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What Does This Fee Cover? Unpacking What Goes Into TPA Administrative Costs and Fees
White Paper Summary
Take a moment and try to name a product or service whose price hasn’t increased in recent years.
Trouble thinking of one? Odds are you’re not alone. “This trend is prevalent across various service sectors,” said Michael Becker, senior vice president and chief client officer for Broadspire. “As time passes, factors such as inflation, increased operational costs and market dynamics contribute to the gradual rise in prices for services rendered.”
The trend of rising prices for goods and services, of course, applies to insurance claims. The increasing complexity of newer, tech-savvy vehicles has caused commercial auto claims costs to increase. Medical inflation has increased workers’ compensation costs, especially in states without fee structures.
With claims costs on the rise, many insureds are looking at their bills from service providers such as third-party administrators (TPAs) with increasing scrutiny. They want to know what these fees are paying for and, in some cases, are considering unbundling their TPA services.
“When consumers see a fee on their bill, their immediate reaction is often to question what it is,” Becker said.
These fees often cover critical services, like vetting medical vendors, managing contracts, conducting background checks — and all of the other administrative tasks that go into coordinating care and managing claims. By unbundling services, insureds could open themselves up to higher workloads and increased exposures. Instead, TPAs and insureds need to work together to understand why a fee exists — and why these services save money in the long run.
To learn more about Broadspire, please visit their website.
