- When self-funding, many companies hand over the management of their employee benefits plan to a third-party administrator (TPA).
- Finding the right TPA is essential to realizing the benefits self-funded insurance can offer, such as flexible plan design and cost savings.
- To find the right TPA for your self-funding needs, meet with several companies to evaluate aspects such as network access, customer service, and vendor flexibility.
Self-funding is an ideal way for small to midsize businesses to save on health insurance costs. Part of the self-funding puzzle is finding a TPA that will meet your needs and help you enjoy the benefits that self-funded insurance can offer. Knowing how to find a TPA that’s a good fit ensures you partner with a company that runs your plan efficiently and helps members engage with their benefits.
Choosing the Right TPA for Your Self-Funding Needs
At its most basic, self-funding is a mechanism an employer uses to pay for its employees’ healthcare costs. But it’s also an investment in controlling a major cost of doing business. The employer relies on three trusted partners to deliver a return on that investment: their benefits advisor, the stop-loss carrier, and the third-party administrator, also known as the TPA.
Advisors are the gatekeepers who influence the selection of the TPA, who provides administrative services and claims management for self-insured health plans. Several considerations impact TPA selection, including the following:
1. Network Access
First, an employer should review the TPA’s network access, which determines the provider network you will be using. The chosen network often drives TPA selection, but this can be short-sighted, particularly when networks are often selected based on reputation and marketing rather than a careful comparison. Advisors should ask potential TPAs for access to reports to determine provider options.
They should also consult with the stop-loss carrier to determine the value of the network discounts. In all likelihood, there are several good network options. With the flexibility to go with one of several networks, the employer can select its TPA based on fit.
2. Similar Client Type
Another important point to consider when finding the right TPA is the company’s focus. There are fantastic TPAs with an average group size of several thousand. While they do a great job for those clients, their quality might not transfer well to an employer of 200. There are certain services that large employers need that small and mid-market employers do not.
The advisor should have a good handle on the TPA’s preferred client type. When the employer is matched up with a TPA that focuses on that type of client, the employer will receive the services it needs, and the TPA will be able to deliver those services within its regular business model.
3. Vendor Flexibility
Another vital component of a good TPA is vendor flexibility. The value of self-funding is that it incorporates more variable than fixed costs — and helps you to control them. But the value can be limited if a TPA does not accommodate a choice of pharmacy benefit manager, wellness provider, and other cost containment partners.
If a TPA limits cost containment vendors, the advisor should fully vet the limited options to ensure they deliver savings to the employer and not just additional compensation to the TPA.
4. Advanced Services Contract
One major document to be provided by the potential TPA is the services contract. A TPA should be willing to provide its services contract well in advance of the effective date. The employer will need time to find an alternative if it contains unreasonable and non-negotiable provisions. The contract should include necessary services and clearly set forth administrative costs.
5. Open Communication During Enrollment
First impressions are everything, especially during the enrollment process. The enrollment with a new TPA is a single event. For a group making the transition from fully insured to self-funded, however, it is the first impression of self-funding. The entire self-funding experience can be marred if the enrollment process does not go well. Open communication and planning will demonstrate that the TPA’s process will work for the employer.
6. Excellent Customer Service
The TPA will also make an impression by the way it manages customer service. Employee complaints are a quick way to damage the self-funding experience. TPAs that have made an investment in customer service and show dedication to quick responses are more likely to keep employees satisfied.
This is especially important if the employer is switching plan design or networks; the employees will need additional attention while navigating those changes.
7. Efficient Claims Management
Lastly, TPAs typically don’t have skin in the game when it comes to accurate claim payments, which can lead to incorrect claims slipping through. Claims management is more than just “claims processing.” A TPA can demonstrate its commitment to accurate claims management through investment in technology and personnel.
Advisors can also discuss hypotheticals to understand how the TPA approaches situations like egregious billing, subrogation, and out-of-network providers. The TPA should have clear, aggressive plans for dealing with these and not just act as a rubber stamp.
Enjoy the Benefits of Self-Funding with an Effective TPA
If you consider all of these qualities during the TPA selection process, your plan is bound to have a solid claims management partner. Roundstone has researched numerous TPAs throughout the country and has found strong candidates for every type of plan. We can work with advisors and management teams to find a TPA that’s the right fit for each company.
Contact Roundstone today to receive a few potential TPA options you can speak with to determine which is a good fit for your self-funded plan.