If you are a Third Party Administrator (TPA), you are most likely responsible for insurance claims and performing other admin services mainly in employee benefits. Other services provided by a TPA could include processing, negotiation of claims, actuarial consulting, retirement plan design, record-keeping etc. A TPA could provide other services depending on the contract signed.

We recently interviewed two brokers, Jack Wilkinson, a senior VP from Marsh & McLennan Agency LLC. company and another senior VP from Risk Strategies Company who have given us valuable insights into what they are looking for when it comes to their TPAs.

  1. What are you specifically looking for in a TPA?
    1. MMA – Access to managed care networks (if they have access to Anthem’s network, it is a major plus), ability to get creative around administering unique plan designs, ability to carve out Rx, and data analytics capabilities. Since UMR is a wholly owned TPA of United, they have a nice advantage in that they have a robust mangaged care network in conjunction with the flexibility of a true TPA.
    2. RS – Aside from claim accuracy and customer service metrics, I look carefully at how flexible a TPA is. Have they locked themselves into proprietary tools such as Verscend? Can they plug and play solutions as they are uncovered?
  2. How can TPAs differentiate themselves in the market?
    1. MMA – By having value added resources such as case management and data analytics. Having a strong network can outweigh anything though. Managed care discounts “sell” at the end of the day. That said, we do think reference based pricing will change the approach of overanalyzing managed care discounts moving forward.
    2. RS – TPAs can differentiate themselves by embracing innovation. For instance, reference based pricing, while not for everyone, is an interesting tool that employers could take advantage of. Can the TPA build it into their plans? Another differentiation would be the actual services that are able to provide over their competitors. For example, what different tools/services can they provide? Access to ERISA compliance attorneys? A Communications team? I also have an appreciation for TPAs that are transparent in how they are earning their money.
  3. How can they offer more value to your clients?
    1. MMA – Provide more robust disease/case management resources, offer better technology for enrollment either direct to TPA site or offering file feeds to benefit administration platforms.
    2. RS – The value will always derive from being able to manage costs effectively (and legally).
  4. What is the number one thing your clients are asking from a TPA?
    1. MMA – They are asking for help in determining the best way to get creative and innovative. Status quo is not sustainable and whatever a TPA can do to help solve the problem is well received. This includes risk management, analytics, creative plan designs, technology offered etc.
    2. RS – Flexibility combined with competitive discounts.

While the interviews themselves were quite enlightening, there were a few points that we picked up on based on the pain points discussed by the seasoned brokers:

  • When asked about differentiation, both Jack and Pauline mentioned that reference based pricing is a big differentiator when it comes to TPAs.
  • Technology and innovation are also important features that TPAs have to be in par with to succeed in the market.

It’s interesting to see what top brokers in the country are looking for in their TPAs especially with the market being volatile.