financial questions by a risk manager being answered and resolved?

ADJUSTER CASE LOAD

Besides the experience of claims-handling and the senior staff, you also want to look at the caseloads and types of claims they are familiar with.

In workers' comp, it's usually 150, plus or minus 10 percent.

You want to get a sense of what the standard is for that particular third-party administrator in terms of caseloads and productivity requirements.

It's pretty wise when a buyer or a broker asks us for a sample of an adjuster's work product when doing claims reporting.

The client should be looking to see how well the adjuster is covering all the issues and hitting all the things that a risk manager deems important to hit/address, which may come up in a claim review.

They want to make sure you're covering everything, and they want to make sure you've looked into subrogation, SIU opportunities, etc.

It demonstrates to the buyer that this is a claims company (that) is serious about loss control. It demonstrates that they are mining for ways to get money back into the risk manager's pocket.

I would always ask for a sample of adjusters reporting or the work product.

SUBROGATION

We get asked what percentage of cases get subrogated. You see more subrogation opportunities in auto so you can expect the higher rate of subrogation in auto claims than you would in workers' comp claims.

It's the same thing with putting a special investigator on the case. What is your referral criteria, what type of success have you had with them? What percentage of claims gets successfully controverted after using subrogation and/or special investigation?

Risk managers want to know that we know about it, we are aggressively pursuing it and that we've had success

NONSTANDARD CRITERIA

When choosing a third-party administrator I would also look at nonstandard or new genres of criteria such as are third-party administrators willing to unbundle and go with a managed care company chosen by the risk manager?

I'm now quoting business for clients that have historically been in a different vended managed care relationship, and people are willing to unbundle to MedInsights. That's becoming another metric by which savvy buyers are looking at third-party administrator. Who do you unbundle to now and how quickly can you build an interface?

RMIS AND DATA

People need to be making decisions by looking at and reading the data. They need to be persuaded by the data. So how third-party administrators present the data is important.

They should be carefully testing and demonstrating the risk management information system. The RMIS should be asking about the self-service engine used by the risk manager. If the risk manager wants me to do a report really quickly, let me see how fast I can look at the claims data.

How robust is the system to the portal data?

All this should be explored when choosing a third-party administrator. But not only do you have to have data, but you've got to have comparative data. How does my book of business rank with others in a similarly situated industry or with the rest of the company, or compared with WCRI?

Do we have the ability or the manpower to look at the comparative data and spot trends that lead to loss control solutions?

STRATEGY

Sometimes you're the risk manager and you're so busy looking at your piece of the pie or answering some question or resourcing to some internal issue from internal sources (HR, finance, operations) that we often don't have enough time to focus on the strategic outlook. The third-party administrator can help do that. They can step back and help the risk manager ideate loss control opportunities, do process improvement in the current program or bring some measurement or clarity to earlier management decisions in claims processes.

Something else that often gets asked of us is references from people who've left us. The divorce might have been for some obvious reasons. Maybe they went to carrier that was unbundled. What caused you to leave?

(Editor's note: Please feel free to read the first part of Woolworth's responses about how to properly unbundle claims from your insurance program.)

March 1, 2010

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