Health insurance industry in India is growing at a fast pace and hence needs to be supported by a robust infrastructure. Third Party Administrators or TPAs can play a major role in providing support and increasing efficiency of the industry.
What is a TPA?
TPA is a professional agency meant to coordinate the process of Claim settlement in a cost effective, timely, fair and hassle-free manner. As TPAs associate with multiple insurance companies, they get critical mass to best leverage technology and deliver cost effective services to the Policyholder as well as to the insurance providers.
Who all are there in a TPA and what do they do?
As per the regulations of IRDA, TPA should have their own in-house medical doctor (registered with the medical council of India), hospital managers, legal experts, insurance consultants, information technology professionals and management consultants.The team of these professionals liaison with the customers for streamlining the claim process and ensure that there are no fake claims and also restrict unnecessary treatment, thus improving quality of services which ultimately leads to lower insurance premium. TPAs receive fees from the insurance provider which is a percentage of the Premium and is typically 5.5% of the premium amount.
The concept of TPA has been borrowed from the US, although minor structural differences have been made in the way TPA is implemented in India to ensure the concept remains relevant to India's needs and current status of health care industry. Third party administrators operate under the license of the Insurance Regulatory and Development Agency (IRDA) and so far about 25 companies have been issued a license to operate as a TPA in India.
Role of TPA in health insurance
Role of the TPA starts right from the time when a Policy
is issued. Mentioned below are key roles of a TPA in health insurance
•Managing policyholder records - As soon as a policy commences records of the customer or the Insured is provided to the TPA and from this point onwards the TPA assume almost all responsibility for the customer or the insured. Maintenance of the database of policyholders, issuing of identity cards, claim settlement and grievance redressal, all come under the responsibility of a TPA. Besides, the TPA is responsible for making payment to the hospital. A TPA in-turn receives Reimbursement from the insurance service provider once it sends all the supporting documents for the claim, along with the bills to the insurance company.
•Building hospital network - The TPA is also responsible to build a hospital network for cashless services and negotiate rates and discounts. While empanelling a hospital on their network, the TPA with thorough due diligence takes into account the infrastructure and facilities of the hospital, track record, management background and IT infrastructure / computerization at the hospital.
•Claim settlement - Besides managing customers, it is also the job of a TPA to coordinate with the hospital for the claim settlement process. The hospital will share the bills for the treatment rendered to the insured with the TPA and the TPA will verify the same against the pre-negotiated tariff's and may also take a second medical opinion for complicated cases and may investigate hospital records in case of suspicion with regard to false claim or moral hazard. In some cases, the invoices may have to be re-priced.
•Maintain customer service centre - The TPAs also maintain a 24-hour customer service center, where customers can speak to and get any information regarding the hospital network, understand eligibility for a claim and get status of claim benefit if reimbursement is pending. In case, treatment has been taken in a hospital which is not included in the list of empanelled hospital, then the policyholder will need to coordinate with the TPA for getting a reimbursement.
Additional services - TPAs may also provide value-added services like ambulance services if mentioned in the policy, offer guidance to policyholders regarding specialist/doctor for the treatment of their medical condition and organize lifestyle management and well-being programs.