Ever wonder what life would be like if you got to choose all the elements of your healthcare plan?
When exploring self-funded health plans, you’ll eventually need to decide between bundling services with an administrative services organization (ASO) carrier or unbundling with a third-party administrator (TPA).
There are some serious advantages to choosing a TPA and an unbundled approach. Namely:
- Flexibility
- Cost savings
- A tailored healthcare experience for your employees
What Are the Key Differences between ASOs and TPAs for Employee Coverage?
When managing self-funded plans, it’s important to understand the main differences between ASOs and TPAs.
ASOs and TPAs both collaborate with self-funded plans to offer employee coverage, but they have different structures and approaches. ASOs are typically managed by large insurers and share the insurer’s name, mindset, staff, and compliance team.
TPAs are independent entities that work with various vendors to ensure they meet their clients’ unique needs. Their independence allows them to offer more flexibility and tailored solutions for managing healthcare benefits.
What does bundled versus unbundled mean?
In a bundled plan, a single provider offers a complete service package, including administrative tasks, network access, and risk management tools like stop-loss insurance. The carrier teams handle everything internally.
An unbundled plan allows employers to select different vendors for various health plan components. This allows for a personalized approach, with choices for network access, pharmacy benefits, dental care services, EAP providers, and stop-loss.
In some cases, larger groups may consider unbundling with an ASO, but the quality of integration might be compromised. ASOs typically provide standardized solutions, and unbundling within an ASO could lead to challenges as resources may be limited.
In contrast, TPAs operate with a different cost structure, dedicating more staff to handle vendor integrations and management, especially for unique plan designs. The way these approaches impact health plan functionality can mean the difference between significant savings and substantial expenses.
How Does Data Transparency Help You to Make Better Decisions?
In healthcare, knowledge truly is power, and partnering with a TPA can open the door to a wealth of valuable information.
As the plan owner, you are granted direct access to a treasure trove of data encompassing details on claims and financial insights. This newfound transparency plays a pivotal role in demystifying healthcare expenses, illuminating spending patterns, and uncovering avenues for cost savings.
With this data, your plan is equipped to identify inefficiencies and areas of excessive spending. By leveraging purchasing influence, you can fine-tune your focus on effective programs. Resources can be redirected from solutions that may no longer serve your employee population’s needs. If there are programs providing the same service, you can correct this double payment and save money by cutting one.
Taking ownership of your data provides valuable insight into your workforce’s composition. It enables you to create benefits that directly enhance employee wellbeing while fostering financial savings.
For instance, if a notable portion of your employees are managing diabetes, implementing a targeted care management plan for diabetes can yield cost reductions and enhanced health outcomes for your workforce.
This proactive approach results in a healthcare strategy that is not only cost-effective but also accountable. Every dollar you invest should be working to enhance employee health and bolster the company’s financial performance.
Effective Cost-Containment Strategies Empower Financial Stewardship
Efficient cost management lies at the core of every successful employee healthcare plan.
Partnering with a TPA gives you a direct path to tools and tactics tailored to maintain financial prudence. From comprehensive audits aimed at detecting fraud, waste, and abuse to ensuring payment integrity and conducting thorough reviews of significant claims, your TPA is primed to protect your financial assets while upholding the highest standard of care for your employees.
As the custodian of the health plan, you have the autonomy to set audit thresholds, determining which claim charges prompt a review rather than adhering to the standard ASO threshold. You can also establish and implement prior authorization standards. Additionally, when a claim is submitted, you have the flexibility to specify the documents that must be reviewed before payment, such as medical records or itemized bills.
This proactive method of cost management directly translates into immediate savings, establishing a solid foundation for long-term financial security.
By delegating the administration of your self-funded plan to a TPA, you are investing in your company’s economic health, proactively positioning your organization for sustained financial wellbeing. Your resources will be optimized to support the best possible care for your employees while bolstering your bottom line—guaranteeing a more resilient and prosperous future for your organization.
How Does Plan Customization Provide Savings?
