THIRD PARTY ADMINISTRATOR (TPA)

TPA is an organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity. This can be viewed as “Outsourcing” the administration of the claims processing, since the TPA is performing a task traditionally handled by the company providing the insurance or the company itself. Often in the case insurance claims a TPA handles processing for an employer that self-insures its employees. Thus, the employer is acting as an insurance company and underwrites the risk. The risk of loss remains with the employer and not with the TPA. An insurance company may also use a TPA to manage its claim processing, provides network, utilization review or membership functions. Some may operate as units of insurance companies, they are often independent. TPA also handles many aspects of other employee benefit plans such as the processing of retirement plans and flexible spending accounts.

TPAs were introduced by the IRDA in the year 2001. The core service of a TPA is to ensure better services to policyholders. Their basic role is to function as an intermediary between the insurer and the insured and facilitate cash less service at the time of hospitalization.

A minimum capital requirement of Rs.10 million and a capping of 26% foreign equity are mandatory requirements for a TPA as spelt by the IRDA. License is usually granted for a minimum period of three years. Ideally, The TPA functions by collaborating with the hospitals in order for the patient to enjoy hospitalization services on a cashless basis.

Ideally TPA are intermediaries who connect insurance companies, policy holders and healthcare providers.

The “Insurance Regulatory Development Authority” (IRDA), selects the TPA’s on the basis of strict professional norms.

The following points should be noted when availing cashless services from TPA’S:-

  1. Pre-authorization form from the Insurance help-desk 3-4 days prior to the admission for planned hospitalization should be obtained.
  2. The treating doctor should fill the pre-authorization should be obtained.
  3. The pre-authorization approval at the Insurance helpdesk should be checked out within 24 hours.
  4. Cashless treatment at the hospital can be availed after receipt of written authorization from TPA for the covered.
  5. At the time of discharge leave all the entire original documents and signed claim form with the hospital.
  6. In case of verification, the TPA office must be contacted.
  7. Payment to the hospital for the expenditure over and above the TPA approved limit or for treatments not covered under the package must be made by the policy holders at his cost.
  8. Admission at the hospital merely for the investigation , evaluation or health check-ups will not be approved by TPA’s.
  9. Do not insist on admission on cashless basis in the hospital without obtaining the pre-authorization approval from TPA.
  10. Don’t carry back any original documents at the time of discharge from the hospital if the TPA approves your cashless claim.

The bottom-line is that before undergoing any treatment check all the facts with TPA’s to avoid disappointment.

Challenges

There are many challenges perceived by hospitals and policy holders in availing services of TPA are:-

  1. Policy holders mostly rely on their insurance agents.
  2. Law awareness among policy holders about the existence of TPA.
  3. Policy holders have very little knowledge about the empanelled hospitals for cashless hospitalization services.
  4. In settling of their claims by the TPA’s , the health-care providers experience delays as the TPA’s insist on standardization of medical services/procedures across providers.
  5. Hospital administrators perceive significant burden in terms of effort and expenditure after introduction of TPA.
  6. Hospital administrator’s foresee business potential in their association with TPA in the long run though as of now there is no substantial increase in patient turnover after empanelling with TPA’s.