Third-party administrators (TPAs) have been around for decades. In terms of numbers, the Third Party Administrators’ Association of Canada (TPAAC) estimates that its members oversee billions of dollars in premiums, claims and pension funds.
TPAs range in size from a single advisor to companies with boards of directors. Their product offerings are just as diverse—from the administration of an employer’s benefits plans, premium billing and employee communication, to third-party payers (TPPs), which also adjudicate and pay claims.
TPAs originally developed from the need to handle complex plans or association plans, such as multiple employers under one group plan, but there are a variety of reasons to work with one. Some businesses may need a TPA’s help due to a lack of resources or in-house expertise to manage the necessary benefits administration and claims inquiries. Or, perhaps a growing organization would like to ensure continuity of benefits.
Whatever the reason, the relationship between the plan sponsor and the TPA has certain advantages. One key benefit is the savings in time and money. The employer’s HR department no longer has to worry about handling claims adjudication inquiries or managing changes to the insurer and group benefits plans.
For example, one public organization in Ottawa found it challenging to field the large number of calls and questions that it was receiving from members about the group benefits plan. The organization hired a TPA with a call centre to handle the members’ queries.
Another benefit—if the TPA is also a TPP—is a smooth transition for employees with regards to claims payments and adjudication if the employer decides to change insurers.
At Your Service Third-party administrators (TPAs) provide services to insurers, public sector organizations, private sector employers, Every TPA is different, as are the services it offers. Services that a TPA may offer include: • benefits administration; |
Questions to Ask
While there are many advantages to working with a TPA, one challenge is getting the right TPA for your organization. It’s important for you, as the plan sponsor, to do your research before you choose the right administrator.
The following is a list of eight recommended questions to ask.
1) What services does the TPA provide? First of all, you will want to understand the type of services offered—such as benefits administration, claims adjudication, disability management and consulting—and how flexible these products are to your needs. This is particularly important if you plan to grow your business and see the need for an expanded relationship in the future.
2) Does the TPA provide these services from within or are they contracted out? It may be important for your organization to know if services are provided in-house or contracted out, particularly if there are privacy concerns around employee data. This will help you determine whether the services are a primary function of the TPA’s organization and how it ensures quality control. If everything is handled internally, when a member calls, employee information is readily available so that if the need arises, a claim can be processed on the spot.
3) What type of online solution does the TPA offer, and how flexible is it? Some TPAs have their own online systems, and it’s a good idea to determine the flexibility of their website tools. Do you want to be able to submit all benefits administrative transactions—such as enrollments, terminations and claim forms—online? Similarly, can the TPA make group benefits invoices, benefits statements and booklets available online, if desired, and can they be adapted to your needs?
4) What level of support can you expect? Ensure that the provider has a proven record of quality service by asking for references. Will you be assigned a dedicated account executive and claims management team? What is the call centre’s hours of operation? What are the language capabilities of the administrator? What is the TPA’s claims turnaround time and accuracy standard?
5) What will the TPA do if claims information is missing? What happens with complex claims? It’s not uncommon for claimants to accidentally omit information in a claim. Will the TPA go the extra mile to obtain that missing information or will it simply return the claim and delay payment? What about claims that are more complex in nature and require further investigation? It’s important to know that the claim will be handled by an expert—for example, a medical or dental consultant.
6) How does the TPA handle the administration of disability claims? It’s important to understand how the TPA will handle the administration and verification of short- and long-term disability claims, and whether or not it will include the integration of other compensation or incomes.
7) Is the TPA a member of the TPAAC? TPAs in Canada are largely unregulated. However, membership in the TPAAC can help ensure that the TPA adheres to a code of ethics, resulting in professionalism, best practices and governance standards. TPAAC members must also prove that they have the appropriate insurance coverage and reapply to the TPAAC every year to show they are maintaining high standards of service. This may give your organization peace of mind that it is working with a professional firm that has the capacity and structure in place to properly serve your business.
8) Can the TPA provide you with references for a background check? The plan sponsor/TPA relationship is important, and it’s a good idea to obtain feedback from other organizations regarding the level of service, support and communication they have received.
Once you have made your decision, you can expect the new TPA to arrange an implementation meeting with you to go over next steps, depending on the services you require. Keeping these key considerations in mind can help ensure that your TPA properly supports your business.
Christine Lenters Daoust is a principal consultant with Cowan Insurance Group’s benefits division in Ottawa.
christine.daoust@cowangroup.ca
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the August 2009 edition of BENEFITS CANADA magazine.