03.10.17

Performance Goals: Is My TPA Performing Well?

 

performance goals.jpgYou’ve worked out an agreement with your TPA for adjudication of your healthcare claims. It’s right there in black and white: services you do and don’t cover, the time frame they’re required to process claims in and more. You have even worked out performance guarantees within your contract to measure how effective your TPA is at carrying out the terms of your agreement. So if everything is there on paper, and the TPA says they’re measuring and meeting performance goals, do you really need an independent auditor to take a double look?

Absolutely!

TPAs adjudicate thousands of claims per day, and each client they serve has a different set of parameters they use for their members. When you’re setting up your contract with your TPA, it’s important to customize a plan that works for you and your employees, and it’s equally important to follow up with these terms of agreement to be sure they’re being upheld. Inevitably, some claims fall through the cracks, leaving a trail of your money along the way. But never fear! It’s not too late to recover your lost dollars.

Measuring Your Performance

There are a wide variety of ways to measure effectiveness. One way is through financial claim accuracy (claim dollars being paid), but there’s also procedural accuracy, call metrics and claim turnaround time, to list a few. Using performance goals that are mutually set, the TPA determines whether or not they’re meeting the terms agreed upon. The catch here is that they’re measuring their performance by analyzing whether or not they think they’ve met these goals. In many instances, we have found that TPAs claiming to meet performance goals at 99% are not actually meeting those goals when reviewed and measured by an independent healthcare claims auditor.

Turnaround time looks at the plan parameters to determine whether the TPA has processed claims in a timely manner. Most performance goals lay out a maximum number of days the TPA has to review and adjudicate claims. Some TPAs count the first day as day zero instead of day one. This means that if the TPA is given 15 days to process the claim, they’re giving themselves 16 days instead of 15, something you should be reimbursed for.

Some Perspective

Perhaps the most important performance indicator is financial accuracy, which compares the total number of correct claim payments to the total number of payments made.  When an administrator is only processing claims correctly 98.50% of the time, the remaining 1.50% of claim payments is being paid incorrectly.  Whether your group spends $10 million or $100 million annually on healthcare claims, 1.50% of your benefit dollars are paid out incorrectly. That’s a large dent in the corporate checkbook.  

Get the Most of Your Performance Goals

So how do you make sure that your TPA is meeting your expectations for performance goals? It starts at the beginning: with your terms of agreement. Generally, the plan administrator creates the performance guarantee in your contract and you agree to the terms. Not only should performance goals be discussed and incorporated in your contract, but you should also push for independent third party verification. While it’s OK to accept their proposed guarantee, know that the TPA doesn’t make a habit of creating a goal they can’t meet. Using an independent auditor with this in mind ensures that performance goals are actually being met.

Making the Grade

Most schools consider 90 to 100% an “A.” The reality of the performance goal scale is that a 97% is considered failing financial accuracy and results in a loss for your company and its members. Independent auditing processes can help not only identify these mistakes, but also correct errors to stop them from happening in the future. This might not seem like a big difference, but even at 97% versus 99.9%, you’re losing a substantial amount of money. Want to know if you make the grade? Contact one of our industry experts to schedule your consultation and comprehensive audit today.

health care claim audit