Third party adminstrator

Third party administrator (TPA) is an organization that processes health care claims without carrying insurance risk. Third party administrators are prominent players in the managed care industry and have the expertise and capability to administer all or a portion of the claims process. They are normally contracted by a health insurer or self-insuring companies to administer services, including claims administration, premium collection, enrollment and other administrative activities.

Self-insured employers often contract with third party administrator to handle their insurance functions. Insurance companies often outsource the claims, utilization review or membership functions to a TPA. Sometimes TPAs only manage provider networks, only claims or only utilization review.

While some third-party administrators may operate as units of insurance companies, they are often independent. However, hospitals or provider organizations desiring to set up their own health plans will often outsource certain responsibilities to TPAs.