Every year, a bigger number of people lose their lives due to not being able to arrange funds for their medical treatment. The expenses for healthcare are increasing every year. In these times, investing in health insurance policies is a must. Choosing among the best and most appropriate ones could be challenging, so it is important for us to understand what aspects a health insurance policy entails. One of those things includes knowing What is TPA or Third-Party Administrator?
What is TPA?
A Third Party Administrator is a person or company that performs administrative services and processes claims under a service contract. Third party administrators are significant in the healthcare industry as they are responsible for a part of the claims process. They are under contracts with the health insurance company to provide services like administration, enrollment, collection of charges/bills etc. An organization or hospital usually outsources specific responsibilities while setting up their healthcare plan to a third party administrator.
In other words, TPA is neither the insurance company (provider) nor the insured person. It is a professional entity that handles the administration of the plan with processes like adjudication, negotiation of claims, record-keeping and maintenance. The insurance company, healthcare provider and policyholder are generally the stakeholders involved in the claim process with the TPA acting as an intermediary.
TPAs are associated with many insurance companies and provide appropriate technology and cost-effective services to the insurance company as well as the policyholder.
Role of TPA in Health Insurance
The key roles of health insurance TPA are provided right from the time when the health insurance policy is issued. Here are some of them.
- TPA is responsible for record-keeping of the policyholder. When the health insurance policy period starts, records of the insured person are provided to the From this period onwards the Third Party Administrator adopts most of the responsibilities for the customer, especially with regards to claims.
- Maintenance of customer data, issuing health cards, overseeing smooth claim settlement process and handling grievances of the customers come under TPA’s responsibilities.
- The TPA further creates a pool of hospitals to render a number of e-services along with rate negotiation. While conducting this process, they take into consideration the track record, infrastructure and facilities of the hospital, management background and the IT services and level of computerization and automation in the hospital.
- It is the job of the TPA to work with the hospital for the claim settlement process. They may have to investigate hospital records in suspicious cases or false claims which could lead to moral hazard.
- The Third Party Administrator maintain a 24/7 customer service center where people can inquire about their pending claims or reimbursements and get information about the cashless hospital network. These centers help customers understand the eligibility of a claim and other related queries.
- Other services provided by the TPA include guidance regarding medical practitioner and treatment of disease, lifestyle management, well-being programs and ambulance service. These add-ons have to be mentioned in the policy wording to be utilized by the customers.
Why we need Third Party Administrators (TPA)?
Many industry experts have discussed the need of Third Party Administrator and the reasons why healthcare companies do not handle all the services themselves. The main reason is because Third Party Administrator provide great efficiency and quality in the delivery of services. The standardization of all procedures is provided by Third Party Administrator which gives way to an improved management system. They develop thorough protocols to streamline investigations and avoid delays in processing claims. TPA also develop a cost-effective way of handling expenditures and make way for lower insurance premiums.
Challenges of Third Party Administrators
There are certain challenges that lie ahead in the improvement of TPA-based services. There are currently no strict rules and regulations to effectively gauge the performance of Third Party Administrators. Due to lack of symmetry of information and weak networks, Third Party Administrators continue to face some difficulties. They are a necessity to the healthcare insurance process, but they certainly need new standards for improvement.