Third-party administrators (TPAs), are one of today’s hottest trends in insurance. According to the Society of Professional Benefits Administrators, (SPBA), 66% of U.S. workers are covered by self-funded plans. Most of these plans are managed by independent third party administrators. What should you look for when choosing a TPA? Here are some tips for independent agents.
Where do I start
The Self-Insurance Institute of America and the SPBA are your best options for TPAs. These organizations can be used as initial filters to find the best TPAs. Don’t forget to spread the word. Ask other brokers about their experiences with TPAs.
The first step in determining the needs of your clients is to identify them. What are your target clients? What are their preferred workers? Find out if your customers have minimum premium, fully insured or self-funded. Next, determine the size of their self-funded groups: small (50 to 200 employees), medium-sized (200 – 2,000 employees), or large (more then 2,000). TPAs who serve large corporations might not be able to pay enough attention to 75 employees. For example, employees who have waited two months for their insurance cards will complain to their chief finance officer or human resource administrator. They will then be angry with you.
Next, find commonalities among potential TPAs’ customers. Do they serve mainly the manufacturing sector? Are they able to serve government and technology companies?
Find out if your customers live in one state or spread across the country. Find out their priorities and what they need. Are they looking for an online provider? Are they looking for a TPA who can offer self-service to employees? Do they want one that gives real-time information about claims?
Once you have an understanding of your target customers, and their employees, you can begin to search for the right TPA. Not all TPAs are the same. If your customers have multiple needs you might need to work with more than one TPA.
Questions to Ask
Once you have a list, it is time to ask questions during your first meeting.
– How many employees does the TPA currently serve?
What clients does it serve and what are the types?
Is it a customer of your profile? Is the profile compatible with yours?
– Does the TPA’s style work well with your client list?
– What provider networks does the TPA collaborate with?
– Which prescription benefit manager does it work?
– Which markets does it offer for employer-stop-loss insurance coverage?
– Request specific information about areas such as claims turnaround time, accuracy, inventory control, and call-to answer rate.
How can they audit and verify their claims quality?
Refer to references.
Determine if the TPA is able to accept electronic claims. This streamlines the claims process. Find out if the TPA handles paper claims or scans them and uses electronic data interchange (EDI) to process them. Ask about the TPA’s auto-adjudication capabilities. You will find better service by scanning, EDI, and automating.
Is the TPA’s claim-editing system capable of editing claims? If so, what edits can be made? A system that is reliable will allow for duplicate claim checking, unbundling, and upcoding. The claim system should also be able tell if the claim was not bundled or if the sex of claimants matches the service rendered.
Next, explore the TPA’s Internet capabilities. These should at a minimum include claims status and enrollment. Find out if your TPA has interactive voice response capabilities to enroll and claim status for customers who aren’t tech-savvy.
Next, ask your TPA about the reports they can provide. It is common to find that some reporting capabilities are included in the base service and others are extra. A TPA should offer reporting capabilities as a standard service. Ask about additional reports and if they are available at an additional cost.
Finally, check to see if the TPA offers call tracking. The hall-tracking system should automatically deliver service requests. You can find out the capabilities of its service unit without the help of other departments. This will reduce the time your clients spend waiting.
