This article was published on August 7, 2018 on Employee Benefit News, written by Corte Larossi.
We all know that making changes to your health plan can have major consequences for your company. It can impact your medical costs and company bottom line, the health and welfare of your employees, employee satisfaction and performance, as well as your ability to hire and retain high performing staff. If your health plan is currently self-funded — or you are considering moving to a self-funded arrangement — the stakes can be even higher since you’re responsible for part or even all the medical costs, depending on the size of your company and risk tolerance.
One of the most critical functions is the administration of your medical claims. Your claims payer — whether a traditional insurance carrier or a third-party administrator — can help make or break the success of a self-funded plan. Many times, these entities also will provide other services directly, or through strategic partnerships including pharmacy benefits management, medical management, stop-loss, employee and provider portal access, voluntary products and telemedicine — just to name a few.
For many small to medium-size employers (25-1,000 employees), and even some larger companies, a TPA may be a good option. The advantage of the traditional carriers is often the medical claim discounts they offer along with nationwide access, which is clearly important, but they might not provide the flexibility smaller employers may need to meet their plan objectives. Additionally, some carriers do allow TPAs to access their networks, which can provide TPA clients deeper savings than may be available through rental PPOs.
Here are eight important questions employers should ask when vetting TPA partners.
1. What is their claims administration platform?
This is one of the most critical issues when choosing a TPA. Do they have an older legacy system that may be less flexible, or are they using a platform that provides the ability to manage newer, more sophisticated products? Also, can they adjudicate a high volume of claims on an automated basis, or is the process more manual? This is not to say that manual processing isn’t necessary since there could be plan nuances and exceptions that need to be addressed outside of the standard adjudication process. But in general, the higher degree of automation, the more cost effective the process for both the TPA and the client.
Can they easily and accurately manage service/provider carve outs or additions? What is their process and commitment to meeting your objectives? Can they administer other types of services including, but not limited to dental, vision, HRAs, HSAs, COBRA, subrogation and COB? Continue reading