Technology and the TPA: What’s Next?

Third party administrators (TPAs) are no different than any other 21st century business; among their top priorities are controlling costs, increasing efficiencies and developing strong competitive differentiators. And, like businesses in just about every other industry, they increasingly rely on technology to move the needle on performance.

According to Tom Cardwell, Executive Director of Account Management for The TriZetto Group, Inc., TPAs must change their value propositions if they want to thrive in a cost-competitive market. His company, which sells technology products and services to TPAs and other health care organizations, knows these clients must become more efficient, consumer-driven and quality-focused while minimizing risk and maximizing returns, a tall order in today’s turbulent environment. He sees technology playing a major role in moving TPAs from focusing primarily on claims management to becoming integrated health care managers.

Years ago, managing health care benefits dollars to produce a good claims year was enough. Nowadays, to compete with big carriers and brokers offering deep discounts, TPAs must get back to managing the overall care of employer group members. After all, claims account for 85% of health care expenses versus 15% for administration. The new thinking is if TPAs manage the 85% and are able to prevent claims from occurring in the first place, it won’t matter what the discounted rate is. Getting there, however, requires full integrated systems offering sophisticated functions such as claims and data analyses, predictive modeling, online enrollment and access, debit card utilization and HIPAA compliance and security programs.

There’s no doubt that customer expectations and rapid advances in health care administration systems have propelled TPAs to re-examine their technology investments. They’re now building the infrastructure to support new initiatives that not only satisfy their customers’ demands for information and innovative services but also provide new revenue streams for the TPA.