Highlights
- Self-funded health insurance plans use a third-party administrator (TPA) to manage the program and process claims on behalf of its members.
- The right TPA provides high-quality customer service and keeps the plan compliant with state and federal guidelines.
- Choosing an efficient TPA for your self-funded health insurance plan helps your company enjoy the cost-saving benefits of self-funding without managing day-to-day paperwork and administration.
As insurance premiums continue to escalate by double digits year after year, more companies are discovering the value of self-funded health insurance.
Traditionally feasible only for large companies, self-funded insurance has increasingly become an affordable option for small to midsize businesses, thanks to group medical captive solutions like Roundstone’s.
Self-funded insurance plans allow companies to pay only for what they need. They keep what they don’t spend. And as part of the captive, any unspent premium at the end of the year gets reimbursed to the employer. Every year, Roundstone writes checks in the hundreds of thousands of dollars to clients who’ve saved on their health insurance costs thanks to being self-funded in the captive.
Self-funded insurance also provides enhanced visibility into plan performance, so you can always adjust your coverage to better fit your needs. Employers can readily tailor health solutions to reduce claim expenses while enhancing care.
To take full advantage of the savings and benefits of self-funded insurance, you’ll need the right TPA – that’s key.
What Is a TPA For Self-Funded Health Insurance?
TPA stands for third-party administrator (TPA). It’s a company that processes and manages claims for an employee benefits plan. Under traditional insurance, claims and administrative work are managed in-house by the carrier. When your company decides to implement self-funded health insurance, you take on the responsibility of providing the benefits outlined in the health insurance plan.
Most companies with self-funded insurance work with a TPA to provide administrative and claims processing services. Partnering with a TPA ensures compliance and efficiency regarding your employer-sponsored health insurance.
Enlisting a TPA also hands over the complex and time-consuming administrative burdens of running a self-insured plan over to a specialized company, allowing you to focus on employee engagement and plan design. The TPA does all the heavy lifting — so you can focus on your business.
What Does a TPA Do?
Although a TPA is an outsourced service, your TPA partner is integral to your health benefits team. They help you take advantage of the cost savings and flexible plan design of self-funding while handling the bulk of the administrative work.
A good TPA will help with the following elements of your self-funded group captive insurance plan:
- Drafting plan documents, including your Summary Plan Description (SPD)
- Managing onboarding for new plan members
- Maintaining compliance with health insurance regulations and reporting
- Processing claims, including coverage verification, determining benefits, and paying claims
- Putting together and managing a list of in-network healthcare providers for the plan
- Providing excellent customer service for plan members with questions about their benefits
- Providing data-based analytical insights into your company’s healthcare plan utilization rates and expenses
Depending on your TPA, they may offer additional services. For example, your TPA may help you identify cost savings opportunities based on claims data from reports. They may also help you develop and implement benefits like an employee well-being program, connect you with a pharmacy benefits manager (PBM), or create employee education materials to increase engagement about your plan.
Benefits of an Effective TPA for Self-Funded Insurance
With an effective TPA, your company can realize several benefits of self-funded insurance. When you find the right TPA for your plan, your team sees higher cost savings, better plan utilization, and improved compliance. Best of all, your TPA handles the day-to-day management of your plan, making it easy for your HR team. The best TPAs work as an extension to your own team.
Administrative Support
TPAs handle all administrative tasks, freeing up your team to focus on other areas of your plan design and implementation. Your TPA will enroll new members, process claims, and manage the financial side of your plan.
Compliance Expertise
An experienced TPA is familiar with health insurance requirements at the state and federal levels and will ensure your plan stays compliant. For instance, your TPA can review your plan documents and coverage to ensure they comply with Affordable Care Act requirements.
Streamlined Claims Management
Your TPA will handle claims management, including filing claims and negotiating with providers on payment. They can also handle high-risk claims and implement stop-loss insurance to protect your company if a catastrophic claim occurs.
Flexibility
One of the most significant benefits of working with a TPA is the flexibility they provide. Your TPA can offer your company customized solutions for your health plan. The right TPA acts as a one-stop resource for every element of your plan, from claims to coverage to plan design.
Data Insights
Unlike fully insured plans that don’t offer insights into your claims data, a good TPA tracks and reports data insights on your claims and expenses. These insights help you make decisions regarding your plan, such as guiding members to primary care rather than urgent care. This information will help you choose cost-effective solutions and plan changes for better coverage and reduced costs.
How to Choose the Right TPA for Optimal Savings and Quality of Care
As an HR manager, it’s your duty to ensure the health, safety, and satisfaction of your employees. The quality of your work is essential to the success of the company. It’s the same for a TPA. Choosing the right one makes all the difference in delivering the best savings advantages and quality of care possible under a self-funded insurance plan.
In our Essential Guide to Self-funding for HR Execs, we discuss the value of a TPA and explain best practices for hiring the right TPA for your business size and healthcare needs. We cover the topic of self-funding in detail from an HR perspective so you can take full advantage of this plan using a group medical captive model.
To choose the right TPA for your company’s insurance coverage, start by reviewing their network access. This will determine the network your employees will tap to access the best care. This decision should be made carefully. Networks are often chosen based on reputation and marketing efforts, rather than actual access and quality of care. Always ask potential TPAs for detailed reports that prove their worth through quantitative data.
You should also discuss your options with a stop-loss carrier to best evaluate the value of network discounts.
Keep in mind the size of your company and its needs. Many TPAs are ideal for large companies of several thousand employees but might not work so well for a small to midsize company. Look into the TPA’s preferred client type and make sure you are an ideal match.
One key reason why self-funding is a better option than being fully insured is that it has more variable costs, and therefore, more opportunities and control for greater savings. That value can be stunted if the TPA limits choice when it comes to the pharmacy benefit manager, wellness provider, and other cost containment partners. If your choices are limited, make sure it’s to ensure your company savings, not just to benefit the TPA.
When evaluating a TPA, ensure they are openly communicative and well-planned in everything they do. This becomes especially critical during the open enrollment process. Open enrollment will be your employees’ first impression of their health plan. It’s the TPA’s job to ensure the process is smooth and efficient from the beginning so your employees can best take advantage of the new plan.
Customer service, especially quick response time, is also a critical attribute of a good TPA. It’s your employees who will be dealing with the TPA, and if their concerns aren’t promptly addressed, the reception of your self-funded plan will suffer. How fast they get back to you and the time they dedicate to your needs are indications of how the TPA will treat your employees.
Lastly, pay attention to the quality of technology used by the TPA, as well as the professionalism of their personnel. Accurate claim payments impact your company, not the TPA. Make sure they play at the top of their game. Ask them how they handle hypothetical challenges like egregious billing, subrogation, and out-of-network providers. The TPA should offer clear and effective solutions — not a rubber stamp.
Find the Right TPA for Your Self-Funded Health Insurance Plan
With the right TPA, you can make the most of your self-funded health insurance plan and experience real cost savings. From drafting plan documents to paying claims, your TPA is an integral part of your team.
Roundstone is an open platform, and the choice of your TPA and other solution partners is up to you and may vary depending on your region and network. Roundstone offers Bywater, our in-house TPA, and we are proud of their services, backed by the Bywater Promise and service guarantee.
Partner with Roundstone to find the right TPA for your company. Contact us today for a quote and benchmark review.
