The verdict in three sentences
For a TPA administering 45,000 members in Miami, phone approvals and paper claims cost twice: in undetected fraud and in late payments that push the best providers out of the network. Custom claims administration software that checks eligibility in real time, issues prior authorizations online and adjudicates claims in under 15 days protects both the loss ratio and the provider network. The first release covers members and premiums, online authorizations and adjudication; advanced fraud detection comes in release 2.
What phone-based administration costs
An administrator takes a call from a clinic, looks the member up in a file, checks that premiums are current and reads out an authorization number. Claims then arrive by fax or mail, are keyed in by hand and audited by sampling. With 220 network providers (clinics, pharmacies, labs, imaging centres), the backlog of pending claims regularly exceeds two months.
| Indicator (2026 order of magnitude) | Current process | With claims software |
|---|---|---|
| Average prior authorization time | 15 to 45 min | under 2 min |
| Provider payment time | 60 days | 10 to 15 days |
| Share of claims paid for ineligible members | 3 to 6% | under 0.5% |
| Estimated fraud and abuse (upcoding, duplicates, identity misuse) | 6 to 10% of claims | 2 to 3% |
| Premium collection rate | 90 to 93% | 97 to 99% |
| Staff assigned to data entry | 6 to 8 | 2 to 3 |
With limited-benefit and supplemental plans averaging USD 60 to 90 in claims per member per month, the plans administered represent around USD 38 million a year in claims. Each point of fraud avoided is worth close to USD 380,000 to the self-funded employers the TPA serves.
Modules to plan for and their budget
In Florida, a TPA must be licensed with the Office of Insurance Regulation, follow HIPAA privacy and security rules and process standard EDI transactions (837 claims, 835 remittances, 270/271 eligibility).
| Module | Key function | Miami market budget (USD) |
|---|---|---|
| Members and premiums | families, dependants, employer billing, reminders | 40,000 to 80,000 |
| Provider portal | eligibility check by member card, online prior auth, claim upload | 60,000 to 130,000 |
| Adjudication and payment | fee schedules, limits, deductibles and co-pays, batch ACH | 50,000 to 110,000 |
| Fraud detection | rules (duplicates, abnormal frequencies, incompatible codes), scoring | 40,000 to 100,000 |
| Member app | virtual ID card, provider directory, claims history | 30,000 to 70,000 |
| Regulatory reporting and EDI | 837, 835, 270/271, loss ratios per plan | 30,000 to 60,000 |
| Total full project | 250,000 to 550,000 |
Kolonell builds this type of custom application for 2.5 to 15M+ FCFA (EUR 3,810 to 22,870+) depending on complexity, with the rest quoted separately. A first release covering members, the provider portal and adjudication is delivered in 12 to 16 weeks.
Health data confidentiality
Protected health information falls under HIPAA. The software must separate administrative data from clinical data, log every record access, encrypt data in transit and at rest, and run on infrastructure covered by a business associate agreement (BAA).
Mini case study
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Daniel, director of a Miami TPA administering 45,000 members, processes USD 38 million a year in claims for a group of self-funded mid-size employers. By cutting fraud and abuse from 8% to 3% of claims, he saves those employers USD 1.9 million. Real-time eligibility checks avoid 2.5% of ineligible claims, another USD 950,000. With a USD 400,000 project and USD 50,000 of annual maintenance, the net gain exceeds USD 2.4 million in year one, a payback of under 3 months, not counting the provider network retained by payment within 15 days.
FAQ
Can small pharmacies use the portal?
Yes, the portal runs on a smartphone or desktop browser: the pharmacist scans the member's card and gets eligibility in under a minute. No equipment is needed beyond existing devices.
How do we detect fraud without penalizing honest providers?
Rules flag anomalies (same procedure twice in 48 hours, visit frequency three times the average) for human review, with no automatic denial. In practice, fewer than 5% of claims are flagged.
Can employers and members pay premiums online?
Yes, by ACH or card with automatic reminders before the due date. ACH fees of well under 1% are easily offset by a collection rate up 5 points.
Where is health data hosted?
We recommend a HIPAA-eligible cloud region in the US with a signed BAA, encryption and daily backups, for USD 1,500 to 4,000 a month. The setup is validated with your compliance officer.
Can we migrate member and claims history?
Yes, migrating 3 years of history takes 3 to 5 weeks. It also calibrates fraud detection rules on your real data.
Let's scope your project. Tell us your number of members, providers and current tools: we will price a first release covering members, online prior authorization and adjudication with an indicative budget and timeline. Detailed quote within 48 h. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
