Skip to Content
Claims Management

4 Questions You Need to Ask Before Considering a TPA Change

When a legacy TPA no longer satisfies an organization’s needs, changing to a new service provider could enhance claims results and improve relationships. But, before jumping ship, there are substantial considerations for all stakeholders to discuss.

August 15, 2022

Transitioning to a new third-party administrator (TPA) can benefit an insured through renewed resources, like technology that produces report reviews and claims analysis trends, as well as potential cost savings. However, a TPA change may be unnecessary or for the wrong reasons, particularly when there is a lack of communication between the employer and TPA regarding the program needs and the claims process.

“TPA changes don’t happen overnight — legacy TPAs need considerable time to manage arrangements with an insurer, and the new TPA will need time to get an employer’s program up and running,” said Tanya Parker, Senior Account Manager at Safety National. “The relationship between TPA and employer requires a lot of time and effort, so before contemplating this change, an employer should re-evaluate what might be missing in their current program.”

The following are some questions to consider before considering changing your TPA:

1. Is the change necessary?

This process can be expensive, requiring collaboration and intervention between many departments. Changing a TPA outside of a renewal period may cause the insurer to conduct a collateral review or charge a fee for a mid-term change. There should be an effort made to determine if the legacy TPA can rectify any issues that can prevent a possible change.

2. Is it a specific person or process that is causing issues?

Talk to your current TPA about current concerns. Personnel issues can play a significant role in your company’s overall claims outcomes from a TPA, so having a more experienced adjuster could offer a different approach. If your TPA is using a claims management system that is not providing accurate data or meeting your company’s financial data reporting requirements, ask if they plan to update technology soon.

3. Is cost the main factor in your decision to move?

Analyzing performance on cost alone does not provide an overall picture of your TPA’s value. They may have better claims results in the long term. They could also be providing additional benefits like nurse expertise at no charge, and there is no substitution for first-hand knowledge of your claims handling process. Remember that pricing can always change, and the additional expenses associated with a TPA change, like fees for continuing to access data maintained by the legacy TPA and charges for the legacy organization to run off existing claims, may not be worth it.

4. Have you considered limitations depending on location and lines of business?

Jurisdictional expertise is essential to your TPA choice, and TPAs outside of your current territories may not be able to support your company’s business type and location. Even if they can handle applicable jurisdictions, they may not have quality assurance processes to guarantee consistent results between offices and adjusters. There are multiple tiers of TPAs ranked by the services they can provide, and your company may need the services provided by a top-tier option.