By Christine Monahan, Kennah Watts, Karen Handorf, and Kevin Lucia
About 165.6 million non-elderly Individuals obtain protection via an employer-sponsored well being plan. The majority of them are enrolled in a self-funded well being plan wherein the employer (or different plan sponsor, corresponding to a union) takes on the monetary danger of paying their well being care claims, moderately than an insurance coverage firm. Sometimes, nonetheless, self-funded employers will rent a big insurance coverage firm to manage medical advantages. The insurance coverage firm, performing as a third-party administrator (TPA), negotiates with suppliers and builds a community, administers and manages claims, and engages in different plan administration tasks which are outlined in an administrative companies settlement (notice 1).
Employer-sponsored insurance coverage, particularly massive employer insurance coverage, has lengthy represented the gold normal for protection within the US. However by many measures, the system is failing employers and plan members, in addition to many unbiased suppliers and practices. The entire common annual premium for household protection was $27,000 in 2025, up greater than 150 % since 2015. This value is collectively paid by employers and staff, however analysis exhibits that development in employer spending on well being care has come on the expense of worker wages. On prime of this, plan members nonetheless pay out of pocket for care, which might quantity to a number of hundreds of {dollars} yearly. But, even with this excessive, rising spending, many clinicians and small, unbiased hospitals battle to outlive as main well being techniques dominate the market. Gaps in entry additionally develop as prices turn out to be extra burdensome.
Consolidation, corporatization, and financialization inside and throughout segments of the well being care system are largely responsible for these circumstances. Massive hospitals, well being techniques, and different vertically consolidated suppliers extract exorbitant reimbursement charges and restrain competitors via their contracts. Massive insurer TPAs and a complicated net of affiliated intermediaries have developed methods to capitalize on excessive supplier prices, together with hefty “shared financial savings” charges after they reprice claims and get well overpayments. TPAs additionally accumulate charges on different companies, together with complicated prior authorization and different utilization administration that drive up administrative prices and sometimes block entry to medically obligatory care. Even with rising prices of look after beneficiaries, information reveal that per enrollee income of the highest three insurer TPAs have been constantly constructive, with an upward development since 2010.
Regardless of ongoing efforts to extend transparency for well being plan purchasers, employers typically battle to grasp what they’re paying and why. Some employers have opted out of the aforementioned net by direct contracting with centers-of-excellence packages or doctor practices; hiring smaller, unbiased TPAs; or each. However even these employers could need to contract straight or not directly with massive insurer TPAs to entry broader supplier networks, or for different non-network companies. Consequently, employers agree—knowingly or not—to no matter phrases insurer TPAs could impose, even when these phrases pose value or different considerations.
The time has come for Congress to offer employers a extra accountable and inexpensive choice to administer their medical profit plans. We name this method disruptor the Truthful Pay, Truthful Play TPA.
Introducing The Truthful Pay, Truthful Play TPA
Lawmakers in Congress—or doubtlessly state-level coverage makers—can set up a brand new Truthful Pay, Truthful Play (FP2) TPA that operates on “truthful pay, truthful play” phrases for employers, suppliers, and plan members alike. The FP2 TPA would function as a authorities or public company, a authorized standing that ought to protect it from the revenue motives and conflicts of curiosity that may drive conventional non-public TPAs to prioritize shareholder pursuits over their purchasers’ pursuits. To additional guarantee its neutrality, the FP2 TPA wouldn’t outsource core features to current non-public insurers, administrative service suppliers, or different entities with a direct or oblique monetary stake in industrial medical insurance. The FP2 TPA’s actions and insurance policies would additionally face sturdy public oversight and auditing to make sure sincere operations.
The FP2 TPA would require preliminary authorities appropriations. As elaborated beneath, the FP2 TPA would cowl ongoing operations via a clear per member, per thirty days (PMPM) charge schedule designed to cowl the prices of doing enterprise—and nothing extra. To stability entry and affordability, the FP2 TPA would provide suppliers truthful funds pursuant to truthful fee insurance policies. Acceptance of those charges as fee in full can be obligatory for suppliers to proceed to take part in Medicare and Medicaid. In different regards, nonetheless, the FP2 TPA would function like, and compete towards, conventional non-public market TPAs, and would rely on delivering high-value companies to succeed (see exhibit 1).
