Third party administrator (TPA) is an organization
that processes
health care claims without carrying
insurance risk. Third party administrators are prominent
players in the managed care industry and have the expertise
and capability to administer all or a portion of the claims
process. They are normally contracted by a health insurer or
self-insuring companies to administer services, including
claims administration, premium collection, enrollment and
other administrative activities.
Self-insured employers often contract with third party administrator to handle their insurance functions. Insurance companies oftentimes outsource the claims, utilization review or membership functions to a TPA. Sometimes TPAs only manage provider networks, only claims or only utilization review.
While some third-party administrators may operate as units of insurance companies, they are often independent. However, hospitals or provider organizations desiring to set up their own health plans will often outsource certain responsibilities to TPAs.
References
- Healthcare Crisis Glossary
- The Hartford Group Benefits Glossary
- Plexis Online Resources
- Why Third Party Administrators (TPA's) use Independent Review Organizations (IROs)