Audit: TPA billing discrepancies, fee overage and missing incident reports found in Springfield City workers’ compensation program

Young Ngo, audit staff, told the Springfield City Audit Committee that a performance audit of Springfield City’s self‑insured workers’ compensation program found inconsistent billing practices by the city’s third‑party administrator and gaps in required documentation.

The audit covered fiscal year 2023 and most of fiscal year 2024 through March 2024 and excluded police and fire claims, which are administered under a separate statutory process. Ngo said the audit’s objective was “to assess the city's oversight over the third party administrator and assess the city's risk mitigation processes related to workplace injuries.”

Why it matters: The audit flagged controls and contract issues that could increase costs and hinder the city’s ability to identify and prevent repeat injuries. The audit also identified departments that account for most claims — Springfield Public Schools and the Department of Public Works — and recommended targeted training and written loss‑control recommendations from the TPA.

Key findings and details

- Billing rates: The contract lists a utilization‑review rate of $140 per claim, but auditors found invoice line items ranged from about $70 to over $1,300 and multiple charges per claim. Ngo said invoices “weren’t very detailed,” which made it difficult for HR to trace billed rates back to the contract.

- Contract cap exceeded: The contract set a contractual fee cap of $213,000 (composed of claims administration and several service components). Auditors reported that FutureComp received approximately $270,000 in FY23 — about $57,000–$58,000 more than the cap — and did not notify HR when the cap was being approached, as the contract requires.

- Missing incident reports: The TPA did not have required supervisor incident reports in its database for many departments. Auditors said those forms are important for determining root causes of injuries and recommended HR implement procedures to ensure supervisors submit incident reports and to verify the TPA’s receipt.

- Loss control recommendations absent: The contract requires the TPA to provide written loss‑control recommendations. Auditors said they did not see such written recommendations and recommended HR require the TPA to deliver them and that city departments target training for high‑claim areas. Ngo also noted state grant programs could offset training costs.

Reactions and follow‑up

Director Bill Mahoney described multiple factors behind a recent decline in claim totals, including milder winters and claim maturation effects, but agreed that documentation and timeliness need improvement. Mahoney said safety‑coordination reminders and training materials exist and the city has been reminding departments to submit forms.

Ngo recommended HR work with legal to (1) require more granular invoice detail, (2) modify the contract to list the actual rates or an acceptable range, and (3) determine whether the FY23 overage must be repaid or whether the contract should be amended. He also said auditors will review the full FY24 year in a follow‑up.

Ending

The audit committee asked the audit staff to include FY24 full‑year data in the follow‑up work and for HR and legal to pursue contract clarification and stronger invoice monitoring. Auditors recommended written loss‑control recommendations from FutureComp and targeted training for the school department and DPW.