Optimizing Health Plans Using a Third-Party Administrator (TPA)

Are you struggling to provide meaningful employee benefits while respecting the price point determined by your C-Suite?

Optimizing health benefits means providing comprehensive coverage that enhances members’ wellbeing while aligning with the company’s overarching rewards strategy. In a marketplace brimming with options, achieving this can be a challenge.

By partnering with a Third-Party Administrator (TPA), you can elevate the overall health and wellbeing of your workforce, generate healthcare cost savings, and enhance both employer and employee satisfaction.

Human Resource (HR) leaders juggle multiple roles, including that of benefits designers and health plan managers. The responsibilities can be demanding, particularly for leaders at organizations with self-funded plans, where they bear the responsibility of managing costs for all stakeholders, from the executive team to hourly employees and dependents.

Brokers and consultants play crucial roles in guiding their clients through the development of benefit plans and managing vendor relationships in tandem with their TPA.

According to the most recent Employer Health Benefits Survey by the Kaiser Family Foundation, a significant 65% of covered employees in the US are enrolled in self-funded plans, with 83% of them employed at larger companies.

Self-funded companies operate as their own insurers, assuming the risk and administration of the plan instead of purchasing traditional health insurance from established payers. Collaborating with a top-tier TPA to drive cost reductions and enhance plan efficiency is common and beneficial.

Proven TPAs can empower companies to achieve greater independence, take command of their benefits plan, alleviate administrative burdens, facilitate additional vendor partnerships, and leverage tech-enabled analytics to offer deeper insights into plan performance and optimize them for their employees.

The following will serve as a guide for employers, brokers, and consultants on how to effectively collaborate with a TPA to create generous, effective health benefits plans that foster employee engagement and wellness while efficiently managing costs.

What is a TPA?

TPAs function as the administrative backbone for self-funded companies. Typically, TPAs collaborate with brokers, consultants, and an organization’s HR team to conceive and implement a healthcare benefits plan aimed at enhancing employee benefits. The administrative tasks provided by TPAs encompass:

• Claims processing, including adjudicating and paying claims for members and providers
• Plan design and implementation, working closely with HR teams to design the optimal plan for the employee population and aiding in its implementation
• Compliance management, ensuring self-funded health plans adhere to federal and state regulations such as ERISA, HIPAA, and the ACA
• Member services, directly engaging with members to ensure their plan-related needs are met, managing member requests, and guiding high-risk members toward appropriate care
• Network administration, liaising with providers and networks to negotiate contracts and pricing
• Comprehensive reporting and analytics, offering data-driven insights into a plan’s utilization, spending, and the overall health status of an employee base
• Managing stop-loss, sourcing, and managing stop-loss carrier claims

How do TPAs Save Time and Money?

TPAs specialize in benefits administration and play a pivotal role in ensuring all aspects of a plan are optimally utilized, thereby minimizing waste. Their expertise allows for more efficient task handling while reducing administrative costs that would otherwise be managed in-house. They achieve this through:

• Offering network flexibility in partnership with multiple payers and insurance carriers, providing top-tier networks paired with the TPA’s own member services, technology, and reporting and analytics
• Optimizing fund allocation by identifying wasted funds from underutilized programs through analytics, advising on re-engagement, or optimizing future plans with alternative programs
• Ensuring compliance with healthcare regulations and keeping abreast of the latest advancements to mitigate the risk of fines and penalties
• Enabling unbundling and carve-out strategies, allowing employers to select a provider network without being locked into bundled services, thus reducing costs and strengthening access to care
• Providing superior technology solutions that streamline administration for employers and enhance the member experience
• Clinical care management services that identify and address high-cost events, driving cost savings and facilitating a faster return to work for employees.

Recently, Personify Health’s Case Management team intervened in a member’s care who was struggling to afford treatment. This team offered a viable solution that was easy for the member to implement and saved both the employee and the company significantly.

In addition to these capabilities, TPAs also offer unique and creative solutions for self-funded employers aiming to establish non-traditional, cost-effective plans for their employees, such as Reference-Based Pricing. TPAs negotiate rates with healthcare providers, pharmacy benefit managers, and other vendors to ensure their clients receive the best possible prices for medical services and supplies.

