Third-Party Administrators (TPAs) are outside administrators that provide operational services such as claims processing and benefits management for companies under contract. Insurance companies and employers with self-funded health plans often use TPAs to manage their claims, as it offers several advantages. One of these is consistency in managing claims, even if the insurance company changes. TPAs work for the customer, not the insurance company, so there is more flexibility and willingness to keep the customer happy with personalized claims service instructions. ASO is typically a wholly-owned subsidiary of a health insurance company, which may limit provider network options to those available from the parent insurer.
In order to adjust claims in any state, an independent appraiser's license or a public appraiser's license must be issued by the superintendent. This license must be held by any person, firm, association, or corporation that is reliable and competent to act as an appraiser in a manner that safeguards the interests of the population of the state. TPAs can also maintain relationships with insurers through which employers can access specialized insurance coverage called loss-free insurance. This helps limit the high risks of claims for employers who offer self-funded health plans. In exchange for insurance premiums, the insurer assumes the risk of claims that exceed the premiums charged. Under the Insurance Act, an independent appraiser is a person who adjusts losses on behalf of an insurer (compared to a public appraiser, acting on behalf of the insured).
Both the company and any of its employees engaged in adjustment must be licensed as independent adjusters in order to adjust claims in this state for any insurer. Some states require TPAs to submit copies of their agreements to provide services to insurance companies to the state insurance department. TPAs manage and process insurance claims and other aspects of workers' compensation claims on behalf of the employer and the insurer to ensure that injured workers' lost medical and wage bills are paid in a timely and appropriate manner. The external claims managers of commercial liability insurance providers act much like claims adjusters and can work together with the insurance company's internal claims adjuster, as well as with external claims investigators and the defense attorney. It is important to note that TPAs are not “TPA insurance”. They are connectors between companies with self-funded health plans and insurance providers.
The fact that they are located outside the state does not matter if they are adjusting claims, whether by mail, telephone, or other means of communication, and the insured or other claimant is in New York. In conclusion, TPAs offer many advantages when it comes to managing claims for companies with self-funded health plans. They provide consistency in managing claims even if the insurance company changes, more flexibility and willingness to keep customers happy with personalized service instructions, access to specialized loss-free insurance coverage, and they can adjust claims in any state as long as they have an independent appraiser's license or a public appraiser's license.
