Third Party Administrator (TPA) Is Not An Insurance Carrier
A firm hired to handle Workers Compensation claims by contract. Third Party Administrator (TPA) usually work for self insureds on a yearly renewable basis. Most governmental organizations hire TPA’s usually are paid so much per incoming medical only, lost time, or reportable only claim. The TPA fee for incoming claims is usually a flat fee. A TPA will also usually handle the older claims and the claims from the prior TPA for a certain amount of fees – usually called “tail claims.”
A TPA differs from an insurance carrier in that no premiums are charged and the funds are spent directly from their clients’ budgets. The TPA relationship with their self insured client requires a large amount of communication between the TPA and the employer.
The largest TPA is Sedgwick Claims Management.
Quite often, the TPA offers their client employer ancillary services such as
- Medical bill review
- Nurse Case Managers
- Discounted Medical Network
- Large medical bill negotiations
- Safety Training
- Online claims access – very important
- PBM – Pharmacy Benefit Management
- Many other ancillary services
The employer client may include extra requirements of the Third Party Administrator in the TPA contract.
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