posted by Oracle
on September 10, 2021
For third-party administrators (TPAs), self-funded health plans are the way
healthcare should be doing business.
Self-funded or self-insured health plans are customized to an employer’s workforce, unlike the one-size-fits-all approach large payers take. These plans also give employers more control over their healthcare dollars, eliminating the need to pre-pay for coverage and services and giving more control to spend money where employees need it the most.
The plans align with the healthcare industry’s push to provide personalized care for individuals and populations at the lowest possible cost. For this reason, among others, the number of employees in self-funded plans has increased to 67 percent in 2020 – up from 59 percent of covered workers in 2010, according to the 2020 Employer Health Benefits Survey from Kaiser Family Foundation.1
The self-funded plan market is growing and, alongside that, the opportunities for TPAs.
TPAs are central to the success of self-funded plans currently and are quickly becoming integral to quality, affordable healthcare. The organizations take on the operational work associated with running a health plan, including claims adjudication, customer service, utilization review of claims, and contracting of provider services. Leveraging a TPA provides employers with the cost-savings associated with self-funding while leaving them to focus on growing and optimizing their business.
However, in order to seize new opportunities and ensure the success of clients, TPAs must be nimble and agile—two characteristics difficult to embody in the bureaucratic, manual world of healthcare administration.
Spending on healthcare administration reached a whopping $812 billion in 2017, according to the Annals of Internal Medicine’s most recent study.2 The study illustrates that healthcare administration costs represented over one-third of total national healthcare spending – nearly doubling neighboring Canada’s spend.
The study’s findings point to inefficiencies in the healthcare system that
complicate the operations of TPAs. But these are also challenges TPAs are poised
to solve with the right tools.
TPAs face a set of unique challenges when it comes to successfully running a self-funded health plan for employers. Rising healthcare costs, rapidly changing rules and regulations, ever-evolving employer and employee health needs, staff retention and recruitment, growing security concerns, and technology limitations are all top challenges TPAs currently face in the aftermath of the COVID-19 pandemic.
TPAs can overcome these challenges with automation and technology implementations that streamline core business administration while supporting each TPAs mission: providing personalized benefits and service at the lowest cost possible.
Disclaimer: This paper represents the views of the author, not AHIP. The publication, distribution or posting of this paper by AHIP does not constitute a guaranty of any product or service by AHIP.