Difference Between TPA and In-house Claims Department – Which is More Customer Friendly?

When you need to file a claim request as part of your health insurance policy, you can do it either directly with the insurer or with TPA. What exactly is TPA and is it different from the insurer’s claim department? Let’s understand all about this in this post.

TPA Full Form in Medical Insurance

Before we proceed, let’s begin by clarifying what exactly does TPA stand for so that it isn’t confused with the insurer. TPA refers to a Third-Party Administrator and, as you may have understood by now, health insurance TPA is indeed different from your insurance company.

Your insurer may outsource claim-handling to a third-party group to process all claims from the policyholders on the behalf of the health insurance company. This third-party group is known as TPA in health insurance. Interestingly, both the insurer and TPA insurance work quite differently when it comes to handling claim requests from the insured.

What is a Third Party Administrator?

Let’s begin by understanding what TPA is its role in health insurance. The TPA desk is essentially an outsourced support team that handles all medical claims filed at a hospital. Your insurance company appoints this support team for its assistance to mediate between the hospital authorities and the insured for a smooth claim-settlement process for both.

Serving as a mediator, the third party administrator insurance also handles all communication and correspondence that takes place between the insurance provider and the policyholder with regard to claims. It must be remembered here though that TPA is merely a mediator and has no authority to either accept or reject a health insurance claim filed by the insured.

It only works on making the whole process simpler for both the insured and the hospital staff on behalf of the insurer. The final authority to accept and reject claims and also settle the amount for each rests solely with the insurer.

What do Third-Party Administrators Do?

Having understood what exactly is a TPA team, let’s now look into its actual role and how it functions when it comes to claim-settlement in medical insurance. The TPA desk has the following 3 primary roles to perform:

1. It affiliates with one or more insurance service providers to assist them in their claim-settlement activities for their policyholders
2. It serves as the point of contact for the insured when the latter files a claim with the insurer
3. It provides complete support and answers all queries from policyholders that they may have during the claim process, assisting them until the claim has been finally settled

Note: The Insurance Regulatory Authority of India (IRDAI) has provided authorization to nearly 26 Third-Party Administration companies in India. Each TPA has a unique code which the insured must enter while filing a claim request with the insurer.

Meaning of In-House Claim Settlement Team

Now let’s move on to another party involved in the health insurance claim-settlement process for the insured. The in-house claim-settlement team is your insurance company’s own team handling all the claims for the insurer within the company itself. It is therefore different from the outsourced TPA desk detailed above.

Each insurance company has a dedicated department within to handle all medical claims filed by the insured. Unlike TPA, this team directly coordinates with the insured to handle all claim requests.

The primary responsibilities of the in-house claim-settlement team include:

1. Directly gets in touch with the policyholder to address their claim requests
2. Responsible for all communication regarding requirements, updates, and any other information directly with the insured
3. Resolves all queries of the policyholder regarding rejection of claims and the like
4. Provide updates to the insured regarding any changes introduced in the claim-filing and settlement process by the insurer, provides the list of network hospitals, and any other information that needs to be conveyed as important

TPA or In-House Claims Department: Which is More Customer-Friendly?

We discussed in detail above about the meaning of TPA and the in-house claims department of the insurance company. We also discussed each of their roles and functioning with regard to the claim-settlement process for the insured. Now, a common query that most policyholders have is which one should they really go to or approach when it comes to filing a claim request. Which team is more friendly to the end customer?

If you look at it closely, the services provided by an in-house claims-settlement team clearly outweigh the benefits of a third party administrator in health insurance. The following proves this point:

• Hassle-free claim settlement: The in-house claim department is the single point of contact for the policyholder, which means an easier and hassle-free claim-settlement process. In case of TPA desk, several customer executives may be assigned to one claimant which would result in unnecessary confusion and excessive escalations of the claim request too.
• Faster Turn-Around-Time (TAT): When a policyholder files a claim request, a Relationship Manager appointed by the in-house claim department is dedicated to resolving all queries of the insured. This facilitates the TAT of each claim request, unlike the TPA team which generally takes longer to respond to claim queries.
• Lower cost: Since the TPA desk is an outsourced support team for the insurer, it generally proves to be costlier than dealing directly with the in-house claim department. The latter’s services prove to be more cost-effective to the customer, also because there are no middlemen involved in the claim-settlement process which means more money.