BEWARE STATISTICAL DISTORTIONS:   SPBA is often asked “How many TPAs are there?”. The answer is multi-facetted and (not by design) may sound like double-talk. It is best if you read it once, open-minded, purely for the insight. Then re-read for specific reference to your situation.    I have to start with a big disclaimer.  I always warn that every number or statistic about TPAs, health care & costs, employee benefits, etc. have a built-in 1,000% distortion factor.  It is not that anyone is lying.  It is merely that even the most simple vocabulary terms have vastly different meanings & usage in the employee benefits, insurance and medical communities in which TPAs operate.  For example, one “life” can refer to one individual in a plan….or it might be an employee + spouse + 10 children.  Even highly-respected sources of statistics get distorted results.  Let me demonstrate by anecdote.  A few years ago, I was asked to serve as a judge of a federal government panel of experts.  It was about 20 of the top statistical research agencies of government, such as GAO, CMS, Bureau of Labor Statistics, Congressional Research Service, White House Office of Economic Advisors, etc.   My role was purely ceremonial.  About 25 of the same questions had been planted in studies of these research organizations. These were all very basic questions (including number of self-funded plans & size of TPA market).   Each group came before me and was very proud of their methodology & credentials.  However, their findings for the same items were tens of millions of people different and tens of billions of dollars different.  So, the moral of the story is even if you find some very official & impressive-seeming sources for a statistic…..variations of 1,000% will be found.

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This entry was posted by cmonfils on Tuesday, January 17th, 2012 at 9:28 pm and is filed under Third Party Administrators. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.