Role of Third Party Administrators (TPAs)

Shruti’s husband had a serious heart attack, and he was rushed to the hospital. Shruti knew that he had a health care plan in his name, and she did carry his id with her, but given the emergency situation and her ignorance about the policy details, she was in a very tricky spot. She was nervous, and when told by the hospital authorities to contact TPA for insurance details, it sounded Greek to her! She didn’t know anything about it except that she was guided towards the concerned counter. Thankfully, TPA officials were helpful and provided complete assistance to her about hospitalization, claims and documents required.

What Exactly is a TPA?

TPA is a third party administrator that works as an intermediary between the insured, the insurance company and the healthcare providers when it comes to health insurance. They are not employed by the insurance companies but are the outsourced entities to take care of all claim related procedures after the customers have bought the health policies.

How Do They Work?

Insurance Regulatory and Development Authority of India (IRDAI) introduced TPAs in 2001 to help the process of claims in health insurance sector become more efficient and smooth. Once the health insurance policy is issued, then the insurance company hands over the complete details of the customer to the TPA. It then becomes the responsibility of the TPA to issue ID cards to the customers, manage their data, help them with cashless health insurance as well as work on the claims filed by them in case they select a non-network hospital for the treatment.

Primary Functions of TPA:

  • Cashless Hospitalization:

    The TPAs are responsible to help the insured go through the process of availing this benefit

  • Manage Claims:

    The insured is supposed to file all the necessary documents with the TPA regarding their claims, whether they are hospitalized in a network hospital or non-network hospital. After verifying the details and confirming with the insurance company, TPAs either disburse the claim amount, ask for more documents or reject the claims and give valid reasons for the same

  • Maintain Customer Database:

    TPAs are authorized to maintain complete customer record, their medical history, claim history, assign unique identification numbers and also collect premiums from them.

  • Value-added Services:

    TPAs also provides extra health care services like helping in getting beds in a hospital, ambulance services, consultation with a specialist, supply of medicines etc.

  • Customer Service:

    This is a highly valuable service provided by the TPA. They have a full-time medical practitioners working for them who can guide a patient about the need for hospitalization as well as with other queries if there is a planned hospitalization

TPAs have helped the insurance companies in managing their business in an efficient manner, thereby ensuring that customers get the best possible service. While their primary role has been for the cashless health insurance policies, it is also to be noted that in case they don’t perform their duties honestly and as per the regulations of the sector, IRDAI has the right to cancel their license as well. Even the insurance companies sometimes work with more than one TPA to improve operations and provide better customer service.

Be informed of your TPA as mentioned in your policy documents so that you can get best possible help in times of need. Health policies work best when their benefits are actually utilized by the buyers. TPAs play a major role in achieving this objective.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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