Here is advice from a senior official with a national TPA.
Unlike the thousands of TPAs that existed years ago, there are now a few hundred. A handful have taken over the national TPA arena while most are smaller, homegrown companies.
Both offer advantages, depending on a company's needs. Smaller TPAs typically have higher levels of customer service.
"If you're talking about a locally based customer or policyholder and the emphasis is on very close tight communications, some TPAs do an outstanding job taking care of customer concerns," said Fred Weber, vice president of account management at Specialty Risk Services. "They are able to flex and pair up with risk managers in a way that very few larger ones can do."
That does not necessarily mean national TPAs can't excel at customer service, though. But companies seeking a national TPA would be those that need assurances that their claims will be handled consistently; in other words, they do well handling data.
"They have an incredible appetite for information. That's a big change that's happened over the years," Weber said. "The investment national TPAs have made in their infrastructures is such that they can often meet the more complex needs that sophisticated companies would have."
Where larger TPAs typically spend more on technology, some smaller companies have greatly developed their expertise in this area as well. The key is to find out the focus of the TPA's technology.
"A mistake sometimes risk managers make is they assume the platform with the most bells and whistles is necessarily the best," Weber said. "In my view, a risk manager needs to start from the perspective, 'What is it I actually need to measure?' Think about the end use."
An example is an acute care hospital seeking to understand the costs associated with patient handling injuries. "That hospital needs a way to measure at claim intake those claims where patient handling was an issue. It needs to understand the mechanism of injury," he said. "Then, identify the common denominators where the injuries are occurring."
Armed with that information, the facility could then formulate a loss prevention strategy.
Specialization. Some TPAs handle workers' comp better than others. Even those that do well with workers' comp may not be experts in a particular segment.
"Part of it is asking probing questions about the types of programs the TPA handles," Weber said. "Adjusters and TPAs that have done well with retail programs are more likely to do well with newer retail programs."
Weber strongly advises getting references from clients that have long-standing relationships with the TPA. Another suggestion is to look at state reports.
"Several states, such as California and Texas actually benchmark and measure TPA performance when it comes to reserving and handling claims within the scope of the law," he said.
Quality. Measuring the quality of a TPA is largely intuitive. Weber says what you ultimately want is a strong partnership.
"In an age where there's more focus on automation to measure adjusters' performance, one of the key measures has to do with what sort of judgment is that claims adjuster making on the claims file," Weber said. "In other words, with machines we can measure timeliness of contact, how quickly the investigation is completed, whether the adjusters are on timely diary; but what that technology doesn't get at is did the claims adjuster reach an informed decision early on in that claim regarding what type of strategy to execute?"
Among the issues that can reveal the quality of a TPA is the average caseload of the claims adjusters.
"There's a tendency to saddle very competent adjusters with high caseloads," he said. "Typically, adjusters with lower caseloads are going to be much more successful than those saddled with high caseloads. There's a direct correlation between caseloads and outcomes."
Weber also suggests finding out how much training a TPA promotes for its employees. More and better continuing ed to employees leads to better outcomes. "It's another area that tends to get short shrift in the name of cost control."
When considering price, Weber says it's essential to look beyond the obvious. The claims fees that are charged tell only part of the story.
"The mistake most risk managers make is they don't pay nearly enough attention to allocated expenses," he said. "Keep in mind in many workers' comp programs the sum total of case management fees, medical bill review fees, and PPO access fees charged will exceed claims fees that are being paid, and if you're not paying attention to those costs and understanding how your TPA makes money, you may be confusing low claims fees with low cost service."
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January 10, 2011
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