InvestorQ : What exactly do third-party administrators do in the entire chain of insurance business?
Anjali Desai made post

What exactly do third-party administrators do in the entire chain of insurance business?

3 years ago
The job of a third-party administrator (TPA) starts at the very moment a policy is issued. TPAs are professional agencies meant to coordinate claim settlement processes in a cost effective, timely, fair and hassle-free manner. Third-party administrators operate under the license of the Insurance Regulatory and Development Authority of India (IRDAI).
Here are a few reasons why TPAs are extremely important in the entire insurance chain:
- Manage policyholder’s records – The moment a health insurance policy begins or commences, the policyholder’s records are provided to the TPA. It is from this moment on that the TPA assumes almost all responsibility of facilitating the insurance policy.
Policyholders’ database maintenance, identity cards’ issuance, settlement of claims and grievance redressal are some of TPA’s prime responsibilities. The TPA is responsible for making payment to the hospital and the TPA in-turn receives reimbursements from the insurance company once the TPA sends all the claim-supporting documents, along with the bills to the insurance company.
- Build hospital networks – Building a network of hospitals for cashless services and negotiating rates and discounts is among TPAs key responsibilities. A TPA is expected to conduct due diligence, bearing the hospital’s infrastructure and facilities in mind before empanelling a hospital on its network. Other factors TPAs have to consider are the hospital’s track record, its management background and its IT infrastructure.
- Help settle claims – Coordinating with the hospital for a policyholder’s claim settlement is also the job of TPAs. The hospital will share bills of the treatments given to the insured with the TPA and the TPA will then have to verify the same against the pre-negotiated tariffs. If it deems necessary, the TPA might also take a second medical opinion for complicated cases and may investigate hospital records if it suspects any foul play with regards to a moral hazard or a false claim.
- Maintain customer service centre – For those customers who want to reach out and get information on services and hospital network, TPAs also maintain a customer service centre. This service centre helps give policyholders information to understand eligibility for a claim and get status of claim benefit if their reimbursement is pending. If the policyholder takes treatment in a hospital which is not included in the list of empanelled hospital, then the policyholder will need to coordinate with the TPA to get a reimbursement.
- Additional services – If mentioned in the policy document, TPAs can also provide value-added services like ambulance services. Additionally, they provide guidance to policyholders regarding specialist/doctor for the treatment of their medical condition and organize well-being and lifestyle management programmes.