What is TPA in Medical Insurance and How Does It Work?

What is a TPA in Medical Insurance?

TPA full form in insurance is a third-party administrator in medical insurance. It is an independent third-party that helps in processing claims under medical insurance policies. Usually, TPAs act on behalf of insurers to help settle claims without hassle. They are also regarded as the bridge between the health insurance company, the hospital, and the policyholder.

Functions and Responsibilities of a TPA

In a nutshell, the primary responsibility of a TPA in medical insurance is to process claims under health plans. To do so, TPAs take on several other responsibilities, such as:

Ensure Smooth Claim Settlement

The primary responsibility of a TPA is to expedite the claim settlement process. When a claim is raised under health insurance, the network hospital contacts the TPA to seek pre-authorisation. All the prerequisites, such as document verification, are performed by the TPA to ensure a smooth claim settlement.

Keep Records of Claims

The TPA's role in health insurance also includes the duty to keep a record of all claims related to the insured. This lowers the burden of health insurance companies in many ways.

Issue Health Insurance Cards

When you purchase a health insurance policy, you are issued a health insurance card that contains all the necessary details, such as your name, policy validity, policy number, etc. This health insurance card is issued by the TPA on behalf of the health insurance company.

Assist in the delivery of Value Added Services.

Health insurance companies are now offering several value-added services, such as ambulance services, referrals to surgeons or specialists, and wellness programs. To assist with service delivery, health insurance companies rely on TPAs.

Maintain Network of Hospitals

Health insurance companies tie up with hospitals to offer cashless claim settlement. The TPA handles finding a reputable network hospital, negotiating rates, enrolling hospitals in the network, etc.

How Does a TPA Operate in Medical Insurance?

A TPA in medical insurance comes into the picture in two scenarios: Cashless Treatment and Reimbursement Treatment. Let’s understand how a TPA operates in these scenarios:

Cashless Treatment

When you visit a hospital and claim for cashless treatment, the hospital shares your treatment details and the estimated cost of medical expenses with the TPA. The TPA then verifies and grants pre-authorisation. Once the treatment is complete, the TPA settles up payment directly with the hospital. This way, you get to enjoy cashless treatment.

Reimbursement Treatment

If you have opted for reimbursement, you must pay the bills upfront. Thereafter, you must submit all necessary documents, including medical bills, to the TPA for reimbursement. Upon verification, the TPA will reimburse you for the amount.

Benefits of Having a TPA in Health Insurance

In a nutshell, a TPA is the body that makes medical insurance beneficial in practice. Here are some benefits of having a TPA in health insurance:

Facilitate Cashless Treatment

TPA facilitates cashless treatment as promised under the health insurance policy.

Improve Service Quality

TPA improves the service quality of health insurance companies by facilitating the submission of the right documents, processing large numbers of claims, maintaining a history of claims, etc.

24*7 Availability

TPAs are available for customer assistance 24*7. Whether you have a query regarding document submission, claim approval, or value-added services, you can contact the TPA.

Difference Between a TPA and a Health Insurance Company

On the surface, a TPA can be confused with a health insurance company. Although they work for the same purpose, their roles are significantly different.

A third-party administrator (TPA) is a bridge between the insurance company, the hospital, and the policyholder. The sole purpose of a TPA is to facilitate the services that are provided under a health insurance plan by a health insurance company.

In contrast, a health insurance company provides health insurance coverage in exchange for a premium.

List of Third-Party Administrators (TPAs) in Health Insurance

The Insurance Regulatory and Development Authority of India has listed down licensed third-party administrators that you must know:

Cancellation or Change of TPA in Health Insurance

Know that a TPA is appointed by the health insurance company, and the TPA itself does not have any power in being appointed or dismissed. As a policyholder, you can request either to cancel the existing TPA or to point to a different one.

Here’s a step-by-step guide you can follow to raise the request:

1. Step 1: Contact your insurance company by phone or email.
2. Step 2: Submit important details like your name, policy number, etc.
3. Step 3: Raise a request to cancel or change the existing TPA. Ensure to list your reason for such a request.
4. Step 4: Once your request is raised, the insurance company will look into it and either approve or reject it.

Who Should You Contact for TPA-Related Issues?

If you feel that your TPA is not performing its duties efficiently, you can contact your health insurance provider. You can raise your concerns, and if you are still not satisfied, you can always submit a cancellation or change request to the TPA.

Summing Up

A TPA in the health insurance sphere is an important body that ensures a smooth claims process, settlement, and delivery of services as promised under a health insurance policy. In the absence of a TPA, processing such a large number of claims could become burdensome for health insurance companies.

Looking for a health insurance plan with a reputed TPA, adequate coverage, and affordable premiums? Head straight to Jio Insurance Broking.

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