Exhibit 1: Evaluating insurer third-party directors (TPAs) that at present dominate the market with the Truthful Pay, Truthful Play TPA
| Characteristic | Conventional Insurer TPAs | Truthful Pay, Truthful Play (FP2) TPA |
|---|---|---|
| Organizational Construction | For-profit non-public insurers accountable to shareholders | Authorities or public company targeted on serving employers, suppliers, and plan members |
| Revenue Motive | Generates income via administrative charges and associated companies | Operates at value with no revenue requirement |
| Administrative Charges | Typically complicated and opaque; could embrace unfold pricing and shared-savings charges | Clear per-member-per-month (PMPM) charge schedule primarily based on precise working prices |
| Knowledge Entry for Employers | Might restrict employer entry to claims and encounter information | Supplies full entry to deidentified claims and encounter information, topic to privateness legal guidelines |
| Supplier Contract Phrases | Negotiated contracts could embrace gag clauses and anticompetitive provisions | Supplier participation guidelines established by statute and utilized uniformly |
| Supplier Cost Charges | Negotiated charges which will replicate supplier market energy and excessive industrial costs | Clear, regulated charge schedule designed to offer truthful however not extreme fee |
| Community Composition | Proprietary supplier networks | Broad community tied to Medicare participation, with potential Medicaid participation necessities |
| Utilization Administration | Prior authorization and different administration instruments could create administrative burden | Protection requirements primarily based on accepted scientific tips with streamlined processes |
| Claims Processing | Processes range and will create administrative complexity | Clear claims procedures with interoperability and prompt-payment requirements |
| Employer Flexibility | Providers bundled in response to contract phrases | Employers can choose companies à la carte and retain management over plan design |
| Plan Member Affect | Potential publicity to increased prices and restrictive utilization administration | Probably decrease out-of-pocket prices, broader supplier entry, and fewer administrative obstacles |
| Oversight | Primarily company governance and regulatory oversight | Public oversight, auditing, and transparency necessities |
Supply: Authors’ evaluation.
Truthful Pay, Truthful Play For Employers
The FP2 TPA would supply self-funded well being plans with a brand new alternative after they store for a TPA. Not like the present dominant insurer TPAs, the FP2 TPA would provide “truthful pay” costs on companies, with “truthful play” phrases.
For collaborating employers, the FP2 TPA would cost a flat, absolutely clear PMPM charge schedule primarily based on the cheap prices of doing enterprise. The FP2 TPA wouldn’t interact in unfold pricing or accumulate “financial savings” charges or make use of different exploitive practices. Employers might choose the companies they need à la carte, with charges scaled to the sources required. For instance, employers might use the FP2 TPA to assist with enrollment and eligibility or information reporting and analytics, whereas others could maintain these features in-house or use different distributors.
Within the spirit of “truthful play,” the FP2 would give employers full entry to deidentified claims and encounter information, and different data it captures. No limits on information entry and use would apply, moreover these clearly delineated or required by regulation to guard the privateness of plan members. Supplier participation guidelines can be set in statute and never topic to negotiation; accordingly, suppliers couldn’t impose gag clauses, hidden phrases, or anticompetitive clauses on the FP2 TPA. On the similar time, employers that select to contract with the FP2 TPA would retain management over essential plan selections, together with setting worker contribution ranges, figuring out profit protection, and designing value sharing. Certainly, free from anti-steering and -tiering clauses, employers might implement profit designs that direct their members to high-value suppliers.
Truthful Pay, Truthful Play For Suppliers
The FP2 TPA would undertake a “truthful pay” charge schedule and “truthful play” protection standards and claims processing procedures. These steps would decrease supplier monopoly energy—and the multitude of harms consolidated markets trigger—for the plans it administers and scale back supplier administrative burden.
The FP2 TPA would create and preserve a good supplier charge schedule that provides enough, however not extreme, fee ranges. Particularly, the FP2 TPA’s charge schedule ought to lead to decrease combination spending for employers by eliminating the above-average charges consolidated well being techniques and different corporate-backed suppliers command. Concurrently, the FP2 TPA might pay greater than typical industrial market charges for sure companies or supplier sorts the place justified, corresponding to major care. The FP2 TPA should interact in a clear course of with protections to attenuate undue trade affect when crafting and updating its charge schedule. Coverage makers also needs to set up reporting techniques and analytical instruments that enable the FP2 TPA (or an advisory physique akin to the Medicare Cost Advisory Fee) to repeatedly consider entry, prices, and different metrics to tell fee updates.
Even when the FP2 TPA’s fee charges usually exceed Medicare charges, some suppliers—significantly these with vital market energy to demand the best costs within the industrial market—could wish to decide out. To make sure that an enough quantity and mixture of suppliers settle for the FP2 TPA’s charges in full, participation within the FP2 TPA’s community should be a situation of participation in Medicare. Coverage makers might additionally make Medicaid fee contingent on participation within the FP2 TPA to make sure enough participation of pediatricians, youngsters’s hospitals, and every other supplier sorts that usually decide out of Medicare, given the populations they serve.
