Total healthcare spending is growing faster than the rate of inflation, which is putting everyone in a cash crunch. While most conversations center around the dollars behind paying for healthcare, that’s only part of the problem. Costs are also becoming less predictable and more complex. For third-party administrators, controlling healthcare expenses is an ongoing nightmare.
In a high-cost environment, TPAs owe their plan sponsors more than administration. Sponsors expect TPAs to provide insights, intervene when necessary, and deliver results. Here’s how your role as a TPA is changing, and how you can meet the needs of plan sponsors.
The Shift From Processing to Performance
Historically, TPAs built their reputation on being efficient by:
- Accurately adjudicating claims
- Making payments in a timely manner
- Promoting compliance
While plan sponsors still expect you to deliver in these areas, they are now demanding:
- Greater transparency into healthcare spending
- Predictability in budgeting
- Demonstrable improvements in member health outcomes
These changes are driven by necessity. Healthcare is becoming one of the largest line items on the balance sheet, which means plan sponsors cannot tolerate passive administration.
The Cost Drivers TPAs Can’t Ignore
Third-party administrators must address these three factors that are driving up healthcare costs:
1. Rising Rates of Chronic Illness
Conditions like diabetes and cardiovascular disease continue to become more common. These conditions represent long-term drivers of cost that must be managed on an ongoing basis. Each patient who develops one of these conditions can cost a plan tens of thousands of dollars over their lifetime.
2. More Frequent Catastrophic Claims
High-cost claimants may represent a small percentage of the patient population, but many plans are seeing several of these incidents every single year. A single catastrophic claim can cost hundreds of thousands of dollars or even break into the seven-figure threshold.
Addressing catastrophic claims that stem from uncontrolled health conditions or poor medication adherence is essential. TPAs can assist with this process by providing plan sponsors with better data and supporting interventions.
3. Unpredictable Spending
Volatility is becoming the venom. Plan sponsors that don’t receive proactive oversight from TPAs are left reacting to expenses instead of managing them. By the time spending has gotten out of control, plan sponsors will be in the hot seat, and so will TPAs.
What Plan Sponsors Expect From TPAs Now
If you serve as a third-party administrator for plan sponsors, it’s vital to adjust to the environment you now operate within. Acting as a vendor is no longer enough for plan sponsors. Instead, you need to provide:
Insights Backed by Data
Providing simple reports won’t suffice. You need to translate the data you collect into actionable intelligence. When delivering insights, make sure the information helps plan sponsors answer the question, “What should we do with this data?” Determining what to do about a problem is where TPAs can deliver tangible value to clients, especially as healthcare costs keep rising.
Proactive Risk Identification
Waiting until a plan sponsor has racked up millions in claims is too reactive. Sponsors expect you to help identify high-risk members before costs escalate. While you can’t catch every case early, you can identify enough of these patients to make a significant difference in spending. Early intervention leads to better health outcomes for patients and a huge reduction in cost for the plan sponsor.
Integrated Medical Management
When various health services live in separate silos, there are gaps in care. Plan sponsors want coordinated strategies that address problems from all angles, including:
- Utilization
- Access
- Care quality
- Cost
When you can target all of these issues, there is a much greater likelihood of solving the root problem.
Measurable Outcomes
Every strategy or change you propose needs to be linked back to results, such as reduced costs and improved health outcomes. These are the metrics that plan sponsors care about most.
Level Up With Healthcare Strategies
If you want to become a more proactive TPA for plan sponsors, you need the right tools. Healthcare Strategies offers high-touch technologies that support truly proactive plan administration at scale.
Contact us to schedule a consultation.
