What is a Third Party Administrator (TPA) and Role of TPA in Health Insurance?

What is TPA?

The TPA full form is Third party administrator. According to the Insurance Regulatory and Development Authority of India (IRDAI), the third-party administrator can be defined as a business that is appointed to assist a health insurance firm in providing health insurance-related services, such as policy servicing, claims processing, and customer service to policyholders. They can be called as an intermediary for the insurance company and the policyholder, thus ensuring the process of settlement for claims is handled efficiently.

However, there’s also an internal claim department in some insurance companies, established by the insurer, under its wings, to process claims raised by policyholders. In these cases, there isn’t a TPA involved, and all needs that are related to the health insurance policy are dealt with by the insurance company directly.

What is the Role of TPA in Health Insurance/Medical Insurance

As increasing numbers of people are brought into the health insurance fold, the task of managing everyone is a major challenge for insurance companies because it demands a lot of manpower. This is where the function of a TPA insurance is vital as a single point of communication for the policyholder who needs his/her concerns addressed. For the insurer, they can concentrate on introducing newer policies that benefit all people. The role of TPA in health insurance extends in many other areas as well, as explained below:

1. Claims settlements that are streamlined: The first and foremost obligation of TPA is to ensure that the claims settlements submitted by policyholders are filed on time. If it’s a cashless or reimbursement request, the job of a TPA is huge. Starting with filling up the health insurance claim form to reviewing the documents submitted, verifying the hospital’s acceptance, collecting all relevant evidence for the insurance company, the release of the claim, and so on. The whole process requires streamlining which is handled by the administrator of a third party.
2. Deliver value-added services: Health insurance protects the insured from increasing medical expenses and assists their claim during a moment of need. With TPA in place, it is possible to contact the policyholder to provide additional value-added services that are based on the selected policy like emergency assistance as well as ambulance pickup, wellness programs, etc., the insured will opt to stick with an insurance company only if they can be assured of benefits that enhance their experience with the policy.
3. Network hospital relationship: Establishing a proper relationship with hospital administration is necessary to expedite claim processing, quicken the hospitalization process, etc. A third-party administrator along with existing relationships with hospitals can be a huge benefit to the health insurance company as it is one of the major selling points and also a bang for buck deal for the policyholders.
4. 24/7 customer service: Customer service is the lifeline for any health insurance company, and it is very much required to answer the doubts or queries of policyholders, at any time so that they are happy and satisfied. While the health insurance company may provide a dedicated client support department that can handle any questions regarding policies, TPA will be an extra advantage to any insurer since it can boost their efforts in a variety of ways.

Why TPAs are Required in Health Insurance

While the largest insurance companies have their own in-house claims division, even then sometimes they as well as the new-age insurers collaborate with TPAs to share the work. Here are the important reasons and benefits of choosing a TPA over internal department for settlement of claims.

• Third-party administrators enjoy a wide presence throughout the nation and can connect millions of policyholders throughout the country. They also have offices in remote regions, where insurer might not even have a physical presence.
• TPA’s have a customer service team that is able to answer emergency calls made by customers which is an important advantage from the perspective of the policyholder since contacting the insurance company during midnight hours is not possible.
• A third party administrator is able to gain experience over claim settlements through working with many insurers which helps them become more effective at what they do. This results in streamlined claim processing from the start as opposed to the in-house claim department in an insurance company that may not have the knowledge and expertise that TPA has.

If you’re interested in purchasing an insurance policy for you and your families health needs, we hope this article helped you to know what is a TPA in the insurance industry and how they facilitate claims processing. In the wake of covid19 and the resultant increase in claims, it would have been impossible for the health insurers to manage the claim settlements without the help of the TPA. Also without the right information reaping the best benefits of your insurance policy might not be possible.

PayBima’s experts can help better understand the benefits and features of insurance policies for an informed policy buying experience.