Why most TPA evaluations fail
Most TPA selection processes compare the wrong things. The RFP asks for headcount, years in business, and a client list, then the finalist meeting turns into a demo of a portal nobody will use daily. None of that predicts what your plan will actually experience.
The questions below are the ones that separate administrators. They are ordered roughly by how much the answer will cost you if it is bad. Bring them to any TPA, including us.
1. What percentage of clean claims do you auto-adjudicate, and how do you define clean?
The definition matters more than the number. Some administrators count a claim as auto-adjudicated if it passes intake without a human touching it, then route it to a person for payment approval. That is not auto-adjudication. That is a queue with extra steps.
A good answer gives you a number, defines clean, and explains what falls out. Industry median sits around 40 to 60 percent. Anything above 85 percent is genuinely strong.
A bad answer is a range with no definition, or a number that turns out to include pended claims.
2. Who reviews the claims that do not auto-adjudicate?
Every plan has exceptions. The question is what happens to them. Ask whether exception review is a licensed examiner, an offshore processing team, or an algorithm with a rubber stamp.
A good answer names the role, describes the escalation path, and tells you what percentage of exceptions get overturned on review. A TPA that tracks its own overturn rate is a TPA that measures itself.
3. Show me the fee. All of it.
Ask for total compensation, not the administrative fee. A TPA can quote an attractive per-employee-per-month rate and earn multiples of it elsewhere: pharmacy spread, network access fee rebates, undisclosed vendor commissions, interest float on claim funding, per-transaction charges buried in an addendum.
A good answer is a single number plus a written statement of every other dollar the administrator receives from any source connected to your plan. Under the Consolidated Appropriations Act, brokers and consultants must disclose compensation. Hold your TPA to the same standard even where the statute does not reach.
A bad answer is "our fee is all-inclusive" without a written schedule. Ask again in writing.
4. Does your pharmacy benefit run on spread pricing?
Spread pricing means the PBM charges your plan more than it reimburses the pharmacy and keeps the difference. It is legal, it is common, and it is invisible unless you ask.
A good answer is a flat no, followed by a willingness to show you claim-level reimbursement against what the plan was charged. Pass-through means those two numbers match.
5. What happens to rebates?
Follow the money to the end. Ask what percentage of manufacturer rebates reach the plan, who audits the number, and whether rebates are netted against your invoice or passed through as a separate credit.
A bad answer is a percentage with no audit right.
6. How current is eligibility on any given day?
If eligibility runs on a weekly file, then for most of any week your plan is making coverage decisions on stale data. That shows up as claims denied for terminated members who are still covered, and claims paid for members who left.
A good answer is real-time or daily, with a described reconciliation process for the gaps.
7. What are your actual EDI capabilities?
Ask which X12 transactions run in production, not which ones are supported. There is a difference between a TPA that processes 837 claims and 835 remittances and one that also runs 270/271 eligibility, 276/277 status, 278 authorizations, and 820 payment orders.
A good answer names transactions and clearinghouse relationships. A bad answer is "we are clearinghouse agnostic" with no specifics.
8. How do I see my own data?
You sponsor the plan. You are the fiduciary. Ask what reporting you get, how often, and whether you can reach claim-level detail without filing a request.
A good answer includes access to the underlying data, not just a report. A bad answer is a monthly PDF and a quarterly review meeting.
9. What is your security posture, specifically?
The 2026 HIPAA Security Rule removed the addressable category. Safeguards that were optional are now required. Ask for encryption standards at rest and in transit, multifactor authentication policy, audit log retention, and where SOC 2 stands.
A good answer cites specifics and distinguishes what is certified from what is in progress. A bad answer is a HIPAA compliance badge on the website.
10. What happens if I leave?
Ask this before you sign, when you have leverage. Who owns the claims history, in what format, on what timeline, at what cost. Some administrators charge for data extraction, some provide it only as a report rather than structured data, and some take months.
A good answer is documented in the services agreement: standard formats, defined timeline, no extraction fee.
11. What is the stop-loss relationship?
If your TPA is affiliated with a stop-loss carrier, that is not automatically a problem, but it is a conflict you should see. Ask whether they are paid by the carrier, whether you can place stop-loss independently, and who tracks specific and aggregate triggers.
Missed or late stop-loss filings are a real and recurring loss on self-funded plans. Ask who owns filing and what happens if a deadline is missed.
12. Who does clinical review, and are they independent?
Prior authorization, concurrent review, and appeals should not be graded by the same organization that pays the claim. Ask whether utilization management is in-house or independent, whether the reviewers are URAC accredited, and who handles external appeals.
A good answer separates the payer from the reviewer structurally.
The three answers that should end the conversation
Some responses tell you enough on their own.
"We cannot show you claim-level data." You are the plan fiduciary. If the administrator will not show you the claims your plan paid, the relationship has a structural problem no service level agreement fixes.
"Our compensation is confidential." Every dollar earned from your plan is your business. Confidentiality on that point means there is something worth hiding.
"We will get back to you on the auto-adjudication rate." Any administrator that measures itself knows this number. Not knowing it is the answer.
How to run the process
Send these twelve questions in writing before the finalist meeting and ask for written responses. A demo will not surface any of it, and a good administrator will welcome the specificity. Then do one thing more: ask each finalist to run a sample of your actual claims through their engine and show you line by line what they would have paid differently. Any administrator confident in its pricing and edits will agree.
That last step is worth more than the entire RFP. It replaces claims about accuracy with a number computed on your own data.
Where SmartTPA lands on these
We built this list from what employers and brokers actually ask us, so it would be strange to dodge it. Our clean-claim auto-adjudication design target is 85 to 95 percent in under two seconds, exceptions route to a person, pharmacy runs pass-through through an independent PBM, our administrative fee is the whole of what we earn, clinical review runs through independent URAC accredited partners, and external appeals go to a separate review organization. SOC 2 Type II is in progress. Data leaves with you in standard formats at no charge.
If you want the line-by-line comparison described above, send us a claims file and we will run it. You keep the report either way, including the version that tells you your incumbent is pricing correctly. Ask every other finalist for the same thing.