Notes on TPA in Healthcare Insurance

Introduction

• Speaker: Dr. Stokhanil Gadaway
• Institution: Symbiosis School of Open and Distance Education
• Topic: Third-Party Administration (TPA) in healthcare insurance

What is TPA?

• TPA: Stands for Third-Party Administrator.
• Acts as a middleman integrating components of healthcare delivery:
  • Physicians
  • Hospitals
  • Insured individuals
  • Insurers
• Provides cashless treatment, settles claims and payments.
• Helps insurers by outsourcing administrative work.

How TPA Works

• Diagram of TPA structure shows:
  • Corners: Policyholder, Insurer Company, Healthcare Provider.
  • TPA integrates services between these entities.
• Functions include:
  • Claims processing and management
  • Settling payments with healthcare providers
  • Providing cashless treatment options for policyholders.

Major TPAs in India

• Notable TPAs include:
  • United Healthcare
  • Parekh TPA Private Limited
  • Mediasys India TPA Private Limited
  • MD India Healthcare TPA Services Limited
  • Paramount Health Services TPA Private Limited
  • E-Meditech TPA Services Limited
  • Raksha TPA Private Limited

Working of TPA

• Diagram illustrates:
  • Insurance company, TPA, regulators (IRDA), macroeconomic factors, healthcare providers, and policyholders.
• Role of TPA:
  • Handles administrative tasks, claims processing, and fraud investigation.
  • Links healthcare providers and policyholders.

Key Services Rendered by TPA

1. Provider Contracting and Management: Establishing a preferred provider network (PPN).
2. Claim Processing and Management: Efficient handling of claims and grievances.
3. Fraud Control: Investigation of fraudulent activities from both providers and insured individuals.
4. Customer Service: Account management and support.

TPA Roles

Role with Insurer

• Administrative work for insurance companies.
• Claims data management and standardization of treatment procedures.
• Helps in medical cost management.

Role with Insured Individual

• Issues medical insurance cards.
• Provides 24-hour customer support for claims.
• Negotiates with service providers for quality care and costs.

Role with Healthcare Providers

• Sends authorization letters for hospital admissions.
• Reimburses hospitals for treatment costs.
• Helps in patient management and health plan design.

Reporting Requirements for TPA

• Must provide:
  • Enrollment information
  • Pre-authorization status
  • Claim analysis and reimbursement data
  • Float utilization reports
  • Call center operation reports.

In-Network vs. Out-of-Network Claims

• In-Network Claim Process:
  • Cashless facilities, streamlined documentation.
• Out-of-Network Claim Process:
  • Requires upfront payment and specific documentation for reimbursement.

Cost Containment Measures

• Scrutinizes bills to prevent fraud.
• Conducts medical procedure audits to eliminate unnecessary costs.

Regulations for TPA

• Minimum paid-up capital: 5 crores.
• Must operate solely as a TPA, no other business activities.
• Cannot engage in marketing.

Advantages of TPA

• Better quality standardized medical services.
• Claim cost management through contracted discounts.
• Cashless facilities simplify transactions.
• Reduces administrative burdens for employers and insurers.

Drawbacks of TPA

• Increased premiums for policyholders due to fees.
• Restricted choice of healthcare providers.
• Dependency on TPAs can affect insurer business.

Benefits of TPA to Insurers

• Cost savings from outsourcing.
• Improved service delivery to policyholders.
• Enhanced focus on core insurance tasks.

Changing Role of TPA

• New regulations require insurer approval for claims.
• TPA's engagement with hospitals is more structured.

Conclusion

• TPAs play a vital role in healthcare insurance management.
• Understanding TPA functions is crucial for effective health insurance management.