Importance of Third-Party Administrator (TPA) in Health Insurance

Rasool, an IT engineer with a start-up, suffered a heart attack during his morning walk. Though he was just 31 years of age, his sedentary lifestyle and a highly stressful job contributed to this condition. Without wasting any time, he got himself admitted to a hospital with the help of his friends and informed his family later. Rasool was treated on time, with doctors suggesting complete rest till he recovered completely. Since he got admitted to a nearby hospital, which was part of his health plan’s network, he could avail of cashless hospitalization. He gave all his health insurance details to his dad, who called the health insurer’s third-party administrator (TPA), who in turn processed his cashless claim within a few hours. Rasool was appreciated for his insurance planning and his presence of mind to opt for a network hospital for treatment.

Health insurance benefits are plenty, which is now being understood by many due to the claims filed during the pandemic. When the treatment costs are rising, health insurance plans are making it easy for people to not worry about the expenses but focus on their well-being. If you are already a policyholder or looking to buy health insurance, you may have come across the term ‘TPA’ and would have wondered what it means and what is the full form of TPA. The following article will help you understand the TPA meaning and its importance in health insurance

What is a Third-Party Administrator (TPA)?

As per the Insurance Regulatory and Development Authority of India (IRDAI), the third-party administrator is defined as a company appointed by a health insurance company for providing health insurance services such as policy servicing, claims handling, customer service, etc. They can also be referred to as an intermediary between the policyholder and the insurer to ensure the claim settlement process is managed smoothly.

On the other hand, under its wing, there is an in-house claim department set up by the insurer for processing claim requests from the policyholders. There is no TPA involved in such cases, and all the services requests related to the health policy are handled by the insurer directly.

Important of Third-Party Administrator (TPA) in Health Insurance Policy

As more people come under the fold of health insurance, managing everyone gets tough by the insurer as it requires huge manpower. This is where the role of a TPA becomes vital, as the single point of contact for a policyholder to get his issues addressed. For the insurer, they can focus on introducing newer policies that will benefit the masses in general. For example, during the COVID-19 pandemic, the surge in claims could not have been managed without the involvement of TPA’s.

1. Streamlined claim settlements: The first and foremost responsibility of a TPA is ensuring the claim settlements filed by the policyholders are made on time. Be it a cashless claim or reimbursement claim, the work done by TPA is massive. The entire process needs streamlining from providing the health insurance TPA claim form, verifying the submitted documents, confirming with the hospital, collecting relevant proofs from the policyholder, the release of claim, etc., by the third-party administrator.
2. Add value to the policies: A health policy protects the policyholder from the rising medical costs and helps them with claims during the time of need. With a TPA in the picture, they can get in touch with the policyholder to offer various other value-added services based on the chosen policy, such as providing emergency assistance, ambulance services, wellness programs, etc.; a policyholder will choose to stay with an insurer only if they are guaranteed of services that enrich their policy experience.
3. Engagement with network hospitals: Building proper communication with hospital management is required for faster claims processing, speedy assistance in hospitalization, etc.; a third-party administrator, with their existing hospital relationships, adds massive value for the health insurer in enabling broader service to their policyholders.
4. Providing 24/7 customer service facilities: Policyholders are the lifeline of any health insurance company. It is essential to clear their queries or doubts at any point in time, to make them feel satisfied. Although the health insurer may have a dedicated customer care department to handle questions on the policy, TPA is an added asset to any insurer as it largely boosts their efforts manifold.

Advantages of TPAs in health insurance

In India, the Insurance Regulatory Development Authority of India (IRDAI) has authorized 26 companies to function as Third-party administrators (TPA). While the bigger insurance companies have their in-house claims department, they also engage with TPAs to share the workload. While choosing a health insurance policy, you may also have to look at this facility to have a clear idea of the process. Here are some of the major advantages of opting for a TPA over in-house claim settlement departments.

• Third-party administrators have a wide presence across the country, connecting millions of policyholders all over the nation. They also possess offices in distant areas, where the insurer may not have a physical presence.
• TPA’s, offer a dedicated customer service department that may function round-the-clock to attend emergency calls from policyholders, which is a major advantage from the policyholder’s point of view as reaching the insurance company during midnight may not be possible.
• A third-party administrator has the knowledge of claim settlement by working with multiple insurers, which makes them better at their job. This translates to streamlined claim handling from day one, compared to the in-house claim department of an insurer who may not carry the level of expertise that a TPA possesses.

If you are looking to buy a health insurance policy, the above article would have made you understand what TPA is in insurance and the types of claim processing they provide – through a TPA or with an in-house claims department. Claims are an integral part of any health insurance plan, and choosing them from the right organizations goes a long way in offering you peace of mind and avoiding any last-minute trouble.