Third Party Administrator Selection Process

Third Party Administrator Selection Process
Christine Henderson, Director of Business Operations – September 13, 2017

Now that your company has made the difficult decision to delegate claims management and/or processing to a Third-Party Administrator (TPA), you now must choose the correct TPA based on your unique business needs. At Catalyst, we frequently conduct TPA Systems Selections and below are a few best practices that we’ve found can help you navigate the sometimes-rough waters of the TPA selection process.

Evaluate: Know who you are today, and who you want to be tomorrow…
Understanding your basic claim data is important, but it is only the tip of the iceberg in really knowing the story of your claims shop. For perspective, what is really needed to evaluate your performance is a review of how you stack up against others in your market. Are the trends you see in your shop mirrored by others in the industry? How does your cost per claim and gain/loss ratios compare to key competitors? Are you out in front of trends, or are you merely getting pulled along in the riptide of change?

Once you have taken a good hard look at where you currently sit, the next step is a basic SWOT analysis. By documenting your strengths, weaknesses, opportunities and threats you will not only have a better understanding of your current state (warts and all), but you will also be able to articulate what is important in a TPA partner. In sounds simple, but you must understand what you want out of your TPA before you start your search for the perfect partner as without the ability to clearly convey what you need, you are setting yourself up for a mismatch of expectations versus delivery.


Investigate: Know what you want in a TPA partner…

Document and rank the skills you require for a successful TPA partnership; some examples include:

  • Ability to Support Fully Insured and ASO Business

  • Ability to Support Commercial, Medicaid, Medicare, and/or Exchange Products

  • State and Federal Compliance (CMS, HIPAA, SOCs, ERISA, ACA, etc.)

  • Fee for Service, Capitated, and Encounter Processing Functionality

  • Utilization Management/URAC Accreditation

  • Network Coverage/Secondary Savings Networks

  • On Shore or Off Shore Service Model/Geographical Needs or Preferences

  • Implementation Timeline Requirements

  • Robust Reporting Suite

  • Metrics and Service Level Agreements (SLAs)

  • Customer Service Support

  • Fraud/Waste Prevention Programs

Once you determine what you want from a TPA partner, now you start your search for administers that best match your criteria. Standardly you will start by casting a rather wide net; however, use your list of requirements to whittle the list down to a more manageable size based on what you rank most important versus what you rank least. Once you have landed on three finalists, take the time to investigate the intangibles (things not necessarily on your list) such as the TPA’s business & management model, culture, attrition rates, flexibility, etc. At this stage, I recommend you physically visit your TPA finalists as often nothing gives you better insight into how the business runs than to go and view a day in the life of the TPA first hand. 

Governance: Setting yourself up for success…
Once you have selected the TPA that best fits your requirements today and moving forward, you must now build a solid foundation to safeguard your success moving forward.

Schedule mandatory touchpoints to facilitate the resolution of issues before they have the chance to negatively impact claim quality or costs; review metrics and SLAs to ensure all parties are living up to their responsibilities; and troubleshoot areas that require process and/or system modifications. While meetings may be daily or weekly in the early stages of the TPA relationship, they should migrate to monthly as glitches are worked out and the TPA waters become easier to navigate. In addition, regular status meetings, and quarterly/yearly partnership meetings should take place to review experience to date, discuss any modifications to existing SLAs or contracts, identify any areas of opportunity, and establish partnership goals moving forward.

Taking a phased and methodical approach to TPA selection will not only set your company up for a successful partnership today, but it will allow you to build a lasting strategic collaboration for years to come.