Third Party Administrator: Here's all you need to know
The third party administrator (TPA) acts as an intermediary between the insurance provider and the person taking the insurance.
A health insurance policy is a financial product that comes in handy in difficult times. At the same time, it also protects your investment by saving your expenses on the treatment of the disease. In such a situation, while taking a health insurance policy, one must also investigate the third party administrator ie TPA. These are extremely helpful in the quick and easy settlement of the claim.
What is a third party administrator (TPA)?
The third party administrator (TPA) acts as an intermediary between the insurance provider and the person taking the insurance. Its main function is to assist in the claim and settlement process. Their responsibility is to check the bill of the insured received by the hospital, deliver it to the insurance company and help both in speedy settlement of the claim process.
What does TPA do?
TPA issues the card to the person taking the insurance. Only by showing this, treatment can be done in a hospital with the help of a cashless facility.
– At the time of a claim, the person taking the insurance first informs the third-party administrator. After this, he is asked to go to the concerned hospital. This is the network hospital of the insurance company. The customer can also go to another hospital for treatment, the cost of which can be met through reimbursement.
– TPA issues a letter to that hospital, after which all the bills are sent to the TPA for payment after monitoring the case and discharging the case.
– TPA sends all the relevant documents along with the bill to the insurance company for payment of a claim.
Choose TPA yourself
According to the insurance regulator IRDA, you can choose from the TPA working with it while taking an insurance policy as per your choice. You can also choose the new TPA and change the old one while renewing the policy. However, if an insurance company has only one TPA, you will not have much choice.
Experts say that while selecting the TPA, it should be seen how its performance has been. Old TPAs have a long list of hospitals. In that case, it may be better for you. It should also be seen that there is a facility of that TPA in the nearest and better hospital from where you live. TPAs that invest more in digital and AI are also beneficial as claim settlement takes less time.
The major revenue of TPAs comes in the form of fee or commission on premium, which is standardized by IRDA. Other sources of revenue for TPAs include benefits management, provider network management, data management, medical systems and claims administration.
For providing claim settlement services, TPAs generally charge 6% of the claim amount from the insurance company.