How Do You Explain the Difference Between an ASO Vendor and a TPA? With Claire Brockbank. Episode 518

The ASO vs. TPA Decision That Quietly Costs Self-Funded Employers More

What's the real difference between an ASO and a TPA — and why does it matter that self-insured employers working with an ASO pay, by one referenced estimate, about 4.7% more than the insured book of business for the same care? In this Ask Me Anything, Stacey Richter puts a listener question from Dr. Alex Sommers, MD, ABEM, DipABLM, president of Astia Health, to Claire Brockbank, newly appointed director of the 32BJ Health Fund, who breaks down how ASO and TPA models diverge on ownership, networks, and incentives.

WHAT YOU'LL LEARN

✅ How an ASO (administrative services only) arrangement differs structurally from a TPA (third-party administrator) — in Claire Brockbank's words, an ASO is essentially "a TPA that's owned by one of the big insurance carriers"

✅ Why bringing your own network, doing carve-outs, or direct contracting is typically much easier with a TPA than with an ASO, since an ASO's network comes bundled in

✅ How ASO incentive structures can lead carriers to charge self-funded employers more to offset thinner margins on their insured book — and why a study referenced by Luke Prettol found self-insured ASO clients pay roughly 4.7% more on average

✅ Why many TPAs, as newer market entrants built around technology, can move faster on things like claims-audit integrations than legacy carrier systems that can take up to 18 months to implement changes

✅ A real-world example of how network rigidity under an ASO made it difficult for one employer to remove 40 identified unsafe physicians from its network

✅ Why reading a TPA contract carefully still matters, since aligned incentives are a structural possibility with a TPA, not a guarantee

WHY THIS MATTERS

ASO and TPA are routinely used interchangeably across the industry, but as Claire Brockbank lays out, the distinction isn't just terminology — it's what determines how much actual control a self-funded employer has over its own health plan. An ASO bundles in the carrier's network and legacy systems, often with built-in incentive misalignments that can show up as higher costs than the insured book of business pays. A TPA leaves more room to bring your own network, negotiate direct contracts, and move quickly when something needs to change. For any plan sponsor sorting out vendor options, knowing which model is actually on the table is foundational to getting the rights, rates, and flexibility they're after.

MENTIONED IN THIS EPISODE

Post by Luke Prettol

EP453 with Claire Brockbank: Apple Podcasts | Spotify | Other Apps

EP498 with Mark Noel: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: [Episode Show Notes]

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00:00 Introduction to this episode.

00:38 Dr. Alex Sommers' question.

04:05 Claire's answer to what differentiates a TPA and an ASO vendor.

04:25 What an ASO vendor is.

04:57 What a TPA is.

06:52 The pros and cons to choosing an ASO as a carrier.

09:05 The pros and cons to TPAs.