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Proper monitoring of TPAs helps keep claims costs in check

Proper monitoring of TPAs helps keep claims costs in check

Employers failing to properly monitor their third-party administrator's adjusters will experience higher claims costs regardless of whether their TPA is a small company or large nationwide entity, industry veterans say.

Proper monitoring can include employer interviews of TPA adjusters before they are assigned to the employer's account; regularly reviewing an adjuster's claims notes; periodically auditing the TPA's services to assure adjusters are complying with client expectations; and maintaining close involvement with the claims examiners and their supervisors, according to employers and consultants.

Adjusters form the front line of defense against unnecessary claims expenses including traditional cost drivers such as fraud or highly publicized concerns such as opioid pain medication addiction among workers comp claimants.

Their roles require decision-making that impacts a claim's ultimate cost, such as helping determine whether nurse case managers should assist an injured worker. Those decisions, in turn, impact how soon an employee mends and returns to the job, how long a claim remains unresolved, and whether closing a claim will require additional resources such as attorney involvement.

But today's adjusters are more overloaded than ever, observers say. In addition to managing large caseloads, the modern work world demands much of their time, distracting them from core practices known to reduce costs, such as staying in contact with injured workers.

“We work in a world now that is very fast with email, paperless, and everything happens so quickly,” said Angela Livingston, president and CEO of Angela Livingston Collaborations Inc., a claims consulting company. “The adjusters struggle with that because, unless you are a spectacular time manager, it is pretty difficult to deal with everything that is coming at you.”


Adjusters overloaded with too large a claim file volume often fail to maintain ongoing contact with the injured worker, said Wayne Austin, audit team leader for Claim File Audits L.L.C., a Hiawassee, Ga.-based company that provides auditing and claims management services.

“That often leads to the injured worker feeling neglected or forgotten,” Mr. Austin said. “And the fastest way to get an injured employee to hire an attorney is to make them feel like you don't care about their injury. So you end up with a lot more claims that go to attorneys than should. That results in higher claim costs.”

Many of her employer clients pay additional sums to assure their TPAs limit the number of files the adjusters on their account must manage, Ms. Livingston said.

Still, it's not uncommon even under those conditions to find adjusters not paying proper attention to case files, Ms. Livingston said. One problem is that their supervisors also are too busy to review a case file's progress or lack of it.

“The most common problem we see is just a complete lack of supervision,” said Ms. Livingston, whose company also provides TPA audit services.

Some employers take a hands-off approach to claims management and “they figure the insurance adjuster should just handle it all,” said Laurie Ogsaen, workers compensation manager in McMinnville, Ore., for Evergreen International Aviation Inc., a freight and aviation company operating in 38 states. But Ms. Ogsaen prefers “100% involvement” to reduce claims costs.


Not all TPAs and insurer claims handling units are accustomed to her level of involvement, Ms. Ogsaen said. But her client instructions, specifically detailed in her claims services contract language, spell out her expectations for when the adjusters are to contact her, such as when they believe nurse case managers or other services should be called in.

“As far as us conversing, I will probably email them daily and circle back to find out what is going on,” she said. “A lot of that information is in the online system where (the adjusters) put their notes. I will go in there and review where they are at, and if I don't see an updated note within several weeks then I will ask what is going on, what can I do to help.”

Third-party administrators must recognize that adjusters' workloads have changed over the years due to real-time information demands, increased communication speed and increased regulations, said Jim Ryan, executive vice president of casualty operations in Marlton, N.J., for Sedgwick Claims Management Services Inc.

“It is incumbent on TPAs to recognize that and offset that with technology making their job more efficient,” Mr. Ryan said.

But Mr. Ryan said employers have stepped up their TPA adjuster oversight in attempts to reach better outcomes by collaborating with the claims examiner. That is driven by challenging economic conditions more so than because of adjuster workloads, he said.

For better service, however, experts also recommend that employers interview the specific adjusters who will manage their claims.


“It's critical that you hand pick your claims adjusters and not simply be given people that (a TPA) wants to give you,” said David Donn, president of David Donn Consulting Inc., a workers comp managed care consultant in San Francisco. Ask about their experience level, their knowledge of your industry, professional designations, and personality characteristics, he advises.

When adjusters are new to Ms. Ogsaen's account, she likes to “test the water” over a couple of months while learning how responsive they are to her communications, she said.

“I understand they have a lot of claims, so I don't expect immediate responses, but I expect a response within 24 hours,” she said. When that doesn't happen, it's time to sit down with her broker and the TPA or insurer's representative.

“I haven't had a lot of problems, but there were times I had to have an adjuster taken off the files,” Ms. Ogsaen said.