Third Party Claims Administrator Services and Benefits

Third party claims administrator services are designed to handle claims efficiently and effectively. This is achieved through the use of technology and a team of experienced professionals.

One of the key benefits of using a third party claims administrator is the reduction of administrative burdens on insurance companies. According to a recent study, third party claims administrators can reduce administrative costs by up to 30%.

By outsourcing claims handling to a third party, insurance companies can free up resources to focus on core business activities. This allows them to better serve their customers and improve overall business performance.

Third party claims administrators also provide access to specialized expertise and knowledge, which can be beneficial in complex claims situations. For example, a third party claims administrator may have experience handling claims related to specific industries or types of losses.

Additional reading: Business Insurance Claims Examples

In Oklahoma, third-party administrators (TPAs) must obtain a license to operate, which costs a non-refundable $100 annual fee. To be eligible, they must hold a valid license as an administrator issued by the Insurance Commissioner.

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A TPA can obtain a non-resident license if they hold a home state certificate of authority or license in a state that has adopted the TPA Act or applies substantially similar provisions. If the TPA's home state doesn't extend to stop-loss insurance, but has similar provisions, they can still qualify for a non-resident license.

To apply for a TPA license, you'll need to provide a National Association of Insurance Commissioner (NAIC) Biographical Affidavit and a comprehensive review of the background report by an independent third-party NAIC-approved vendor. However, this requirement was waived for applications submitted after November 1, 2023.

A partnership must notify the Commissioner within 30 days if any individual licensed on its behalf has been terminated or is no longer associated with the partnership. Each general partner must be licensed and qualify as though an individual licensee, and a separate license is required for each individual named in the partnership license.

The administrator must report any administrative or criminal action taken against them in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order, copy of any payment required, and other relevant legal documents.

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Here are the key requirements for a TPA license:

In Oklahoma, regulations 36 § 1441 to 1452 govern the requirements for entities to administer premium collection and/or adjust or settle claims for life, health, annuity, and/or stop loss coverage for an insurance carrier or trust issuing contracts of insurance.

To become licensed, an entity must hold a valid license as an administrator, which is issued by the Insurance Commissioner.

A non-resident license is required for administrators who hold a home state certificate of authority or license in a state that has adopted the TPA Act or substantially similar provisions.

Partnerships must notify the Commissioner within 30 days if any individual licensed on their behalf has been terminated or is no longer associated with or employed by the partnership.

Any person making application as an administrator or currently licensed as an administrator under the TPA Act must provide a National Association of Insurance Commissioner (NAIC) Biographical Affidavit and a comprehensive review of the background report by an independent third-party NAIC-approved vendor.

However, the independent third-party background check is no longer required for applications submitted after November 1, 2023.

Administrators must report to the OID any administrative or criminal action taken against them in another jurisdiction or by another governmental agency in this state within 30 calendar days of the final disposition of the matter.

Here is a summary of the required reports:

A NAIC Biographical Affidavit must be submitted by TPAs within 30 days of a change, and must include information on all officers, directors, and key managerial personnel, as well as individuals with a 10% or more beneficial ownership in the TPA and the TPA's ultimate controlling person (affiant).

The OAC Bond Amount is a crucial aspect of the licensing and regulations process. It's set by the Insurance Commissioner and varies based on the third party administrator's annual report.

For those with premiums collected or claims paid of $1,000,000 and above, the bond amount is a minimum of $40,000. This is the highest bond amount required.

For those with premiums collected or claims paid between $500,000 and $999,999, the bond amount is $35,000. This is a significant requirement for many third party administrators.

The bond amount decreases as the premiums collected or claims paid decrease. For those with premiums collected or claims paid between $250,000 and $499,999, the bond amount is $30,000.

Here's a breakdown of the bond amounts based on premiums collected or claims paid:

The bond amount continues to decrease as the premiums collected or claims paid decrease, with a minimum bond amount of $10,000 for those with premiums collected or claims paid of $49,999 or less.

Some people have complained that TPAs aren't always transparent about the prices their health plans pay for care. This issue was addressed by Congress in the Consolidated Appropriations Act of 2021, but some violations have still occurred.

TPAs have also been accused of hiding administration fees and using questionable tactics to collect alleged overpayments. These complaints largely focus on insurance companies that act as TPAs.

According to the Georgetown University Center on Health Insurance Reforms, TPAs have been accused of questionable conduct, including allegations against insurers acting as TPAs.

The Society of Professional Benefit Administrators notes that TPAs can be a bit mysterious, but their role is to help employers with their health plans.

The National Association of Insurance Commissioners provides information on third-party administrators, but the details of their operations can be complex.

The following issues have been reported with TPAs:

To become a licensed third-party claims administrator in Oklahoma, you'll need to meet certain requirements. You must hold a valid license issued by the Insurance Commissioner.

A non-resident administrator can also obtain a license, but they must hold a home state certificate of authority or license in a state that has adopted the Third-party Administrator Act. If the administrator's home state doesn't cover stop-loss insurance, but has similar provisions, that's okay.

If you're a partnership, each general partner must be licensed individually. You'll need to obtain a separate license for each partner, and notify the Commissioner within 30 days if any partner is terminated or no longer associated with the partnership.

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You'll also need to provide a National Association of Insurance Commissioner (NAIC) Biographical Affidavit and a comprehensive background report. This is required for domestic insurers, and the report must be conducted by an independent third-party vendor.

After November 1, 2023, the independent third-party background check will no longer be required for applications submitted after this date.

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You need to file an annual report on or before June 1 of each year for the previous calendar year.

The report must include accumulated year-to-date premiums collected or claims paid of Fifty Thousand Dollars ($50,000.00) or more, whichever is greater, that have been reviewed by a certified public accountant who is independent of the administrator.

The report must be subscribed and sworn to by the president and attested to by the secretary or other proper officers, substantiating that the information contained in the report is true and factual concerning each of the plans they administer.

If you have no business or activity in the past calendar year and no funds are under your oversight and administration, you can apply for a waiver of the annual report.

To apply for a waiver, you must submit your application via OPTins no later than April 1st on the form prescribed by the Commissioner.

Failure to file the annual report as required can result in censure, suspension, or revocation of your administrator licensure to transact business in the state, or a civil penalty of not less than One Hundred Dollars ($100.00) or more than One Thousand Dollars ($1,000.00) for each occurrence, or both.

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