The emphasis should be on EXCELLENT and INTERNATIONAL
Since most of our group clients tend to be social businesses, B-corporations and charitable non-profit organizations that are working internationally, we have written the following article to specifically address the needs of not-for-profit and charitable groups seeking to self-fund and locate an excellent third party administrator with experience in overseas medical claims.
What do Third Party Administrators (TPAs) do?
Third Party administrators are consultants, similar to a CPA or law firm, who handle the day-to-day administration of your health benefits and the claims process both domestically and internationally based on your guidance, documents and network. TPAs do not make “medical” decisions. TPAs simply follow, and in some cases – must interpret, your contractual plan language. Nor are they ultimately responsible for claims or disputes since the employer is acting as the insurance company, not the TPA. They will usually provide help/access to medical networks and discounts on services, hospitals and specialists. TPAs also help with enrollment and eligibility of members, and keep track of the participants’ use of benefits under the plan. They should also help with setting up correct amount for reserves, and handle issues of compliance and inform organizations of legal, medical, and other issues that may effect the company’s benefits or workers.
What do TPA services typically cost?
Most TPA fees work on a per employee (per person) per month basis of $20 to $40 EPM depending on size, plan and processing requirements, there are also Administrative Services Only (ASO) plans offered by certain carriers that are often higher than TPAs and are based on a percentage of paid claims. These ASOs often will have greater experience and more services internationally than a TPA. The key to locating the right TPA is personalization, personalization, personalization. You should feel like your TPA is personally aware of your plan, and plan design, and has every answer ready at hand or gets right back to you. Realize that your organization is ultimately responsible for the claims process, not your TPA. Often this means you must take the initiative if you decide to self-fund. And when claims are appealed, your company will have to make the hard decisions if you want to overturn that claim.
Comparing costs? Each TPA is going to have a different pricing system …ranging from one-fee covers all administrative services to a list of services available, each with a price…even possibly sharing services with related firms or outsourced to specialists. So, prices quoted by two or more TPAs may be difficult to compare. The “higher” quote you receive may be cheaper. You’ll have to compare what you’d be getting.
Buy the level of professionalism and international experience you need using the guidelines below. The Department of Labor also audits TPA fees to be sure that they are cost-efficient for clients, protecting you from being taken advantage of. That said, some TPAs might want to use the size and geographical reach of your organization to grow more international themselves and may not be your best choice.
How many TPA firms are there?
There is no accurate number according to the Society of Professional Benefit Administrators (SPBA) but it is growing quickly. If you include every firm that does “some” Third Party Administration you might be confused. According to the Society of Professional Benefit Administrators, the number of “real” TPAs is close to 3500, but realize that most of these (as well as most ASOs) will not be experienced in international claims. And most only service a single business, or a single industry.
Choosing a TPA:
The most important part of evaluating a TPA would be their experience, especially serving overseas clients in the specific regions of the world where you work. Realize that due to expansion you may need a firm that has done work in regions you may not yet serve.
Also ask your TPA about their sources of information and procedures (on government compliance) for keeping you up to date (recognizing that it is always a case-by-case strategy, so you won’t get a precise answer). Do they know the correct laws? For example, insurance law is very different from ERISA & employee benefits law (so different that some normal insurance practices can be criminal offenses under ERISA). Similarly, people who know health & medical law must show that they also know employee benefit law. Employee benefits encompasses many specialties, so, for example, even a tax attorney may be unaware of labor or social law implications of an issue and vice versa.
Is the TPA’s style and operation a “comfortable fit” for the client plan? Unlike relations with an insurance company or HMO, which you just pay a premium to, a TPA must become a much closer, ongoing partner of yours who will be deciding how you wish to implement various aspects and provisions of your health plan and make interpretations to keep all sides happy. Just like any other business or operational partnership, there should be comfort and trust.
Are you primarily shopping for a particular network? In you know you will need key services, access to key markets, geographical regions and/or networks, that will also help you determine your TPA or ASO.
Networks are where you find the power and discounting that can make, or break, a self-funded plan. The right network can easily save you the difference between a “high-priced” TPA and a lower priced TPA that doesn’t have access to that same network(s).
Is bigger better? The key to TPA success has always been personalized service. Often a small firm is better if they have the experience you are looking for. Many do not wish to grow too large so that they can better service the clients they have. Other times a larger firm has the capacity to offer additional services and expertise. So, as noted above, “comfortable fit” and “adequate experience” is the answer to the size question. Don’t lock yourself into only considering TPAs of a certain size since a large firm might work best in helping a small sending agency and a small TPA may be the best at being at a large charities beck and call anytime of day or night.
Don’t forget ASOs. An “Administrative Services Only (ASO)” is usually an international insurance company that is simply allowing you to use their experience, extensive background and services for a fee rather than being insured by them. This access can be priceless when working overseas especially if your staff is not concentrated in one region but very spread out.
Should the TPA be licensed?
That depends. Especially when discussing international operations. TPA licensing is often very demanding, so many TPAs working globally may not want the cost & trouble associated with licensing. And in the USA, some states’ TPA laws end up including entities we wouldn’t consider TPAs, and exclude some who are. So State licensing and definition of TPA are not synonymous. About 95% of the TPAs in the USA are members of SPBA.
Note: Good Neighbor Insurance is not a Third Party Administrator, nor do we handle personally the services of a TPA.