Even with group medical cost trends projected to grow 8.5% in 2026, there is good news tied to cost containment. Much of employers' health plan spending – 82.5% – falls within areas that can be managed strategically to reduce costs.
To optimize cost management, small and mid-size businesses are following the lead of their larger counterparts by moving to self-funded health plans. Navigating the shift to self-funding – and maximizing its advantages – underscores the critical role trusted third-party administrator (TPA) partners play.
"The TPA is the secret sauce for small and mid-size businesses," says Jasmine Bibb, Vice President of Customer Success at Roundstone Insurance. "A TPA partner is a passport that allows smaller employers to access the same control and transparency that large employers have, but with guardrails to help them navigate successfully."
By prioritizing three critical capabilities – operational fundamentals, strategic cost management, and ecosystem integration – benefits advisors can help clients identify TPA partners that deliver measurable value.
Operational fundamentals as a solid foundation
Any TPA relationship must be grounded in strong execution of fundamentals, including claims administration, customer service, technology and reporting. But the evaluation must go beyond basic comparisons.
“A lot of our partner advisors are very proactive when they're interviewing a TPA,” says Rob Hamilton, Executive Vice President of Sales at Roundstone. “One area that can be overlooked is the TPA’s onboarding experience for both the employer and plan members. After all, the renewal really begins with the onboarding.”
Similarly, customer service is critical to day-to-day success. Employers need quick access to knowledgeable representatives who can address claims payment and funding issues, while members need support when they have questions about coverage, deductibles or authorizations.
Accessible data and reporting are also vital foundational TPA capabilities that support claims management and cost containment.
Targeted cost management strategies
In addition to foundational administrative and service expertise, effective TPA partners deliver cost-containment strategies tailored to the client’s needs.
"A good TPA reads the room and really gets to know their clients," Bibb says. "They take a vested interest in being a strategic partner that offers cost-containment solutions that bring real value.”
Cost management can address significant challenges like pharmacy or oncology spending through partner or plan design changes. Bibb also notes that TPA partners should examine smaller-scale solutions that meaningfully impact costs for small and mid-size companies, such as:
◆ Employee assistance programs (EAP) that help direct employees to preventive mental health resources
◆ Education and digital tools that help employees use their benefits or find in-network providers
◆ Concierge navigation services that guide members through complex care journeys
◆ Enhanced data analytics to identify emerging cost drivers and focused interventions
Partner ecosystem integration
Self-funded plans operate within an ecosystem of partners, including pharmacy benefit managers (PBMs), wellness programs, navigation vendors, point solutions and stop-loss carriers. The most effective TPAs excel at collaborating within this network and offering the flexibility to integrate with solutions that fit specific client needs.
"A good TPA partner is open to the fact that advisors and employers want the ability to plug and play," Bibb explains. "A strategic TPA will assist in evaluating options and handle the necessary due diligence to find complementary solutions.”
When vetting potential TPA partners, Hamilton recommends leveraging carrier resources, including education and TPA scorecards, as well as standardized TPA questionnaires available through the Self-Insured Institute of America.
By evaluating TPAs across operational fundamentals, cost-containment strategies and integration capabilities, advisors position their clients for sustainable self-funding success.
Roundstone is an innovative employee health benefits company helping small- and mid-size businesses deliver affordable, high-quality coverage. Learn more about Roundstone's self-funding resources here.
Ann Clifford is a freelance writer who translates her background in financial services marketing into specialized content focused on employee benefits and small business topics.
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