Nearly 130 million workers in the United States are covered by workers’ compensation. Established more than a century ago, this crucial program provides income and medical support to workers who are injured or become ill in the course of their employment regardless of fault. It also provides cash benefits to the survivors of workers killed on the job.

Although systems and laws vary by state, employers pay for workers' compensation through payments to an insurance company or premiums to a state-run insurance program. Occasionally, these benefits are paid directly to employees. Under the Federal Employees' Compensation Act, claims for workers' compensation must provide medical and factual evidence to establish the following five basic elements:

  1. The claim was filed within the time limits set by the FECA.
  2. The injured or deceased person was an employee, within the meaning of the FECA.
  3. The injury, accident or employment factor actually occurred, and a medical condition was diagnosed in connection with the injury or event.
  4. The employee was in the performance of duty when the event(s) leading to the claim occurred.
  5. The medical evidence establishes that the diagnosed condition is causally related to the injury or event.

According to the National Council on Compensation Insurance (NCCI), the most costly lost-time workers’ compensation claims by cause of injury are the result of motor-vehicle crashes, which average $78,466 per claim. The second most expensive claims for workers’ compensation are burns and falls.

The role of third-party administrators

Because of the complexity of workers’ compensation claims and the time necessary to administer them, many self-insured employers opt to outsource the process to a third-party administrator (TPA). As we mentioned in a previous blog, TPAs are independent organizations that handle and process insurance claims in accordance with state laws. Though the TPA handles the claims themselves, the insurance company or self-insured employer is still financially responsible for paying the cost of these claims.

Core responsibilities of TPAs include:

  • Providing risk management consultation to employers
  • Administering group rating and other savings and discount programs to lower an employer’s premium
  • Handling pertinent claims investigations
  • Conducting claims administration
  • Assisting employers in the development of workers’ compensation cost control strategies

Unlike managed care organizations (MCOs), which provide medical management services for employers’ work-related injuries and illnesses, TPAs facilitate for employers the administrative and financial aspects of workers’ compensation claims. In addition to providing self-insured employers with improved claims outcomes, reputable and reliable TPAs help reduce workers’ compensation claims costs and future claims, as well as increase claims processing efficiency, decrease risk, process appeals and more.

Recommendations for finding a reliable TPA

Fortunately, there are numerous workers’ compensation TPAs throughout the U.S. Unfortunately, not all of them have the vast knowledge, experience and resources necessary to provide self-insured employers with the best outcomes possible. In this blog, we’re providing five tips you should consider if you’re in the process of selecting a TPA for your company.

  1. Consider experience: Verifying that the TPA you’re planning to use has experience providing these services to your industry is essential. They should understand any type(s) of claims specific to that industry and have a proven track record of delivering TPA services to businesses of all sizes. Don’t hesitate to ask for references from other companies in your industry and geographic area.
  2. Assess staffing: In a process where experience counts, selecting a TPA with a history of work in workers’ compensation can make a big difference in the results you achieve. Confirm that you’ll have an account manager and/or a team dedicated to your account and that the TPA doesn’t have a high employee turnover rate. Also, make sure to find out whether or not the TPA has adequate staffing to proactively handle your account.
  3. Examine medical expertise: Similar to assessing a TPA’s staffing, check if the provider has the medical expertise available to handle your claims, including the most challenging ones. Ensure they have access to an experienced team of health care professionals, including a medical director who can offer up-to-date occupational illness and injury medical information to adjusters. Finding a TPA with a nationwide network of physicians, nurses and other clinicians is optimal.
  4. Check for compliance: Workers’ compensation guidelines and laws vary by state and jurisdiction. It’s crucial that the TPA you utilize has experience in your state in compliance with those varying requirements. Employing the services of a TPA with both regional and national capabilities is recommended. Also, consider asking if the TPA has received Statement on Standards for Attestation Engagements (SSAE) certification.
  5. Be aware of best practices: TPAs that follow workers’ compensation industry best practices have documented quality assurance practices and processes in place. They utilize a proactive internal audit program and an effective claims system to ensure efficient claims management. To keep private claim data secure, they have implemented measures for fraud prevention and have protections in place to prevent any data breaches.

Advantages of TPA/IRO collaboration

Typically, when an employee submits a claim for workers’ compensation, he or she undergoes an insurance medical examination to assess the severity and breadth of his or her injury. Most TPAs collaborate with an independent review organization (IRO) to facilitate this medical review process.

As an IRO, the MLS Group of Companies employs a nationwide network of licensed physician reviewers who work with insurance companies, TPAs and self-funded employers to assess the clinical aspects of workers’ compensation claims.

MLS provides a variety of services for these cases, including independent medical examinations (IMEs), peer reviews, functional capacity evaluations (FCEs) and impairment ratings. This helps TPAs move claims forward and potentially expedites a return to work for the employee at the center of the case. But, most importantly, it results in a smooth process that benefits employers and employees alike.

Contact MLS to submit an independent medical examination or peer review referral, inquire about joining our physician reviewer network, or learn more about our services.

Five helpful tips for selecting a workers’ compensation TPA