By pooling resources, TPAs can often offer better rates and discounts than an employer could negotiate on their own.

Below are some frequently asked questions regarding TPAs, the different plans available with their administration, and how employers, brokers, and consultants can interact or choose a partner when considering self-funded plans.

How Do TPAs Differ from Administrative Services Organizations (ASOs)?

To work with an ASO means bundling services with a single healthcare company, which provides all administrative services and insurance.

Opting to remain “unbundled” allows you to contract with specialized companies to manage or provide each portion of your program, thereby separating out the different services required to administer and manage the cost of your plan.

There are substantial benefits to choosing an unbundled approach with a TPA. These include flexibility and customization, data transparency, diverse solutions, and access to superior cost containment strategies.

What is Reference-Based Pricing (RBP)?

RBP is a health plan pricing strategy used as an alternative to a traditional PPO network. Administered by a TPA, RBP determines the amount an employer will reimburse for a specific medical service or procedure, typically based on a percentage of Medicare. This model can be negotiated with a provider before or, more commonly, after a service is provided.

How Do TPAs Work with Pharmacy Benefit Managers (PBMs)?

PBMs sit between payers, such as self-funded plans, and drug manufacturers.

Like TPAs in healthcare administration, PBMs focus solely on prescription drug costs and often collaborate with a TPA as part of the employee benefits team. As a TPA, Personify Health partners with various PBMs, enabling its brokers, consultants, and clients to select the best partner that aligns with their needs and financial goals.

How Do TPAs Improve Employee Health?

TPAs can enhance employee health through plan analytics, allowing them to assess plan usage and implement programs custom-made specifically to the employee population.

For example, if an employer has a high population of child-bearing-aged employees, the plan could benefit from a maternal health program such as Personify Health’s Nurturing Together. This program offers families access to prenatal nurses who provide support throughout pregnancy (including the post-birth season), assist with the location of in-network providers, and more.

Other programs include behavioral health, chronic condition management, employee assistance programs (EAPs), and even smoking cessation.

TPAs can also adapt health plans to meet the needs of members, promote healthy habits, and manage clinical care pathways to ensure employees receive high-quality, coordinated care specific to their individual needs. This proactive approach encourages employees to take charge of their health and wellbeing.

What is Clinical Care Management?

TPAs offer clinical care management services to help members navigate the complex healthcare landscape and find cost-effective, beneficial care solutions. These services can significantly mitigate costs across various areas, such as emergency room usage, maternal health, radiology, and inpatient services.

Personify Health’s clinical care management services are like a GPS for your health, guiding employees to the right care at the right time—whether it’s for long-term, preventive, physical, behavioral, or at-home needs.

And let’s talk numbers for a minute: as of 2023, healthcare spending is one of the highest annual expenses for employers, soaring over $15,000 per insured member on average.

Recognizing the impact of different service options and their costs is a vital part of making the most of healthcare benefits plans.

Personify Health’s clinical care management programs aren’t just effective and efficient – they’re also budget-friendly. According to an analysis by the independent actuarial firm Wakely, companies that adopted HealthComp’s programs saw a whopping 23% decrease in overall medical costs, including in-patient costs and emergency room visits.

That’s no small change, right? It’s like getting top-notch care while keeping those costs in check.

How to Work with a TPA

Let’s explore how TPAs can be a game-changer for HR leaders in crafting top-notch benefits plans.

Think of TPAs as your HR Department’s trusty sidekick, swooping in to handle all the nitty-gritty administrative tasks and claims management. This move frees up time for HR to focus on what truly matters—nurturing a thriving workplace culture, attracting top talent, and acing those C-Suite priorities.

Here’s the scoop: TPAs don’t just offer a one-size-fits-all solution. They work hand in hand with clients, brokers, and consultants to craft a benefits plan from scratch, catering to each organization’s unique needs. Once the plan is in place, TPAs work their magic to fine-tune and optimize it, ensuring it hits its financial targets through smart cost management strategies.

To make sure your team gets the best care possible, TPAs use data-driven insights from utilization reports and clinical care programs to steer employees toward top-notch care and streamline claims processing.

