The Truth About TPA Fees

It’s Not About Fees—It’s About Total Cost of Care

When evaluating a Third-Party Administrator (TPA), it’s easy to focus on per employee per month
(PEPM) admin fees. But in reality, those fees represent only a small fraction of total healthcare
spend.
The true drivers of cost are: – Claims volume and severity – Member engagement and navigation –
Financial accuracy in claims processing
At Delta Health Systems, we focus on the areas that have the greatest financial impact—not just
the most visible line items.

1. Managing Claims: Where the Biggest Savings Live

Network discounts are often emphasized—but they only go so far.
The most meaningful cost reduction happens when you: – Guide members to high-quality,
cost-effective care – Reduce unnecessary utilization – Intervene early in high-cost cases
Through solutions like Delta Navigator, plans can significantly reduce total claims spend without
disrupting provider relationships.
A group with $7M in claims could see six-figure savings through improved navigation and
engagement.

2. Financial Accuracy: The Hidden Cost Lever

Many TPAs report accuracy rates in the 98–99% range. Delta Health Systems maintains over
99.9% claims accuracy.
On $3M in annual claims, even a 0.5–1% difference can translate to tens of thousands in avoidable
costs.

3. What Should Brokers and Employers Be Asking?

Key questions: – Can the TPA demonstrate measurable claims savings? – Are there performance
guarantees tied to outcomes? – How are out-of-network savings handled? – What level of financial
accuracy is guaranteed?

4. Understanding Out-of-Network Savings

Some TPAs retain a portion of negotiated savings, reducing transparency. A better approach
maximizes savings returned to the plan with clear reporting.

5. Putting Admin Fees in Perspective

Even modest improvements in claims management, accuracy, and navigation can outweigh months
of admin fees.
The Takeaway
Choosing a TPA isn’t about finding the lowest fee.
It’s about partnering with an organization that reduces costs, delivers measurable outcomes, and
provides transparency.

It’s not about admin fees—it’s about better outcomes for your plan and your people.