One of the most important success factors in self-funding is the service provided by the third party administrator (TPA). Since most employers do not have the expertise or the time to handle the day-to-day management of their health benefits programs, contracting a TPA for the administration of their plans is essential to achieving strong results. HM Insurance Group believes a successful relationship with the TPA is important to both the self-funded employer and the Stop Loss carrier.
Most standard TPA services include adjudicating claims, determining eligibility, communicating important information with plan members, creating forms, providing customer service and working with the Stop Loss carrier on catastrophic claim communication and financial reimbursement. There also are additional modern services that many TPAs provide that exceed these basic services. It is important to identify the key differences in administrative services and claims management approaches that individual TPAs possess in order to evaluate their overall contribution to a successful self-funding experience.
During our more than 30 years in the industry, HM Insurance Group has identified certain practices and approaches taken by effective TPAs that truly set them apart in managing benefits programs. This information should be considered only as a guide.
Key areas where superiority can be noted are as follows:
Progressive Plan Document Language & Design – Effective TPAs should provide a template plan document based on their best practices. A template is considered “good” when it includes differentiating benefit requirements such as precertification for dialysis, transplants and specialty pharmaceuticals; a differential in the coinsurance benefit of 30 percent or more between in-network vs. out-of-network; and an incentive to utilize a Center of Excellence for transplants or surgery. A TPA’s achievement of an “excellent” plan document would include benefit requirements mandating programs that manage patients’ care or achieve population health initiatives. The latter approaches – considered “excellent” – are not common at this point, but they are beginning to be adopted by some TPAs.
Programs that Manage Patient Care – Care management comes with many considerations. There are programs designed to address patient care, including pre-authorization, utilization management and case management, along with programs for cancer and dialysis. But a truly effective TPA goes beyond the basic features, which are by-and-large universally included, by differentiating and offering specific tools and plan language that apply to specific conditions. These might include use of a clinical decision support platform to assist with preauthorization requirements in oncology or dialysis payment language.
Programs that Manage Population Health – Wellness, disease management and pregnancy management programs, along with data mining and predictive modeling tools, help to determine the health patterns of an organization. Effective TPAs provide useful tools and information that not only demonstrate awareness of a group’s trends, but they make a commitment to help an organization use the data to improve outcomes. However, it’s challenging to determine if there is a direct correlation between their use and overall savings. Awareness needs to lead to action to achieve savings. These programs also sometimes come with add-on fees, although effective TPAs may include some of the programs as core features of their administrative services.
Programs Directed to High-Dollar Claims or Claims Repricing – Effective TPAs will include aggressive in- and out-of-network repricing strategies, specialty pharmacy management initiatives, programs that limit transplant costs, aggressive bill auditing protocols and review of charges for implants or devices. These types of programs and services demonstrate a commitment to controlling costs and ensuring groups are properly billed for the services used by their members.
Timely Notification of Potential Claims for Stop Loss – Quality TPAs notify the Stop Loss carrier either at pre-certification/preauthorization of procedures or high dollar drugs through a 50 percent notice report or entrance into a disease management program such as on oncology on nearly 100 percent of their claims. The notifications include data on all charges, including prescription charges when those are covered by the Stop Loss policy. Unnecessary delays can lead to a delay in reimbursement.
Complete Claim Submissions – The Stop Loss carrier’s goal is to process – completely – as many claim submissions as possible “the first time through.” By providing the necessary information initially, e.g., detail claims reports, COB verification, eligibility confirmation, itemized invoices and case management details, along with timely premium payment, submissions received from effective TPAs can be completed, i.e., not “pended” for additional documentation. Effective TPAs see in excess of 80 percent of their reimbursement submissions completed “the first time through.”
Quality Claim Oversight – The oversight of claims should take place prior to payment, with programs touching all claims at a low-dollar threshold to confirm legitimacy based upon criteria that includes medical necessity, accuracy, reasonable and customary, legitimacy (non-fraudulent) and eligibility under the plan document. When the practice of pre-payment audits, oversight and payment integrity review is built into a TPA’s business model, the opportunity for success can be even greater. We recognize that there is a reasonable balance between fees charged for these services and the value or savings they bring to the plan. Revenue generated only for the sake of increased fees and not for significant claims savings limits the potential plan savings.
Not all effective TPAs will use all of these practices, but they are a guide for what one might consider when choosing a quality TPA to manage a self-funded program with successful results. If you have any questions about creating an effective relationship with a TPA for your groups, contact your HM Insurance Group sales representative.