Many self-insured employers choose to outsource their claims handling to a Third Party Administrator, or “TPA” rather than creating their own internal operation. Selecting the right TPA to meet your organization’s needs is critical to your risk management success, since the TPA will be coordinating essential functions like managing loss reserves, conducting claims investigations, issuing claims payments and settlements, coordinating medical management and organizing transitional work.
When making this decision, self-insured entities should consider certain criteria to select a TPA that will partner with them to provide the best claims outcomes. Here are important things to consider when choosing the right TPA for your organization:
Capabilities
First and foremost, your entity will need to find a TPA that can meet your organization’s individual needs, which can vary by type of business and location. Questions that can help you determine the TPA’s ability to handle your specific business include:
- 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-practice 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?
- Do you have the appropriate resources to handle all jurisdictions applicable to my company?
Claims System
A comprehensive and user-friendly claims system is an essential tool for any claims organization. Take time to understand the capabilities and limitations of a prospective TPA’s claims system by asking the following questions:
- 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 provide my company with 24/7 online access to all of our claims data?
- Can your claims system capture information that would be critical to our organization, such as specialized loss codes or basic policy information?
- Do you use any other systems to help lower costs, such as litigation management software or some unique estimating program?
- Can your claims system handle reporting for Medicare and Claims EDI?
Personnel
Personnel issues often play a large role in the overall claims outcomes that a self-insured entity receives from their TPA. Your organization will want to ensure that you will be working with an experienced, licensed adjuster who can make informed decisions, as opposed to an adjuster using automated responses based on decision trees.
To help identify potentially troublesome factors in this area, make sure you ask the following question:
- 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?
In order to choose the right TPA, you may want to invest some time and do your due diligence. Considering that a TPA plays a large role in your claims outcomes and costs, it is one of the most important decisions that your organization can make. If you have any questions about choosing a TPA, please contact the experts at Johns Eastern Company or your broker today.
