October 11, 2004

Brij Sharma, CEO, Tēla Sourcing speaks at the SIIA National Conference

Claims outsourcing can benefit TPA clients
SIIA National Educational Conference and Expo
By MICHAEL BRADFORD

MIAMI-Employers using third-party administrators that outsource claims to offshore service providers should be aware of both the advantages and pitfalls that come with such arrangements, an executive with a company that provides outsourcing services contends.

Employers need to ask a few questions of their TPAs to determine whether claims are being sent offshore and to ascertain the reliability of those outsourcing services, said Brij Sharma, chief executive officer of Tēla Sourcing Inc., a Baltimore-based company that provides outsourcing services.

It is important that a vendor providing outsourcing services have the proper "ramp-up capability," said Mr. Sharma, whose company operates a facility in India that provides U.S.-based TPAs with claims administration services.

"You need to make sure the offshore vendor understands what the business needs are" and can handle an increasing volume of claims from a TPA without a decline in the level of service, he said.

Another good question for employers to pose is, "What are the benefits the TPA has seen, and how much will be passed to the self-funded plan?" Mr. Sharma said.

Speaking in a session at the Self-Insurance Institute of America Inc.'s annual conference in Miami, Mr. Sharma said employers should get better turnaround times on claims administered by TPAs that outsource vs. those that don't.

Mr. Sharma said that low-cost labor in India and China helps drive the savings from outsourcing.

"At this point in time, clearly, India has an advantage," he said, because of the country's large pool of skilled, English-speaking labor.

Apart from the savings, outsourcing has other benefits, Mr. Sharma said.

TPAs become more efficient because they can file their claims electronically to offshore locations at the end of the day and have them administered and back on their office computers by the next morning, he said.

If a TPA is not outsourcing, an employer should find out why not, Mr. Sharma said.

TPAs, he said, will save money as well as improve service to their clients by outsourcing.

"From a pure cost perspective, I don't think any argument can be made against outsourcing," Mr. Sharma said.

TPAs typically see savings of 30% to 40% when they outsource functions of their claims management services, he said.

There are some caveats, though, for TPAs that are considering sending claims offshore, Mr. Sharma said.

Outsourcing is booming, he said, and anyone with the capability to take on work is jumping on the bandwagon. "Every (information technology) company in India is ready to provide outsourcing to health care plans. You need to evaluate whether a vendor has the expertise you need for the level of service you provide," Mr. Sharma said.

It is also important to make sure the service provider has proper training and recruitment processes in place, he said.

"Do they have any health care clients, or are you going to be a guinea pig for them?" Mr. Sharma asked.

He told SIIA attendees that the Health Insurance Portability and Accountability Act "is a very big issue" when it comes to privacy and security issues. The TPA must make sure that a vendor has in place the proper guidelines and safeguards to make sure that information protected under HIPAA is guarded.

Mr. Sharma referred to a case in which a Pakistani medical records transcriber threatened to post protected health information on the Internet if she wasn't paid for her work. The transcriber, who was working on records that had been outsourced four separate times, withdrew her extortion threat after receiving partial payment (BI, May 31). The incident illustrated some of the privacy concerns related to outsourcing.

Employers and TPAs should know what safeguards vendors have in place to protect information and whether records are passed along to other vendors.

"What are the checks that they have in place?" Mr. Sharma asked.