A Little Help

A Little Help
September 01, 2008 | Jane Petruniak

Claims adjudication was once the sole domain of insurers. Today, many TPAs offer adjudication services for dental and short-term disability. The majority of dental claims are straightforward and based on procedure codes. A TPA’s fraud detection tends to be less stringent than an insurer’s, and the ability to deal with more complicated claims may be compromised if adequate technical resources have not been committed. Examine the cost closely. Short-term absence claims have been a challenge for insurers. Some third-party payers specialize in disability claims and offer integrated case management. Whether this is more or less costly than using an insurance company will depend on the plan’s circumstances. Some provide only a limited set of services, while others cover the full range, including claims administration and outsourcing.

Each plan sponsor needs to consider when to consolidate multiple lines of coverage under one provider and when to seek best-in-class advice and assistance. And, regardless of the advisors selected, a plan sponsor should have an exit strategy. Companies get bought and sold; culture and business plans change. A plan sponsor should always have a backup plan. But the key to a successful partnership is to have a clear vision at the outset of the services expected and the desired relationship with the advisor.

Advisor Analysis

You are the new benefits manager at ABC Company. Joe is ABC’s benefits advisor and he is eager to meet with you. How do you prepare for your first meeting?

Information

Gather contracts, policies, copies of the last renewal(s) and any other reports that Joe’s firm has submitted in the past 24 months.
Obtain a summary of all remuneration paid to Joe either directly or as commission. At this point, it doesn’t matter whether Joe is a consultant or a broker.
Ask your colleagues about service and responsiveness.
Determine if there’s any overlap, any synergy or any opportunity to consolidate with other advisors. Additional due diligence may be required, but your priority is to attain the best quality service and advice.
Understand the terms of engagement. Identify what services Joe has delivered, and look for gaps and overlaps. For example, if Joe did not produce an annual financial reconciliation for the benefits account, why not? Perhaps he wasn’t asked to.
Keep track of any tasks that you think should have been done but weren’t.

Synthesis

If Joe gets a good review internally, complete your research by finding out who else hired him and why.
If not, ask Joe for references. Ask them openly what they like and what they would change about working with Joe.
Reach out to your own contacts. They may know Joe, or they may have other useful experiences to share.
Contact the insurers directly to discuss their perspectives and any value-added services they may be willing to offer. (A word of caution: Joe may or may not appreciate this direct contact. You will need to decide how you would like that relationship to work.)
If you’ve found red flags, such as poor invoice documentation or selective responsiveness, dig deeper. Most of the time, red flags can be corrected through open discussion.

At Your Service

If there is no service agreement, have a draft prepared and delivered before the meeting.
If there is an agreement, review it before the meeting, concentrating on the sections that govern scope, scope creep, limitation of liability, right to audit and termination provisions.

After the Meeting

If neither due diligence nor your meeting produces a reasonable sense of comfort and trust with Joe, look for alternatives.
Develop a list of the services you require. Any qualified advisor should be able to provide basic services such as assistance with renewals and financial negotiations, contract documentation and amendments, intercession on contentious claims, and updates on the market and relevant legislation.
If you require third-party administration services, decide whether to use one advisor for both the tactical (administrative) and strategic expertise, or whether to find the best of breed for each. While the latter may be more expensive, it may yield better results in the long run.

Drawing Conclusions

If you’re willing to use Joe’s services, establish the rules of engagement in the form of a new service agreement.
If not, talk directly with Joe about your concerns before precipitating further action.
If you intend to consider other options, inform Joe of your intent after discussing this internally.

Jane Petruniak is currently on hiatus and has been a senior member of the Toronto and Western Canada benefits consulting communities for more than 25 years. jane@srbrewing.com

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