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August 30, 2012

Re:  I. Comptroller Issues an Alert on Savings in Workers’ Compensation Programs
       II. Division of Pensions Offer Certifying Officers and Supervisor Training

Dear Mayor:

I. Comptroller Issues an Alert on Savings in Workers’ Compensation Programs

Yesterday, the State Comptroller issued a Comptroller Alert on “Hidden Costs in Using Third Party Administrators to Administer Workers’ Compensation Program”.  The Comptroller found that a Workers’ Compensation Third Party Administrator (TPA) was receiving money back from the managed care and bill repricing vendors to which the TPA had referred claims, pursuant to undisclosed side agreements (aka “revenue share agreements”).   According to the Comptroller “these revenue sharing arrangements have been criticized by industry experts who have stated that they are potentially wasteful of public funds and compromise the ability of public entities to determine if their workers’ compensation program is being administered in a cost effective manner.”

The Comptroller has recommended that when municipalities are procuring workers’ compensation TPA services, they should require disclosure of any financial arrangements a TPA has made with third party vendors by requiring disclosure in the bid specifications.  In addition, municipalities should periodically review whether they are in fact obtaining the most cost effective TPA services.  Municipalities should consider soliciting separate proposals for TPA services, managed care services and bill repricing services.

We suggest that you review this Comptroller Alert with you Administrator or Finance Officer to ensure that your TPA’s are providing the most cost effective services to your municipality.  In addition, we suggest that you examine all TPA agreements to make sure you understand how all fees, charges, and commission are received and are reported so one understands the full cost of all services provided.

II. Division of Pensions Offer Certifying Officers and Supervisor Training

The Division of Pensions and Benefits has scheduled classroom training for Certifying Officers and Supervisors.  The sessions, for local government entities only, will cover eligibility for active employees and their dependents, leaves of absences, COBRA and Chapter 375.  The Division of Pensions and Benefits will also explain the health benefit and dental plans available and their contact information.  An introduction to the State Health Benefit Program application in the EPIC system is reviewed.  Classes have been scheduled for 10:00 a.m. at New Jersey Forensic Science Technology Center, Hamilton for Wednesday, October 3, 2012 and Tuesday, December 11, 2012.  To register for either class please visit

Very truly yours,


William G. Dressel, Jr.
Executive Director



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