In an earlier post, we discussed the key differences between TPAs and ASOs, and why you should know these differences if you’re currently self-funding or considering self-funding your group health plan. For those of you unfamiliar with these terms, an Administrative Services Only (ASO) firm is a division or wholly-owned subsidiary of a national health plan, while a Third Party Administrator (TPA) is an independent business entity that does not carry risk.
1. Bigger is NOT Necessarily Better. ASOs answer to major insurance companies where the focus is on quantity and generating economies of scale. This can translate to a loss of focus on the plan management needs of each individual client. As smaller, more entrepreneurial organizations, independent TPAs continuously monitor plan performance to detect fraud and protect your interests.
2. Carrier Affiliations Can Cost You. When you dig a little deeper into the carrier/provider network affiliations of ASOs, you may be surprised to discover that the ASOs may be receiving a percentage of every dollar billed to your plan by participating providers.
3. Giving Up Control is Like Giving Up Your Checkbook. ASOs tend to operate like manufacturing sites with a focus on automation and yearly premium increases. An independent TPA will regularly review plan performance and recommend alternatives to reduce plan expense, so yearly increases are minimized or avoided whenever possible.
To learn more, click to view our TPAs vs. ASOs: Part 2 whitepaper, To Pay or To Pay Attention. Or click on the graphic below.