Workers Compensation Claim Reserves Difference Among Carriers and TPAs
Most Workers Compensation Claim Reserves begin when the data input division of a carrier sets the claim up and puts on an automatic reserve.
The automatic reserve sets at usually a nominal amount for a medical only or lost time claim.
Lost time workers compensation claims reserves usually commence at a level specific to the carrier/TPA. A claims supervisor will often input the reserves before assigning the claims to the respective claims adjuster.
The automatic or initial reserves function similarly in lost time or medical-only claims. The initial reserves allow the claims staff to pay small medical bills and possibly pay the injured employee for their time out of work past the waiting period.
This does not apply to denied claims or claims still under investigation.
The adjuster’s timetable to set reserves on lost time claims is:
- 14 days – initial reserves, usually altered at 60 days
- 60 days – reserves for the lifetime of the claim
- 6 months- pegs the permanent workers compensation claim reserves
Confusion Caused By Loss Runs or Online Claims Access
The above scenarios seem easy to understand. At 60 days, the adjusters adjust the reserves for the lifetime of the claim – very straightforward.
I have three loss runs in front of me that I am reviewing – not all at the exact same time. The loss runs each from different carriers has totally different representations for the term Total Incurred.
The basic formula is Total Incurred = Paid + Outstanding Reserves
Loss Run Carrier A
This loss run is more of a matrices setup:
- Total Indemnity Incurred
- Total Medical Incurred
- Total Incurred
- Total Indemnity Incurred
- Paid Indemnity
- Total Paid
- Medical Outstanding Reserves
- Indemnity Outstanding Reserves
- Expenses Paid
- Expenses Outstanding Reserves
- Total Expenses Incurred
The confusion for an insured was finding out what the outstanding Total Reserves were for that file. In other words, what does the adjuster think the claim payout will be in the future for the claim?
Of course for the experienced worker’s compensation claim reserves reviewers, that would be:
- Total Oustanding Reserves = Medical Outstanding + Indemnity Outstanding + Expenses Outstanding
However, that total number appears nowhere on the loss runs. The reserve breakdown was excellent. The Total Outstanding Reserves figure would have been nice.
Carrier B – Actually A TPA
- Medical Paid
- Total Claim Paid – should have been labeled indemnity paid
- Total Payments – should have been labeled Total Incurred
- Outstanding Claim- should have been labeled Outstanding Indemnity Reserves
- Outstanding Medical
- Total Expenses – not really broken down
- Total Payments
- Total Reserves
Streamlining Workers Compensation claim reserves – making a loss run reporting standard
A workers compensation expert would have no problems understanding the workers claim reserves and other figures on the loss runs.
However, a standard way of reporting the medical, indemnity, and expenses paid and outstanding would save a large number of phone calls and emails to the worker’s compensation adjusters who are handling a certain set of files.
Making an employer have to re-input claim figures into their own spreadsheets to figure out a loss run is counterproductive.
Many carriers and TPAs produce loss runs whether online or on paper/PDF which can be read very easily. Kudos to those carriers/TPAs that provide easily-read workers compensation claim reserves.
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