Recently, the Insurance Regulatory Development Authority of India (IRDAI) allowed health insurance policyholders to choose their third party administrator (TPA) while buying the cover or at the time of renewal. This move empowers the consumer and, at the same time, underlines the importance of the TPA in the process of claims handling and settlement. Here are a few things you must know about a TPA.
The role of a TPA
A TPA acts as an intermediary between the insurance company and the policyholder. When the policyholder want to lodge a claim, she is expected to contact the TPA, which in turn identifies a network hospital and guides the customer. In case of cashless claims, the TPA issues an authorisation letter, co-ordinates with the hospital authorities and after the treatment, collects the documents, bills etc. from the hospital and sends them to the insurer for settlement.
In the case of non-network hospitals, the policyholder pays first and later sends the claim documents to the TPA. The insurer then reimburses the policyholder.
The TPA does not take a decision pertaining to the payment or rejection of the claim; its role is restricted to being a facilitator.
What has changed?
The sector sector regulator has empowered insurance policy buyers by allowing them to select the TPA of their choice. This choice can be exercised from the list of TPAs appointed by the insurance company. The insurer has the right to discontinue the service of a TPA. But in such a scenario, the consumer needs to be given an alternative.
“Insurance buyers should look at the hospital network coverage of the TPA and volume of claims handled by the TPA in the past. They can also look at the turn-around time for claim settlement while choosing a TPA,” says Abhishek Bondia, co-founder and principal officer of SecureNow. The list of network hospitals and the volume handled are available in the website of the TPA. Some TPAs mention their turn-around times as well.
“Past experience with a TPA could also be a reason for choosing a specific TPA. The insurer will provide access to all the details pertaining to the TPA, at the time of purchasing the policy,” says Amit Chhabra, Head- Health Insurance, Policybazaar.com.
Who can be the TPA?
According to IRDA (TPA- health services) regulations, a company can apply for a TPA license from the IRDAI. After following due process and satisfying the eligibility criteria, the license is issued. After obtaining the licence, the TPA is appointed by the insurance company to assist the policyholder in the claim settlement process.
It is not mandatory for the insurance company to appoint a TPA. An insurance company may choose to handle the claims in-house or can hand it over to one or more TPAs.