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Third-PartyAdministrator: Here’s why it is crucial in the health insurance sector

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Published on July 7, 2021. EST READ TIME: 4 minutes

When it comes to health insurance, merely availing the policy is not sufficient. You must also know how to make claims and receive policy benefits in the case of an emergency. For instance, during unfortunate events like accidents, you would require immediate medical assistance. With health insurance plans in place, the financing needs during such instances can be dealt with easily.

While insurance providers take care of your financing needs, the facilitation of an immediate claim rests with TPAs or third-party administrators. Thus, when an insured individual is admitted or any such immediate claim is made with a third party, the role of a TPA comes into the picture. Let’s take a better look at what a third-party administrator means.

What is a TPA?

A third-party administrator is an authorised body that aids in the processing of insurance claims and other administrative aspects of such claims. They can either be independent organisations or work under insurance providers. An entity must obtain IRDAI license to work as a TPA for the claim settlement and other designated services under health insurance plans.

What is a TPA in Health Insurance?

As the scope of services and benefits under a health insurance policy is wider than other general policies, the claims can also involve various complexities. Under health insurance, a TPA thus refers to an entity that takes care of aspects related to claim settlement as per the insurer and insured contract.

A TPA would thus facilitate the claim processing in case of the insured’s hospitalisation. The services would basically revolve around settling the bills and confirming necessary documentation. A health insurance provider would choose the TPA for such services for an unhindered settlement of claims made. A TPA can either solely work with one insurer or serve several insurance providers.

What is the Role of TPA in Health Insurance?

A third-party administrator’s role in health insurance can extend to the following functions:

1. Settlement of claim: Facilitating claim settlement, especially cashless claims, under a health insurance policy is one of the primary services provided by a TPA, allowing easy bill settlement between the insured and the hospital. TPAs also issue an ID card and unique identification number for simplified claim processing.
2. Record keeping: Each claim made by a policyholder must be recorded in a dedicated database. Thus, when an insured person is admitted, such record maintenance is done by the TPA.
3. Unhindered support: TPAs also mostly provide continuous assistance, usually round the clock, for any query from policyholders or for claim processing.
4. Empanelment of hospitals: The empanelment of a hospital done by a third-party administrator ensures whether such medical facility meets all necessary criteria or not for joining the healthcare assistance network.

Depending on the TPA, you can also expect additional services like supply of essential medicine, extra beds, and ambulance.

Need for Third-Party Administrators

The need for a Third-Party Administrator precedes many other arrangements related to health insurance as these entities are the key to essential and timely claim settlement. Often, policyholders who face unfortunate circumstances like accidents or need immediate medical attention, rely on their health insurance plansfor financing. However, during an emergency, you might experience a shortage of cash and might not have sufficient time to go through lengthy policy claim processes for the funding. This is when a TPA can help by enabling cashless settlement of such claims.

They coordinate with the medical facilities under the service network of health insurance providers to process immediate cashless claims and ensure hassle-free bill settlement.

Benefits of Third-Party Administrators in Health Insurance for Policyholders

The top benefits that can be derived with a third-party administrator include –

• Assistance related to necessary documentation
• Efficient claim settlement without cash involvement
• ID card issue to policyholders
• Help through immense knowledge related to medical care services
• Improvement in quality of healthcare services

Conclusion

The selection of a third-party administrator depends on the sole discretion of the insurance provider and does not involve the policyholder in any way. The presence of a TPA is nevertheless significantly helpful, given that they facilitate all services related to easy cashless claim when a policyholder seeks emergency medical assistance.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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