Cornerstone Preferred Resources |
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CPR'S Medical Management Partner
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THE ROLE OF TPA sThird Party Administrators operate much like independent CPA or law firms...providing continuing professional outside claims and benefit plan administration for client employers and benefit plans. TPAs often become the employee benefits office for the covered workers and employers in the client plan. By tradition, TPAs usually seek a behind-the-scenes role emphasizing the identity of the employer or sponsored plan...rather than blatant advertising of the name of the TPA firm. Thus, the names of even the largest TPA firms are often not widely known to the general public.Most of the TPA client plans employ some degree of self-funding though the hallmark of the phenomenal success of TPAs in recent years has been their willingness to custom-design and implement plans for the specific needs of each employer or group of workers or health provider arrangement. Because efficient TPAs are often able to provide administration at 40% of what insurers and others charge, there has been a boom in recent years of insurance companies, Blue Cross/Blue Shield, HMO =s medical providers and others outsourcing their administration to TPAs, for their plans.Clients of TPAs include every size and format of employment...from large Taft-Hartley union/management jointly-administered plans...to custom-made for single employers..to cost-effective plans designed for related groups of employers in trade associations and other multiple employer configurations..to plans for state & local government workers...and employees of religious groups...to hospital & doctor sponsored plans (such as PHO, EPO, etc.)...to MSAs. Through innovation and careful planning, TPAs have led the way in making cost-effective group employee benefit coverage available to even the smallest employers. The TPA industry has also played an active hands-on role in shaping and implementing accurate compliance with the host of new government requirements. Every year, there are over 1,000 new laws, regulations, technical decisions, opinions, court cases, interpretations, and other rulings from about 300 government entities which plans, employers and/or administrators must obey. Only about 1/3 ever get adequate announcement or explanation from the government or even technical trade press...yet still carry the effect of law and must be obeyed. Only about 1% (yes, only one percent) of all requirements ever get formal comprehensive guidance on how to obey. Part of the growth of the TPA market and SPBA membership is the desire of plans and employers to be sure to have professionals well-versed in these government requirements handling their employee benefit plans. SPBA members take great pride in the role they have played in spreading coverage for workers and smoothing the often bumpy road of government legislation and regulation. DEFINITIONS STOP LOSS /EXCESS LOSS COVERAGE Insurance purchased to provide protection against large catastrophic claims and against unexpected high utilization. The coverage reimburses the employer for covered claims in accordance with the terms of the coverage elected. Two types of stop-loss insurance are available: Specific and Aggregate. Specific stop-loss insurance protects the employer against the financial impact of large claims. Specific excess loss coverage establishes a stop loss amount (or "Deductible@) per individual for the excess loss period elected by the employer. Aggregate stop-loss insurance limits the employers liability to a predetermined amount for the entire insured group during a certain time period. To determine at what level the aggregate liability of the employer is limited attachment factors are calculated. Benefits can be determined at plan year end or on a monthly basis according to the type of coverage that is chosen to best meet the employers needs. Expected claims: The estimated amount of claims that will be incurred during the policy year as well as claims payment for expenses incurred during that year but not reported until after the end of the year. Deviations between AExpected@ and AActual@ claims can occur on a policy-by-policy basis. Actuaries base expected claims estimates on their past experience as well as on published statistical information regarding (1) the probability that individuals will incur medical expenses (2) the plan design (3) the probable cost of these expenses. Fixed Costs: These costs which are budgetable; typically based on the number of employees. They usually include administrative fees and premiums and exclude actual claims. Excess Loss Period: Contracts are generally offered on an incurred and paid basis; 12/12 incurred in 12 months and paid in 12 months 15/12 incurred in 15 months and paid in 12 months 24/12 incurred in 24 months and paid in 12 months
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