Administrative service only (ASOs) and third-party administrators (TPAs) function in a similar fashion. At their core, they provide administrative services to employers with self-funded benefits plans, helping them adjudicate, process, track and pay claims. They'll work with employees to educate them, manage enrollment, and help them navigate the plan. They'll also help employers stay updated on legislative changes and ensure their reporting and recordkeeping are within compliance standards. Both might offer additional services like COBRA, FMLA administration, cost containment and more. The major differences between TPAs and ASOs lie in their structure and how they provide their services.

Affiliation

ASOs are often affiliated with, or owned by, the major insurance carriers, and the experience rarely differs from the traditional carrier experience. TPAs, on the other hand, are generally independent businesses established as a high service alternative to the major insurance carriers.

Service

Most TPAs were founded using a high-touch, customer-centric approach that mandates service responsiveness and hands-on operation. TPAs generally review claims in greater detail and work with members to educate or identify alternatives, where needed. Alternatively, ASOs are more automated in their administration services and work to deliver economies of scale. To bring back the burger analogy, service is where TPAs eat ASOs for lunch.

Customization

TPAs offer a variety of options from multiple strategic partners, innovative approaches and specialized expertise. They will work with you to determine the combination of benefits that best suits you and your employees. This also includes creating a plan design and finding a network that works best. ASO carriers let employers select customized health plans to a degree, but the plans tend to be more predefined and restrictive to fall within the corporate offering.

Data transparency

TPAs work with employers to make sure they understand expenses and how their employees are using services so adjustments or cost containment strategies can be put in place, if needed. Many TPA firms offer online dashboards for customers so that critical data is continuously available to them. Data visibility with an ASO is similar to that of a fully insured plan in that they control and contain the usage data.

Provider reimbursement

ASOs generally work within the reimbursement structure of their parent company, which takes some of the more innovative TPA arrangements for reimbursement off the table, such as reference-based pricing and direct primary care.

Specialization

TPAs are specialized in self-funded or hybrid plans, and have their teams and expertise focused on these benefits. ASOs are often part of a larger company, with resources designed to support a fully funded or traditional insurance approach.

Instant Insights /

TPAs, ASOs and … burgers?

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