In Ohio's world of workers' compensation insurance, the medical management of on-the-job injury claims is the province of managed care organizations. The Ohio Bureau of Workers Compensation (BWC) requires employers to enroll with an MCO, whose services are covered through premium payments employers make to the BWC.

But managing the legal ramifications of claims usually is the area of expertise of third-party administrators, commonly known as TPAs. Unlike MCOs, TPAs are optional advocates for employers to hire. They do not fall under the jurisdiction of the BWC, so their services typically require an out-of-pocket fee paid directly by employers.

So why would an employer hire a TPA?

"In the grand scheme of things, the MCOs process the bills and approve the medical treatment, but it's the TPAs that (are instrumental in) saving money," says Brent Messmer, co-founder of Matrix Claims Management, a TPA in Cincinnati.

With a staff that includes several veterans who worked for the BWC, Matrix acts like a broker for its clients when it comes to another key service provided by TPAs: creating group rating plans that provide premium discounts for companies. For its customers, Matrix researches the groups that sponsor such group rating programs.

Group sponsors often are trade organizations or employer associations such as chambers of commerce. They may apply one time to BWC for approval to sponsor a group rating program. Beyond that, the group sponsors usually hire TPAs to manage their group-rating process.

Group rating lets employers in the same or similar industries combine their claims experience for rating purposes. Pooling companies with good claims experience will get the group a better rate than they could get as individual members. The system was designed to be an incentive for promoting and rewarding safe working conditions.

TPAs also provide legal and risk management advice, litigate injury claims the employer believes to be unwarranted, and works with the MCOs in getting injured workers back to work. TPA staffs typically consist of paralegals, claims adjusters, underwriters and statisticians.

In 2004, the Ohio Supreme Court backed up the work that TPAs do representing and assisting parties in state workers compensation claim proceedings, so long as TPAs do the work according to guidelines adopted by the Ohio Industrial Commission that year. The court was responding to a complaint by the Cleveland Bar Association that alleged a TPA engaged in the unauthorized practice of law on behalf of its fee-paying clients.

While they often work together, TPAs and MCOs are supposed to operate separately, according to BWC rules.

"Your MCO selection does not have to be connected to your selection of a Third Party Administrator," explains Joe Mercurio, director of operations for Avatar Comp, an MCO. "The state of Ohio has strict guidelines explaining what services and functions a MCO or TPA may provide.

"If you are interested in selecting a TPA, you can contact the BWC for a list," Mercurio adds. "An Ohio managed care organization is not permitted to direct an employer to a specific TPA, due to firewall regulations and compliance."

Again, as with MCOs, it's best to do your homework when choosing a TPA, according to experts. They say employers should look at a group's promised percentage of savings and compare it with its history of savings.