Strategies for Selecting the Right Third-Party Administrator
Finding the right TPA and exercising due diligence can pay dividends by minimizing legal risks and ensuring smooth and cost-effective plan operation.
Why Organizations Use TPAs?
Unlike insurance providers that sell coverage, TPAs provide administrative and operational services most often for employers with self-insured health plans. Some examples of services they provide are claims processing, management, and reporting. Administering benefits can be overwhelming. Many organizations rely on TPAs to, for example, meet regulatory standards more efficiently than they could on their own.
Choosing the right TPA can provide an organization with responsive, flexible, and personalized service. By minimizing claims and administrative costs, it allows an organization to operate more efficiently. Additionally, a TPA can provide organizations with considerable expertise and experience administering health plans. An organization’s legal risks can be reduced by identifying potential trouble spots.
Consider the following strategies when searching for a TPA:
- Understand the organization’s needs and priorities. Plans have different needs depending on the type, design, asset size, and number of participants. Knowing what an organization needs and setting priorities to meet those needs can go a long way toward finding a TPA. A suitable TPA will be able to provide answers to problems and solve issues quickly.
- Determine whether a TPA can meet needs. TPAs offer various services, and they should be reviewed individually. By understanding a TPA’s services and how it administers them, an organization can determine whether the TPA will meet its needs.
- Ensure legal compliance. The regulatory landscape is constantly changing, so organizations should consider how a TPA remains current on legal developments and how it can help with compliance. The right TPA should be able to guide an organization through its legal issues.
- Compare candidates. An organization’s relationship with a TPA is based on reliability, so any potential TPA must be able to work effectively with their client. Organizations may review metrics of a TPA’s actual claim outcomes and know how fast it pays claims as well as its error rates. By comparing these metrics to other TPAs, organizations can select the right TPA for them.
- Check references. Organizations can ask a potential TPA about other clients of similar size and needs. Then, those clients can be contacted to discuss their experience working with the TPA.
- Know costs. Organizations should be aware of all services offered by a TPA and know the costs of each. Understanding the terms of any agreement with a TPA, especially fees and expenses, is essential when choosing a TPA.
- Assess data security. TPAs should have safeguards in place to handle and protect clients’ data. Verifying a TPA’s security protocols and standards will help an organization determine whether the TPA is a good fit.
At HRPro, we believe that no one should have to wear multiple hats to run the HR & Benefits Administration department.
We’ve helped organizations like yours simplify processes, identify priorities, and provide technology solutions in order to gain valuable time back. Not to mention, we will do the same for you as well!
For more information on third-party administrators, contact HRPro today.