By William Rusteberg
Selection of a third party administrator (TPA) is crucial to the success of a self-funded plan. Criteria usually revolve around several factors including compatibility. Corporate philosophies of the employer and TPA should harmonize.
The role of a third party administrator is to adjudicate and process benefits, provide billing and recordkeeping services and provide support and auxiliary services where possible and appropriate. Selecting a TPA based on cost is not a good idea since such action will only result in confusion with plan administration. In addition, fees paid to a TPA represent a very small percentage of overall plan spend.
Unbundling of plan components can be of vital importance to the overall management of a self-funded employee welfare plan subject to ERISA. The Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries. Competitive procurement of plan administration, stop loss insurance, audit services and additional plan components, separately, enables a plan sponsor to fulfill their fiduciary duties in the broadest possible terms. Plan sponsors can achieve more plan efficiency, lower costs and more control.
The role of the TPA can be one of general manager upon which the plan sponsor delegates authority to sub-contract with vendors such as managed care networks, pharmacy benefit management, subrogation and other services important to the operation of the plan. Or, the plan sponsor can reserve the role of general manager to ensure the ability to “plug and play” the various components that are important to the operation of the plan. Plan sponsors who take this approach generally rely on an independent experienced advisor.
The shared vision of RiskManagers.us and clients who retain our services is to establish and maintain a comprehensive employee health and welfare plan, identify cost areas that may be improved without cost shifting to any significant degree, and ensure a superior and sustained partnership with a claim administrator responsive to members needs on a level consistent with prudent business practices.
Plan costs, in all areas including fixed expenses and claims are open for review on a continuing basis. Cost effective plan administration and equitable benefit payments to providers are paramount to fulfilling our mutual fiduciary duties. As we proactively monitor and manage an entire benefit program we are open to any suggestions members may make or the dynamic health benefit market may warrant in order to achieve these goals.
Duty of loyalty to our clients, transparency and accountability are essential to the foundation of our services. To that end, we expect our clients to realize a substantial savings based upon the services that we will deliver.