Third-Party Administrator Health Insurance (TPA)

The term TPA or Third party Administrator is often used when we talk about the cashless facility or cashless claims. What is this third-party administrator, and what role does it play in health insurance? It is important to understand third-party administrator health insurance because a TPA plays a very crucial role in the claim settlement process of a health insurance policy.

As the name suggests, a third-party administrator is a third-party agency or organisation, approved by IRDAI and hired by the health insurance company, that offers assistance in processing claims and other administration activities on behalf of the insurance company. A TPA is an outsourced agency that works as an intermediary between the insurance company and the insured. TPA is appointed by the insurance company to service claim requests.

TPA in health insurance does everything from searching for the network hospital to submission of documents for claim settlement. It is responsible for providing quality service and handling large volumes of health insurance claims.

Following is the complete process of how a TPA works.

• The insurance company appoints a TPA to handle claim processing and settlement.

• Once a TPA is given the authority by the insurer, all records and data relating to a third-party administrator health insurance policy are handed over to the TPA.

• When a claim is intimated to the TPA, it connects the insured to a network hospital for cashless treatment. In case the insured goes to a non-network hospital, the claim is settled on a reimbursement basis.

• An authorisation letter for cashless treatment is issued by the TPA to the network hospital stating that payment for the treatment will be made as per the policy.

• TPA tracks the treatment at the network hospital and collects all the medical bills and other required documents for the claim.

• TPA settles the bill directly with the hospital. In case of reimbursement, the insured pays the bill and then submits all the bills and documents to the TPA for reimbursement.

• TPA sends all the documents and bills to the insurance company, which reimburses the TPA.

A TPA provides knowledge of healthcare services, investigates the claims and manages the cashless service and reimbursement of claims. Following are some of its functions in detail.

• Issuing Health Card - Once a policy is issued, the policyholder gets an authorised health card. This card is issued by the TPA and contains the details of the policy, such as the policy number and the details of the policyholder. This card is needed at the time of availing cashless facility at a network hospital. It is an important requirement for the cashless claim processing.

• Directs the policyholder to a Network Hospital - When the insured informs TPA of a claim, it directs the insured to a network hospital that provides the cashless treatment.

• Ensuring Easy Claim Settlement - After the claim is intimated by the insured, it is the responsibility of the TPA to expedite the claim. TPA collects all the required documents, verifies the details, and submits the documents. For cashless claims, TPA collects the documents from the hospital. In case of reimbursement, TPA asks for the documents and bills from the insured.

• Arranging Value-Added Services - Services like ambulances, wellness programs, medicine supplies, specialised consultation, etc., are also arranged by the TPA in addition to claim processing and claim settlement.

• Provide Assistance - TPA can be contacted 24*7 through a helpline number and provide assistance on claim registration, claim status, etc. Also, in case of planned hospitalisation, a TPA helps in getting admission to a tie-up network hospital.

• Building a Strong Network of Hospitals - TPA works towards building a strong network of hospitals and tries to add the best hospitals where policyholders can avail of cashless treatment. TPA also negotiated the rates with the hospitals. It checks whether the hospital fulfils the criteria of being a network hospital or not and what extra services it offers.

• Maintains Records - A TPA also maintains all the records of a policyholder in a database.

TPAs are beneficial for both the insurer and the insured as it smoothens the process for both parties.

For Insurer

• A TPA is selected by the insurer because it*

• Improves efficiency
• Provides quality service through an in-house team of experts, including doctors, insurance consultants, legal experts, and hospital managers.
• Improves due diligence and the processes
• Minimises expenses
• Streamlines claim settlement process
• Helps in better reach of health insurance

For Insured

• A TPA can be very helpful for a policyholder in case of a medical emergency.

• When the TPA is informed about the claim, it connects with the hospital to get cashless approval and provides support through hospitalisation.
• It guides the policyholder with the required documents and verifies all the documents and bills.
• Ensures fast and efficient claim settlement
• Simplifies the whole process by taking care of all the complicated paperwork.

A TPA smoothens the entire process of administration of health insurance claims and ensures quality services to the customers and better management to the insurers. It helps the insurer maintain good client relationships and also standardises medical treatments and costs in private hospitals. The need for TPA insurance cannot be ignored, especially in cases where the insured needs immediate medical attention due to an accident or an emergency. At such times, TPA helps in arranging a cashless facility immediately, keeping in mind the coverage under the policy.