Third party administrator, TPA in health insurance is a body that acts as an intermediary between the insurance company and the customer at the time of claim settlement and other service related issues. TPA gets a commission from the insurance company for servicing the customers.
The claim settlement depends on the efficiency of the TPA. Insurance companies outsource the claim settlement part to the TPA to reduce the cost as it would take much of the time and manpower of the insurance company to service claims.
Each TPA would handle more than one insurance company as it would be effective for the insurance companies cost-wise and manpower-wise.
TPA should be recognized by the Insurance Regulatory Authority of India,, which is the insurance regulator in India. The efficiency of the claim settlement would be improved with the TPA.
IRDA introduced TPA in the year 2001 after which the TPA has come to the Indian market.
Take a look at the glossary of group health insurance here to know the difference between insurance Agent, TPA vs insurance broker.
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The Role of TPA in Health Insurance is Discussed Below:
The TPA acts as an efficient intermediary between the insurance company and the health insurance-insured customer. TPA operates as an entity and settles the issues of the customers at the time of claim settlement and any other allied services.
The TPA acts as an intermediary for a percentage of the commission on every health insurance policy serviced. Almost all insurance companies have TPAs as their claim settlement partners. TPAs reduce the cost and manpower for the insurance companies as the claim settlement is outsourced to the TPAs by the insurance companies.
The other important role of the TPAs is to provide health cards to the members of the health insurance policies. Health cards act as proof of insurance which can be shown at the time of claim settlement.
The health cards contain the information of the insured customers such as age, name, date of birth, sum insured, health insurance plan, and other necessary details. The health cards should be displayed at the hospital insurance desk at the time of claim settlement so that the TPA would process the claim without hassle.
Cashless Claim settlement:
The cashless claim settlement service would be provided by the TPA at the network hospitals that are tied up with the TPA. TPAs have their own list of network hospitals to provide cashless claim settlement services to their customers.
TPAs would have negotiated with the hospitals and have an agreement to board them as then network hospitals. The TPA would settle the claim to the hospital and then claim from the insurance company.
The claim settlement approval would be obtained by the TPA from the insurance company to process the claim faster.
Reimbursement claim settlement:
The other role of the TPA is to process the reimbursement claim settlement. In case of reimbursement claim settlement, the insured customer needs to pay the hospital bill first and then submit the bills to the TPA for processing.
The TPA then would take approval from the insurance company before approving the claim. The reimbursement claim would be settled by the TPA only after submitting the necessary documents including the duly filled claim settlement form.
Collect and Store claim settlement data:
The best TPA in health insurance is to collect, store, and share the claim settlement data. TPAs would not share a company’s claims data with another and would ensure that the claim data was only shared with the correct customer.
Data collection, storage, and sharing are important factors for any TPA.
Value added services:
The role of TPA in health insurance is to provide services such as arranging blood donation camps, medical camps. The TPA will arrange these services free of cost to the group health insurance customers.
TPA will give a claim authorization letter to the network hospital to process the claim. TPA will provide the value added services to the customers on request.
TPA for health insurance is crucial. The hospital network of every TPA is different, and new hospitals would be added and old hospitals would be removed from the network. The hospital network would be extended depending on the deal done between the hospital and the TPA.
All the insurance companies having a tie-up with the Third party administrator, TPA in health insurance would be eligible to use the hospital network of the TPA which reduces the burden for the insurance companies to have a tie-up with the hospitals separately.