The Third Party Administrators are intermediaries who connect insurance companies, policyholders and health care providers.
The Insurance Regulatory Development Authority (IRDA)
selects the TPAs on the basis of strict professional norms.
The Insurance industry in India has experienced a sea of change since the opening up of the sector for private participation. With a plethora of companies entering the foray in the near future, the health insurance sector is surging forward and is poised for a phenomenal growth.
Health insurance is an important mechanism to finance the health care needs of the people. To manage problems arising out of increasing health care costs, the health insurance industry had assumed a new dimension of professionalism with TPAs.
Further, the uncertainty related to a medical condition increases the need for a health insurance for all the citizens.
Health insurance is any health plan that pools resources up front by converting unpredictable medical expenses into a fixed health insurance premium. It also centralizes funding decisions on health needs of a policyholder. This covers private health plans as well as mediclaim policies.
While call center facilities and personalized financial planning tools are some of the innovative trends, experienced in the products front, the best thing to happen on the service front is the introduction of third party administrators as they serve as a vital link between insurance companies, policyholders and health care providers.
TPAs were introduced by the IRDA in the year 2001. The core service of a TPA is to ensure better services to policyholders. Their basic role is to function as an intermediary between the insurer and the insured and facilitate cash less service at the time of hospitalization.
A minimum capital requirement of Rs.10 million and a capping of 26% foreign equity are mandatory requirements for a TPA as spelt by the IRDA. License is usually granted for a minimum period of three years. Ideally, The TPA functions by collaborating with the hospitals in order for the patient to enjoy hospitalization services on a cashless basis.