What does the future hold for work comp TPAs?

For some, red ink.
Most workers comp TPAs are struggling. The softening market has pushed many larger employers back to insured programs – for good reason. If a policyholder can buy fully-insured coverage for less than their projected losses plus admin expenses plus reinsurance premiums, most will.
This is particularly true in New York, Florida, and California, states where premiums have/are dropping precipitously. In Florida, the number of self-insured employers has dropped by over half since reforms went into effect.
The decline in California has likely paralleled the other sunshine state. Reports are that TPAs are slashing admin expenses in an effort to hold onto business – actually adding new business is a pipe dream for any TPA not willing to give admin services away.
So how are TPAs surviving? Slashing costs, cutting staff, merging, and creatively raising prices on managed care services. Or, working to educate their customers on the long term benefits of a continuous focus on cost drivers – loss prevention, return to work, network direction, medical management. That’s where a long-term focus on the part of the employer will pay off – at some point the market will harden, and when it does the employer will be on the other side of the negotiating table, pleading with TPAs and insurers to provide comprehensive services at a price they can afford.
Take a long term view. Paying a bit more for services now will earn loyalty when the market hardens. And that investment will more than pay for itself.