Choosing the best Third-Party Administrator
By partnering with a trusted TPA, companies can enjoy overall cost savings by self-insuring their health plans without significantly adding to the administrative burden for human resources (HR) and finance teams. A TPA can also work with an employer to implement employee benefit plans, can help familiarize the employer with healthcare options they may not have considered, and can provide ongoing member support.
TPA or Health Insurance ?
The insurance provider sells coverage to protect against healthcare expenses. In exchange for insurance premiums, the insurer shoulders the risk of claims that exceed collected premiums. If actual claim costs come in lower than collected premiums, the insurer typically doesn’t refund premiums.
Instead of providing insurance, a TPA provides administrative services for claims to support a self-funded health plan. TPAs may also help coordinate reporting from outside vendors. With a self-funded health plan, the company pays for actual employee healthcare costs through a fund, a model that can provide cost-saving opportunities, while the TPA provides support for claims adjudication and other administrative tasks.
The components of the best TPA plan
The services provided by a TPA may span a broad spectrum and can often be customized. As in many industries, you can tailor your agreement to match your requirements. TPA services can include:
Health benefits reporting and analytics: A TPA that reports on your health program’s networks and point solutions should provide regular and reliable reporting on claims, members, and other metrics associated with your self-funded plan.
Reducing the burden on your HR department: Your TPA can help with open enrollment for your plan. Your TPA may also be able to assist with communication materials or onboarding events.
Adjudicating claims: A TPA can adjudicate whether claims are reimbursable under the plan and take care of processing member claims for your business.
Customer service for plan members: Enlist the help of your TPA to answer plan-related questions and provide member assistance.
Healthcare provider network access: A TPA can help you connect your self-funded plan to trusted healthcare provider networks. You don’t need to assemble all the parts of your plan yourself.
Detailed healthcare expense reporting: Gain access to more detailed healthcare expense data without compromising employee privacy. A TPA can provide you with reports to better understand healthcare costs. Use the data to work with your TPA and design wellness programs or health-based incentives that can reduce costs in the future.
Supporting stop-loss coverage by working with insurers: Stop-loss insurance reduces the risk for self-funded health plans. If actual costs outrun expected costs, a stop-loss policy can cover some or all of the unexpected expenses.
Consolidating payments for providers: A self-funded plan may receive services from multiple providers. A TPA may be able to facilitate making payments to these service providers, thus streamlining your administrative lift.
Working with brokers and health insurance consultants: Even experts in the business turn to TPAs for their broad understanding of how the pieces of the health insurance puzzle fit together.
While a TPA can handle a wide range of healthcare plan needs, you can also often choose customized services to meet your needs. For example, some businesses might choose not to use stop-loss insurance. Your TPA agreement isn’t necessarily all-or-none, but it’s often more efficient to utilize a TPA.
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