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?
2. What PPOs and other cost savings tools do they offer?
As mentioned earlier, some TPAs can access networks for one or more national carriers, not just the traditional rental PPOs. The impact on your savings through the carrier networks can be significant versus the rental networks, depending on the location of your employees. Additionally, do they offer other less traditional options for generating savings for the health plan including reference based pricing and/or narrow and high performing networks? Having multiple options from which to choose can enable you to address your current and potential future health plan needs.
Another consideration is how they help control cost through other mechanisms including bill editing, bill audits, subrogation, negotiations and out of network claim repricing to name a few. You’ll want to understand their approach to managing all claim costs, including their charge for these services. What is their ability to direct contract with providers if necessary/appropriate to support your plan? For example, if there are provider services needed that are not included in the PPO network, can the TPA negotiate directly on your behalf, and if so, what do they charge?
3. Do they offer and/or manage other plan financing options to impact health plan and member costs including captives, HRAs, HSAs, MEC (minimum essential coverage) plans and concierge services?
In today’s market, employers are considering new options to impact costs, especially smaller plans. Does the TPA offer flexibility in products and have a track record of success managing these types of programs? What else can they offer to meet your specific requirements and objectives? Is their system capable of managing advance specific funding and aggregate accommodation?
4. Is their reporting detailed and flexible?
This can be of critical importance for your health plan management. When you’re self-funding your health plan, the more information related to costs, broken out by multiple factors, the better you’re able to design your benefits to meet your objectives. Every employer population is different, and you need to get detailed and thorough reporting to make decisions and plan changes year to year if appropriate. This means you may also need ad hoc reports; can the TPA provide these and do they charge for them?
Another key issue is their ability to provide stop-loss reporting, including large claim reporting. What reporting tools do they provide and how do they coordinate with your stop-loss carrier, including aggregate specific reporting? Also, how do they work with the utilization management/case management/disease management vendor to help identify and report on your large claims, as well as potential large claimants?
Can they provide reconciliation reports? These are very helpful in identifying costs and fees by vendor. Clients can use these reports to calculate total costs for their plan, and by vendor to determine effectiveness and ROI. Do they offer clinical reporting in addition to financial?
5. What vendor partners can they offer to enhance your plan savings, employee health and employee satisfaction?
Can they provide access to multiple vendors including but not limited to PBMs, medical management, HRAs, HSAs, benefit portals, telemedicine and wellness programs? Do they have multiple options in each category that they’ve vetted and have negotiated favorable pricing and contract language? Can they add other vendors as needed and if so, what is the cost and process for this? Do they support these vendors with timely and accurate data feeds? What is their process, cost and timing to set you up with these vendors? Do they include the setup of new vendors within your administrative fees, or do they charge separate implementation fees?
6. Is the TPA a partner or just a vendor?
Typically, employers want a TPA that acts as a partner with you and your broker/consultant. Does the TPA have a team that works with you not only to address your questions and issues today, but to identify solutions and options for the future that support your growth and plan objectives? Do you want a TPA that invests in your health plan’s success, or just provides a service?
7. Will they put their money where their mouth is?
Most TPAs have a great story to tell. The question is: Will they back up their assertions with performance guarantees? Will they commit to specific results in writing, with potential monetary penalties? For example, what is their turnaround time and accuracy rate for claims adjudication, customer service answer and abandonment rates, plan set up and change management? You also may want to consider incentives for them to go above and beyond the standards as a partner, since better performance can lead to greater plan savings and enhanced employee satisfaction.
8. Do they provide top tier customer service?
This is often a multifaceted question; part of this relates to how they handle provider, employee and member calls, including timely and accurate response. This can be addressed in the performance standards and guarantees. Another large part of this issue is the responsiveness of the account management team to your questions, and those of your broker/consultant. Will your direct contact acknowledge your questions and issues and respond within accepted/committed timeframes? What is the company’s track record in this area and will they also commit to standards? Additionally, and just as important, what is your access to key staff within the TPA? Will they commit to making their executive team available to address outstanding or sensitive issues when needed?
As you can see, there are a myriad of questions and issues that should be addressed in your vetting process. Ideally, having a knowledgeable broker or consultant to help you can be invaluable in your process. This could include creating an RFP (request for proposal) with standard questions that can be sent to potential vendors so that you can more easily measure their capabilities and make the best choice for your company and health plan.
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