Can you run a self-funded plan without a traditional TPA?

Employers who self-fund usually assume a third-party administrator is compulsory. It is not compulsory, but most of what a TPA does still has to happen, and an employer who drops the administrator without understanding which functions were load-bearing will discover the answer the expensive way.

The useful question is not "can we drop the TPA". It is "which of these jobs still exist once the price is agreed in advance?" — because a surprising number of them exist only because it was not.

What a TPA is actually doing

Strip away the packaging and a TPA performs a handful of distinct functions: it maintains eligibility, it receives and adjudicates claims, it applies the plan document to each claim, it pays providers, it produces reporting, and it handles member questions about all of the above.

Most of that work exists because the price was unknown when the care happened. Adjudication is the process of discovering, after the fact, what should have been paid. Repricing exists for the same reason. Appeals exist because adjudication is frequently wrong, and the appeals process is itself a cost centre staffed to handle the error rate of the process above it.

This is worth saying plainly because the industry describes these as services rather than as consequences. They are consequences. No other market pays a specialist firm to work out, weeks later, what a transaction should have cost.

Which jobs disappear when the price is known first

When a service has an agreed price and is paid at booking, adjudication has nothing left to decide. There is no claim to reprice, no explanation of benefits to reconcile against a bill, and no provider waiting on payment and calling about it. The work does not move somewhere else — it stops existing.

That is the genuine saving, and it is worth being precise about it, because vendors are not always. The money is not saved by squeezing providers. It is saved by removing a reconciliation process that both sides were paying for and neither side valued.

A second, quieter saving is the reduction in disputes. A large share of member service volume in a conventional plan is people asking why a bill says what it says. When the member paid a published price at booking, that call has no occasion to happen.

Which jobs do not disappear

Eligibility still has to be right; somebody must know who is covered today, and getting this wrong is the fastest way to break trust in a new arrangement. Plan documents still govern what is covered and still have to be maintained. Reporting and compliance obligations do not go away because the payment mechanism changed. Members still need somebody to call when something does not work.

Any employer told that a direct-pay model removes all administration is being sold something. It removes claim adjudication. It does not remove plan administration, and it does not remove the obligation to run the plan competently.

  • Removed: claim adjudication, repricing, EOB reconciliation, chasing provider payment
  • Removed: most of the member service volume generated by unexplained bills
  • Still required: eligibility, plan documents, compliance and reporting
  • Still required: member support, and someone accountable for the plan
  • Still required: stop-loss for catastrophic claims, if the plan is self-funded

A realistic hybrid

In practice most employers land on a hybrid, and the hybrid is not a compromise — it is the correct shape. Shoppable, schedulable care runs on direct contracts at published prices. Unscheduled and catastrophic care runs through conventional machinery, because you cannot shop an ambulance and nobody should try.

The administrative footprint shrinks in proportion to how much of the spend moves. An employer who moves imaging, labs and outpatient procedures has meaningfully less to administer even though the plan still has a conventional half.

Mishe operates the first half: published prices, booking, payment at the point of care, and the provider network behind it. The second half stays wherever it currently is.

How to test this without committing

Take the claims history for a recent plan year and pull out the procedures that repeat. Look up what those same procedures cost at a published price. That comparison needs no vendor, no meeting and no data room, because the prices are public — and it tells you the size of the prize before you spend anything finding out.

If the delta is small for your population, you have learned something useful cheaply. If it is large, you now have the specific list of categories worth moving first.

Common questions

Do we still need stop-loss cover?

If the plan is self-funded, yes. Direct contracting changes what routine care costs; it does not change the fact that a single catastrophic claim can exceed what an employer can absorb.

What happens to claims that arrive anyway?

Care delivered outside the direct-contract arrangement still generates a claim and still needs an administrator. This is why most employers keep a conventional path alongside rather than switching wholesale.

Is this only viable at a certain company size?

Self-funding itself has a practical size floor, driven mostly by the ability to absorb claim volatility. Using published prices for shoppable care does not — a small employer can route care to contracted prices without changing how the plan is funded at all.

See it for yourself

Every price on Mishe is public. You can check what a procedure costs, and which providers offer it, without an account and without talking to anyone.