Executive Summary: Core: What Table-Stakes Level Funded Administration Includes and What It Costs
LFP-15.02, The Product Architecture#
Core is not the interesting tier. It is the indispensable one. Standard level funded administration executed well, claims adjudication, eligibility management, stop loss coordination, compliance documentation, employer reporting, network access, bundled ancillary options, member portal, and broker dashboard, constitutes the foundation on which Plus and Black stand. A tiered architecture that executes Core poorly has no architecture at all.
The capability stack at Core covers everything a level funded employer needs and draws a hard boundary at anything they do not. Claims adjudication must meet or exceed the industry benchmark of 95% to 98% first-pass accuracy and 10 to 15 calendar days from receipt to payment for clean claims. Failures compound: an incorrect denial produces a member complaint, a provider balance-bill dispute, a broker escalation, and an employer who questions the renewal. Eligibility management in the small group market is exception management, every group produces mid-cycle events requiring precise handling and correct 834 transactions to network and stop loss carriers. Stop loss coordination is the employer’s backstop when high-cost claims breach the specific attachment point. Compliance documentation covers ERISA plan documents, SPDs, SBCs, PCORI filing, COBRA, CAA price transparency requirements, and MHPAEA obligations, a body of requirements that DOL audit findings show many small group plans manage poorly.
Administrative fees across the TPA market range from $5 to $60 PEPM. Fees below $20 frequently signal hidden revenue streams, claim savings percentages, PBM overrides, vendor markups, that undermine the transparency a level funded product promises. Core pricing must be competitive with prevailing market rates while avoiding those structures. The differentiation is not unique capability. Any competent TPA can provide claims processing, eligibility management, and compliance documentation. The differentiation is execution quality: claims accuracy, reporting timeliness, compliance reliability, service responsiveness.
Three strategic imperatives depend on Core excellence. Reputation is built here. The broker who places a Core account and sees competent administration becomes the broker who refers Plus and Black business. The employer who experiences smooth Core administration becomes the natural upgrade candidate when a cost driver emerges, a pregnancy, a specialty drug, an MSK pattern, a stop loss premium increase at renewal. And claims data generated at Core is the raw material for the analytics that make Plus cost management and Black predictive identification possible. A large Core book generates the data volume that Plus and Black intelligence require. Core is not the profit center. It is the data engine and the entry point through which the tiered model’s value ultimately flows.