To truly have a successful claims administration program, organizations need to actively collaborate with their Third-Party Administrators (TPAs) and view the relationship as a strategic partnership. Like all good relationships, this one needs to be based on trust and well-understood expectations, says Charlie Martin from consulting firm Marsh.
Companies that recently have or are about to switch TPAs are in a great position to develop a strategic partnership and positive relationship from the outset. I recommend that your risk management team and TPA sit down and establish a set of realistic program goals. These goals should focus on lowering the overall loss costs for the program, covering everything from settlement authority to use of nurse case management and caseloads. If the goals are unrealistic, it is unlikely that you and your TPA will be able to achieve the expected results, souring the relationship. In addition to being realistic, these goals should be measurable, so that both you and your TPA can continue to monitor progress and make adjustments as necessary.
Metrics and key performance indicators (KPIs) that reflect the success of your program should be determined so that the progress of your program and the performance of your TPA can be measured. I also recommend that you determine checkpoints throughout the year to review these metrics to confirm that they are the most appropriate way to take the pulse of your program and that your TPA is hitting its goals.
Part of this measuring process relies on the quality of the data that you provide to your TPA. If you’ve recently switched TPAs, you need to ensure that the data transfers properly from one vendor to another. In my experience, data transfers are one of the hardest parts of a vendor transition. Each TPA may employ a slightly different RMIS from its competitors. For example, the naming conventions or business rules associated with certain fields may not align between vendors and therefore may be miscoded when you make the change. If you do not catch these errors, you may be continuously making strategic business decisions based off of faulty data. You also need to let your TPA know about changes to your business, such as the opening or closing of locations. I’ve seen issues arise when the location name was changed in the client’s system, but not in the TPA’s, making it quite difficult to true up reports. Remember, the quality of the data that you hand over to your TPA is your responsibility.
Even though your TPA is responsible for providing accurate data practices on an ongoing basis, I recommend doing your own periodic data integrity audits just to be sure. Most TPAs are great at handling claims, but they are not always the best at dealing with data. A bad experience with your data integrity can strain your relationship.
It is important to remember that your team is just as responsible for the overall success of your claims administration program as your TPA. For example, if your team does not report claims to your TPA in the agreed upon timeframe, your TPA is already at a disadvantage in achieving the best claim results for you. Organizations that do not have return-to-work (RTW) policies and guidelines that follow the best practices appropriate for their industry add friction to the claims administration process. If your RTW program doesn’t provide, but is capable of providing temporary transitional jobs, you may be keeping your employees out of work longer than necessary.
As I previously mentioned, a good relationship is based on trust. I once had a client, a large retailer, which gave its TPA a settlement authority of only $5,000. Aside from the fact that this meant that the TPA had to go back to the client for approval each time it had a claim approaching that limit, which ultimately slowed down the claims process, it essentially meant that the client did not trust its TPA to make financial decisions on its behalf. You must give your TPA the proper tools to be successful on your behalf.
I also recommend, if you are looking to switch claims administrators, to take into consideration the ever-changing diversity of your employees and your customers. A good TPA should have multilingual resources to provide the best service for your unique program.
Being actively involved in your own claims administration program and having a true strategic partnership with your TPA is critical to achieving your desired cost savings and other business objectives.
An article from Charlie Martin, Casualty Consulting Practices Leader of Marsh Risk Consulting.