Open enrollment Myth #2
Will your company be well served by using an MCO and TPA that are sister corporations?
MCO stands for Managed Care Organization. Its job is to manage the medical care of the injured workers. It is paid a percentage of your premiums, so its financial best interest is to authorize as many treatments as possible.
TPA stands for Third Party Administrator. Its job is to manage all of your claims to keep your premiums as low as legally possible. The TPA should be a watchdog over the medical services authorized by the MCO.
If the TPA and MCO are sister corporations, how likely is it that the TPA will challenge the services authorized by its sister? In my experience, companies that use a TPA and MCO owned by the same corporation will see increases in their claims costs, and may then be eliminated from group rating.
If the TPA offers to manage your claims for a minimal amount, like $75, how likely is it that the TPA will aggressively work to keep your claims costs down? Can a business really be profitable when it gives its services away for such a small amount?