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What is a Third Party Administrator (TPA)

Third Party Administrators (TPAs)

TPAs are the essential pivot of the Indian Health Insurance Industry. A TPA license can be granted to any company registered under the Companies Act 1956. IRDA, which licenses and regulates these TPAs, has specified stiff entry norms some of which include a minimum capital requirement of 1 Crore, capping the foreign equity at 26% etc. License is usually granted for a period of 3 years.

TPA is expected to
- maintain databases of policy holders
- issue them identity cards with unique identification numbers
- handle all the post policy issues including claim settlements.
- run a 24-hour toll-free number, which can be accessed from anywhere in the country.
- have full-time medical practitioners under their employment who will immediately take a decision on whether the ailment is covered under the policy or not.

The coordination between TPA and Insurer happens like this:
- All the records of medical insurance policies of an insurer will be transferred to the TPA.
- TPA may issue identity cards to all the policy holders, which they have to show to the hospital authorities before availing any hospitalisation services.
- In case of a claim, policy holder has to inform TPA on 24 hr toll free line provided by the TPA.
- On informing the TPA, policy holder will be directed to a hospital where the TPA has a tied up arrangement. However policy holder will have the option to join any other hospital of his choice, but in such case payment shall be on reimbursement basis.
- TPA issues an authorisation letter to the hospital, for the treatment wherein the TPA will pay for the treatment.
- TPA will be tracking the case of the insured at the hospital and at the point of discharge, all the bills will be sent to TPA.
- TPA makes the payment to the hospital.
- TPA sends all the documents necessary for consideration of claims, along with bills to the insurer.
- Insurer reimburses the TPA

Source: The New India Assurance Co. Ltd.

For more details on IRDA regulations for TPAs visit: http://www.irdaindia.org/tpareg.htm