Third-party administrator (TPA)
A third-party administrator (TPA) runs the operations of a self-funded employer health plan — processing claims, managing networks, and administering benefits — while the employer bears the actual cost of care.
- Administers self-funded employer plans without bearing risk
- Major insurers double as TPAs in ASO arrangements
- Self-funded plans set their own coverage rules
- The key integration point for employer digital-health deals
Why TPAs exist
Most large employers self-fund: they pay employee claims from their own pocket rather than buying insurance. The TPA supplies the machinery — claims processing, network rental, member services — without taking the risk. Confusingly, the biggest TPAs are the insurers themselves operating in “administrative services only” (ASO) mode, which is why an employee’s UnitedHealthcare card may actually represent their employer’s money.
Why digital health companies care
Self-funded employers can add benefits without an insurer’s permission — which makes them the natural buyers of digital health programs. Selling into this channel means integrating with the employer’s TPA for eligibility files and sometimes claims, and it explains a common surprise: coverage for the same insurer brand differs employer by employer, because each self-funded plan writes its own rules.
Compliance handled, so you can build
Lithos runs the clinicians, pharmacies, and 50-state rules behind your care program — one API.
Frequently asked questions
Is a TPA a payer?
Functionally adjacent — the TPA processes and pays claims, but with the employer’s money and under the employer’s plan rules.
Why does coverage vary within one insurer brand?
Because self-funded employers customize their plans; the insurer is often just the administrator.
How do telehealth companies work with TPAs?
Via eligibility integrations and billing arrangements when selling through employers — or not at all in pure DTC models.