Now, let’s touch on five steps employers can take to supercharge their partnership with a TPA:

1. First up, set clear goals and expectations – think cost control, employee happiness, high quality care, and staying compliant with the rules.
2. Next, pick the perfect TPA partner by looking at their experience, reputation, and ability to meet your needs. Think of it as choosing a trusty ally for your benefits battle!
3. Once you’ve found your match, build a robust partnership based on open communication, teamwork, and trust. It’s all about working together towards those healthcare goals!
4. Collaborate with your TPA to craft a custom healthcare plan suited to your team’s needs. Think quality care, budget-friendly options, and perks for healthy habits. It’s like tailoring a suit – only this time, it’s for your benefits plan!
5. Remember to monitor your plan’s performance by tracking data, gathering feedback, and staying current on regulations. It’s all about fine-tuning and making the necessary tweaks for a top-tier healthcare offering.

By teaming up with a TPA and following these steps, employers can ace the healthcare game, ensuring their employees have access to quality care without breaking the bank. It’s all about crafting a brighter, healthier future for your team – together, we can make it happen!

What is the Role of the Broker and Consultant?

Ah, the unsung heroes of the benefits realm – the broker and consultant. These savvy professionals are like the fairy godparents of the insurance world, weaving their magic to connect employers with the perfect TPA to bring their dream benefits plan to life.

Picture this: brokers and consultants are the ultimate matchmakers, uniting employers with the ideal TPA to safeguard and elevate their benefits plan. They’re armed with a treasure trove of knowledge about products, trends, and offerings, ready to customize the perfect solution for each client.

These pros team up with TPAs to ensure benefits are not only administered flawlessly but also provide maximum perks and flexibility at the lowest cost for their clients. By working with TPAs, brokers and consultants can unbundle their clients’ benefits, unlocking the power to cherry-pick from a bouquet of vendors to match their unique needs and preferred solutions.

TPAs aren’t just sidekicks in this adventure – they’re nourishing this alliance with the right blend of financial insights, healthcare data, and innovative offerings, revolutionizing the game with abilities that typical insurance companies can only dream of.

And here’s the clincher: TPAs are reliable, flexible partners that can adapt and shift with employers’ changing needs without the hassle of a complete overhaul, giving brokers and consultants a cutting-edge advantage in an evolving industry.

By harnessing the prowess of TPAs, brokers and consultants are navigating these uncharted waters with confidence, ushering their clients into a brighter, more responsive future. They’re harnessing the power of innovation and adaptability to carve a path toward unparalleled success.

What type of employer should brokers and consultants be introducing to TPAs?

Matching the right employer with a top-tier TPA can be a game-changer.

Here’s the scoop on the kind of employers that brokers and consultants should be introducing to TPAs for a winning partnership:

• Employers with Complicated Benefits Design: TPAs can manage health plans with a myriad of options, guiding members through a labyrinth of choices. Whether it’s PPO plans, high-deductible options, reference-based pricing, or a customized mix of vendors, TPAs shine in adjusting plans to meet the unique needs of each member.
• Employers Seeking Cost-Containment Strategies: TPAs are savvy cost-sleuths, uncovering savings strategies like utilization management, clinical care management, claims review, and pharmacy benefits management. These tools aren’t just cost-cutters; they’re superchargers for improving health outcomes while keeping the wallet happy.
• Employers Looking for Help with Administration: Most employers juggling self-funded plans need expert help balancing the administrative act. Enter TPAs – armed with a powerhouse team ready to take the reins and manage every detail with finesse and expertise.
• Employers Eyeing Network Expansion: Think big. Employers opting for a self-funded journey alongside a TPA like Personify Health gain access to an arsenal of networks and insurers. With HealthComp’s web of relationships, employers aren’t confined to one vendor; they can tap into multiple networks and vendors to craft a health plan that’s tailor-made for their employees.

With Personify Health as your guide, transitioning from a fully funded model to a self-funded setup becomes a breeze. Imagine – brokers, consultants, clients, and Personify Health working together to fine-tune health plans, ensuring employees reap the greatest benefits at the best bang for the buck.

And here’s the cherry on top—Personify Health believes your data should always be yours. We offer a portal where clients, brokers, and consultants can access on-demand reports to gain deep insights into plan performance.

We believe in building a future where transparency, collaboration, and insight lead to better, smarter healthcare decisions.

