By: Emil J. Bravo
Executive Vice President, Gallagher Bassett Services, Inc.
This week we will explore those claims-related services that are most commonly considered for “bundled” and “unbundled” options.
Claims Administration System
The claims administration system is the most significant component that you should consider to purchase on a bundled basis from the Third-Party Administrator (TPA). Whether the TPA has developed its own claims system or contracts with a systems provider, you can expect to benefit from the significant capital investments that the TPA has made in that area. Additionally, the claim staff is trained on the system and their IT staff is better able to provide necessary support when system issues arise. When considering a TPA and its claims system, you should determine the breadth of system capabilities in the following areas:
- Ease of use and navigation
- Ability to capture the necessary data
- Report and data-mining capabilities
- Stability of operational platform
- Track record and planned investments in upgrades and enhancements
- Up-front and ongoing maintenance and licensing fees (based on your user’s needs).
When the claims system is unbundled (e.g., the TPA is required to use a different system), additional training and support is necessary to familiarize your claims team with the tools and processes of the claims administration system. This may result in additional costs and inefficiencies that would not occur within a bundled environment. Furthermore, as a buyer, you diminish your ability to make changes to the claims team in the event of service issues, absences, etc., due to the fact that the TPA cannot readily assign someone who is unfamiliar with the claim system. This obviously results in a productivity loss as the new team member(s) gets up-to-speed with the claim system.
Managed Care Services
This is an area where there is a lot of discussion about the pros and cons of unbundling, and options in the various service offerings. The primary managed care service offerings are discussed below.
Medical Bill Review
Schools of thought differ on whether this should be part of a bundled package, or whether an organization should select and negotiate separately from the TPA. There are clear synergies created when using the TPA’s integrated bill review services. Generally, the bundled program offers electronic links so that medical bills, explanation of benefits and the bill approval and payment process are all automated and accessible through the claim system. While many TPAs create links with outside vendors, they are generally unable to create links with all of the potential partners, and synergies are reduced. Multiple partners also mean greater administrative expense for oversight, training, etc., to manage the bill review vendor. In addition to the efficiency gains, there is also revenue associated with this value-added service, which helps support the TPA’s overall service delivery, and ability to maintain necessary growth and profitability. A decrease in efficiency combined with revenue loss could naturally result in price increases elsewhere in order for the TPA to sustain viability and cost competitiveness.
This process should be closely tied to the bill review process to assure that any treatment denied through the Utilization Review (UR) process is also denied through the bill review system, if/when the injured worker elects to self-procure the treatment. As such, it is another area where we discourage unbundling. When UR is unbundled to a vendor that does not have electronic linkage with the TPA, notes and decisions are not easily attached to the electronic claim file and UR-denied treatment can be erroneously approved for payment. Let’s face it, while TPAs strive to deliver top-notch claims administration, at the end of the day, there is a human element and mistakes do occasionally occur. The electronic linkage and tie-in between UR and bill review dramatically reduces the potential for error. Anyone who has paid for treatment that wasn’t due on a claim knows the challenges in trying to recoup that money from the service provider.
Nurse Case Management
Nurse case management (NCM), whether telephonic or field, is something that can be more easily unbundled. While TPAs may encourage clients to use their preferred programs due to the synergies created through the automated process, there is less of an impact with unbundled case management services. We do recognize that relationships with nurse case managers who understand an organization’s culture, return-to-work program and philosophies, and other areas unique to a particular employer can have a greater impact in producing positive outcomes for the program. When NCM is unbundled, there needs to be a clear understanding of communication protocols, case management direction, and the roles and responsibilities of the NCM and claim adjuster so that the file is being collaboratively moved towards resolution without any additional cost. While communication protocols and collaboration are equally important in a bundled program, experience shows that when there is not a strong and ongoing relationship between the TPA and NCM program, assumptions can be made that are detrimental to the claim outcome.
Ancillary services, such as legal panels, investigation firms and interpreting services, are probably the most common area of unbundling. While some TPAs may offer a bundled approach in any or all of these areas, many employers have formed their own panels. When considering panels for any of the identified services, consideration should be given to negotiated rates (task-based or hourly), timeliness of communication and past results.
