Health Insurance: Learn About Third Party Administrators (TPA)

About Third Party Administrators

Third Party Administrator (TPA) is an organization, licensed under the IRDA (Third Party Administrators - Health Services) Regulations, 2001 by the Authority, and has a contract with the Insurance company for a payment for providing healthcare services to policy holders.

The Third Party Administrators are intermediaries who connect insurance companies with policyholders and health care providers.

The Insurance Regulatory and Development Authority of India (IRDA) selects the TPAs on the basis of strict professional norms.

The Insurance industry in India has experienced a sea of change since the opening up of the insurance sector for private participation. With a plethora of companies entering the foray in the near future, the health insurance sector is surging forward and is poised for a phenomenal growth.

Health insurance is an important mechanism to finance the health care needs of the people. To manage problems arising out of increasing health care costs, the health insurance industry has assumed a new dimension of professionalism with TPAs.

Further, the uncertainty related to a medical condition increases the need for a health insurance for all the citizens.

Health insurance is any health plan that pools resources up front by converting unpredictable medical expenses into a fixed health insurance premium. It also centralizes funding decisions on health needs of a policyholder. This covers private health plans as well as mediclaim policies.

While call center facilities and personalized financial planning tools are some of the innovative trends experienced in the products front; the best thing to happen on the service front is the introduction of third party administrators as they serve as a vital link between insurance companies, policyholders and health care providers.

TPAs were introduced by the IRDA in the year 2001. The core service of a TPA is to ensure better health insurance services to policyholders. Their basic role is to function as an intermediary between the insurer and the insured and provide 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 said by the IRDA. License is usually granted for a minimum period of three years. Ideally, the TPA functions by collaborating with the hospitals for the patients to enjoy hospitalization services on a cashless basis.

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Role of the TPA

The introduction of TPAs is of great help and relief to the insurance companies which have been searching for ways and means to get their management expenses get in line with the specifications laid down by the IRDA.

Insurance companies (insurers) can now outsource their administrative activities, including settlement of claims to third party administrators, who offer such services for a cost. The insurers remunerate the TPAs so that the policyholders receive enhanced facilities at no extra cost. Once the policy has been issued, all the records will be passed on to the TPAs and all further association of the insured will be with the TPAs and not with the insurance companies.

With the advent of TPA, the insurance companies aim at ensuring higher efficiency, standardization of charges, greater awareness and penetration of health insurance to a larger section of the people

The TPA undoubtedly aims to give the health insurance industry the required boost in India.

The services provided by TPA are as follows:

• Enrollment process- TPA provides ID cards to all their policyholders in order to validate their identity at the time of hospitalization.
• 24 hours customer support services- providing assistance in case of any new incoming claims, information regarding policyholder's data and provider network hospital, claim status, benefits available with the existing cardholder, any other query related to the insured person’s policy or claim.
• Claim processing- Processing of cashless and reimbursement claims
• Grievance Redressed Management
• Investigation and fraud control
• Empanelment of hospitals to provide cashless facility

The Claim Intimation Process

In case of claim, the insured individual/representative of insured person shall inform the TPA (if claim is processed by TPA)/company (if claim is processed by company) in writing by letter, fax, email or by phone and should provide all necessary information relating to the claim such as consultation reports, diagnosis, plan of treatment, discharge summary, policy no., identity proof among other documents within the given time limit.

• In case of a claim, policyholders will have to inform the TPA on a 24 hr toll-free line provided by them
• After informing the TPA, the policyholder will be directed to a hospital where the TPA has a tied up arrangement. However, policyholders have the option to be admitted at another hospital of their choice in which case, payment will be on reimbursement basis.
• TPA pays for the treatment; they issue an authorization letter to the hospital for the admission of the policyholder in the hospital.
• At the point of discharge, all the bills will be sent to the TPA while they are tracking the case of the insured at the hospital.
• TPA makes the payment to the hospital.
• TPA sends all the documents necessary for consideration of claims, along with the bills to the insurance company.
• The insurance company then reimburses the TPA

Claim Intimation to TPA in Case of Cashless Facility:

• In case of planned hospitalization – TPA should be intimated at least 72 hours before the insured person’s admission to network provider/PPN hospital.
• In case of emergency hospitalization - TPA should be intimated less than 24 hours of the insured person’s admission to network provider/PPN hospital.

Claim Intimation to TPA in Case of Reimbursement:

• In case of planned hospitalization – TPA should be intimated at least 72 hours before the insured person’s admission to network provider/PPN hospital.
• In case of emergency hospitalization - TPA should be intimated less than 72 hours of the insured person’s admission to network provider/PPN hospital.

Checklist for Policy Holders

• Contact your agent or TPA if you have not received your health insurance card from the Third Party Administrator (TPA).
• Before getting hospitalized, check the name of the TPA on the Health Insurance ID cards you have received.
• If in case you have a fresh policy or recently got your policy renewed, check with your TPA on your policy enrollment, failure to do which can result in rejection of your cashless authorization request.
• All cashless claims will be processed directly by the TPA in co-ordination with the hospital. Whereas, for the reimbursement process the insured person has to submit all duly signed and stamped original documents such as final bill, receipts for all the treatment expenses, prescriptions, all investigation reports, document regarding treatment done and discharge summary to the TPA.
• Remember - TPAs do not necessarily work on holidays

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List of TPAs in India

List of TPAs in India as on July 2016

Dos and Don'ts For Policyholders

The following points should be noted when availing cashless services from Third Party Administrators:

Do’s:

• Pre-authorization form should be obtained from the Insurance helpdesk 3-4 days prior from the date of admission in case of planned hospitalization.
• The treating doctor should fill the Pre-authorization form.
• The pre-authorization approval at the insurance helpdesk should be checked out within 24hrs.
• Cashless treatment at the hospital can be availed after receipt of written authorization from TPA for the covered treatment.
• The TPA has the right to deny pre-authorization in case the insured person has not provided the relevant medical details.
• At the time of discharge leave all the entire original documents and signed claim form with the hospital.
• In case of clarifications, the TPA office must be contacted.
• 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 policyholder at his cost.

Dont’s:

• Admission at the hospital merely for investigation, evaluation or health check-ups will not be approved by TPAs.
• Do not insist for cashless service at the hospital without obtaining the pre-authorization approval from TPA.
• Don't carry back any original documents at the time of discharge from the hospital, if the TPA approves your cashless claim.

Before undergoing any treatment, check all the facts with TPA's to avoid disappointments.

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TPA-related Challenges

The challenges perceived by hospitals and policyholders in availing services of TPA are-

• Policy holders mostly rely on their insurance agents
• Less awareness among policyholders about the existence of TPA.
• Policyholders have very little knowledge about the empanelled hospitals for cashless hospitalization services.
• In settling of their claims by the TPAs, the health- care providers experience delays as the TPAs insist on standardization of medical services/ procedures across providers.
• Hospital administrators perceive significant burden in terms of effort and expenditure after introduction of TPA.
• Hospital administrators 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 empaneling with TPAs.

Future Role of TPAs

In the fast developing health insurance sector the TPAs have crucial roles to play in the future. Some of them are–

• Medical examination services for life insurance policies and overseas mediclaim policies
• Record verification under adjustment policies
• Documentation and policy issuing
• Co-insurance recovery services for both premiums and claims
• Follow up of recoveries from reinsurance companies
• Servicing of motor policies
• Arbitration services
• Inspection and assessment of risk prior to issuing the policy

Developing viable mechanisms would help TPAs to strengthen their human capital and ensure smooth delivery of their services in an emerging health insurance market.