When managing a business’s health benefits plan, selecting the right third-party administrator (TPA) is essential to ensure smooth and cost-effective operations. A TPA provides administrative and operational services such as:
- claims processing
- and more.
Choosing the wrong TPA can lead to:
- poor claim outcomes
- legal exposures
- and higher insurance costs.
But understanding the importance of finding the right TPA and exercising due diligence can pay dividends. Learn why organizations use TPAs, the benefits of selecting the right one, and strategies for making an effective selection.
BENEFITS OF SELECTING THE RIGHT TPA
Using TPAs is beneficial for employers because they can provide administrative and operational services that help organizations meet regulatory standards and conserve time and resources.
Furthermore, choosing the right TPA can provide an organization with responsive, flexible and personalized service as well as considerable knowledge of administering health plans. This can lead to improved claim outcomes, reduced legal exposures and lower insurance costs.
STRATEGIES FOR SELECTING THE RIGHT TPA
Choosing the right TPA is essential for an organization to ensure smooth and cost-effective plan operation while minimizing legal risks. An organization’s goals should match the TPA’s offerings; otherwise, you may pay for services it does not need.
Strategies for selecting the right TPA include:
- Understanding your needs and priorities. Plans have different needs depending on type, design, asset size and number of participants.
- Determining whether a TPA can meet those needs. TPAs offer various services and should be reviewed individually.
- Ensuring legal compliance. The regulatory landscape is constantly changing. Organizations should consider how a TPA remains current on legal developments and how they can help with compliance.
- Comparing candidates. Organizations should 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 one for them.
- Checking references. Organizations can ask potential TPAs about other clients of similar size and needs, then contact those clients to discuss their experience working with the TPA.
- Knowing the costs of services. Understanding the terms of any agreement with a TPA, especially fees and expenses, can help an organization make the right selection for your needs and goals.
Selecting the right TPA is essential for employers to ensure smooth, cost-effective plan operation while minimizing legal risks. By understanding why organizations use TPAs, the benefits of selecting the right one, and strategies for making an effective selection, employers can maximize their chances of finding the best TPA for them.
For more information on Kapnick’s third-party administration services, reach out! We’d be happy to discuss how we could help you optimize your benefit plan program and save your organization time.