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The concept of TPA in health insurance

When you claim under your health insurance plan, there are two entities that can process your claim- The In-house claim desk of an insurer or a Third-Party Administrator or TPA. Typically, the larger and older public sector insurance companies operate through a TPA, as they are unable to manage all claims on their own. So, a TPA mainly helps the insurer process a claim and acts as a liaison between the insurer and the customer. However, the new-age insurers prefer to keep their claim servicing desk in-house and hence do not outsource the process.

The most important reason for opting for a health insurance plan is to get a claim efficiently. Especially, with the rising number of Covid cases in India, getting the claim has been a concern for many. According to the General Insurance Council, 9,96,8041 [1] claims had been raised as of 31st March 2021. Out of this about 8,55,250 have been settled. However, about 1,41,554 cases were still pending! This may seem concerning on paper but it is a good indicator for the industry. The claims processes are becoming shorter and more efficient.

All you need to do is to follow a specific protocol for claim settlement. You need to inform the insurance company or its Third Party Administrator (TPA) when you incur a claim. But do you have any idea what a TPA is?

What is TPA in health insurance?

TPA is an abbreviation for Third Party Administrator. A TPA is a company that acts as a mediator between the health insurer and the policyholder at the time of a claim. You need to inform the TPA about the claim. It is the TPA’s responsibility to inform the insurance company about the same. The TPA helps you in getting your claims settled easily and quickly.
Basically, TPA is the liaison between you and your insurance company.

So, who exactly is a TPA?

  • The TPA is licensed by the Insurance Regulatory and Development Authority of India (IRDAI) to offer its assistance at the time of health insurance claim settlements. 
  • TPAs are selected by the insurance company itself. The company might engage the services of one or more TPAs if needed.
  • Though the TPA is a link between the insurer and the policyholder, the claim is settled by the insurance company itself.

Role of TPAs

TPAs perform a variety of roles. In many instances, they issue the health cards that you use for availing cashless claim settlements. The other types of roles that they play include the following –

  • TPAs specialize in health insurance and its claims. So, for any assistance or query, you can take their help for quick claim settlements.
  • In case of an investigation, the TPAs might be engaged in investigating the cause of the claim.
  • The benefit of cashless or reimbursement claim settlement is provided to the policyholder through the TPA.
  • The TPA handles all your claim-related documents, verifies them, and then processes them for settlement. Moreover, it is tasked with the collection of all relevant medical documents from the hospital in case of cashless settlements.

Benefits of TPAs

By being a link between the company and the customer, the TPA benefits both. Here’s how-

For customers
  • Complete assistance at the time of claim
  • Information about claims and admissible expenses
  • Helps in locating the nearest empanelled hospitals for cashless claims
  • Round-the-clock assistance for any query, feedback, or complaint
  • Makes the claim settlement quick, smooth, and hassle-free
For insurance companies
  • As TPAs collect and verify claim-related documents, it becomes easier for health insurance companies to handle their claims.
  • TPAs keep in constant touch with the insurance company and update it about its claim liabilities ensuring that the claim turnaround time (TAT) is reduced and the company becomes efficient in claim servicing.
  • They help in minimizing claim-related investigations and verifications for insurance companies.
  • TPAs maintain claim-related records of the policyholders thereby reducing the burden on insurance companies.

In-house claim settlement – an alternative to TPAs

Though TPAs have been an integral part of claim settlement for both the insurance company and the policyholder, many companies are switching to the concept of in-house claim settlements. In-house claim settlement means that the insurance company has not appointed any TPA for its health insurance claims. On the contrary, the company has designated a claim-handling department that would perform all the services of a TPA. 

In-house claim settlements allow you to connect with the insurance company directly in the case of a claim. The claim process is also streamlined as there is no back and forth with the TPA. Many leading insurers are opting for this alternative solution and eliminating the need for TPAs.

What you should do?

When you are buying a health insurance policy, check whether the company uses the services of a TPA or whether it has an in-house claim settlement. Both have their respective pros and cons. If you know the claim process, in-house claim settlement would be better but if you would need assistance, you can opt for TPAs. Moreover, if the health insurance company has appointed two or more TPAs, you can switch between the TPAs if you are not satisfied with the service offered by one. This switching can be done by informing the insurance company.

So, compare and buy the best health insurance policy that offers the easiest claim settlement process. It would ensure that your claims are settled without you having to break into a sweat in a medical contingency.  

References:

[1]https://www.newindianexpress.com/business/2021/apr/12/covid-health-insurance-settlements-remain-slow-2288923.html


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