Finding Success as an Insurance TPA

An insurance third-party administrator (TPA) is a business organization that performs services on behalf of an insurance plan. TPAs are most commonly used with self-insured health plans where an organization wants the benefits associated with self-insuring but not the hassle of managing the operational work that goes with the savings. 

Businesses hire insurance TPAs for a number of reasons, including:

  • Saving money
  • Simplifying back-office functions
  • Improving claims efficiency 
  • Bettering customer satisfaction
  • Maximizing the productivity of a small staff

The market for insurance TPAs was valued at $280.69 billion in 2020 and is projected to reach $514.98 billion by 2023 – a compound annual growth rate (CAGR) of 6.3% from 2021 to 2030. Although TPAs are used by 79% of employers, finding success as a TPA is not a straightforward process. Not only does your TPA business need to ensure you’re prioritizing the relationship between yourself and organizations, but it also needs to be able to ease the burden of claim processing through three pillars of TPA.

Pillar 1: Efficiency 

To be a successful TPA, you must efficiently process claims for your organizational partner. TPAs can do this by learning about their client’s platforms and available tools, as well as employee makeup and current — if any — claims processing system. Collaborating with clients and discovering the health plans that best align with their needs, as well as alternatives, is essential to the success of insurance TPA and their client relationships. 

Automation can also help to increase the efficiency of claims processing. Manually processing claims is becoming increasingly outdated, and manual systems leave TPA providers with the headache of processing claims one-by-one from the very beginning to the end, increasing cost and limiting the effectiveness of staff. Automation allows businesses and the TP to stay in lock-step with each other, enhancing the process through new technology and refining existing internal systems. 

A TPA is meant to act as a behind-the-scenes partner that improves organizations’ claim processes by providing efficiency and the best value to clients. Known as a “set and forget” provider, becoming a successful TPA provider means providing beneficial analytics, lowering administrative costs, onboarding new implementation plans, and helping design an efficient easy-to-follow plan.

Pillar 2: Accuracy

Another vital pillar of importance for success as an insurance TPA is the ability to handle a claim and the costs associated with the claims at a high degree of accuracy. As a TPA, you may be handling a wide variety of clients, some of which are involved in high-volume medical claims. Accuracy is of utmost importance as mismanagement could lead to discrepancies in documentation, a dark mark on reputation, loss of client trust, and an increase in costs for clients. 

Inputting data or clerical processing must never fall between the cracks for TPAs. If mistakes are made, the TPA, and by extension, their client are held accountable for correcting any mistakes and repairing any resulting damage.

An option that can help TPAs increase the accuracy of the operational services provided, such as claims processing and employee benefits management, is to integrate automation into their processes through software and insurtech partnerships. With 94% of industry respondents reporting that system workflow claims automation was effective in managing claims with best practices, TPAs are partnering with leaders in custom software solutions and claims automation, like Populus Technology to increase efficiency and improve the accuracy of claims. Although certain tasks, like investigation and evaluation, are required to be manual, automation gives TPAs the ability to increase the value provided with each service by increasing the capacity for work and limiting mistakes. 

Pillar 3: Compliance 

As a TPA, compliance is essential in order to maintain credibility and ensure that all claims are processed correctly. There are several ways TPAs can become compliant, including:

  • Reviewing and updating policies and procedures on a regular basis
  • Conducting audits of claims processing
  • Providing training to staff on compliance issues
  • Monitoring claims processing activity closely

By taking these steps, TPAs can help create a culture of compliance within their organizations and ensure that they are meeting the highest standards of service for partner organizations. Compliance oversight creates tremendous work for the TPA and is tremendously expensive. 

There are many different types of compliance regulations and codes that a third-party administrator (TPA) must adhere to. These compliance requirements are important for ensuring the quality and accuracy of the services that a TPA provides. Non-compliance with these regulations can result in significant penalties, including financial fines and suspension of operations.

Some of the most important compliance regulations and codes for TPAs include the following:

  • The Employee Retirement Income Security Act (ERISA) 
  • The Health Insurance Portability and Accountability Act (HIPAA)
  • The Gramm-Leach-Bliley Act (GLBA)
  • The Sarbanes-Oxley Act (SOX)

Failure to comply with any of these regulations can have serious repercussions for a TPA. Therefore, it is important for TPAs to have a comprehensive compliance program in place that includes regular training and monitoring of compliance risks.

Next Steps to Becoming a Successful TPA 

Becoming a successful TPA is not an easy or straightforward business venture. However, with a faster than average growing market and the increase of red tape in insurance, veterans of the industry can successfully venture into the TPA industry. However, insurance TPAs must remember the three pillars of success and make them the lifeblood of their organization. 

Additionally, the success of the growing emergence of automation should be noted by those wishing to foray into this competitive market. To learn more about how automation could help your potential third-party partners, reach out to experts in the field of automation. 

Populus Technology has guided TPA organizations in successfully creating solutions for their clients and instituting new technologies for years. If you want to position yourself for success, consider reaching out to Populus today. 

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