Unbundling with a TPA provides you with the freedom to craft a healthcare plan that perfectly aligns with your employees’ unique needs.
Unlike bundled services that offer limited, predetermined choices, TPAs can customize everything from benefits to communication. This results in a bespoke plan that seamlessly caters to your workforce’s requirements and budgetary considerations.
Conversely, a standard ASO-bundled plan does not accommodate the specific needs of your members or company, which can lead to heavier communications management for internal teams like Human Resources and Finance. These could include:
- Managing communications for employees when a plan wasn’t built with them in mind
- Understanding and explaining financial performance to C-Suite when there is a lack of data
- A lack of urgency from the ASO in addressing issues
A TPA offers plan reviews as a strategic tool. By leveraging insights and data, you, your broker, and your TPA can collaboratively evaluate your plan’s performance, identifying opportunities for enhancement or adjustment.
This ongoing process ensures that your plan remains adaptable, evolving in sync with your workforce’s changing needs and the cost of healthcare. With a TPA, implementing plan changes to address discovered issues can be executed at any point in the plan year. This stands in stark contrast to ASOs’ annual reviews, where changes during the plan year are constrained or non-existent.
Stay Agile in a Shifting Dynamic
The changing needs of employees and shifts in the industry demand a swift and responsive plan.
With an ASO, persuading plan administrators to make timely changes can create significant challenges for internal teams while delaying necessary modifications. Additionally, delays or incomplete data delivery from the ASO can hinder your plan’s agility, impacting its ability to generate maximum savings and benefits.
By unbundling with a TPA, you’ve got a nimble framework that allows you to respond promptly to feedback, identify trends, and proactively address unforeseen challenges. Altering vendors, rejiggering benefits, or implementing new cost-containment strategies – the possibilities are endless!
A TPA ensures that changes can be made expeditiously and effortlessly without the bureaucratic red tape frequently witnessed in bundled services. This streamlined approach not only elevates your plan’s responsiveness but also ensures that your employees are continuously supported by a healthcare system that caters to their needs.
Maximizing Employee Healthcare with Vendor Partnerships
Who doesn’t love variety?
Don’t limit your choice to the flavors of chips with your sandwich. Unlock the potential of vendor partnerships through TPA unbundling.
A TPA offers a gateway to a diverse array of services, allowing you to craft a network that mirrors your vision for employee healthcare. From healthcare networks to dental services, vision care, and pharmacy benefits managers (PBM), the freedom of choice is yours—a striking contrast to the confined selections often encountered with ASOs.
Collaborating with vendor partners who align with your company’s values and goals ensures a good fit. This fosters competitiveness, driving down costs while elevating service quality. Your broker and TPA act as guides within this ecosystem, ensuring each partnership contributes significant value to your employee healthcare plan.
Traditional carrier ASOs tend to exhibit lower engagement levels and a more reactive member experience, with engagement rates hovering around 10%. These ASOs commonly lack substantial investments in clinical and cost management programs and can have conflicting interests between the provider networks and the auditing providers. As a result, clients may experience soaring medical cost trends of up to 6%.
In contrast, Personify Health boasts a proactive engagement approach, achieving remarkable engagement rates of 60%.
Through audits, increased resources, care management, and digital tools, Personify Health clients can experience 23% overall lower medical costs, translating into savings of $63.58 PEPM. By streamlining contracts through pre-negotiation, Personify Health aims to make affordable options available to smaller groups previously excluded from accessing these vendor networks.
Selecting a TPA for your employee healthcare needs is a deliberate choice emphasizing flexibility, control, and financial responsibility. From tailoring your plan to meet your workforce’s unique needs to embracing the transparency and adaptability that unbundling permits, a TPA empowers you to seize command of your healthcare coverage, offering a level of control and customization unmatched by ASOs.
Unbundling with a TPA introduces an innovative and responsive path forward.
Entrust your employees’ well-being and your company’s financial health to capable hands. By doing so, you can have a healthier business and your employees can lead healthier lives.