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What is a TPA in Insurance? (Functions, Benefits & Role)

Many businesses across various industries outsource services from agencies or companies. The insurance industry is no exception. In the insurance industry, there are TPAs (Third-Party Administrators) which are licensed to make the processes related to insurance more efficient. As time has gone by, TPAs have become the problem-solvers for policyholders. Continue reading to know more about TPA in insurance.

What is a TPA?

TPA or Third-Party Administrator is a body that provides services such as processing claims and employee benefits. This body can be a company, an agency or an organisation. A TPA is licensed by the Insurance Regulatory Development Authority (IRDA). It can be independent, or it can also act as an entity belonging to the insurer.

The TPA is appointed by the insurance provider. Hence, if the insurance holder faces any issues regarding the claim settlement, then he/she should contact the insurer and not the TPA. However, if there is a problem with the process of the claim, then the policyholder can reach out to the TPA.

Why are Third-Party Administrators needed?

The process of claim settlement is not effortless. Sometimes, there are many hurdles that need to be crossed. Having a TPA can reduce these hurdles. It can ensure that the services are delivered with greater efficiency. As a TPA cross checks documents and information, it increases the quality of the services provided. It also improves standardization procedures. TPAs have also increased the knowledge base of services such as healthcare services. This has allowed for greater penetration of health insurance.

TPAs also establish protocols to carry out the investigation faster and reduce unnecessary delays. This minimizes the expenditures. Along with that, TPAs are also needed to pave the way for lower insurance premiums.

What are the functions of a TPA in Insurance?

Some of the functions of a Third-Party Administrator are:

1. Easy Claim Settlement

Whenever a claim is filed, it is the responsibility of the TPA to check all the documents that are submitted in support of the claim. The TPA can request more information to double check the details. The TPA also guides the policyholder about the right kind of documentation. This simplifies the claim settlement process. Hence, the TPA helps in easy processing and settlement of claims.

2. Connecting Link

A Third-Party Administrator is the link between the insurance company and the policyholder. Whenever a claim is filed, the policyholder will directly and indirectly meet the TPA.

3. Record Keeping

All the documents related to the policyholder are maintained by the TPA. For instance, if a policyholder is admitted as a patient, all the important documents will be maintained by the Third-Party Administrator. These records are usually stored in a secure database.

4. Support to Policyholders

Many Third-party Administrators provide information and assistance to policyholders related to their claims. TPAs also offer 24×7 support to policyholders through call centers and mobile applications.

What is the role of a TPA in a Health Insurance?

Many health insurance companies use third-parties for their claims processing. During the processing a of health insurance, a TPA would:

1. Give Health Cards to the Insured

A validation procedure is carried out for every policy issued to the policyholder. After the validation procedure is complete, an authorized health card is issued. This card is very important for claim processing. The card has the details of the policy number and the TPA who is responsible for the processing of claims. While getting admitted to the hospital, the insured can start the process of the claim by offering this card.

2. Provide Additional Services

Some TPAs also offer extra services to the policyholder. These services can include helping with procurement of extra beds, ambulances, medicine, etc.

3. Strengthen the Hospital Network

Having a TPA helps the policyholder get the important benefits that come with a health insurance policy. A TPA finds and enlists good hospitals which can arrange for quick cashless treatment. The TPA builds a strong network of hospitals so that the policyholder can get the best treatment.

According to some experts, the primary service offered by TPAs should be providing cashless hospitalization of the insured.

What is the Cashless Claim Facility?

Your insurer will provide you with a Guide Book and a list of Network Hospitals when you buy a health policy. Whenever a claim is filed, a TPA can approve of a cashless claim settlement or reimburse it later. It basically means that you won’t have to pay your hospitalization bills at the time of discharge.

To avail the cashless facility, you need to visit one of the network hospitals that come under the network group of your insurer.

The hospital coordinates with the TPA for authorization in the case of a cashless claim facility. To avail this facility, you just need to take an identity proof and the valid policy proofs to the hospital. If you want to be referred to a network hospital, then you need to give the following documents to you TPA for the authorization of the cashless facility:

  • An original detailed prescription from the doctor. It should contain a description of the symptoms of the diagnosed disease on the letterhead of an authorized medical practitioner.
  • The hospitalization form mentioned by the insurer.
  • And details of the old policy (if the TPA does not have a copy of it).

If there are missing or incomplete details of hospitalization, or if your disease is not covered under the policy, you will not be able to avail the cashless treatment. This is why you should provide complete and accurate details about your hospitalization history.

Under a health insurance policy, the waiting period is 30 days. This means that any disease that gets diagnosed or happens within that period will not be covered by the policy. But the policy will cover any accident that takes place in the initial 30 days of the policy.

Even though one of the main purposes of TPAs is to help policyholders, many policyholders still need to learn more about TPA in insurance. By gaining more knowledge about the services and benefits provided by TPAs, the insured will be able to get the best out of their insurance policies.

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