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Importance of Health Insurance Third Party Administrator Research Team | Posted On Wednesday, July 10,2019, 05:50 PM

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Importance of Health Insurance Third Party Administrator



A third party administrator or TPA is a licensed organization, which has authority to process claims. These entities are authorized by the insurance regulatory development authority (IRDA), to make health insurance claims seamless and are also allowed to process corporate and retail policies as well as offer cashless facility as an outsourcing authority of the insurance companies. These agencies help process claims on behalf of the insurer.

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Importance of Health Insurance Third Party Administrator

How Does Third Party Administrator Work?

The TPAs are third-parties which are licensed and authorized by the IRDA, to provide assistance to insurance companies, while processing claims. They serve as an intermediary between the policyholder and the insurance company and allow hassle-free processing of both reimbursement and cashless claims.

When the policyholder is under emergency hospitalization, the TPAs assist the client through the entire process of raising the claim up to the settlement. The TPA assists the clients by providing the details of the network hospitals and also helps find the nearest network hospital. The TPAs also assist clients make health insurance claims. During hospital discharge, the bills are collectively sent to the third-party administrator for settlement. The TPA verifies the medical bills and once the documents are approved, the bills are settled directly by the insurer.

Role of Third Party Administrator in Health Insurance:

The TPAs are licensed authorities which process individual claims and make the process efficient and hassle-free. The Third-Party Administrators serve as an intermediary between the healthcare providers, the insurance company and the policyholder. The assistance provided by third-party administrators are as follows:

  • Approving cashless claims
  • Processing of cashless and reimbursement claims
  • Assisting insured with finding the nearby network hospitals
  • Ambulance services and specialized consultation
  • Free customer care services and helpline
  • Tracking claims and maintaining a database

See Also: 10 Reasons to Review Your Health Insurance Portfolio

Need for Third-Party Administrators:

The third-party administrators help bring the following changes:

  • Improved efficiency in the delivery of services.
  • Improved management and customer-friendly services.
  • Investigation of medical bills and easy settlement of claims.
  • Increase of the knowledge base and seamless health care services.
  • Resolve cashless and reimbursement claims and increase transparency.
  • Develop protocols to process claims and reduce unnecessary delays.

See Also: History of Health Insurance in India

Third-Party Administrator for Employee Health Benefits:

A TPA for employee benefits refers to a person or an organization which is authorized to undertake services like record maintenance, utilization reviews, processing of claims and membership functions. These entities work on behalf of the employer that offers health insurance to employees.

TPAs play a crucial role in the management of health insurance in an organisation. Many health insurance and employee benefit plans involve many technical aspects and difficult administrative terms. So, rather than performing these tasks the companies/organisations find it easier and cost-effective to hire a TPA to handle the various aspects of employee benefit plans.

Cancellation of Third Party Administrator in Health Insurance:

A third-party administrator is generally decided by the insurer. The policyholder must understand this, in case he/she encounters any problems during claim settlement. For any issues, the buyer must contact his insurer and not the TPA. But if there is an issue with the claim process, then a TPA is authorized to solve the problem.

See Also: Health Insurance Benefits

Highlights of TPAs in Health Insurance:

The TPA is directly appointed by the health insurance company to increase efficiency and offer better services to policyholders. The TPA handles various aspects of the health insurance policies on behalf of the insurance company. Outlined below are the ways they provide assistance:

During Health Insurance Claims: The TPA assists the policyholder at the time of a medical emergency and guides him through the entire process, from getting admitted to a network hospital until claim settlement.

The Authenticity of Claims: As the insurance companies and network hospitals have tie-ups, there are very less chances of fake cashless claims. In case of reimbursement, the TPA conducts a thorough verification of claims and settles only after a proper scrutiny.

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