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Numbers: Describing the Number of TPAs & Distortions in Counting

(Below is an explanation provided to a government researcher on how to count the number of “TPAs”.)
The answer was written by SPBA Past President Fred Hunt in July 2011.  (Edited Fall of 2017)


For a couple of decades, government & private researchers’ offices & mine have tried to "document" or understand what constitutes the "TPA" industry.  For example, why does SPBA say it has a comprehensive list of 215 TPAs, and yet there are other lists of a couple thousand "TPAs" floating around.  The answer is in the definition of the vocabulary term "TPA". There is no standard definition and many different uses.

 We polled our members and our Stop-Loss Service Partners and asked what percent of TPAs they see in the market are SPBA members.  (It is assumed that most “real” TPAs would be accessing the Stop-Loss market for their clients or known by the Stop-Loss providers.)  The answer is that SPBA's 215 TPAs are virtually 90% of the Comprehensive Service TPAs.  (There is occasionally a vocabulary glitch, because some subsidiary TPAs operate in their old name, but are part of an SPBA parent firm, and some Stop-Loss count TPAs who are related to an insurer differently.)  However, when each of those is analyzed, they fit into the virtually 90%.  So SPBA’s 215 member TPAs can be considered the total of the firms that perform a comprehensive array of TPA services as envisioned by ERISA and most federal laws.

Who makes up the others who use the nebulous term "TPA"??
("Comprehensive Service" is a Fred Huntism, not a legal term.  The same is true of the other category names described below.)

>>Specialty TPAs - there are a couple hundred, which do admin services for one or a few services, such as dental/vision, wellness, 401k, etc.

>>Minimalist TPAs - There are probably a couple thousand entities that may do TPA work to some degree, but it is a tiny by product of their real function.  Examples:  Law or accounting or insurance agent or consulting firms that handle some degree of plan administration as part of their overall other service to their law, accounting etc. clients.  OR... some software or data-processing firms may do some small number or just a part of "administration" as part of their overall other business.  Also a great many insurance companies also provide TPA duties.  Most are represented in SPBA in the name of their separately named TPA subsidiary.  Some use the term ASO (Administrative Services Only) in the insurer name and may or may not be represented in the overall count of TPAs.

>>TPAs-of-convenience - Probably 1,000 who come and go that like the term "TPA" in their company resume.  They usually are simply pushing some product or specialty....or some new idea not envisioned as employee health benefits.  They often call me, and after hearing them brag that they are the biggest, fastest, etc. TPA, I mention some new requirement or liability TPAs must face, and they immediately scramble backwards and say no-no-no, they are not a TPA!!!!!

<<There are also “TPAs” in the Property & Casualty Insurance field and the Workers Compensation arena.  However those types of “TPA” duties & applicable laws are so different that they should be considered totally separately.

One further statistics complication:  Last but not least, about 60% of states have TPA licensing laws, but that gives a VERY distorted count, because each state’s definition of what is a TPA which must be licensed is different.  So, in some states, many firms I would absolutely consider TPAs are exempt from being licenses (and counted as) a TPA because of the type of clients they handle.  On the other hand, other states include insurance agents or whatever and thus the TPA licensing laws there becomes a misleading  "catch-all" number.