The evolving role of TPAs in building health plans

By Lorene Barulich and Stefanie Watt

As employers struggle to keep up with rising health care costs and growing benefit complexity, third-party administrators are emerging as partners for building smarter, data-driven health strategies. Through deeper data access, flexible plan design and a focus on member education, TPAs help employers strike a more sustainable balance between cost and care.

Once viewed as behind-the-scenes processors, TPAs are evolving into strategic allies —leveraging insight and adaptability to design health plans that improve outcomes and control costs. Here’s how they’re reshaping the benefits landscape.

TPAs and the cost-care conundrum

In 2025, employer-sponsored health care costs are expected to jump 5.8% — marking the third consecutive year of cost increases above 5%. Meanwhile, nearly 40% of insured adults report skipping or delaying care because of cost concerns.

Employers are increasingly seeking new models that control costs without eroding the quality of their benefit offerings. TPAs are well-positioned to help. Unlike traditional carriers, TPAs offer greater flexibility, direct access to claims data and the ability to customize benefit plans to reflect the specific needs of each workforce. This adaptability enables a more strategic, evidence-based approach to cost containment without defaulting to blanket benefit cuts.

TPAs offer flexibility and customization

Traditional insurance carriers often rely on pre-set plan structures and closed networks, limiting employers' ability to tailor offerings. TPAs, by contrast, operate independently and can design plans aligned with a specific population’s health risks, demographics and financial goals. This includes flexibility in plan design, network configuration, care management programs and partnerships with preferred vendors.

TPAs provide actionable data insights. With direct access to detailed claims and usage information, TPAs can identify patterns and cost drivers that might be obscured in more traditional models. These insights allow for targeted interventions — such as utilization management, care navigation or chronic condition outreach — that reduce unnecessary spend while maintaining care quality.

What the data shows

Common cost drivers frequently uncovered through utilization analysis include:

• Chronic conditions like diabetes, hypertension, and musculoskeletal disorders.
• Overuse of emergency rooms for non-urgent needs.
• High-cost specialty medications and emerging therapies.
• Avoidable inpatient admissions and readmissions.
• Unmanaged high-risk or complex cases.

With this visibility, TPAs can implement proactive medical management strategies — engaging high-risk members earlier in their care journeys, improving medication adherence and helping patients navigate toward lower-cost, higher-quality care settings.

In one example, a TPA identified that members were not filling maintenance medications for chronic conditions due to cost barriers. The plan eliminated copays for those prescriptions, which led to better adherence and fewer emergency room visits and hospitalizations, ultimately lowering overall health plan spend.

Education as a cost and care lever

Member education is often overlooked but plays a critical role in improving health outcomes and managing costs. Research found that only 12% of U.S. adults have proficient health literacy, making it difficult for most employees to navigate the health care system effectively.

TPAs that prioritize member education through case management, care navigation or targeted communication empower individuals to make more informed decisions. For example, teaching the difference between emergency and urgent care, encouraging preventive screenings or promoting the availability of telehealth can all yield meaningful savings and smarter care utilization.

Education also fosters self-advocacy, which is especially important for members managing chronic or complex conditions. When individuals understand their options and are equipped to engage with their providers, they’re more likely to follow treatment plans and avoid preventable complications.

Collaboration over administration

The shift toward sustainability isn’t only about adjusting plan mechanics — it requires stronger collaboration among employers, brokers, providers and administrators.

TPAs are driving this shift by:

• Working with brokers to analyze data and shape a long-term benefits strategy.
• Providing consultative reporting to help employers understand the impact of plan design choices on real-world outcomes.
• Collaborating with providers and vendors to align care delivery with population health goals.

This holistic model moves beyond short-term cost containment to lasting improvement in member health and health care value.

At a time when both employers and employees are being asked to do more with less, the ability to align cost management with meaningful health benefits is essential. By offering greater transparency, flexibility and strategic collaboration, TPAs provide the tools to align cost control with meaningful, accessible employee health benefits. With the right approach and partnership, employers can manage costs without sacrificing quality or employee satisfaction.

Lorene Barulich, MSN, RN, OCN, CCM, is manager of clinical programs and strategy at Nova Healthcare Administrators. Contact her at [email protected].

Stefanie Watt is manager of clinical operations at Nova Healthcare Administrators. Contact her at [email protected].

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