Details Matter in a Self-Funded Plan' TPA Agreement
The agreements governing the relationship between a self-funded health plan and its third-party administrator (TPA) cover a close but somewhat competitive dynamic. Most plans want oversight in the form of periodic health plan audits to assure the accuracy of their claims processing. They review a TPA's work handling claim payments, which add up to large sums of money. Ever-rising health care prices put plan budgets under pressure, and assuring the correctness of claim payments is one way to monitor costs. Today's audits and continuous claims monitoring covering 100-percent of payments provide a higher level of accuracy. They are valuable management tools for plans and their TPAs.
Software advances that made 100-percent audits possible ushered in a new era of accuracy compared to prior random-sample methods. Today's oversight of health care claims administration provides higher quality data in areas such as duplicate claim payments. Catching and recovering funds from duplicate payments is one of the easiest ways to control rising costs – and nearly every plan has paid some claims twice in error. Audits and monitoring also commonly uncover payments for items excluded by the plan and other billing/payment practices that may be errors. The total dollars involved can add up over time.
No other method can match the results produced by an independent audit firm because they are acting only with the self-funded plan's best interests in mind. Some TPAs have begun trying to negotiate conditions into their contracts, limiting or avoiding audits at specific levels of detail. Often such limits are to the TPA's advantage, and wise in-house plan managers won't sign off on them. Best practices always include a plan's freedom for management oversight of all operations, especially every detail related to claim payments and money's outflow. The goal is always to control costs while serving members.
The freedom of independent auditors and their monitoring services to review every claim payment from every angle is essential. Limits or restrictions nearly always conflict with a plan's best interests and reduce the audit reports' accuracy. Rooting out errors is always a priority, and TPAs should join their clients in striving for accurate payments only for covered services. Any TPA-plan agreement that limits audit oversight is likely to conflict with best practices. Benefits costs, especially medical expenses, can have a material effect on a company's bottom line. When the stakes are that high, compromises don't work.
