What is a Third-Party Administrator?
A company/organization/agency that provides operational services like processing claims and managing employee benefits under a contract with another company and is licensed by Insurance Regulatory Development Authority (IRDA) to work is called a Third-Party Administrator (TPA).
Insurance companies outsource the third-party administrator, and it acts as an intermediary between the insurance provider and the insured.
A health insurance third-party administrator manages the hospital bills and other related expenses of the patient so that friends and family members can take good care of the patient.
In the process, the stakeholders are:
- Insurance companies,
- Healthcare providers,
- Policyholders.
The importance of Third-party Administrators in health insurance
Tpa in health insurance manages a few significant areas of health insurance. Some of these are as below:
1) Processing of the health insurance claims and settlements incorporates the following
- Accepting the intimations
- Approving the cashless claims
- Disbursing the claims
2) Provider network
3) Utilization review
4) Enrolment
5) Premium collection
6) Cashless processing (if the treatment is taken in the network hospital)
7) Additional services like:
- Ambulance facility
- Bed availability
- Specialized consultation
- Medicine supplies
- 24-hour toll-free helplines
- Well being programs
- Health facilities
- Lifestyle management
- Medical supplies
- Health facilities
8) Database management
Important things to remember about the third-party administrator in health insurance:
- The health insurance company selects the TPA.
- When a claim is made, TPA functions like a bridge between the health insurance company and the insured.
- Third-party administrators in health insurance hold the license of the Insurance Regulatory Development Authority (IRDA).
- TPA can be associated with multiple policyholders.
- The primary purpose of TPA is to handle the documents and the hospital bills, so the claim process becomes smooth and easy.
- Insurance companies rely on TPA for a hassle-free settlement process.
How do the TPAs work?
TPA full form is a third-party administrator. TPAs play a major role in undertaking the responsibilities of the health insurance companies by assisting the policyholders. There are cases of cashless claims or reimbursement claims. TPAs work in the following manner :
1) Cashless treatment case:
Once the policyholders decide to opt for the cashless treatment, they approach the TPA of their health insurance company. The TPA helps them find a suitable network hospital for the required treatment. Once the policyholder goes to the suggested network hospital, the TPA helps them at the hospital desk by guiding them with the submission of the required important documents for the treatment. When the policyholder gets the approval for the treatment, the TPA then settles the expenses of the treatment with the hospital.
2) Reimbursement treatment case:
When the policyholder, for some reason, chooses to go to a non-network hospital, they inform the third-party administrator of their health insurance company about their decision and undergo the treatment at the non-network hospital they select. After the treatment, they pay the hospital bills. Post-discharge, the policyholder files for the reimbursement of the hospital expenses that they settled. It is here that the TPA insurance helps the policyholder with the submission of the essential documents that are required for a successful reimbursement process. Once the claim is approved, the health insurance company will reimburse the approved amount in the registered bank account of the policyholder.
How TPA benefits the health insurance company?
- TPA is a dedicated source for claim settlement.
- They provide high-quality services.
- They coordinate the entire claim settlement process.
- They manage and investigate the claim requests properly.
How TPA benefits the policyholders?
- They give constant support during hospitalization.
- They provide 24*7 customer support.
- It reduces the complexity of the health insurance claim settlement process.
- A TPA in health insurance ensures that the claim settlement process is efficient and also helps with proper documentation during the process.
It can be understood that the third-party administrator can be of great help in increasing the efficiency in the delivery of the services of the insurance company and also improving the knowledge base of the healthcare services. It can even help expand the penetration of health insurance. Observing the scope of the TPA for the betterment of the health insurance claim settlement, there seems to be a need to develop protocols to streamline the investigations and avoid unnecessary delays.