Workers' Compensation Claims TPA Industry - Flat Rates and Peripheral Services Negatively Impact Bottom Line

From insurance industry blogger Joe Paduda: "I was talking to an insurance company claims exec about CorVel; this was her/his take: “We have always been concerned about them from an ALAE standpoint.  They only started the TPA business because the other TPAs were taking all their other bill review and case management business away.
Unfortunately, they are not alone when it comes to TPAs who put greater emphasis on ALAE billing than claims handling.  It’s a plague of the industry right now.”
As I’ve noted in the past, this is partially the responsibility of employers.  They’ve been able to beat up TPAs for ever-lower administrative fees to the point that some TPAs were losing money on claims handling."

Really, someone has finally identified that claims TPAs that are charging ridiculously low flat rates are surviving by assigning claim tasks to entities that are paid from the claims (not out of the TPA flat rate) that share common ownership with the TPA.  Nothing against CorVel, all of the national TPAs are doing the same thing. CorVel just went in the opposite direction, going from a peripheral service company to entering the TPA space through acquisition. Our company has devoted more than a decade to doing the right claims work, not using commonly owned businesses for peripheral services, and not charging some artificial flat rate.  Results: Our WC average cost per lost time claim across all industries at 80% less than the state Fund organization in Montana, including ALL COSTS and TPA fees.  Yes, Avg Cost per claim $12,500 vs $62,000.  Good claims handling, caring spirits, engaged professionals AND no artificial flat rates.