The innovative idea of introducing the concept of Third-Party Administrators (TPA) was first introduced by the Insurance Regulatory Development Authority of India (IRDAI) in 2001. One can find the list of TPAs on the IRDAI website. As evident from the name, these TPAs are third-party entities licensed by the IRDAI to ensure a seamless and hassle-free claim settlement process. They do this by acting as the intermediary between the policyholder, the health insurance company and the healthcare service provider.
For example, Narayanan Krishnamoorthy, aged 35, needs urgent medical treatment as advised by his doctor. He gets in touch with the TPA and informs them about the need to seek medical treatment. The TPA advises the policyholder about the nearest hospital listed in the insurer’s network and aids him in the claim process post-discharge from the hospital. The TPA is liable to help the policyholder irrespective of whether he had opted for cashless claims or reimbursement of the amount expended on hospitalisation and subsequent treatment.
The IRDAI has listed certain guidelines governing the working of the TPAs engaged in providing necessary management solutions to the health insurance companies. The myriad responsibilities of TPAs include timely premium collection, seeking details of the treatment from the policyholder and intimating about the same to the concerned health insurance company, finding details of the network hospital nearest to the policyholder, approving the claims raised by the hospital or treatment facility, approving the cashless claims raised by the policyholders and disbursement of the billing amount to the hospital.
The concept of TPAs came into effect after the government allowed private insurance companies to sell health insurance policies. The inception of TPAs since 2001 has greatly increased the efficiency of the claim settlement process, thus, enhancing the effectiveness of buying health insurance in India. Apart from this TPA has brought many other benefits to policyholders and insurance companies. Let us discuss them in our upcoming units.