TPA Transformation: Turning Data into Decisions

TPA Transformation: Turning Data into Decisions

In the half-decade since the passage of the Affordable Care Act in 2010, the employer health industry has experienced a seismic shift. The various segments of the industry have seen the effects of this shift play out in plan design changes, new reporting requirements and an unstoppable trend toward consumerism.

While change has been most obvious and notable in the fully insured small-group (2-99 employees) and large-group (1,000 employees) segments, the mid-market (100-999 employees) segment is beginning to experience this tectonic alteration, as well. For example:

  • The percentage of mid-market employers transitioning to self-funding has increased from 48 percent to 56 percent 2009 (Kaiser
  • The number of grandfathered plans has declined each year since 2011 (Kaiser)
  • Thirteen percent of mid-market employers now offer at least one high-deductible health plan (HDHP) (Benefitfocus State of Employee Benefits - Midsize Employer Edition) 

Perhaps no stakeholder in the mid-market employer health continuum is better positioned to facilitate this transition than the Third Party Administrator (TPA). TPAs can serve an important function in the self-funded space, including helping to establish plans, claims processing and claims review.

Many TPAs are transforming their organizations from reactive, claims-paying service providers to proactive, strategic health plan management partners. The foundation for this transformation is data. TPAs are capitalizing on the vital role they play as the repository of vast amounts of plan, utilization, cost and health data to offer employers and their brokers insight to make informed health plan and benefits decisions.

Health Data Integration

Medical claims are the building blocks of a consolidated health data warehouse. TPAs have a strategic advantage over other stakeholders in the employer health plan management chain because of their direct stewardship of claims data. By combining member demographics and eligibility, prescription claims, dental claims, biometrics, miscellaneous financial (premiums), and more, TPAs can offer their employers a comprehensive data warehouse view into all aspects of their health plan. TPAs can also use this integrated data to help employers develop plan strategies, evaluate plan design changes and select cost control program vendors.

Employer Group Reporting

Providing the basics are still table stakes for TPAs. Standard monthly, quarterly and annual health plan reporting is a necessity. TPAs are increasingly turning to consolidated data analytics and reporting technology to provide automated reporting and analytics access to their employer group customers and partner brokers. Giving employers cloud-based tools to monitor plan activity, identify trends and evaluate plan design changes extends the TPA’s value exponentially.

Data-Based Strategic Health Plan Design

In our second State of Employee Benefits report released in May 2016, Benefitfocus delved into the midsize employer segment. Among the midsized employers utilizing the BENEFITFOCUS® Platform for online enrollment and member communication, we found that the vast majority of them have not yet moved to an HDHP. Only 13 percent of mid-market employers offer at least one HDHP. However, when offered an HDHP option, 34 percent of employees at midsize groups selected one. This indicates significant opportunity for movement and education by TPAs as midsize employers follow larger employers (58 percent of whom offer at least one HDHP) into the new paradigm.

TPAs will no doubt play a vital role in the transition from traditional plans (PPO, HMO, POS) to HDHPs, and integrated data from the TPA and other sources will be key to helping groups and their members make smart decisions.

The TPA transformation taking place in the self-funded industry is well underway. Organizations who proactively offer their employer customers and partner brokers the data integration, reporting and analysis tools to turn data into decisions will play vital and strategic roles. 

Download the full State of Employee Benefits - Midsize Employer Edition to explore more key metrics to help guide your benefits administration strategy.