Practice Management With or Without Third-Party Administrators

By Patricia Johnson and Susan Pilch

This article is a part of the September/October 2022, Volume 34, Number 5, Audiology Today issue. 

In the world of health insurance, a third-party administrator, or TPA, is a state-regulated entity that provides support for self-insured or self-funded health plans. The use of self-funded health plans has grown over the past two decades and the prevalence of TPAs has matched that growth along the way. Initially, TPAs were used to provide basic administrative services necessary to execute a health plan or benefit, such as claims processing, customer service, and billing. TPAs are typically funded through commissions from premiums, specific fees, or a combination of both.

The role of the TPA has evolved over time. Some of these entities are now taking on the responsibility of benefit design, the formation of provider networks, and the ongoing management of a health plan or specific benefit type. There are also “specialty” TPAs that administer a specific benefit such as hearing, vision, or dental within a larger health plan. These benefit-specific TPAs offer in-depth knowledge of the specific benefit and many times offer proprietary provider networks.

TPAs in Hearing-Health Care

TPAs emerged in hearing-health care in the 1990s. They were originally created to facilitate audiology provider networks and to provide audiologists with access to managed care plans. Today, hearing-care TPAs contract with a variety of plan types, including Medicare Advantage, managed Medicaid plans, self-funded employer plans, commercial insurers, state and federal workers compensation, and direct-to-consumer (DTC) hearing aid discount programs. Most hearing-health TPAs and provider networks are owned, contracted, or affiliated with major hearing aid manufacturers, retailers, and/or distributors.

Remember that value is the intersection between a patient’s goals and the amount a patient spent to meet those goals.

Emerging Issues 

TPAs are here to stay, although several issues of concern have emerged, including consumer confusion around terminology and coverage. Many consumers are unaware of the differences between actual insurance coverage versus a discount plan. 

A discount plan is not an insurance product. It is a discounted rate that has been negotiated for the beneficiary. Consumers may not be prepared for possible out-of-pocket costs. Health-care providers across disciplines, including vision, dental, and hearing, have expressed concerns about the provisions of TPA contracts. 

Some TPAs limit dispute resolution, reimbursement, length of contractual terms, and obligate participation in multiple other contracts. Each TPA contract presents a unique set of considerations for audiologists and should be evaluated for potential business, legal, and ethical implications. It may also be advisable to retain the services of an attorney.