Health insurance: Why we need TPA entities for processing claims

Naval Goel

Before CY2000, the health insurance industry in our country was confined to a few basic insurance plans. With the liberalisation of this sector by the government, a galaxy of private insurance companies entered the arena and revolutionised the entire industry with innovative plans and operational methods to woo a large population of citizens who were only too keen to grab the opportunity. It ushered in an era of customised health insurance protection backed by excellent service.

What is health insurance

It is a contract between you and an insurance company for bearing your expenses in a hospital in the event of future medical emergencies, including accidents, against a premium, for a fixed tenure, generally a year. Needless to say, it is required to be renewed every year.

Types of health insurance:

The health insurance plans are broadly classified as:
Individual health insurance: Designed to provide coverage to individuals for a specified sum with features to suit his needs and affordability.
Family floater insurance plans: You and your family are covered for health emergencies and you and any member of your family may utilise the coverage to the extent of the sum assured.

Group insurance plan: Companies buy this plan for their employees as a group. The cover may not always be comprehensive.

The health plans have many variants now and you need to analyse your needs before buying a plan.

How does health insurance function

In case of a medical emergency, you need to get yourself treated in a hospital as an in-patient. If you are covered under health insurance, your expenses are borne by the insurance company. There are generally two methods of payment, apart from a few exceptional features available in some policies.

Cashless: The bill relating to your hospitalisation expenses is directly paid to the hospital by the insurance company after due approval subject to the sub limits defined in your policy.

Reimbursement: You submit your hospitalisation bill to the company after the treatment as per norms and the company reimburses you with the approved amount subject to the prescribed features in your policy.

The need for TPA:

With the present high penetration, diversity of health insurance plans and the complexities of rendering service of a consistently high quality necessitated the need for professional organisations capable of managing the myriad operations of health insurance industry. Third Party Administrators (TPAs) are outsourcing entitiesthat hold a licence issued by the IRDA to provide management solutions to the industry. They act as intermediaries in the system. The stakeholders are:

The Insurance Companies
Healthcare Providers (Hospitals and clinics)

The policy Holders

TPA operations:

The concept of TPA was introduced by the IRDA in the year 2001. They are entrusted with a wide gamut of activities encompassing all the aspects of the health insurance industry and additionally, health care. Their primary area of operations involves processing your claims and settlement of your hospital bills, be it cashless or reimbursement. They may be broadly listed as:

Accepting intimations of treatment
Approving cashless claims
Disbursing claims
Other activities involving:
Utilization review
Managing Healthcare provider network
Enrolment; and

Premium Collection.

TPAs are known to provide the following value-added services for your benefit.

Ambulance Services
Specialized Consultation.
Availability of beds.
Maintenance of 24 hours toll-free help lines.
Dissemination of knowledge on Lifestyle issues and spreading awareness on diseases and ailments.
Managing well-being programs.
Maintaining medical supplies.

Database management.

Impact of the role played by TPA:

It goes without saying that the TPAs have played a significant role in the industry. They may be tabulated as:
Ensures greater efficiency in the delivery of services.
Assured improved standardization of procedures.
Increase knowledge in healthcare.
Rationalize costs and minimize expenditure.
Develop protocols to minimize delays.

Pave way for reduced premiums and the addition of new features for coverage.

Bottom Line:

Notwithstanding the pious goals set with the introduction of TPAs, the ground reality reveals a great chasm between the aims and achievements. There is a lot of room for improvement, in which the TPAs have to play a proactive role. The co-ordination amongst the stakeholders and a constant endeavor to upgrade their infrastructure manned by able professionals for various fields can only lead to a meaningful approach.

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