A Third Party Administrator (TPA) is a party that administers insurance claims or particular features of benefit plans for employees for an unconnected entity.  This can be seen as "outsourcing" the management of the claims processing, as the Third Party Administrator is undertaking a duty customarily dealt with by the insurance provider or the business itself. Frequently, in insurance claims cases, a TPA deals with the processing of claims for a business that self-insures its employees. Accordingly, the employer is acting as an insurer and guarantees the risk. The risk of loss remains with the employer, and not with the TPA.

Third party administrators are high flying players in the managed care industry and have the capability and expertise to run a sectionor all of the claims process. They are typically entered into by a health insurer or self-insuring companies to manage services, including claims administration, premium collection, enrollment and ancillary organizational activities. A clinic or provider institute needing to appoint its own health care plan will regularly farm out certain duties to a TPA.

In the USA, Medicare was created when the Social Security Act of 1965 became law.  It is a government funded health care, hospitalization, and prescription drug program for qualified beneficiaries, that include persons aged 65 and over, younger than 65 years old with particular disabilities, and persons of all ages with terminal renal disease (lasting kidney malfunction that requires transplant or dialysis). SCHIP or the State Children’s Health Insurance Program endows matching monies to individual States, and is intended to grant healthcare insurance coverage for uninsured minors in households not covered by Medicaid. The United States has approximately – that amounted to a brokered insurance market for 400 billion US dollars in 2009. In these difficult times where high unemployment (nine percent as of April 2011) and redundancies are a familiar headline in economic news sections, there is a mounting dilemma of individuals without insurance, as medical insurance cover in the States is frequently offered by a person’s employer.

For a number of years, numerous insurance companies have been working with the Centers for Medicare and Medicaid Services to obtain endorsements for Medicare set-asides on qualifying workers’ compensation decisions. Now, insurers and businesses must renew the quantity of claimant information being given to the CMS, in addition to expanding their scope of reporting to incorporate liability insurance claims (including self-insurance arrangements). The data will be applied to identify Medicare beneficiaries in the early stages. Having the data will help ensure benefit expense payments are made in agreement with MSP protocols; help trim down the degree of under and over-payments; and better support the reimbursement of conditional or mistaken payments.