PART 5: HOW EMPLOYERS SHOULD EVALUATE A TPA
When evaluating a Third-Party Administrator (TPA), the process should start with the employer's strategic vision rather than simply seeking the lowest administrative fee.
VP of Employee Benefits · BHC Insurance · Independent Benefits Consultant
When evaluating a Third-Party Administrator (TPA), the process should start with the employer's strategic vision rather than simply seeking the lowest administrative fee. Consider what the organization envisions for its health plan over the next three to five years.
Key questions include:
- —Does the organization desire greater transparency?
- —Is there a need for more control over pharmacy spending?
- —How important is employee advocacy?
- —Are there plans to implement cost-containment programs?
- —Is advanced reporting a priority?
- —What about a flexible network strategy?
These answers will guide the evaluation process.
Employers should assess several critical areas:
- 1.**Operational Capabilities**: Does the TPA possess the necessary capabilities for claims administration, eligibility management, reporting, compliance support, vendor integration, customer service, and implementation?
- 1.**Flexibility**: Will the TPA support independent vendors and customized plan strategies without unnecessary restrictions or fees?
- 1.**Data Access**: What access will the employer have to claims and eligibility data? The contract should clarify data ownership, reporting frequency, and file access.
- 1.**Performance Measurement**: How will performance be evaluated? Ensure service expectations are documented with guarantees on claims accuracy, turnaround time, and issue resolution.
- 1.**Account Servicing**: Who will manage the account post-sale? It's essential to meet the implementation and account-management teams to understand their experience and escalation procedures.
References should come from employers of similar size and complexity, as a TPA that excels for one organization may not suit another.
Finally, a thorough review of the administrative services agreement is crucial. Pay attention to termination provisions, data access, vendor fees, and performance guarantees.
The aim is not to find a perfect TPA but to choose one whose capabilities, service model, technology, and culture align with the employer's strategy. Selecting the right TPA is a strategic decision that can significantly impact the performance of a self-funded plan.
Questions about this topic? I'm available for consulting engagements across Northwest Arkansas and beyond.
Sources & Further Reading
- Self-Insurance Institute of America (SIIA): TPA Selection Criteria — Industry framework for evaluating TPAs across claims accuracy, network access, data reporting, and member services.
- DOL: ERISA Fiduciary Obligations for Health Plan Administration — Employer fiduciary duties that govern TPA selection and ongoing oversight — the legal framework for the evaluation process.
- PBGH: Evaluating Third-Party Administrators for Self-Funded Plans — Employer coalition guidance on TPA evaluation criteria including data access, audit rights, and performance guarantees.
- KFF Employer Health Benefits Survey 2024 — Self-Funded Plans — Data on self-funding prevalence and TPA market structure — context for the employer evaluation process.
- ERISA Section 503 — Claims Procedure and TPA Accountability — Statutory basis for TPA claims processing obligations and the employer's right to audit and oversight.
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TPA Comparison Tool
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Benefits Plan Checkup
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About the Author
Corry Hull, REBC®, CSFS®
VP of Employee Benefits · BHC Insurance
Corry Hull, REBC® CSFS®, is VP of Employee Benefits at BHC Insurance and the founder of Employer Benefits IQ (www.employerbenefitsiq.com). He is a Certified Health Rosetta Advisor — one of fewer than 200 nationwide — and a multi-year presenter at United Benefit Advisors (UBA) national conferences. He specializes in self-funded health plan design, PBM contract strategy, stop-loss structuring, group medical captives, and ACA/ERISA compliance for mid-market employers. His work has been recognized by Health Rosetta (Rosie Award, 2026), UBA (Producer Peak Performer, 2025–2024), and BHC Insurance (Producer of the Year, 2021–2025). His employer-education content has been referenced in BenefitsPro and cited within the Health Rosetta advisor community. All consulting and brokerage compensation is fully disclosed.