The FP2 TPA additionally would provide suppliers “truthful play” by establishing cheap claims processing and protection guidelines to restrict supplier burden. Not like non-public TPAs, the FP2 TPA would don’t have any incentive to make use of onerous utilization administration to each stability extreme supplier pricing and generate income alternatives for themselves or their associates. The FP2 TPA would, as a substitute, middle its protection standards on usually accepted scientific care requirements and set up clear claims processes, together with federal interoperability requirements and prior authorization guidelines. The FP2 TPA would additionally comply with immediate fee requirements to reimburse suppliers on an affordable schedule and mitigate considerations that payers revenue by strategically delaying supplier reimbursements. To stop abuse, Congress might create an investigative division throughout the FP2 TPA to watch combination use ranges and billing practices. This division might suggest protection coverage updates and, when obligatory, make referrals to—and doubtlessly co-prosecute circumstances of fraud with—applicable authorities.
In establishing the FP2 TPA’s truthful pay, truthful play supplier phrases, Congress ought to look to the Medicare program. The FP2 TPA will certainly must adapt Medicare’s framework to fulfill the wants of the industrial market and to deal with Medicare’s current shortcomings. Nonetheless, the FP2 TPA ought to leverage Medicare’s efficiencies and experience when potential.
Truthful Pay, Truthful Play For Plan Members
Plan members would additionally straight and not directly profit from the FP2 TPA’s truthful pay, truthful play insurance policies.
“Truthful pay” supplier reimbursement charges would possible straight scale back a plan member’s out-of-pocket prices for a lot of companies the place the plan member’s contribution is tied to the speed of fee, together with high-cost hospital care topic to deductibles, coinsurance, or each. To the extent the FP2 TPA institutes different fee and supply reforms, plan members would profit from the extra financial savings generated. For instance, if the FP2 TPA adopted site-neutral fee insurance policies, sufferers can be protected against extreme outpatient facility charges which are more and more widespread within the industrial market. Moreover, to the extent that employers’ plan spending goes down, specialists posit that employers are more likely to move the financial savings to staff via decrease premiums, decreased value sharing, extra beneficiant advantages and protection, and/or increased wages.
The “truthful play” elements of the FP2 TPA would promote broader entry to look after plan members. Provided that Medicare is probably the most complete community within the nation, as almost all nonpediatric suppliers settle for Medicare sufferers, plan members’ community would turn out to be the Medicare community. With mandated Medicaid supplier participation as effectively, this is able to decrease gaps throughout the FP2 TPA’s community to incorporate suppliers that decide out of Medicare, corresponding to pediatricians. With the breadth of this community, plan members would expertise minimal, if any, service disruptions, and their most well-liked suppliers would nearly actually stay in-network. Moreover, the FP2 TPA’s use of simple claims processing and clinically grounded protection guidelines would lead to much less frequent publicity to restrictive utilization administration insurance policies.
Trying Ahead To Market Disruption
If this coverage strikes ahead, vital coverage selections stay to be resolved. No matter selections are made, the FP2 TPA gives a chance to introduce a good plan administrator into the industrial market. Each self-funded employers and plan members may benefit financially from the financial savings generated by at-cost administrative companies and decrease combination spending. Whole financial savings ranges would range throughout plans as spending does at present, with better financial savings extra possible for employers and plan members in additional consolidated well being care markets the place industrial costs are highest. Taking part employers would additionally face considerably much less stress and trouble in contrast to people who proceed to navigate the complicated, opaque non-public TPA market, whereas plan members might entry a broad community with minimal prior authorization necessities.
This proposal is certain to face steep opposition from moneyed trade pursuits, as does any reform to rein in spending. Insurer TPAs are more likely to argue that the supplier participation guidelines give the FP2 TPA an unfair benefit––however unfair to whom? Absolutely not the US individuals and companies that at present subsidize extreme supplier costs and company income. But, even taking the argument at face worth, the FP2 TPA might unleash a much-needed disruptive drive right into a stagnant market. The FP2 TPA might, as an illustration, make unbiased TPAs extra aggressive. These entities, in addition to the present dominant TPAs, might proceed to develop low-cost, slim networks or revolutionary quality-focused merchandise, whereas employers leverage the FP2 TPA, moderately than massive insurer TPAs, as a wrap community. Impartial well being care suppliers and smaller, extra financially weak hospitals might also profit from the doorway of a aggressive market participant that may provide truthful pay on truthful play phrases.
Word 1
Pharmacy profit managers present related companies for pharmaceutical advantages. This proposal focuses solely on medical profit although, and thus completely discusses third-party directors.
Authors’ Word
The authors are workers of the Heart on Well being Insurance coverage Reforms at Georgetown College’s McCourt College of Public Coverage. Their time and analysis associated to this text was funded by Arnold Ventures.
Christine H. Monahan, Kennah Watts, Karen Handorf, and Kevin W. Lucia “The Truthful Pay, Truthful Play TPA: A Proposal To Disrupt The Market For Well being Plan Administration” August 7, 2026, https://www.healthaffairs.org/content material/forefront/fair-pay-fair-play-tpa-proposal-disrupt-market-health-plan-administration. Copyright © 2026 Well being Affairs by Challenge HOPE – The Folks-to-Folks Well being Basis, Inc.