These are the services you should require from your Third Party Administrator (TPA):

General Counsel:
It is very important that your Third Party Administrator has an in-house attorney due to HIPAA privacy laws. An employer will need guidance and answers regarding privacy issues and it can be extremely cost prohibitive to pay to find an attorney who specializes in HIPAA privacy law and ERISA. A quality third party administrator will provide this service at no charge. Also, legal issues will arise where an employee may use an attorney to attempt to get benefits paid when those benefits are not covered by the employer’s plan. TPA’s with in-house counsel are used to dealing and disposing of these matters, where as a TPA who does not have an attorney is not going to pay the expense of outsourcing the matter and may just pay the claim to sweep it under the rug.

Because of HIPAA privacy laws you need a TPA that is fully HIPAA compliant and also EDI compliant. Your TPA should have legal counsel on staff to answer and respond to any of your HIPAA privacy needs or questions.

Claims Payment:
You should choose a TPA that pays claims within two weeks or less. Most quality TPA’s can pay claims within 5 business days or less. Slow claims payment results in poor plan performance and dissatisfied employees. When claims are not paid promptly, doctors send employees balance bills. The employees become very agitated and take time out of their work to discuss these issues with managers and other employees, hence disrupting the work force.

Another important reason to choose a TPA that pays claims promptly is that if claims are not paid within 30 days then all PPO discounts are automatically lost and the employer must pay the full price for the medical services performed. PPO discounts provide significant discounts especially on larger claims. This should be a concern for any TPA that is not processing claims in fewer than two weeks. Also, if the TPA is late submitting promptly a specific or aggregate claim to the Reinsurance – Stop Loss carrier , then the reinsurer will not pay the claim, and the employer may be stuck with the claim.

Subrogation is the right of recovery of one party against another party. This refers to the rights of the employer to recover additional money from a second insurance policy.  (Third party) Many claims in a health plan can be the cause of “third party liability”, where another party is liable and there potentially is an insurance policy protecting that third party. Every good, quality TPA has a team of Subrogation attorneys who pursue cases against third party’s. They recover money already paid out by the employer. The employer does not pay for this service. The Subrogation firm pays all up front and legal costs and then retains a part of the recovery.  It is imperative your TPA utilizes a Subrogation firm with attorneys on staff.  Otherwise Subrogation recoveries will be severely limited to non-existent, hence costing the employer more money for medical services that are not the employer's responsibility.

Steerage refers to managed care procedures that direct members inside a contracted network of providers. Sometimes referred to as "repatriation", Steerage also refers to the effectiveness of utilization review functions to get out-of-area members back into the local contracted network. This is especially important to the management of transplant, burn, rehabilitation and neonatal patients. Most TPA’s do not provide steerage, which can save up to $150,000 for every 1,000 employees. It is important to find a TPA that provides steerage.

Hospital Bill Audits:
The Standard for any quality TPA is to have a group of provider specialists that independently audits all hospital bills over $10,000 and provide quarterly reports showing the savings. "In-house TPA hospital bill auditors" are nothing more than glorified claims examiners who have no medical background or experience to audit hospital bills. Hospital bills are the most expensive cost of a health plan, and a good percentage (%) of savings can range from 10% - 23% on hospital bills that are audited. A quality third party administrator should be able to show a sample of a hospital bill audit (at least 3 inches thick). Note: Most TPA’s do not audit hospital bills due to the intense administrative work required. Do not utilize a TPA that does not audit hospital bills, be wary of a TPA that has internal audits for hospital bills with their “in-house” nurse or claims examiner or the well referred to "eye-ball test."   - where a claims examiner looks at a bill and if it "looks good" it is paid.

Information extracted from Selffunding