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Health benefits cost cutters are looking harder at employer health plans' "third-party administrators" — the outside firms that help employers run their health plans.
Health Affairs, an academic journal with one of the highest academic journal impact factors in the world, published a commentary about the role of TPAs in the U.S. employer health benefits arena earlier this week.
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Karen Handorf, a professor affiliated with Georgetown University's Center of Health Insurance Reforms, and two colleagues at the center argue in the paper that TPAs may cause some of the same kinds of problems for employers that pharmacy benefit managers create.
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In some cases, Handforf and her colleagues argue, TPAs may hide important plan information from the employer, manage cost-management programs in ways that favor corporate affiliates, and, directly or indirectly, keep streams of negotiated discounts that were supposed to go to the employer or the plan participants.
Congress and federal regulators should make TPAs give employers more data, to make sure employers understand what the TPAs are doing and whether there are opportunities for the employers to save money, the researchers write.
They would also like policymakers to address situations in which health insurers own the TPAs and the TPAs may have conflicts of interest.
The TPA market: About 60%, or 94 million, of the 156 million Americans in employer-sponsored health plans are in plans served by TPAs, according to the Society of Professional Benefit Administrators.
Next Move Strategy Consulting estimates TPAs are generating about $100 billion per year from administering U.S. health benefit plans.
The history: Handorf and her colleagues are not the first health cost watchers to talk about the possibility that TPAs contribute to employers' rising benefit costs.
Handorf and her colleagues point out that some private lawsuits and federal regulatory actions have targeted TPAs.
In the U.S. House, the new, bipartisan Hidden Fees Disclosure Act bill would impose fee and data disclosure requirements both on PBMs and on TPAs.
TPAs' perspective: PBMs have argued that they are under attack because of other prescription drug market players' fury about PBMs' successful efforts to hold down drug prices and other sector players' profit margins.
TPAs make similar arguments about critics of TPAs' role in the health benefits sector.
A commenter on Health Affairs article who identified himself as a TPA sector veteran said he believes that Handorf and her colleagues are misunderstanding TPAs' position.
Employers may have trouble getting detailed information from the TPAs because insurers have included contract provisions that keep the TPAs from disclosing the data, the commenter said.
If employers and policymakers want employers to be able to get more data from the TPAs, policymakers need to eliminate the insurers' confidentiality clauses, the commenter said.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
