If you’re a company who has decided to self-fund your health plan, you’ll want to hook up with a good third party administrator or TPA. This will result in a contractual relationship with a company that will have access to your business assets. You need to make sure that the TPA knows about your situation and that you know they are someone you can trust.
TPAs are more complicated than they used to be. They no longer simply handle claims but do a variety of services for you so you need to know what these are before you go about asking questions and choosing the TPA for you.
As an employer, you create a custom arrangement with your TPA, which can do a few things or many things for you such as designing insurance plans, help with government regulations, review employee usage of the health plan, maintain plan records, prepare materials when things change, administer claims and arrange for your company’s participation in PPOs.
TPAs are common. About 66 percent of all employees in the US are covered under plans that are self-funded, many of which use TPAs to manage them. Many corporations hire brokers to help them find TPAs. This isn’t always a good idea because the brokers often provide you with the same information you can already get from the TPA and they charge you a lot of money for that information.
So how do you evaluate and find a good TPA? First look for one that can tailor your health plan to meet your needs in a specific way. The TPA needs to be flexible to fit your demographics. If, for example, you have many women under the age of 35, maternity coverage would be important. TPAs can be specialized in certain areas so make sure the area of specialty fits with your particular needs.
Don’t be afraid to check references, especially those from the TPA’s biggest clients. Don’t just accept a list of references supplied by the TPA. Find out about the satisfaction of these bigger clients and find out if they would choose to renew contracts with the TPA. Get advice from these larger clients on how best to negotiate with the TPA.
Make sure that the TPA uses legal practices. Government compliance issues are complex and often aren’t tested so make sure your TPA is up to date on compliance issues. Unfortunately, if your TPA does something illegal, you are liable for their actions and it could cost a great deal of money your company can’t afford to lose.
Make sure you know how the PPO fits into the plan. You may negotiate the PPO on your own or you can choose to have the TPA do this. You get to make the final decision but the negotiations of the TPA are important in getting the best deal.
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