Dragging claims can be an effective way to obtain competitive stop loss quotes prior to renewal. It is also an effective strategy to make year end results appear to be more favorable.
Most reputable TPA’s don’t employ this scheme, which ensures their continued good standing in the insurance community. Those TPA’s that make a habit of dragging claims are eventually blacklisted within the stop loss world.
How does a self funded employer detect the phenomenon of claim dragging? Continued review of monthly claim activity including pended claim reports as well as monthly lag reports are helpful.
Another indication of a TPA dragging claims is an uptick in provider and employee complaints. If claims are delayed, employees with claims begin to get hounded by those providers who expect to be paid quickly. PPO contracts usually stipulate that claims must be paid within a certain amount of time or the PPO discounts are lost and the full billed charge is then demanded by the provider. The state of Texas has passed a law requiring insurers to pay claims within a specified time or be sanctioned.
Clearly, when claims are dragged, they eventually must be paid. A decision to release these claims rapidly causes a spike in claim activity which a descerning risk manager would question. The alternative method is a well managed slow but consistant release of claims over a 90 day period.
Towards the end of a contract that may be in jeopardy (political subdivision which is planning to bid out the service), the TPA may drag claims so that if the case is lost, they can then adjudicate the claims “post contract” at exhorbitant fees. Held hostage to a degree, the self funded employer is stuck with a bill that otherwise would not have occured.