5 things TPAs should do to capitalize on the Affordable Care Act
1. Intensified focus on niche markets
TPAs are solidifying and growing revenue streams through an intensified focus on niche markets such as hospitals, municipal workers and Native American tribes (including their non-tribal employees in casinos, fish canneries, ranches, etc.) These are relatively large groups that have historically valued the services of TPAs, as well as their flexibility and personalized service. They view TPAs as being better able than the large carriers to advise them on managing the complexities of the ACA, and more capable of delivering customized programs that recognize the unique needs of their members.
For example, hospital and municipal workers tend to incur an above-average number of back injuries. TPAs can design health plans that cover programs to teach them how to strengthen their back and core muscles, encourage them to stretch, and educate them on lifting and other techniques to help them avoid these injuries.
More progressive TPAs throughout the country have experienced early success in these niche markets, but there is still plenty of opportunity that remains. While the Native American market may be more concentrated, every area has hospitals, municipalities along with other groups which value the flexibility and personalized service offered by TPAs.
2. Heal what ails ACOs, new Marketplace Offerings, and co-op plans
With the advent of ACOs and other opportunities as a result of the ACA, not to mention small physician practices being absorbed by large healthcare systems, more hospitals are setting up their own health plans and offering them to their employees as well as other employers in the community. It makes sense. The more they can tie the community to their providers (and cut out the insurance company middle man), the more revenue they can capture – which is of paramount concern as the industry shifts away from the fee-for-service model.
Yet while they possess deep knowledge of healthcare that can be used in designing plans, they lack the administrative mechanisms required to process claims, create easily understood EOBs, build member portals, provide 24/7 customer service and so forth. This is where TPAs can use existing relationships and knowledge of the community to capture business outside their norms. In the process, the TPAs gain partners that will take care of marketing services and getting members on board; TPAs simply manage the back end.
The same applies to the government-funded, non-profit co-ops that were established prior to the ACA to create independent group purchasing plans. One forward-thinking TPA that pursued this type of business gained 160,000 members practically overnight.
Finally, the advent of the HealthCare Marketplace has brought with it a number of new insurance company players that are now offering coverage in various states. Just like the hospitals and ACOs, these groups possess great knowledge on how to design and market health insurance coverage, but lack the administrative mechanisms that TPAs readily possess. Any of these Co-ops, ACOs, and Insurance Plans are targets for business that has never been there before.
3. Derive value from minimum-value plans
As a result of the ACA, some employers who have never offered healthcare benefits are being forced into it to avoid penalties. This requirement creates a new business opportunity for TPAs to offer minimum essential coverage plans – either plans they market from carriers or self-funded plans they create themselves. This pre-packaged approach is different than the standard customized plans TPAs create.
To market them, TPAs can compare the cost of the plan with the cost of non-compliance, creating a case as to why the employers should offer this coverage versus paying the penalty. In addition to avoiding penalties, TPAs can explain the benefit employers will receive as a result of offering the plan, including generating goodwill among current employees who didn’t have coverage, having another tool to use in attracting new talent and an ability to influence employee health to reduce man-hours lost to injury or illness.
4. Offer consulting services
The knowledge TPAs possess, especially in terms of ACA compliance, is invaluable to employers, associations and other organizations. Rather than giving it away, TPAs may want to consider selling it in the form of consulting services to organizations trying to determine which way to go, but not yet ready to make a commitment.
TPA consultants can lay out the options for these organizations and then advise them on what it will take to create a successful program and how to sustain that success over the long term while minimizing costs and risks. It can also provide a good introduction to future business.
5. Create new revenue streams with consumers
Your extensive knowledge can also be applied to consumers. Taking what they are already doing for self-funded employers with multiple plans, some TPAs are looking into establishing separate divisions that can function as what the ACA calls “trusted advisors,” answering consumer questions, comparing plan options and helping them make decisions. The ACA, and especially the marketplaces, have created a great deal of confusion. TPAs can use resources they already have, including call centers and self-help portals, to capitalize on consumer uncertainty and create a revenue stream.
The ACA has become a virtual “golden ticket” for TPAs, creating new opportunities and helping them gain access to business that was never available to them before. More are certain to be uncovered as the healthcare industry evolves over the next few years. Taking advantage of them requires some creativity and thinking outside the box. But as many are already finding, it’s well worth the effort.