What is a Third-Party Administrator (TPA)?
A third-party administrator (TPA) is a company that runs the day-to-day administration of a benefit plan, most often a self-funded employer health plan, on behalf of the plan sponsor, including claims processing, eligibility, and reporting, while the sponsor keeps the financial risk.
Self-funded employers pay their employees' health claims themselves rather than buying a fully insured policy. Most hire a third-party administrator to do the operational work. The term also applies to administrators of retirement plans, FSAs, HSAs, and workers' compensation programs, but in group health it usually means the administrator of a self-funded medical plan.
What a TPA Does
- Adjudicates and pays medical claims on the employer's behalf
- Maintains member eligibility and enrollment records
- Arranges access to provider networks
- Coordinates with stop-loss carriers, pharmacy benefit managers, and care vendors
- Delivers plan reporting to the employer and its consultants
Why TPAs Sit at the Center of Benefits Data
A TPA receives data from every employer client and sends data to every partner those clients use. Inbound, it gets census and eligibility files in each employer's own format. Outbound, it owes eligibility feeds to pharmacy benefit managers, stop-loss carriers, networks, and point solutions, each in that partner's layout, plus claims extracts for reporting. Every new client and every new partner adds another mapping to build and maintain.
TPAs and Integrate.io
Integrate.io lets a TPA accept every client file as it arrives, standardize it into one layout, and deliver each partner's feed on schedule, without writing code for each connection. See data integration for TPAs.
FAQ
Frequently asked questions
Clear answers to the questions teams ask when evaluating Integrate.io.
What does a TPA do for a self-funded health plan?
A TPA processes and pays claims from the employer's funds, maintains member eligibility, provides access to provider networks, coordinates with stop-loss carriers and pharmacy benefit managers, issues ID cards, and produces reporting for the employer. The employer remains financially responsible for the claims.
What is the difference between a TPA and an insurance carrier?
In a fully insured plan, the carrier takes on the claims risk in exchange for premiums. In a self-funded plan, the employer pays claims directly and hires a TPA to administer them. Some carriers also offer administrative services only (ASO) arrangements, which work much like a TPA.
What data does a TPA exchange with other parties?
A TPA receives eligibility and enrollment files from employers and benefits administration platforms. It sends eligibility to pharmacy benefit managers, stop-loss carriers, provider networks, and point solutions, and sends claims and utilization data to employers, consultants, and analytics vendors.
Related Terms
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