In the United States, a third-party administrator (TPA) is an organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity.
An insurance company may also use a TPA to manage its claims processing, provider networks, utilization review, or membership functions.
Many employee benefit plans have highly technical aspects and difficult administration that can make using a specialized entity such as a TPA more cost effective than doing the same processing in house.
Third-party administrators are prominent players in the health care industry and have the expertise and capability to administer all or a portion of the claims process.
A hospital or provider organization desiring to set up its own health plan will often outsource certain responsibilities to a third-party administrator.