What is a Third Party Administrator?

You likely know the name of your private insurance carrier and you may even know the name of your employer's worker's compensation insurance carrier--but what you may not know is that these insurance carriers have little to do with your actual claims.  Instead of doing the back-office work themselves, they contract with Third Party Administrators, or TPAs. 

TPAs are responsible for a wide number of tasks. They may conduct Utilization Reviews for medication and medical procedures and issues authorizations or denials. They may handle pharmacy benefits, or contract directly with the pharmacy benefit managers (PBMS) that process the pharmacy claims. They handle all billing for medical providers, and pay those providers based on contractual agreements. The TPA may have complete control over every financial aspect of your private insurance or worker's compensation claim. Sedgwick or United Healthcare may be your insurance carrier in name only. 

Insurance carriers contract with TPAs in order to save money, specifically on the administrative costs of handing your claim. An insurance carrier that accepts 10,000 claims a month simply doesn't have the manpower hours available to handle that amount of data entry, processing, medical review, payment processing, and adjudication. Instead of fully staffing five different departments to handle all the work, they contract with one or two other third party administrator who absorb the costs of the process as part of their business model. 

Like Pharmacy Benefit Managers (PBM),  TPAs are not obligated to the patient in any way. They are authorized to act on behalf of the payor/guarantor and their primary goal is to reduce cost and eliminate "unnecessary" medical treatment. Of course, they are the ones who decide what is necessary. They may solicit the opinion of your doctor, or they may employ their own and simply ignore what your doctor has diagnosed or the treatment he provides. TPAs are well within their rights to insist their own doctors review your medical files and make decisions about your treatments without discussing any of it with you. 

Also like PBMs, Third Party Administrators do not advertise what they are doing. Their names will appear on insurance cards and other paperwork, but if your insurance carrier is Sedgwick, it may not be clear who Mitchell is, what they do, and why they are denying your treatment. 

Who owns your claim? Who administers it? Why is it being denied? Why is your doctor being ignored? You may have a dozen questions about your own healthcare and have no answers.  Patient Services Solutions can help you answer those questions. We can help you understand exactly what is happening on your claim, why your requests for prior authorizations are denied, and why insurance carriers are refusing payments.