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Is there an inherent conflict of interest when third party administrators manage employers' workers compensation claims?
TPA's get paid to manage claims with the goal of helping injured employees recover their health and return to the workplace as quickly as possible. But they may also earn more revenue when additional services are applied toward the goal of closing a claim.
I am not a claims expert, never resolved a single one. I'm a journalist. So I don't know the answer to the question I pose. But if there is a conflict of interest is it something employers need to monitor?
Perhaps you, the reader, can respond and help me on this.
I do know this: there are many TPA's. So I suspect their practices, work quality, talent pool, etc., all vary widely as well as their strategies for driving revenue.
The conflict of interest topic came to mind while attending the recently concluded California Workers' Compensation & Risk Conference in Dana Point, Calif. As a side note, the organizers produced a strong conference program that attracted a lot of risk managers, not just vendors.
I've heard this called the “shark-to-minnow ratio” and it's a good measurement for determining a conference's value.
Anyhow, a risk manager presenting at the conference discussed contracting for a telephonic nurse triage program he said keeps minor injuries from turning into claims. It reduced his claim frequency.
He joked, sort of, saying his TPA probably didn't like that.
Sure, the more claims the more a TPA gets paid. But do TPA's also have an incentive to drive revenue by adding more services onto their claims management process and how concerned should employers be about that? How should employers monitor for that? Or am I way off the mark here?
Either way, let me know.