Who's behind the card? Plans sometimes administer, rather than insure

Self-insured businesses increasingly are tapping health plans to serve as third-party administrators. This could mean more hassle for your practice.

By Emily Berry, AMNews staff. Aug. 25, 2008.

The growing trend for companies to self-insure health benefits could mean less recourse for physicians having trouble getting paid fairly and on time. But most physicians don't know which patients are covered by self-insured plans.

The problem for doctors, says Tim Maglione, senior director for government relations at the Ohio State Medical Assn., is that they don't know "when someone shows up with a UnitedHealthcare insurance card [whether] that could be a fully insured patient or United acting as a TPA. There's no way to know that."

TPA stands for third-party administrator, a role health plans are being asking to play more frequently. According to surveys by the Kaiser Family Foundation and Health Research and Educational Trust, 44% of workers with health benefits were covered by self-insured plans in 1999. That percentage had risen to 55% in 2007.

Though self-insurance used to be an option only for large companies with rich cash flow, smaller companies have moved to self-insurance as a way to save money, said Mike Ferguson, chief operating officer of the Self-Insurance Institute of America, a lobbying group based in Simpsonville, S.C..

Health plans serving as TPAs often get paid less than they would if they take full risk. A TPA also has less control, as it under more direct marching orders from a client company.

How this affects doctors is not always clear.

The most important thing is whether companies are going to a self-insured plan to create an inferior or superior benefit, said Brian Kalver of Wilentz, Goldman & Spitzer, a law firm in Woodbridge, N.J. An inferior plan "is going to hurt the doctors, because insurance will just cover less of their bill."