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Benefits of Third Party Administrators (TPA's) in Health Insurance Sector

Benefits of Third Party Administrators (TPA's) in Health Insurance Sector

The Insurance industry in India has experienced a sea change since emergence of private participation. Health insurance is a mechanism to finance the health care needs of the people. To manage the problems arising out of increasing health care costs, the health insurance industry had assumed a new dimension of professionalism with TPA. The core service of a TPA is to ensure better services to policyholders. Their basic function is to act as an intermediary between the insurer and the insured and facilitate cash less service at the time of hospitalization.

Introduction of TPA benefits both the insured and the insurer in the healthcare industry. While the insured benefits from the 24 x 7 service, the insurer is benefited by reduction in administration cost.

Policy holders welcome introduction of TPA since they receive enhanced facilities at same cost. Once the policy has been issued:

  • All the records are passed on to the TPA and all the correspondence of the insured remains with the TPA.
  • TPA issues identity cards with unique identification numbers to policy holders and handles all issues related to their claim settlements.
  • TPA runs a 24-hour toll-free number, which can be accessed from anywhere in the country.
  • They have full-time medical practitioners under their employment who take decision whether the ailment is covered under the policy or not.
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From the perspective of the insurance companies, the TPA benefits them by:

  • Bringing down their claim ratio by reducing false claims as well as standardizing treatment cost.
  • Playing a role in availing data for actuarial calculations, because they are the recipients of morbidity data that are linked with individual characteristics such as age.

One of the disadvantages of cashless facility is that it increases the capacity of insured to incur higher costs at the time of illness, and therefore there is a tendency to inflate the cost of treatment. This has been limited to a certain extent with the presence of co-payments in which 10 percent of the expenses are paid by insured and 90 percent are paid by the insurance company.

The reason why insurance premiums may go up in near future would be the inability of TPAs to make enough profits, owing to the low percentage of commission.

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The Insurance Regulatory and Development Authority of India (IRDA) and the ministry of health should jointly ensure that the TPA plays an active role in community health insurance schemes as well as the universal health scheme. The need for cashless facilities for communities is more significant than corporate or ordinary households, but there is as yet only a limited use of TPA in such schemes.

Today the insurance industry across globe is facing challenges of dwindling premium receipts and rising operating costs. Increased cost per member/policy holder and higher loss ratios has resulted in making it extremely important for the insurance carriers and the third party administrators to look for cost-containment options to improve the diminishing bottom-line and operational efficiencies.

Benefits of TPA to the insurance world include:

  • Faster and focused claims management
  • Lower overhead cost and reduced cost of claim management
  • Immediate access to highly trained claim administrators
  • Improved control over claims outcomes
  • Provision of cashless services at much ease
  • Safeguarding of customer relationships
  • Protection of brand reputation.
  • Control of possible frauds by the private healthcare providers

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Comments should be on the topic and should not be abusive. The editorial team reserves the right to review and moderate the comments posted on the site.

Comments

SethuMadhava

I regret to inform that I have submitted my Domiciliary Treatment Claims from Nov.16 to February 16 along with necessary documents as prescribed by Bank/TPA to Vidal Health,Bangalore and there is no response from Vidal till date. My efforts to get the status of my claims proved futile. I am at a loss to understand the reasons for the inordinate delay on the part of Vidal to reimburse my claim amount . Pl help me to get my claims sanctioned at the earliest. As I am representing my difficulty to Insurance Ombudsman Hyderabad, kindly use your offices to get the problem solved. Thank you.

tcjn74

Kindly let me know if it is obligatory to have the services of TPA while purchasing the Mediclaim Policy?Kindly reply at the earliest as I am to renew my Mediclaim Policy next month,and I am not happy with the services of my existing TPA.Kindly also let me know,whom to complaint against the TPA for the unsatisfactory services of TPA. An early reply to my querry will be a big favour as I understand that the fee payable to TPA is by the Policy purchaser.

B.R.Khanna

Health insurance consists of Pre Hospitalisation, Hospitalisation and Post Hospitalisation. But normally it is seen that Pre and post hospitalisation are not cared by TPAs. They pay only for hospitalisation in cashless claims to hospitals. If in a cashless claims, if an insured is late to intimate to TPA while still in Hospital, the tPA does not entertain cashless service. What are the reasons ?

@Guest

Q. MY FATHER WAS ADMITED IN APOLLO HOSPITAL, KOLKATA ON 17.1.2013 AT 2.45PM, AND RELEASED ON 21.1.2013 AT 9.45AM. HOSPITAL AUTHORIYT SEND THE FINAL BILL AT 10.00AM ON 21.1.2013 FOR CASHLESS APPROVALTO TPA [Emeditek] FOR 5 (FIVE) DAYS. BUT TPA SEND THE APPROVAL AT 4.30PM FOR 4 (FOUR) DAYS, BECAUSE THR 5TH DAY NOT COVERING 24 HOURS. WHAT IS THE RULE OF IRDA and AM I CASH BACK FOR THE 5TH DAY'S AMOUNT ON REIMBURSEMENT BASIS?

brkhanna

You have stated in the third para related to TPA that TPA also collects premium.Is it permitted by IRDA regulations for TPAs?

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