What self-insureds want from TPAs

The work comp TPA business is at last beginning to emerge from a very long, and very cold, winter. The soft market drove many of their customers back into the arms of insurers, as premiums were very competitive with the projected costs of self-insurance, with few of the risks.
It’s about time, as more than a couple TPAs were driven out of business by the precipitous decline in self-insurance, particularly in Florida and California.
As the market begins to harden (a transition somewhat delayed by AIG’s continuing effort to buy business), those TPAs that were able to survive the last few years will find their endurance rewarded, as more prospects come to them looking for bids.
TPAs will also find prospects have evolved, matured, become more intelligent and more demanding. Large employers are (with some notable exceptions) going to ask a lot more of their TPA in 2009 than they did in 2003. And chief among their demands will be smarter, faster claims adjusting and data-driven medical management.
Employers have had just about enough of the same old same old. Their experience with generic, one-size-fits-all approaches to cost containment is not good – many have come to realize that what works in one area, for one type of claim/care/condition may be counter-productive elsewhere. Increasingly buyers are looking for solutions customized to their specific situation, and flexible enough to adapt when those needs change.
It all starts with accurate, consistent data – data about injuries, treatments, disability and functionality. These data provide the foundation for broad decisions about what networks to use where – factoring in where injuries occur, what types of injuries are most common, and which become the most problematic. And here’s where most TPAs are falling well short.
TPAs tend to do what’s easy for them – keeping it simple, uniform, consistent across customers makes it easier for their IT departments, adjusters, managers, compliance folks, vendor management departments and nurses. But that’s not why they’re in business. TPAs are in business to serve the needs of their customers, to provide customer-specific solutions. To do that, they have to invest in people and IT that will enable them to understand their customers’ cost drivers, and build customized medical management solutions unique and specific to each client.
These solutions must allow the TPA to provide claimants with ‘best-in-area’ networks, networks that carefully select physicians based not on how deep a discount they’ll give but how well they manage comp injuries and return to work. There is no single national network that has the best answer in all areas; Horizon is very strong in Jersey, Rockport in Texas, Kaiser on-the-job in much of California.
That’s nice, you say, but in many areas the generic networks – Coventry, CorVel, etc look like the only game in town. That’s not the case – specialty hospital bill repricing services can deliver savings far greater than that available from the generic networks; specialty vendors in PT, imaging, Rx, and DME/HHC provide much better savings and much better outcomes than the generics.
This requires IT flexibility – the ability to plug in and pull out networks, individual providers, and provider groups as customer needs evolve. And to have different answers for different customers in the same jurisdiction – because at the end of the day, TPAs are there to deliver results, not do what’s easy for them.
What does this mean for you?
Before you roll your eyes and complain about how hard this is, know this – a few TPAs are already well down the path on precisely this strategy. And if you can’t do it, they’ll eat your lunch.