TPA in health care
What is a TPA in Health Insurance?
The scope of health insurance is a lot wider than other general insurance categories like vehicle or travel insurance. Due to this wide scope, health insurance involves a plethora of terminologies. This is the reason why probably potential and current policyholders perceive health insurance to be filled with complexities. From the outset, this does seem intricate, entangled, and maze-like. But it is simple to understand if you focus on one component at a time instead of getting overawed by the entirety of it. For example, not everyone might know about the concept of Third-party Administrators (TPA) in health insurance.
A TPA in health insurance is an entity that is a third party in a health insurance agreement and administers the claim settlement aspect of the contract between a policyholder and the insurer. Here are some points that will help you understand TPA in a better manner.
What is the Role of TPA in Health Insurance?
The following points will explain the role of TPA in health insurance.
1) Connecting Link
Whenever there is a hospitalisation claim, the policyholder directly or indirectly meets the TPA. The TPA offers the ID card and a Unique Identification Number to the patient, which helps in claim settlement. Thus, the TPA is the link between the insurance company and the policyholder when it comes to availing the hospitalisation cover and processing claims.
2) Record Keeping
Crucial records related to the policyholder when admitted as a patient are maintained by the TPA. The records are stored in a dedicated database.
3) Claim Settlement
The role of a TPA is integral to the Cashless Claims settlement process. The coordination between the insurer and the hospital is crucial in a Cashless Claims process as the bill is settled directly between these two parties. The TPA offers back-end support in such situations.
4) Continuous Support
Several TPAs have a 24×7 support system where policyholders can raise their queries and get to know the answers seamlessly. Call centres and mobile applications help to offer such kind of support.
5) Empanel Hospitals
TPAs also perform duties related to hospital empanelment. They check whether the hospitals meet the set criteria concerning being a part of Network Hospitals (tie-ups for hassle-free claim settlement).
6) Extra Services
Some TPAs might also offer additional services related to ambulances, extra beds, medicine supply, etc. to the policyholder.
Benefits of Third-Party Administrators in Health Insurance for Policyholders:
The benefit of TPAs for the insurance company is obvious—they get assistance for settling claims. But how does a good health insurance TPA benefit the policyholders? The following points will let you know.
Hand-holding during hospitalization.
Providing ID cards to policyholders/patients.
Assistance regarding the right kind of documentation.
Efficient Cashless Claims settlement process.
24×7 customer support.
Simplification of the entire claim settlement process.
Can You Do Without a Third Party Administrator When Self Funding?
Employers enrolled in a traditional fully-insured healthcare plan are used to writing a check to a big healthcare insurance company and being “done with it.” When self-funding a healthcare plan, administering all aspects of the plan and paying the covered healthcare claims of employees becomes the responsibility of the employer.
Because of the complexity of and regulations surrounding overseeing all aspects of an employee healthcare plan, choosing to work with an experienced outside vendor – a third party administrator – is typically the preferred route. That said, there are actually three ways to manage the administration involved in self-funding. An employer who chooses to self-fund can:
1. Contract with a third party administrator
2. Administer the plan in-house
3. Subcontract the claims using an administrative services only (ASO) agreement with a traditional insurance carrier.
The level of services offered by a TPA can run the gamut from simply processing claims without sending payment to the provider all the way to a near turn-key health plan solution that includes direct primary care and transparent pharmacy benefits.
References:
https://euphorahealth.com/blog/what-is-a-third-party-administrator/
https://scorefinancial.com/en/blog/group-insurance/benefits-of-third-party-administrators/
https://www.bankrate.com/glossary/t/third-party-administrator/
