Who is third party administrator in Health insurance

TPA stands for a third-party administrator that acts as an intermediary between the insurer and the policyholder. It is a company/agency/organization that operates under the license of the Insurance Regulatory and Development Agency (IRDA to process claims in a hassle-free manner for policyholders in addition to providing cashless facilities to the policyholder.

 What is the role of a third-party administrator?

  • Third-party administrators help in maintaining the database of the policyholders. Besides this, they also help the policyholders in issuing an identity card with a unique identification number.
  • They are responsible to expedite the claim process. Their job is to check all the documents submitted in favour of the claim made by the policy-owner. The settlement of the claim will either be on cashless or on a reimbursement basis.
  • A third-party administrator also helps in building a strong network of hospitals where the policyholders can take the treatment. They try to enlist the best hospitals that can quickly arrange for cashless and the best treatment.
  • They further help in maintaining a 24-hour full-fledged customer care center where the policyholder can call and get their queries answered. Any queries related to health insurance, eligibility, claim settlement process, claim request status,  list of the network hospitals, etc. are handled by these service centers. It can be accessed from anywhere in the country.
  • In addition to the above, third party administrators also help in arranging value-added services such as ambulance services, bed availability, lifestyle management, supplies related to medicine, health facilities, etc.

Benefits of third-party administrators in health insurance

  • Better delivery of services: The involvement of a third-party administrator helps in improving the services of a health insurance policy. This is because of the ease of contacting TPA, now the customer finds it easy to deal with the various processes of health insurance which includes work like claim settlement, network hospital information, cashless treatment, etc.
  • Better standardization: Due to the specialized skill set and technology, a third-party administrator can make better standardization of all the processes as they carried it with due diligence. They help in sorting out the confusion of the customers regarding the various processes of health insurance.
  •  Greater penetration and better reach:  The presence of TPAs has also allowed a greater penetration of health insurance among the masses. This is because of the better services provided by them which makes people easily understand the complexities of health insurance. Now, people are becoming more aware of the benefits of the health insurance policy and their perception of the product is also changing.

Who can be the third-party administrator?

According to IRDA regulations, a company can apply for a third-party license. After following due process and satisfying the eligibility criteria, the license is issued. After that, the third-party administrator can start working with the insurer to assist the policyholder in the claim settlement process. However, the insurance company does not need to appoint a third-party administrator. An insurance company may choose to handle the claims in-house or can hand it over to one or more third-party administrators.

Challenges in third-party administrator related services

Some of these challenges are listed as follows:

  • Awareness about the role of third-party administrators is still very low in the health insurance industry. Policyholders are also unaware of the extra premium amount charged by the insurers to avail of their services.
  • For the process to be effective, third-party administrators must be well trained in the administrative process. They might not be able to take care of the needs of the policyholders if they have inadequate experience.
  • To take care of the administrative needs of the health insurance, third-party administrators must also have the staff personnel. Effective claim processing requires the services of doctors, management consultants, legal experts, hospital managers, etc. Hiring all these professionals and ensuring adequate training for them is a major challenge for a firm involved in this service.

So, if you have recently purchased a health insurance plan and are facing issues while claiming. You can take the help of third-party administrators and harness its benefit to enjoy timely and cost-effective processing of your health insurance claim.