Adding a third party to any customer journey may be considered an unnecessary complication, but in some instances, third party administrators (TPAs) can add significant value.
For customers this can be in the form of improved claims journeys and for insurers they can help facilitate expansion of the business into new markets and territories.
TPAs are also often the first port of call where advisers want more information about claims and such is their importance that intermediaries are increasingly researching and making provider choices based on the TPA being used.
Being able to rely on support from other operations across the world can help improve service levels and this means good TPAs who add value are becoming strategic partners as the sector seeks to better serve its customers.
Wide range of services
According to Diana Haydar Karam, director – direct sales at Nasco, TPAs can offer a wide range of services ranging from contract negotiation aiding network expansion, financial reconciliation with healthcare providers, assistance with complex case management, underwriting and policy design and administration.
But Haydar Karam maintains advisers connect the most with TPA whenever at claims level.
“Since the TPA represents the first level of escalation for rejected, non-approved or pending claims, advisers tend to connect directly with the TPA to receive the first justification answering the client,” Haydar Karam says.
“Advisers are now selecting the TPA equally to the insurer; the same products and benefits are offered by different insurers, however the member experience differs depending on the TPA.
“Therefore, advisers are building these relationships with the TPA to increase their leverage and better serve their clients.”
Cost containment
While there are signs that medical inflation is coming down in certain locations across the globe such as the UK, TPAs are also proving their worth in containing costs.
Christian Gregorowicz, global head of health services and utilities and managing director at Nextcare, says: “Cost containment now combines analytics, strong provider management and continuous process improvement.
“TPAs analyse claims data in real time to identify unusual activity and potential waste, and in some cases fraud.
“Specialised medical provider management teams negotiate cost of services with healthcare providers to maintain quality of the delivery and the associated costs within control.
“Alongside this, ongoing simplification of internal processes from pre-authorisation, adjudication and payment, result in leaner operations, with better predictability on claims trends to create additional value for both insurers and policyholders.”
Source of real-world insight
But Gregorowicz also maintains that for advisers, TPAs are a powerful source of real-world insight and added value.
“As TPAs see claims and member journeys up close, we can share trends on utilisation, cost drivers and customer expectations that help advisers shape more effective insurer selection,” he continues.
“TPAs also offer digital health tools and platforms that advisers can use to enhance their propositions and differentiate in a crowded market.
“Finally, when complex claims arise, a strong relationship with the TPA means faster, clearer resolution – improving the experience for their clients and reflecting well on the adviser.“
Expanding international reach
According to Nadia Jafar, CEO and founder of Bluestone of London, as well as improving claims experience, the use of TPAs can prove fundamental to insurers.
“The insurer needs to do that for client purposes where they’ve used TPAs if they haven’t got access in certain parts of the world, where they don’t have the licence for example or don’t have the networks, so they need to establish a TPA,” Jafar explains.
One such example of this is Bupa Global which early last year extended its reach into France by establishing a business partnership with third-party administrator (TPA) ExpaTPA and opening a new sales branch in Paris.
William Russell is another organisation to have used TPAs to expand international reach.
William Cooper, director at William Russell, says: “We have a fronted product in Indonesia and one in UAE.
“There you need a TPA just because of the whole emphasis on direct billing and access to outpatient treatment without any hassle, so it’s essential that you have a TPA.
“Also, all the clients are in concentrated geographies, so you need to be on the ground and in the right time zone to support.”
Keeping a competitive edge
Though Cooper maintains the company uses TPAs sparingly.
“For our offshore business, for our global portfolio, for our global clients, we prefer to keep things in-house,” Cooper continues.
“We have just much more control over the customer service and the quality of claims treatment and clients.
“We don’t really want to delegate that to a third party.
“If insurance doesn’t have its own customer model, then what does it have?
“I’m not saying that there aren’t any good TPAs out there, but we like to keep things in-house and keep control of what in our view makes us different from our competitors.”
Help from parent company
A further use of TPAs is to use international capacity to improve customer service levels.
Mike Hesch, head of UK employee benefits at Engage Health Group, tells Health & Protection: “Some of the risk providers use third party administrators to help them get up to speed where their service has dropped over the last few years.
“And then you’ve got the likes of Vitality who use their parent in South Africa and that works pretty well because they put together a team there that is trained in the same way as the UK team are.
“They are part of the UK team and are delivering a good level of service.
“Where we or they struggle to recruit those people with a good medical background, in South Africa, they can do that relatively easily and relatively cheaply.
“So actually the quality of the people you’re speaking to from South Africa, not knowing who you are, you’re just ringing up a Vitality UK number, that does add quite a bit of value because they’re getting better quality.”
Hesch notes in these instances the end customer sees little difference in service levels as this support is coming from the back office.
“They’re not speaking to people with a foreign accent which makes them think they are speaking to someone in a different country,” he continues.
“And so the end user’s experience is sped up, but they don’t know what’s being done where and therefore don’t feel the service is being detrimental from those third party administrators being used.”
Researching TPAs
Ultimately, according to Jafar, there is a difference between a good TPA and a really good TPA.
“If I’m using an insurer that has a TPA and it happens to be that insurer and their product fit in with the client’s needs, I will always ask the insurer which TPA they use,” Jafar continues.
“Then I do my research on the TPA and if I feel this will work, then we go ahead.
“There’s no harm in having TPAs; to some insurers there is really good expansion and it will probably add value to the service, but it depends on how it’s structured and it depends on the TPA.
“If I was to do my search and I found that there was a TPA included in this insurance company product, I would just ask the question and find out about the TPA.
“Overall, I would say they add value.”
Evolution into strategic partnerships
Consequently, looking to the future, TPAs will need to continue to evolve so partnerships become less transactional and more strategic.
Steve Mikano, president of TPA, SureGo Administrative Services, says: “Insurers’ relationships with TPAs are evolving from transactional arrangements into deeper, more strategic partnerships.
“Carriers are increasingly relying on TPAs not only for operational delivery, but also for insight, innovation, and consultation, drawing on TPAs’ cross‑carrier experience and frontline exposure to customer needs,” Mikano adds.
“There is a growing emphasis on collaboration around technology, automation, and straight‑through processing to improve efficiency and customer outcomes.
“At the same time, TPAs are being asked to play a more proactive role in recommending process enhancements and service improvements, with both parties aligning more closely around shared accountability for customer experience, cost management, and long‑term sustainability.”
