Remembering Shay Litvak Our Co-Founder and CTO

November 1979 - September 2023

The Top Secrets for Choosing the Best Workers' Comp TPA

Workers' Comp TPAWorkers' Comp TPA
min read
August 21, 2023

Even when doing everything in your power to keep employees safe, workplace accidents can still happen. 

Getting hurt or sick workers the care they need then becomes priority number one. You can work with your workers' comp insurance company to handle the claim or a third-party administrator (TPA) instead.

So what exactly do TPAs do? We cover all this and more below, including the seven steps to finding your own. 

What is a TPA?

A third-party administrator is a company hired by an employer to manage workers' compensation insurance claims. These claim administrators act as liaisons between the employer, the injured employee, and the insurance carrier. 

A TPA's job is to manage all aspects of your workers' compensation claim, from initial reporting to claims processing to the final settlement. They also ensure that the employee receives the appropriate medical treatment and that you comply with all applicable workers' comp laws and regulations. 

Although sometimes called Managed Care Organizations (MCOs), TPAs typically handle claims management and administrative services. MCOs focus more on managing the medical treatment of injured workers.

These companies also play a significant role in managing claims for self-insured employers. When an employer chooses to self-insure, they take on the financial risk of covering their employees' workers' compensation claims rather than purchasing insurance coverage from a carrier. 

How Do TPAs Work? 

TPAs are responsible for processing workers' comp claims and handling other related services, like managing employee benefits, claim settlements, and medical bill negotiations. 

Unlike workers' comp insurers, they don't take on any of the financial risks associated with those claims. TPAs are also paid directly by the employer and aren't affiliated with any insurance carrier. 

Workers' comp claim administrators can also help prevent accidents. They evaluate your workplace to find hazards and risks that could lead to injuries. Claim managers may also review injury reports to see if there are any patterns or recurring issues leading to accidents. 

Once they find the potential causes of injuries, they'll work with you to implement safety measures like training programs, safety equipment, and changes to your employee's work process. 

What Are the Benefits of Hiring a TPA? 

Employers hire claim administrators because they can do much more than manage claims and lower injury risks. They also provide: 

  1. Claims Expertise: Third-party administrators excel at handling workers' comp claims, quickly getting your injured worker the care they need and saving you tons of time. Some of the things they do (that you won't have to) include: investigating claims, determining how much money the injured worker should get for their injury, and managing workers' comp employee benefit payments to injured workers. TPAs also take care of administrative tasks like filling out paperwork and monitoring claims, as well as creating and implementing safety training programs. 
  2. Cost Savings: Claim managers know all the cost-saving strategies, like negotiating with medical providers, spotting fake claims, and ensuring only necessary medical treatments and procedures are authorized.
  3. Access to Providers: TPAs typically have large healthcare provider networks that include specialists like orthopedic surgeons and neurologists, so your employees can get quality care. 
  4. Compliance: It can be hard for employers to understand, remember, and comply with all federal and state-specific workers' compensation laws, but third-party administrators are well-versed in them. They'll ensure you stay on the right side of the law and avoid fines or penalties.

7 Steps to Selecting the Right TPA for Your Business

Third-party administrators can save you time and money, but only if you choose one that's right for your company. Our step-by-step guide below helps make sure your relationship is a success.

Just remember that if you're already working with a TPA and are looking for a new one, you should start your search about five months before your current contract expires. That'll give you some time to do your research and provide the 60- to 90-day notice that most TPA contracts require. 

Step 1: Determine Your Needs

The first step in selecting a workers' comp claims administrator is determining your needs. You can use the size of your workforce, the nature of your business, and your budget as a starting point. 

You also need to decide if you want support with your employee safety measures since not all offer this added service. 

Once you understand your needs, you can research TPAs offering those services.

Step 2: Create a List of TPAs to Review

There are a few ways to create a list of companies to research. One option is to ask for recommendations from other business owners in your industry or network. 

You can also search online for TPAs in your area or industry and check out their websites and reviews from other clients. 

Another option is to contact your insurance broker or carrier and ask for their recommendations.

Step 3: Research Their Experience and Track Record

Once you have a list of potential TPAs, see which ones have experience working with companies in your industry and ask for their track record of successfully managed claims. 

You can also look for testimonials or case studies from other clients to get a sense of their level of service and expertise. If you're in touch with the TPA, you can ask for a reference from a current client—and schedule a meeting to discuss their experience.

Step 4: Consider Their Technology and Systems

Another important factor to consider is the technology and systems the TPA uses. You want claim management companies with cutting-edge technology and a user-friendly interface for employers and employees. 

You can ask if they:

Step 5: Factor in the Cost

Make sure you understand how the claim management company's fee structure works and that it's within your budget. They could have flat or per-claim fees or performance-based fees tied to metrics like how long it takes to resolve your claim and how much money they save. A hybrid fee structure that's a mix of these is also possible. 

It's also worth considering any extra fees you might have, such as charges for using out-of-network providers.

Your contract type will also influence your cost. Here are the ones you might come across:

Step 6: Check Their Network of Providers

When selecting a TPA, it's essential to check their network of providers. Make sure they have a wide range of doctors and specialists in their network and that those providers are in the areas where your employees live and work. 

You should also check if they have any restrictions on which providers your employees can see and whether they have any incentives for using certain ones. 

The ultimate goal is to make sure your team members will be able to get the treatment they need when they need it. 

Step 7: Consider Their Customer Service

Lastly, it's important to consider their customer service level. Make sure they have a customer service team that's responsive and knowledgeable and that they're available to answer questions and provide support when you need it. 

To ensure you get the level of service you want, you should also check how many claim adjusters are assigned to you and whether they have many clients. These professionals are responsible for investigating and evaluating insurance claims made by an injured worker.

How Do TPAs Get Paid?

Third-party administrators usually get paid a percentage of the total claim cost, such as 5%. That means the bigger the claim, the bigger your fee. Alternatively, they can receive a fixed sum per claim to process them, such as $500. 

Some claim administrators may charge for additional services, like risk management and safety training. These fees are typically negotiable and customized to the level of support needed. 

It's worth noting that TPAs are different from insurance brokers or agents, who are typically paid through commissions from insurance carriers. 

Choose Your TPA Wisely

Working with a workers' comp TPA can provide various benefits for both employers and employees. By managing claims efficiently, reducing costs, and implementing measures to prevent injuries, TPAs can help employers create a safer, healthier workplace. 

Because you'll work closely with your third-party administrator in many areas, you want to choose who you work with wisely. 

You can find the best one for your company by evaluating their experience, track record, credentials, data safety and cost. Now all that's left to do? Talk to your insurance agent or others in your industry to get some solid references.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.