Have You Checked Your TPA Costs? It Might be an Eye Opener

on May 12 at 09:04 PM
The relationships between the self-funded medical plans of large employers and their third-party administrators (TPAs) for claim processing can be complex. In recent years as in-house departments have been downsized, the role and influence of TPAs have grown. As outside TPAs handle more services, the value of claim audits and continuous monitoring for oversight of claim payments has become more vital. Although TPAs make guarantees about their accuracy, nothing replaces a review of their work to check for errors and oversights. Medical claims involve high costs and must be checked.

Working with an unbiased and independent medical claims auditing firm that reviews 100-percent of claims payments is the best way to evaluate a TPAs performance. Capable auditors will flag claim payments that are off track and can help find hidden fees going to the TPA. Correcting costly errors and mistakes as auditing and claim payment monitoring can do will save thousands of dollars – generally much more than the price of the audit and monitoring service. The key is finding a firm with excellent claim review software and processes. Advanced technology can make a substantial difference.

It's well within the boundaries of the plan-TPA relationship to review any fees for services. A careful check often reveals they are coming in above the amount that was budgeted. It's a routine function of the complexity of plan language and TPA agreements, and only an audit will show where hidden fees may have been tucked in among the standard charges. Auditors commonly find extra costs for negotiations about out-of-network service, subrogation, and recovery of overpayments. Even though some of these may be small individually, they can add up over time and become significant expenses.

TPA outsourcing of some functions can also lead to commission expenses and other payments. For example, many TPAs outsource subrogation and overpayment recovery to vendors charging fees ranging from 10 to 30-percent. Because the errors originated with the TPA, it should pay the outside vendor costs rather than the plan. But it doesn't always work that way, and catching it with audits and monitoring can help in-house staff manage the situation. Funds leaking out of plans for ancillary costs are a growing concern, and although most TPAs do excellent work, they need oversight.

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