Workers Comp Self Insured Resolutions
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The Workers Comp self insured resolutions were originally written in 2013. Yesterday, the overall resolutions for WC were updated for 2016. You may want to follow the link to the old article for reference. I am often reminded by our self insured clients to include articles that discuss self insurance advice.
Self insureds for WC should:
- Not think they are outside of the regular WC system. Self insureds often say “We do not have to worry about ______ as we are self insured.” Nothing could be further from the truth. They may not have a Mod, but a Loss Development Factor should be calculated every year. The LDF is very similar to a Mod. The premium-paying companies are not that much different from a large deductible or a self insured program in this area. Updated for 2016- This has been an area of improvement for self insureds over the last few years. However, not obtaining or understanding their Loss Development Factors is still an area for improvement.
- Realize there is a closer fiduciary relationship with their TPA than with an insurance carrier.
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There is no “buffer” that a Mod and premium supply. The TPA is spending directly out of one of your budgeted accounts. Reading over your TPA contract may produce some surprises. Updated for 2016- Many of our clients and associates have begun to follow their TPA’s spending very closely. As previously mentioned, reading over the TPA contract is critical at renewal.
- Understand their TPA expenses. Many self insureds pay attention to only the yearly cost to handle the claims – usually paid per claim. Has your company considered the bill review, PPO network, rehabilitationnurse, and other TPA costs? If not, you may want to obtain an analysis of those charges.
- Not think they are adjusting the claim. Many of the self insured employers usually have a Risk Management Department. Managing risk and adjusting a WC claim are very different. The TPA was hired for their claims expertise. Monitoring the claim is excellent. Calling every shot on a claim can be very costly. Updated for 2016 – This is an area that has possibly worsened over the last three years. There is a very fine line between Risk Management and claims adjusting in WC. See #6 as a great way to manage the risk and not adjust claims.
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- Periodically review their TPA’s performance on a random selection of claims. This function goes beyond emailing questions to the adjuster. Medical Only claims should be included in the selection. Festering Medical Only claims are usually the ones that appear out of nowhere and are the most difficult to control.
- Updated for 2016 – This has become a very critical area for self insureds – Have a prescribed level of reserves, settlements, bill payments, that must be approved by the employer. This level is usually in your TPA contract. If not, you should add it at renewal/bid time. Making the TPA’s authority level too low can end up hampering your TPA’s ability to close claims. In other words if the TPA has to check with the employer for everything, they are not adjusting the claim and the risk is not being well managed by the employer.
