When you leverage your organizational capacity to the hilt, growing your bottom line is far more achievable than when you just add more layers of marketing or sales skills. When you review revenue growth plans, there may also be other opportunities to identify root causes and apply authentic fixes. Many of our clients are businesses working through restructuration or firms that require re-engineering to identify profitability bottlenecks, which could be either People or Process.
Outsourcing is still a magic word
Outsourcing remains an efficient way to streamline business costs, with a notable caveat: many processes that were outsourced before without a second thought can now be handled in-house using appropriate technology.
However, insurance claims fall into the category of those ‘soft issues’ that lie in the domain of your HR department and cannot similarly be automated. Tech cannot (yet) replace that human touch that makes your employees feel valued.
As a result, your Human Resources department may currently be overwhelmed with administrative tasks. Some of these tasks are tedious but exacting, while other tasks may require in-depth knowledge of specialist fields like medical insurance or workers’ compensation.
The role of the third party administrator in your business
Human Resources have a specialist job: finding and retaining the right sales, marketing, and management staff for your company. When their administrative burden gets in the way of that function, you should consider a good TPA to lighten the load without relinquishing control.
Third Party Administrators (TPAs) stand between claimants and your insurance company and render the administrative tasks, as required by your insurance, to the ensured employees (claimants). The TPA operates as the customer-facing service division of, or on behalf of insurance companies.
6 benefits of appointing the right third party administrator (TPA)
Choosing the right TPA can mean significant savings in time and money for the employer and can considerably enhance employees’ overall work experience and job satisfaction.
1. It allows your specialist HR team to do their jobs. Time-consuming routine tasks can be reassigned to specialist administrators in outsourcing companies that are entirely geared to execute such tasks in bulk.
2. TPAs have custom-built infrastructures to deal with detailed paperwork and processes. You don’t have to maintain (or worse, grow) your back-office workforce just to keep up with small details.
3. Third Party Administrators often specialize in specific industries and employ industry-specific specialists where necessary.
4. No more micromanagement of staff or processes, which leads to fewer administrative staff, fewer supervisors, and fewer business process managers.
5. Fewer incidents of improper claims handling.
6. Savings on overheads, salaries, and infrastructure.
Why you should involve a broker in appointing your TPA
To understand why brokers are involved in vetting or recommending TPAs, it is necessary to review a short definition of the roles of these different service entities:
TPAs are essentially ADMINISTRATORS who process medical and/or other claims. They manage the paper trail to make claims processing smooth and stand between the employees and the insurer – even in cases where the employer is self-insured. They save time and money.
Brokers are RISK SPECIALISTS. Brokers are an invaluable source when you determine your needs for risk or liability insurance – especially when you offer employee benefits such as group or health insurance. Brokers are a technical source for navigating the terms, conditions, benefits, exclusions and costs of insurance policies and can also arrange and place the cover with the chosen insurer. Their job is to manage your company’s risk.
Appointing the wrong TPA is a business risk
Besides medical claims, third-party administrators often handle other employee benefit plans like retirement plans, reward programmes or loans. Administration of these employee benefit plans may include legal or highly technical aspects and can require the care of specialists not easily found in the HR department.
The Third Party Administrator can, therefore, be regarded as an extension of your company’s risk management team. Due to long-term macroeconomic constraints, this situation is now prevalent. Brokers have a vested interest in lowering your company’s risk profile, and thus would ensure that your TPA is a productive part of the risk chain. It is worth remembering that in the administration of medical claims where the employer is self-insured, the risk of loss remains with the employer, and not with the TPA.
Clearly, due diligence is critical when you select your TPA. If you choose your Third Party Administrator well, they should be able to offer performance management mechanisms that will make oversight of their performance easy.
Essential criteria for selecting a third-party administrator
Some factors – apart from cost – may be highly significant for reducing your company’s exposure to risk:
* Does the TPA have the capacity to handle all the types of claims you wish to outsource (e.g., medical, workers’ Compensation and retirement plans)?
* Can the TPA provide services for your company’s entire geological footprint?
* Is there a requirement for jurisdictional expertise in cases where claims will be handled in different states?
* Do they have a modern claim and communication system and a quality assurance process? What about confidentiality?
* Are the staffing levels appropriate? Can they accommodate dedicated staff to look after your interests, or will the team be handling multiple accounts at the same time?
* Does the TPA have efficient performance bench marking and analytical tools?
Management of the TPA
Administrative processes usually feature rather conspicuous Key Performance Indicators, making it ideal for outsourcing. It is also often easier to manage key drivers in an outsourcing scenario than to manage staff and resources in-house.
Your Third Party Administrator’s account manager should have a clear understanding of your business needs. Good communication starts with clear, concise instructions and continuous performance measurement against measurable results. A good overview will improve smooth claims handling and minimize avoidable expenses known as leakage – for example, penalties from regulators for improper claims handling.
Lost savings means lost profit
A competent TPA is a prized asset to your company’s risk management team, and your broker may be able to offer a valuable opportunity to outsource non-core operations and reduce your company’s risk profile at the same time. Snatching at every opportunity to increase your company’s productivity and performance will maximize your company’s growth potential.