When to Consider a Self-funded Health Plan 

Healthcare expenses can be a major burden for employers. Costs seem to only go one way – up!

Employers capable of handling the financial responsibility are turning to self-funded plans as a strategic option to manage these expenses. This approach often proves to be the best choice for controlling costs and enhancing the affordability of health plans for employees.

When contemplating a shift to a self-funded model, collaborating with a broker, consultant, and TPA can be highly beneficial in ensuring the timing is right for the transition.

Among other critical factors, employers should consider:

• Assessing claims data to gain insights into overall expenses and the patterns of payments for both current and historical claims.
• Evaluating the age range and overall health status of the employee population.
• Analyzing the utilization of benefits to determine which are most and least utilized. Employers may discover opportunities to streamline offerings, explore more cost-effective options, or bolster benefits in areas with high utilization.

Self-funded plans could help employers tame rising costs, creating a win-win scenario where employer expenses are managed smartly, and health plans become more affordable for employees. But before taking the plunge into self-funded waters, partner with a trusted broker, consultant, and TPA to determine the opportune moment for the switch.

Working with a Broker and Consultant to Assess a TPA

When an employer decides to make changes to their health plan, considering a TPA switch or a new administrator is a common next step.

But before jumping into an exclusive partnership or making a move, team up with a broker and consultant to issue a request for proposal (RFP). This step allows you to weigh multiple TPAs and decide on the best fit.

The collaborative effort involves the employer, broker, and consultant crafting the RFP and distributing it through their network or a public bid platform. Once this process is complete, the employer has a range of options to consider before choosing the ideal TPA.

It’s worth noting that an RFP can also be shared for various types of benefits vendors and administrators, not just TPAs.

In the decision-making process, engage your broker and consultant in a constructive dialogue about their history with the TPA in question. Here are some key questions to ask:

• Have they seen success with this TPA and other clients?
• Can they share data on cost savings and plan efficiency achieved with this TPA?
• Can they provide references or case studies from working with this TPA?
• How long has the partnership been in place, and do they actively seek out other solutions to ensure they’re providing the best offerings on the market?

Fostering transparent conversations and seeking clarity on these vital points, as well as partnering with a knowledgeable broker and consultant, can help you make informed decisions about moving to a self-funded model. This proactive approach empowers you to make informed choices and sets the stage for a smarter, more sustainable future in your benefits management.

Choosing the Right TPA: How to Evaluate and Make a Change

Partnering with a TPA can bring numerous advantages when it comes to managing benefits plans and HR departments.

But how do you know if a TPA is the right fit for your company?

Whether you’re new to the TPA scene or considering a change, understanding your company’s unique needs and expectations can help you find the right partner.

What matters most in a strong TPA partnership? Look for a TPA who:

• Goes above and beyond to help you understand your health plan options.
• Provides options that are high-quality, flexible, and tailored to your current needs.
• Is an agile partner that offers detailed, accurate, insightful, and helpful reports.

Once you’ve teamed up with a TPA, you’ll start to see the rewards: cost savings and greater employee satisfaction. Although results won’t happen overnight, transitioning to a self-funded, TPA-administered plan will start to show benefits in a few years.

To evaluate how this change is impacting your organization, consider asking yourself these questions annually:

• Have I seen meaningful impact on my healthcare spend, or an overall trend in lowered healthcare expenses?
• Does my TPA have an actionable plan to help reduce costs?
• Am I receiving real-time data to optimize my plan before open enrollment?
• Are my employees receiving timely payments or reimbursements?
• How is the care management at my current TPA? Are employees being directed to the most effective care setting, helping lower costs and improve overall health outcomes?
• Are my employees satisfied with their experience and coverage?

By regularly assessing the impact and continually working towards improvement, you can make informed decisions that benefit your company’s bottom line and the wellbeing of your employees.

Making the Change

When it’s time to fine-tune your benefits plan and budget, connect with a TPA that truly gets your HR, C-Suite, and, above all, your employees.

That initial conversation is the foundation for a solid benefits plan – whether you’re considering a shift from fully funded to self-funded, talking through the implementation process with your chosen TPA, or diving into their cost management strategies and wins.

It’s all about forging a shared path, making sure both sides understand each other’s needs, and crafting a benefits plan that will fit and edify your organization.