Employers Unaware of How TPAs Are Paid, Says Industry Survey

December 10, 2008

Nearly 60 percent of the employers surveyed recently were not sure how their third-party administrators (TPAs) or managed care organizations (MCO) were compensated for medical provider network development.

Seventy-four percent did not know the compensation arrangements for TPA and MCO bill review services.

Injury Management Partners, a consulting firm that helps employers reduce workplace injuries, teamed up with Occupational Health and Safety Group magazine to develop an online survey on workers’ compensation policies and processes. Nearly 100 employers, representing a variety of workers’ compensation programs, participated. Forty-eight percent were self-insured.

“The fact that employers do not know if their TPAs or MCOs are paid on a percentage-of-savings basis or fee-for-network access is disturbing,” said Susan S. Toussaint, president of Injury Management Partners. “This is a huge concern because some payment methodologies create misaligned incentives and actually drive up claim costs.”

Another concern is that more than half of the employers indicated that their TPA/MCO did not conduct injured worker satisfaction surveys, and 32 percent of the respondents were not sure. “The industry forgets who the ultimate customer is,” Toussaint said. “We spend millions of dollars trying to restore injured employees to health and full capacity, and we don’t even ask them, ‘How is this working for you?'”

The survey also probed injury management processes and learned that a little less than half of the respondents knew their physicians were committed to practicing evidence-based medicine. The use of a post-offer, pre-placement medical screening prior to hiring employees was nearly 50-50 among respondents, and a full 82.9 percent had job descriptions specifying the physical demands and essential functions of the job.

Perhaps the best news from the survey was that more than 56 percent of the companies said that injured employees returned to work, including modified duties, within four days. A large number, more than 78 percent, had written and communicated return-to-work programs for injured workers.

Injury Management Partners

Occupational Health & Safety

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