A TPA (Third Party Administrator) is an organization that manages a company’s employee healthcare plan and in some cases other benefit packages. TPAs manage self-insured healthcare plans, where the employers are funding medical coverage for their employees, rather than an insurance company. TPAs are regulated at the state level, and almost every state complies with NAIC (National Association of Insurance Commissioners), a model law that ensures the protection and regulation of both TPAs and employers.
It is important to note that no two TPAs are identical. Each TPA follows their unique operations model, providing selected services as opposed to a “one-size-fits-all” approach. The most crucial distinction between TPAs is if they are direct or indirect. Meaning, if they deal directly with the employer or through an insurance agent or broker. Keep in mind some TPAs will do both. For example, Varipro will work directly with employers and through a broker or agent. Offering the same self-funded administration and a plethora of other services for both types of relationships.
Some TPAs focus on handling only health care benefits for an insurer and employers will seek out other organizations to manage retiree benefits, stop-loss policies, and in some cases even vision and dental. However, there are some TPAs — Like Varipro — who offer administrations for all of those benefit amenities within their organization.
The number one factor that will set a TPA apart from the rest is not the services they offer, but their knowledge and expertise of the field. State and federal healthcare is an incredibly vast amount of information and can be an exhausting task to learn. TPAs should have an insightful understanding of both to provide proper administration, allowing employers to focus on their business, rather than worrying about abiding by the many regulatory restrictions.
Another key factor is communication. TPAs should openly and consistently provide reports and insight, allowing employers to make well-informed decisions for their healthcare plans. Providing consistent insight also enables TPAs and employers to catch irregularities and overages, holding healthcare providers to reasonable, high standards. With Varipro, each company will have an account manager who provides monthly reports, ensuring proper communication and a vast knowledge of regulations at the federal and state level.