An article in CFO.com analyzes the complex web of transactions, relationships, and incentives that exist in the employer-TPA-managed care firm web. David Katz notes:
“risk managers, by some accounts, often hand over the management of claims and medical costs to third-party administrators (TPAs) without a clear idea of their relationships with medical and claims-services providers.
In some cases, such wholesale delegation can result in “the complete outsourcing of the risk manager’s fiduciary responsibility to the organization and its shareholders by allowing these service providers to control what should be viewed as a line of credit,” according to one senior sales executive for a managed care organization specializing in workers’ compensation. Potentially, a self-insured corporation’s lax management of its workers’ comp outlays could represent “a huge hole in internal controls,” said the executive, who asked not to be identified.”
Katz goes on to discuss some of the legal investigations now in process that may be related to these issues.
What does this mean for you?
With Mr. Spitzer et al hot on the trail of unseemly transactions in the property and casualty industry, participants would be well-served to monitor their TPA relationships closely.
Jun
9
I don’t see where this is any different from the TPA’s lack of transparancy for a regular self insured company. When we do an audit of a S/I’s TPA records, we typically find an error rate of 12%-15%. How is the audit for WC TPA conducted and by whom?
Lin