The Modern TPA - HealthSmart - Tech & People - Craig Julien

This interview features Craig Julien, CEO of HealthSmart, a Third Party Administrator (TPA), providing an in-depth look at the evolving role of TPAs in the self-funded health plan market. The discussion establishes the TPA as the administrative partner for self-funded employers, handling all functions typically managed by a fully insured carrier, including claims adjudication, EOBs, member services, care management, and PBM services. A central theme is the modernization of the TPA model, encapsulated by HealthSmart’s philosophy: "Technology when you need it, people when you don't," emphasizing the balance between digital efficiency and essential human empathy in healthcare interactions.

Julien details the infusion of technology into TPA operations, distinguishing between visible and invisible tech. Invisible technology includes core systems for digitizing manual processes like claims and correspondence, focusing on interoperability and data transportability via APIs and open source standards. Visible technology includes member portals, mobile apps, and advanced phone systems designed to guide members to the fastest, highest-quality answers. This technological push is driven partly by regulatory mandates like the No Surprises Act and Transparency in Coverage, which require TPAs to implement price transparency tools, allowing members to "shop" for services by running mock claim adjudications based on procedure codes and benefits before receiving care.

The conversation also explores major industry trends and operational strategies. HealthSmart is actively moving down-market with a level-funded hybrid option called "Smart Care," targeting employers in the 1-100 employee range who desire the control of self-funding without bearing excessive financial risk. Furthermore, Julien highlights the increasing importance of data integration, noting the use of platforms like Deer Walk to identify "trigger diagnosis codes" that signal high future healthcare costs. This data is used to proactively invoke care management discussions, particularly concerning specialty drugs, where in-house PharmDs engage providers to potentially adjust drug use or frequency to control costs while maintaining quality of care. Finally, the discussion touches on behavioral economics, exploring how to incentivize members (through rewards or benefit design) to utilize lower-cost, high-quality care options like virtual care (e.g., Teledoc, virtual MSK) and direct primary care, shifting member interaction from reactive "push" to proactive "pull" engagement.

Detailed Key Takeaways

• Data-Driven Care Management and Rx Optimization: TPAs leverage data platforms (like Deer Walk) to identify "trigger diagnosis codes" that predict high future costs. This data is critical for proactive intervention by care management teams, including in-house Registered Nurses and PharmDs, particularly for managing specialty drug utilization and costs.
• The Modern TPA Philosophy: The operational model must balance digital efficiency with human empathy, summarized as "Technology when you need it, people when you don't." This ensures that while routine tasks are automated, complex or emotionally sensitive issues are handled by knowledgeable staff who provide education and decision support.
• Regulatory Impact on Technology: Compliance drivers such as the No Surprises Act and Transparency in Coverage are mandating the development of new technology, specifically tools that enable members to receive accurate, point-in-time cost estimates for medical services before they are rendered.
• Interoperability and Data Flow: Modern TPA systems rely heavily on APIs and open-source standards to ensure data transportability and interoperability between core claims processing systems, PBMs, stop-loss carriers, and external care management vendors.
• Shifting Member Behavior through Incentivization: To increase the adoption of lower-cost, high-quality options like virtual care (e.g., Teledoc), TPAs must implement incentivization models (e.g., small rewards for creating an account) to overcome initial behavioral barriers and make the convenient option the default choice.
• Addressing Down-Market Needs: The small employer market (1-100 employees) is addressable by offering level-funded hybrid options (like Smart Care), which provide the data control and benefit flexibility of self-funding while stabilizing premiums and mitigating financial risk.
• Behavioral Economics in Healthcare: Understanding that patient decisions are often driven by "hope" (seeking experimental care) or "reassurance" (over-consuming unnecessary tests) is crucial for designing benefits and communication strategies that guide conscientious decision-making.
• Preventing Denial of Care Events: A critical operational focus is minimizing "denial of care events" caused by administrative failures (e.g., eligibility file errors), which immediately erode member trust and can lead to catastrophic financial outcomes for the patient.
• The Rise of Retail and Virtual Care: The trend toward retail and virtual healthcare delivery (including virtual MSK and expanded mental health services) requires TPAs to integrate these options seamlessly and ensure members are aware of and utilize them appropriately to manage costs and convenience.
• Proactive Member Engagement (Pull vs. Push): Instead of constantly pushing information, TPAs should aim to build trust early (e.g., during enrollment by verifying in-network providers) so that members proactively "pull" information and guidance from the TPA when a need arises.
• Integrated In-House Model: Having an integrated model where core systems, technology, and clinical staff (nurses, PharmDs) are connected allows for faster, more informed decision-making and a unified member experience, avoiding the friction of siloed vendors.
• Aligning Incentives: The broader healthcare trend involves aligning incentives between payers and providers (seen in large entities buying into the supply chain of care delivery) to control costs and improve quality holistically.

Tools/Resources Mentioned

• Deer Walk: Industry-standard data platform used for data analysis, identifying trigger diagnosis codes, and informing care management strategies.
• Teledoc: A virtual care partner utilized by HealthSmart, representing the growing trend of virtual health services.
• Smart Care: HealthSmart’s proprietary level-funded health plan option targeting the small-to-mid market (1-100 employees).

Key Concepts

• Third Party Administrator (TPA): An organization that performs administrative services (claims processing, member services, data management) for self-funded health plans.
• Level-Funded Option: A hybrid insurance model where premiums are fixed and level, blending elements of fully insured and self-funded plans to stabilize costs for smaller employers.
• Price Transparency in Coverage: Regulatory mandates requiring healthcare entities to provide clear cost information to consumers upfront, enabling them to shop for services.
• Behavioral Economics: The field of study focused on the psychological factors influencing economic decisions, used in healthcare to design incentives and communication strategies that guide members toward better health choices.
• Trigger Diagnosis Codes: Specific medical codes that signal a diagnosis likely to lead to high future healthcare utilization and cost, prompting proactive care management intervention.
• No Surprises Act: Legislation aimed at protecting consumers from unexpected medical bills, particularly those resulting from out-of-network services provided during an in-network visit.