Feature Article:
How to Help An Employer Client Select a Qualified Claims Administrator
By: Dorothy M. Cociu, RHU, REBC, GBA, RPA
President, Advanced Benefit Consulting & Insurance Services, Inc., OCAHU V.P. Communications & Public Affairs
The County of Orange Insurance News (The COIN), May, 2019
Since the OCAHU Business Development Summit in February, 2019, when I did a CE class for agents on Self-Funding, I have been asked by numerous brokers about claims administrators and how they should evaluate them. Because the number of questions on this topic was memorable, I decided to write this feature article on this, to give agents some helpful hints on evaluating administrators.
Whether you need to find an administrator to do just COBRA administration, or just Cafeteria Plan administration, or just a self-funded dental or vision plan, or other stand-alone ancillary product, to bill for multiple products, or whether you need an administrator to do all claims processing and other administrative functions for your client, employers are relying on their brokers/agents to assist them in making these decisions. They want information to make comparisons… They want a starting point, a mid-point to evaluate, and finally, a recommendation. So how, exactly, do you do that?
I’ve had a few brokers tell me that they are doing or are thinking of doing a lot of the administrative functions, such as billings and eligibility, for the employer. I want to caution you… California requires an administrative license before you can perform certain administrative functions. You do not want to be in a position of acting as an administrator without a license. And even if you had such license, you are also required to carry errors & omissions coverage for those administrative functions… and to get it, you need experience. So, I advise you to consult with your legal counsel before trying to take on those functions that could get you into trouble. (Incidentally, Marilyn Monahan, who does the Legal Briefs each issue for the COIN in the Compliance Corner, could certainly assist you if you don’t have a qualified attorney to assist you – but of course I am not endorsing anything on behalf of OCAHU… I’m just pointing out that she is one of many qualified attorneys in this field).
As a former executive in a third-party administration operation, and as a broker specializing in self-funding ever since, I wanted to share some insights about how to start, how to evaluate, and of course, how to make recommendations. The decision, of course, is ultimately the employer’s, but it’s our responsibility and obligation to help them get to the point where they can.
First off, it’s important that you look at more than one option. Employers want choices, and recommendations as to why one may be better suited for them than the next.
Next, you need to compile a list of prospective administrators. This can include ASO providers/carriers, if the employer wants to see those as well. However, keep in mind, they generally are less flexible and tie networks, UR/Case Management and perhaps even stop loss to their own carrier, which in my opinion, can sometimes be construed as a conflict of interest. Again, that is my personal opinion, and not that of OCAHU. But if they want to see that option, you are obligated to show it.
To help compile the list of prospective administrators, you can use the resources of organizations such as the Phia Group, the Self-Insurance Institute of America, the Health Care Administrator’s Association, or even the California Department of Insurance. They often have lists of administrators on their websites. You can also ask experts in the field for recommendations. That is usually the best way, I’ve found, to find a good administrator.
Next, you want to narrow down the search to a manageable number of entities to request information from. But what do you ask for? How do you compare them? That is quite a process in itself, and usually takes a few months if you haven’t done it previously.
There are basic questions you need to ask and gather information on… Like ownership, locations, types of staff, expertise in-house (such as a nurse or medical professional to help with chronic claims and assist in stop loss placement and negotiations at renewal following a large claim in a self-funded group), affiliations, whether they were recently acquired or are currently involved in a merger (claims system merges are the worst), how often they’ve had claims system upgrades and when was the last one completed, name changes or DBAs (you want to know all names so you can do searches to see if perhaps they changed a name due to a lawsuit or related situation), whether they sell direct, work exclusively with brokers, or a combination of both, how many clients they have, how long they’ve been in business, what type of software they use… is it leased or purchased? Do they have the ability to program for custom reports, or is it a long and expensive process if your client wants something special? You want to know about their data recovery plan in the event of a natural disaster or other situation that could wipe out their data… You want to know if they’re HIPAA compliant, and just how secure they really are. You should check with HHS/OCR to see if they’ve had a HIPAA Privacy or Security Breach.
Honestly, I could write pages on what to look for and ask, and it’s all important, but I don’t have the space in this article. I will suggest, if you’re looking for an administrator, the Self-Insurance Institute of America has the best TPA questionnaire that I’ve seen. And it’s become standardized, so most TPAs already have it completed, and just update it annually or when changes occur. That makes it easier to get the data from them quickly and easily. But then the process begins… The hard part… Comparing the administrators. You may not have the expertise to do so, so I’d recommend you start with a spread sheet on the basic differences, then bring in a qualified expert to help you create a workable comparison for your client and you to evaluate.
I asked MaryAnn Wessel, Vice President, New Business Development, from EBA&M, a third-party administrator in Irvine, CA, what she felt the most important things a broker should be asking and looking for… “Two of the most important questions to ask is how experienced is the TPA’s staff in all areas – not just Account Management, and how many layers does one have to go through to get resolution if there are issues, or if assistance is needed for special requests. ”
The “layers” she is referring to are the situations where TPAs that are often owned by large insurance companies or large national TPAs and the multiple layers of management one may have to get through to get a resolution. Sometimes this can substantially add to the time it takes to get answers or get a problem resolved.
Sometimes smaller can be better. You can get directly to the decision-makers easier. When working with a 900-pound gorilla, such as a large national carrier or administrator, you may never actually see face-to-face the powers that be. Personally, I prefer being able to walk in, talk to who I want to talk to; the person or persons I need to and get a quick resolution. I also always insist on taking a tour and meeting the folks that would be working directly with your client. I also, personally, avoid companies that have a customer service que. I don’t like the “next available representative” thing when it comes to complicated claims situations. I like personal service and assigned reps.
Most importantly, do your homework, and listen to what your client wants and needs. ##
Editor and Author’s Note: The views contained herein are the views of the author, and not those of OCAHU, CAHU or NAHU. The author always recommends the use of qualified legal counsel for legal recommendations. She is not an attorney and does NOT provide any legal advice, and this should not be construed as such.
