A Broker's Secret Weapon In Customizing Benefits
The Five-fold TPA Advantage
Published Feb. 11, 2021
Google “TPA” and you’ll have to scroll past Tampa International Airport and tissue plasminogen activator to find the initials applied to the hard-working organizations that market and administer health plans and other employee benefits.
In fact, third-party administration within business organizations is also applied to retirement plan guidance, property and casualty insurance, and worker’s compensation management. You’d think a business concept functioning since the Taft Hartley Act[i] would be better recognized, but group health TPAs remain stealth, intentionally so, according to an association of TPAs.
“TPAs have traditionally made their function seem like an office of the employee benefit plan. This is not modesty,” according to the Society of Professional Benefit Administrators (SPBA), “it is the spirit and role intended by the ERISA law and a professional commitment to emphasize to employers and workers that the plan belongs to them.”
Brokers have numerous options for writing business. Why you might choose a TPA[ii] includes – at least – the following considerations.
Piecemeal Product Pricing. Within the big-carrier bundle are spikes in cost that may go unnoticed. Itemizing the medical, prescription, dental, and whatever else is desired can produce a cost savings both immediately and over the long term. The long-term savings compile because transparency of pricing-by-the-piece injects competition into premium pricing year after year.
Claims Checking. While seldom a factor on ancillary products, exorbitant charges sometimes find their way onto large medical bills. Administrative Services Only (ASO) companies, which are essentially carrier-owned TPAs, rely heavily upon auto-adjudication. If/when an ASO audits and subsequently recover funds, they retain a portion of the recovered amount. Part of a TPA’s service is to contest bills and recover funds for the employer.
Data-driven Plan Designs. Large carriers may include raw medical claims data in its renewal offering, but rarely do they offer an analysis. A TPA recognizes employer ownership of member-level claims data and will assist in evaluating trends. This enables a comparison of a company’s claims history to industry and regional benchmarks, information critical to formulating plan strategy and development of financial models. This type of analysis is where an erstwhile broker forges a strong bond with clients.
Plan Pliability. TPAs typically select product from multiple carriers, sort of like choosing an all-star team of product. The difference is a choice between an off-the-shelf take-it-or-leave-it offer versus one more inclined to find what accommodates multiple nuances in plan design. This flexibility enables more customized coverage to meet employee needs while remaining within the employer’s budget.
Size Significance. TPAs are generally privately owned, not traded on the New York stock exchange, and thus likelier to provide more personalized service. At OptiMed, we pay claims within days, respond to inquiries within minutes, and concentrate on timely reporting and generous group support to give brokers confidence in customer satisfaction and direct relief from arduous tasks.
An Employee Benefits News article[iii] pointed out that:
“A strong TPA can make all the difference in how your self-funded healthcare benefit program is managed. It will make the difference in employee satisfaction, cost savings and quality service.”
SPBA estimates that more than half of U.S. workers and their dependents covered by private insurance are in plans administered by TPAs.[iv]
“The clients of TPA firms include virtually every size and format of employment,” SPBA contends. “These range from small- and large-sized firms to state, county and city, as well as union, non-union and collectively bargained multiemployer plans.”
Like A CPA
“Too many people wrongly think of TPAs being like the insurance industry,” an SPBA article mentioned. “Instead, the relationship resembles that between an employer or plan and their independent CPA firm or outside law firm on retainer. In both cases... the service is on an ongoing, personalized closely involved, long-term basis.”
Contact Email Sender
If you've come to this post from a link in an email, the email's sender is your OptiMed sales reprsentative. This person can provide invaluable assistance in formulating plans for your groups. Even if you have no pressing matters needing immediate attention, they'd welcome your call or email to get acquainted.
If you've yet to experience the speed and ease of instant, online health plan quote generation, be sure to ask your rep for a demo and orientation on the OptiRater.
OptiRater is part of the OptiMed Brokers' Portal which also enables brokers to assist in handling any employer-level health plan administration such as enrollments or medical claims.
Brokers can also check an ongoing tabulation of their sales commissions in the portal.
If you've come to this post through some means other than an email from on of our reps, our in-house sales person can get you started with OptiRater and assigned to a rep. Email BrokerServices@OptiMedHealth.com or call our toll-free number, extension 220.