Why the ACA creates a golden ticket for TPAs
New opportunities: handling ACA challenges and complexity
Many of the new opportunities for TPAs result from challenges and complexity associated with the ACA. For example:
- Small and mid-size employers who wanted to continue providing employees with health insurance were uncertain of what the changes would mean or how to document compliance. Others realized they needed to offer a plan for the first time to avoid fines. In both cases, they turned to TPAs for guidance.
- Accountable care organizations (ACOs) found they needed help managing new administrative tasks that accompany moving to a pay-for-performance model.
- Niche players like hospitals and municipal groups found greater incentive to continue offering self-funded health insurance. TPAs With their deep expertise in insurance administration, their understanding of how to drive member participation, and their flexibility to tailor programs to suit the specific needs of groups from 25 covered lives and up, the changes brought about by the ACA are directly in the TPAs’ wheelhouses. In fact, they are proving better suited to the ACA than the large, full-insurance carriers for the self-funded employer market.
Additional opportunities: increasing business from bread-and-butter clients
While self-funded employers have always been the bread-and-butter of TPAs, many have recently been able to expand that market downward as a result of two primary forces:
- Changes brought about by Reinsurance carriers make it more attractive to self-fund (such as creation of coverages with smaller specific and aggregate stop-loss limits). Reinsurance carriers have also begun offering coverages where claims reimbursement takes place immediately and claims auditing takes place afterwards, helping employers manage risk more effectively.
- The requirement for employers to offer some form of health insurance to employees or face significant government fines.
The result is more small employers are now looking into what types of affordable health plans they can offer. This is where TPAs shine.
Added bonus: Flexibility to tailor plans and programs
Unlike large carriers who only offer a handful of off-the-shelf options, TPAs have the flexibility to tailor their self-funded plans to the specific needs of each employer. They also have the administrative capacity to manage the entire program for employers – including complex, ACA-specific requirements such as calculating and reporting on the number of covered employees based on hours worked.
Once programs are set up, TPAs are also in a better position than large carriers to drive employee engagement with it. For example, they can:
- Build portals that match the employer’s website in terms of design, branding, and language. This is important because employees – especially those with less insurance literacy – are far more likely to feel good about and trust a portal that looks like it’s from their employer rather than an insurance company.
- Set requirements that drive usage of the portal, such as making the portal the only option for enrollment or requiring an employee to complete an online HRA to be eligible for the company contribution to health insurance (with the employer’s approval, of course). Engaging employees through the portal, rather than sending information such as explanations of benefits (EOBs) through regular mail, can help TPAs bring their administrative costs down further, making it more affordable for employers to offer health insurance.
- Incorporate other services into the portal with one-click access, such as health risk assessments and wellness programs. By doing so, employers make it easier for employees to become and remain healthier. In addition, reports generated through those services can help brokers and TPAs develop new programs, such as rewards for smoking cessation and exercise, which address specific health concerns of that group. These programs not only help employers lower claims; they also contribute to reducing time lost due to avoidable illnesses, improving productivity.
TPAs across the country are already seeing results. One that already had a small business program in place has doubled its revenue in the last two years by adding new, smaller self-funded employers. Others that have added this capability have created new markets for themselves and established a position as the dominant player in their area. And the surface has only been scratched.
Next up: Creative ways to capture the opportunity
Taking advantage of ACA-related opportunities may require a bit of “thinking outside the box” for TPAs. Check out this post for some creative routes to consider.