It is likely that your claims adjusting teams have good relationships with many qualified defense firms and are happy to make recommendations for same. In some cases, there may be formal panels in place to assure that there are consistent protocols for all defense firms and individual attorneys, while in other cases it may be based upon adjuster preference. However, it is also very common for employers to have relationships with defense firms and/or individual attorneys, and a desire to use their panel in the event representation is necessary. Regardless of who is selecting counsel, the key is to assign an individual attorney (or select attorneys), rather than the entire firm in general. This ensures that the attorney has a good understanding of expectations, culture and approach (settle or defend), and will work hard to meet those expectations. When a firm, rather than an individual, is selected, the claims may be distributed to multiple attorneys within the firm, which can make the educational process slow, cumbersome and repetitive for both the adjuster and employer. There can also be a lack of “pride of ownership” by the defense attorney, since there is not much of a relationship at stake in achieving desired results.
Similar to defense firms, there are generally panels of preferred vendors for claims investigation. Some may specialize in compensability investigations (AOE/COE), while others may specialize in surveillance (sub rosa). Many firms offer expertise in both. Where it is most common to have an employer panel for investigators is in AOE/COE investigations. These types of investigations often involve an investigator going on-site at an employer’s location to review the accident site, conduct interviews and interact with a number of employees. An investigator who is familiar with the location and employee time constraints (such as shift change, peak hours, etc.) can work with the employer to be less disruptive to the primary operations of that location.
Translation services may be necessary at different times for different reasons. Timeliness of accessibility can be crucial, particularly during the initial phases of a claim, when communication with the injured worker is most important. Often, a TPA will have preferred relationships based upon past results, and like the other ancillary services can offer recommendations. Employers with a large number of non-English speaking employees may have existing relationships with interpreting companies so that there is a timely and high-level of responsiveness.
The decision to bundle or unbundle ultimately comes down to where you believe you will receive the best results. As a TPA, we are constantly reviewing the workers’ compensation landscape to determine the best service partners and service offerings to deliver the best claim outcomes for our clients; this is not a responsibility that we take lightly and we recognize that the competition is fierce. We also understand the strong desire with many employers to control their own destiny, which can include creating a fully-customized approach to their claim program. We welcome discussions with our clients as to the approach that will best meet their needs and impact the outcomes necessary in today’s environment. Typically, if you hear any hesitancy on the part of your TPA, it is due to the market research, experience, and program results that have influenced their bundled offerings and their desire to exceed your program expectations.
About Emil Bravo
Emil Bravo began his career at Gallagher Bassett Services, Inc. in 1977 in New York. Emil quickly moved up the corporate ladder using his positive attitude and business savvy. After moving from the East coast to Illinois, he started in his position as Executive Manager in charge of training and development. He then moved on one year later to Vice President of the Managed Care division where he developed managed care programs for Gallagher Bassett. He soon added to his responsibilities by also taking on the Account Coordination division (currently Account Management). From 1997 to 2000 he was Senior Vice President for Sales, Marketing and Managed Care. In 2003, Mr. Bravo was elected Corporate Vice President/Corporate Officer for Arthur J. Gallagher & Co. In addition to his duties as Corporate Officer, Mr. Bravo is also Executive Vice President of Gallagher Bassett, responsible for Sales, Marketing, and Managed Care. Emil Bravo attended State University of New York at Stony Brook and graduated in 1973 with a B.A. in Economics.
About Gallagher Bassett Services, Inc.
Gallagher Bassett Services, Inc. is one of the nations’ largest property casualty third-party claims administrators. They provide insights and services in the areas of claims management, information management, medical cost containment, and consultative services which includes risk control consulting and appraisal services. Gallagher Bassett has been providing comprehensive risk management services for nearly 50 years. They currently have over 100 service offices worldwide, including offices in Canada, Australia, New Zealand, and the United Kingdom. They employ 4,200 professionals to serve and deliver high-quality, cost-effective and innovative claims management services – from Workers’ Compensation, Automobile Liability, General Liability, Products Liability, Texas Non-Subscriber, to Property lines of business – with recorded revenues in excess of $462,000,000. For the third consecutive year (2008, 2009, 2010), they were the proud recipients of Business Insurance magazine’s Readers Choice award as the “Best Property/ Casualty Third-Party Claims Administrator.” Visit www.gallagherbassett.com to learn more about how Gallagher Bassett can help you to lower your cost of risk.