As we discussed in our look at the top-performing Third-Party Administrators (TPAs), TPAs are a critical component of workers' comp systems in most states. When a TPA upholds its legal obligations and demonstrates technical proficiency, injured workers and the providers who treat them benefit.

On the other side of the coin, TPAs that are consistently non-compliant, seemingly incompetent, and just plain bad at their jobs make it harder for providers to treat injured workers, ultimately hurting access to care.

Today, we look at the five worst-performing TPAs as measured by our Electronic Data Interchange (EDI) grading system.

The TPAs below consistently botch their payment responses to providers' e-bills. Each failure forces providers to fall back on phone calls, faxes, and manual resubmissions to get paid: exactly the friction e-billing was designed to eliminate.

Given the time and administrative resources required to treat injured workers, providers struggle to manage the added payment friction these worst-performing TPAs create.

Employers have a choice: They can choose a top-performing TPA or settle for a bottom-performing one and pass the consequences on to the providers willing to treat their injured workers.

The Fundamentally Flawed 5: Worst TPAs In Our System

The five companies below have the worst EDI "Grades" among our highest-volume TPAs, reflecting abysmal (and in some cases, long-standing) records of poor e-billing compliance.

These TPAs aren't just violating obscure regulatory minutiae or failing to meet arbitrary technical performance payment standards. They are imposing significant but needless administrative work on practices that already struggle to justify the administrative costs of treating injured workers.

The simple fact is that for employers to uphold their end of the "Grand Bargain" of workers' comp, they need claims administrators to fulfill their obligations to providers. When injured workers can't find care or can't get it quickly enough, the poor performance of major TPAs is a contributing factor.

Sedgwick: The Nation's Largest TPA, and Among Its Worst

Chief among these bad examples is Sedgwick Claims Management Services, Inc., the nation's largest workers' comp TPA. Sedgwick has long demonstrated technical insufficiency and committed hundreds of thousands of documented legal violations, with labor groups describing Sedgwick as a "menace" to their members.

daisyBill has submitted Audit Complaints to the California Division of Workers' Compensation reporting 359,626 documented violations of state requirements by Sedgwick in the last several years.

Those violations represent only our provider clients. How much difficulty is Sedgwick imposing on practices nationwide? If this is how Sedgwick treats providers, how are they treating injured workers?

From touting high treatment denial rates as a "return on investment" to a pattern of non-compliant responses to bills, Sedgwick epitomizes how a TPA should not behave.

EDI Grade Calculations

As we explained yesterday, our Claims Administrator and Network Directory draws on data from millions of electronic bills (e-bills) annually to calculate an EDI "Grade" for every payer in our system, based on four key factors:

• 837 Sent (e-Bill): How often the payer accepts compliant e-bills, rather than forcing providers to send via mail or fax (Grade Weight: 15%)
• 277 Timely Receipt: How often the payer issues a timely electronic "receipt" indicating acceptance or rejection of the e-bill (Grade Weight: 5%)
• 277 Accept/Reject: How often the payer accepts compliant e-bills for processing, as opposed to improperly rejecting them on invalid technical grounds (Grade Weight: 5%)
• 835 Posted (EOR/EOB): How often the payer sends a compliant electronic Explanation of Review/Benefits (e-EOR/EOB) (Grade Weight: 75%)

These terms and file formats may seem obscure to outside observers, but what they represent is crucial to the health of a workers' comp system.

When obtaining reimbursement is as simple as sending an e-bill and allowing an e-billing system to help track and manage revenue, treating injured workers is infinitely easier. When TPAs throw wrenches into the e-billing process, it's one more reason for providers to tap out.

Employers have a real interest in choosing TPAs that enable care rather than discourage provider participation. Return-to-work rates, disability costs, and lost productivity are on the line, to say nothing of their employees' health.

Employers, choose a TPA that acts according to higher standards, and your employees will be better off.

daisyBill gets providers paid faster and more accurately for injured workers’ treatment. Click below to see how:  

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