The Nevada Division of Insurance (the "Division") recently initiated an audit program of third party administrators ("TPAs") that administer workers compensation and self-insured workers' compensation claims on behalf of Nevada residents. The audit program is being conducted in order to satisfy a required response to aspects of the Nevada Legislative Counsel Bureau's audit of the Division. The audits are being conducted by A.M. Bennett & Company on behalf of the Division. Beginning in July, many TPAs received Examination Warrants and follow-up emails explaining the audits.
According to the Division, the audits are not intended to be claims-related audits or market conduct audits. Instead, the audits are intended to provide the Division with the TPA's current operational data and supporting records, in order for the Division to ascertain the degree of reporting compliance by each TPA. The Division will be reviewing twenty-five items as a part of the audits. The Division anticipates reviewing a certain number of items, and that only certain identified items will require action by the TPA. Once the files are reviewed, examiners will contact the TPA to determine whether the TPA needs to provide additional items to the Division in order to be in compliance with Nevada statutory reporting requirements. TPAs will be provided an opportunity to respond to inquiries or concerns of the Division.
As a part of the audit, TPAs will also be required to report all current, new, and terminated administrative service agreements for the last three (3) years. TPAs must also explain to the Division why administrative service agreements were terminated or otherwise failed to renew. In addition, TPAs shall provide the Division with a list of all independent entities the TPA has sub-contracted with, as well as providing the Division with a copy of the contract between the TPA and subcontractor.
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