What is a TPA?

Posted on in COST SAVINGS, HealthEZ

A third-party administrator (TPA) provides administrative services for self-funded or level-funded health plans. TPAs can provide access to healthcare networks and may have access to vendors such as stop-loss insurers.

TPAs help with the design and implementation of health plans. They also oversee the ongoing management of the plan once it is up and running, which differentiates TPAs from health plan consultants.

This blog will focus on how a TPA can help with creating a self-funded health plan.

Why self-fund?

Simply put, self-funding gives organizations more control over their health plans. When you implement a self-funded plan, you are better able to control costs and keep your financial bottom line healthy. Level funding is a subset of self-funding in which you pay an insurance carrier a set amount per month to cover estimated claims. We’ll have more information on level-funded plans in future blogs.

Working with clients

It is the business of third-party administrators to design and build a health plan that meets the client’s specific needs. When a company decides to opt for a self-funded health plan, it is often because they are dissatisfied with the plan or plans offered by an insurance carrier. It may not fit with their corporate philosophy or structure. The employees may need or want something that better fits their family situation or lifestyle. This is where a good TPA comes in.

A high-quality TPA can provide any or all of a variety of services to create a health plan tailored to the specific client.

Program design

A truly bespoke health program matches the benefits with the company’s needs and bottom line—both human and financial. Self-funding experts will analyze the company’s data, claims history, and projected needs to create a uniquely tailored program, from pharmacy programs to stop-loss coverage to provider networks.

Network access

Speaking of networks, self-funding health plans rely on TPAs for access to provider networks. Insurance carriers may have certain network access built into their plan, but it may not be the right fit for what the company is looking for. Local and national networks should be accessible to connect the company and its employees with the providers they need. In addition, the TPA should take the client’s service costs into account to provide fair and acceptable reference-based pricing for both providers and plan members.

Stop-loss coverage

Employee benefits are a top-five expenditure for many mid-sized companies. A good TPA will design a plan to help clients keep costs down while managing plan risks by keeping claims down, providing care management for employees, and offering access to high quality provider networks. When employees stay well, costs stay down, and you can reinvest those savings into your bottom line.

Performance analytics

Implementing a well-designed plan should not be the end of the journey for a TPA and their client. The third-party administrator should perform reviews and provide analytics of how the plan is working on a regular basis, making tweaks where necessary to give the clients and their employees the best possible experience with their health plan. Analytics help identify areas of opportunity and risk, and help your TPA actively manage your plan’s performance.

Claims administration

A self-funded plan still has claims that will need to be submitted. A good TPA will act as your claims administrator so you don’t have to worry about the headaches of filing claims and following up with providers for approval.

Cost control

Your TPA will design a plan that helps you keep costs in check. This includes selecting the plan vendors you want to use, which gives you more insight into what you’re paying for. You also only pay for care when it’s needed, keeping budget in your self-funded plan pool. And since you are not contracted to an insurance company, rate increases year-over-year are much less than with traditional plans—typically less than three percent

Customer service

Good customer service is something of a rarity when dealing with health plans. Providing high quality service to plan members should not be overlooked. Using technology to help employees access their plan information and provider network is a simple way to mitigate what can be a confusing and frustrating process. Likewise, easy payment options can be built into the plan design, keeping the client’s employees—the people who will be using the plan to stay healthy—top of mind.

Finding the Right TPA

When looking to implement a self-funded health plan, companies should look for a third party administrator with experience, deep knowledge of the health industry, and a successful track record. Some things to focus on:

  • Strong networks
  • Robust analytics program
  • High client renewal rate
  • Impressive customer service scores

This list is a good place to start, but it’s important to do a good amount of research before deciding on a TPA to work with.

Ready to get started?

HealthEZ is proud to be Minnesota’s 100% independent TPA, and we welcome the opportunity to work with brokers and clients at any time. If your broker isn’t familiar with self-funding, we’re happy to help. Don’t have a broker? We can help with that, too!