PSU general insurers to finalise JV TPA partner by month end

The four state-owned general insurers will finalise by this month end a common Third Party Administrator (TPA) -- who will be their JV partner -- in a first of its kind arrangement that aims to check overbilling by some hospitals.

The four PSU insurers -- National Insurance Company, New India Assurance, Oriental Insurance and United India Insurance -- have received applications from as many as 24 bidders, both domestic and foreign, for the joint venture TPA.

"The JV partner for a common TPA will be finalised within 8-10 days. We had received bids from 24 TPAs for the JV," General Insurers Public Sector Association (GIPSA) Chief Executive A K Singhal told PTI.
    
The partnership is expected to commence operations by June 30, 2011.
    
TPAs are firms to which insurers outsource servicing of health claims. After the insurance companies issue the policy, almost all the back office work, including networking with healthcare providers, are undertaken by TPAs. In return, they get around five per cent of the premium as fees.
    
The setting up of a common JV TPA assumes significance as with effect from July 1, 2010, the four PSU insurers, alleging over billing, took off about 150 hospitals from the list of preferred provider network (PPN) which provided cashless treatment facility.
    
While some hospitals have resumed the cashless mediclaim facility, biggies like Apollo, Max and Fortis are yet to restart the facility.

The PSU insurers had invited expressions of interest from companies for forming a joint venture TPA and the last date for application was September 24.
    
Currently, there are 27 TPAs registered with insurance regulator IRDA. The health insurance segment generated over Rs 7,000 crore of premium last year, of which about 70 per cent was generated by the four state-owned insurers.
    
Industry insiders say that the requirements in the EoI have stated that the TPA should have a networth of Rs 250 crore, which is very high.
    
Also, the current regulatory norms do not allow one person to hold two TPA licences. It is still not clear whether IRDA would allow companies to continue with their existing TPAs even after they enter into a partnership with GIPSA.
    
The TPAs are also concerned that since the PSU insurers are the major players in the health insurance sector, most of the business would now come to the new JV TPA. Thereby leaving only the private sector insurance companies for the TPAs.
    
Among private insurers, ICICI Lombard and Bajaj Allianz General Insurance, which account for 80 per cent of the health business among private companies, have their own health administration divisions. =