University Hospitals CompCare News

Roles and Responsibilities of MCOs and Third-Party Administrators

In the alphabet soup that is the workers' compensation field, there is a lot of confusion about the roles of managed care organizations (MCOs) and third-party administrators (TPAs), and how the two types of organizations interact and co-exist.

Under Ohio's Health Partnership Program (HPP), MCOs such as University Hospitals CompCare are responsible for the medical management of work-related injuries and illnesses. MCO responsibilities include handling first reports of injury, providing authorizations for medical procedures, processing providers' bills for payment by the state, and facilitating the return-to-work process.

The charter of the MCO program is to run the medical management process efficiently for employers, employees, health care providers and the state, and to work toward a safe, timely return to work. The Ohio MCO program is supported by a portion of workers' compensation premiums paid by state-fund employers to the Ohio Bureau of Workers' Compensation (BWC). Every state-fund (as opposed to self-insured) employer in the state must select a certified MCO to work with.

On the other hand, TPAs have different responsibilities, including managing the legal ramifications of a claim. They work on behalf of employers, providing legal and risk management advice, and investigating and litigating claims that the employer suspects are unwarranted. TPAs are optional and are paid directly by the employer.

The confusion between MCOs and TPAs dates to pre-HPP days, when employers retained TPAs to help them with medical management, in addition to traditional TPA duties, because they were dissatisfied with the BWC-run medical management program. That dissatisfaction and the ineffectiveness of the state program led the Ohio legislature to create the MCO program, which began operating in 1997.

Following the creation of HPP, some TPAs created MCOs, although the state requires that there be a "firewall" between the two parallel organizations to reduce any conflicts of interest. For example, TPAs may contest claims on behalf of employers, while MCOs must play a more neutral role in managing medical treatment for BWC-approved claims.

While some MCOs were formed from a litigation background, University Hospitals CompCare, an affiliate of University Hospitals Health System of Cleveland, has deep roots in the health care field. When MCOs do their job well, employers, employees, health care providers and the workers' compensation system as a whole reap the benefits.