Third Party Admin or In-house claims: Which is better?

Deepak Yohannan
MyInsuranceClub.com

While choosing a Health Insurance Plan, this is quite an important consideration-Third Party Administrator (TPA) or in-house claims processing?

I have often come across people with this query since the new Health Insurance Plans are now advertising No TPA as their USP of the product!

Well, let me first explain, what is a TPA?

A Third Party Administrator (commonly referred to as TPA) is an IRDA (Insurance Regulatory and Development Authority) approved specialized health care service provider. A TPA provides the insurance company with a variety of services like networking with hospitals, arranging for cashless hospitalization as well as claims processing & timely settlement.
TPA is a customer’s point of contact for any health insurance claim. Their basic job is to liaison between the customer and the insurance company.

Insurer==> Third Party Administrator ==> Customer

They help in a number of situations, like:

• In case cashless facility needs to be availed in case of planned hospitalization, there is a pre-approved form that needs to be filled and approved by the TPA at least 48 hours before hospitalization.
• In case cashless facility needs to be availed in case of unplanned hospitalization, TPA counter at the hospitals help out for a speedy pre-approval of the same so that treatment of the patient is not hampered
• In case of reimbursement, the forms along with the original bills and prescriptions need to be sent to the TPA for filing the claim with the insurer.
• Moreover, the TPA only helps the customer for the claim to be finally paid out.

Thus, there are numerous reasons where they can be of help to the customers. They are basically considered as the direct point of contact for the customers. The work is to liaison between the Insurer and the Insured so that the claim is easily processed without hassels.

What is In House Claims Processing Department?
However, new and much smaller Health Insurance Companies do not require an outsider Third Party Administrator to liaison between them and the customer since they are new to this industry and has a much lesser customer base than the older insurance giants. Thus, their claims are settled within the Insurance Company itself without external help.

There are pros and cons of both TPAs and In-House Claims Processing Departments. Let us read some of the basic ones.

TPA’s over In-House Claims Processing Department:
1. Contacting the TPA is a much easier job when in emergency because there is a TPA at every network hospital and hence they serve as the customer’s one point of contact
2. The physical desk of the TPA and the person is found at the TPA office rather than talking to a customer care department as in the case of In-House Claims Processing Department

In-House Claims Processing Department over TPA:
1. Since everything is done in house, the Turn Around Time (TAT) for resolving a query is less
2. The decision is taken by them instead of simply liaising between the insurer and the customer and hence again the TAT is reduced
3. If there is any anomaly in the claim, the same can be resolved by the In-House Claims Processing Department itself rather than simply liaising between the insurer and the customer as in the case of TPAs.

Thus, if you actually think over, be it TPA or be it In-House Claims Processing Department, which should not be the deciding factor for opting for any health insurance plan. Both are quite effective in claim settlement in their own spheres. Thus, you need to choose a plan according to your needs and then settle for the same, irrespective of the fact whether it has a TPA for claim settlement or In-House Claims Processing Department. What do you think??

The author is CEO of MyInsuranceClub.com and can be reach at deepak@myinsuranceclub.com