Common internal TPA likely to improve service

While claims settlement could be faster, it needs to be seen if hospital network will remain the same

Have you ever tried getting approval for a cashless health insurance policy or filing a health insurance claim? Have you felt the biggest hurdle is third-party administrators (TPAs), whose job is to ensure easy settlement of claims? Many people find the process to be unduly time consuming and distressing, too.

Not only policyholders, even insurance companies feel external TPAs are not really delivering the of services they are meant to. That is why public sector non-life insurance companies have set up a common TPA, Health Insurance TPA of India Ltd, to manage their health claims.

Once it is operational, 8-10 per cent of the claims now being handled by external TPAs will be moved to the new TPA. But, how will this help policyholders? Ideally, an internal TPA should do a better job of claim settlement and improve service standards.

Decision-making should be faster because both TPA and insurance company are the same, says Arvind Laddha, chief executive of Vantage Insurance Brokers. “Once the internal TPA starts servicing all policies of public sector companies, or at least a significant portion of the policies, then it will become the biggest TPA and drive efficiency, claims and premia. In the long run, policyholders, too, should benefit.”

While all public sector general insurers use external TPAs for claim settlement, some private companies use internal TPAs and some use a combination of both. “In our experience, private sector companies score better on service but they are not able to drive premia or negotiate rates with hospitals because they don't handle as much volumes of business as some of the large TPAs do. They have not been to drive negotiations with hospitals for discounts like the TPAs have. The top five TPAs handle most of the health insurance claims today,” Laddha adds.

This is one advantage external TPAs have over internal TPAs, says Deepak Yohannan, chief executive of MyInsuranceClub.com. “There are challenges in doing it in-house. Tying up with all hospitals across the country, monitoring them, having a resource person sitting at the hospital etc are things a TPA does. It will be tough for a hospital to do all this. That is why in case of an internal TPA, policyholders must see if the list of network hospitals will be reduced.”

The reason behind setting up the internal TPA was because of the perception that hospitals and TPAs had some kind of revenue-sharing arrangement, leading to higher claims. This was in turn causing losses to both insurance companies and policyholders as their premia went up. But, outsourcing is a double-edged sword because while companies could save money, they might lose out on efficiency.

 

Public sector firms will be able to have greater control over claims settlement, which will ensure payments are on time and amounts are right, says an official from New India Assurance, one of the stakeholders. “The Health Insurance TPA of India Ltd, too, will be empowered to negotiate with hospitals and get good rates for policyholders. It is an independent TPA,” the official adds. 

Today, policyholders face problems such as the time consumed for admitting a cashless policy or settlement of claims, because each TPA has its own rules. If one gives approval for admitting the cashless policy in a couple of hours, another might take up to a day. Similarly, one TPA might approve the entire amount upfront, while another might approve only a part of the amount before hospitalisation. Policyholders have to be aware of these rules, depending on who the TPA is. Having a common TPA could bring in standardisation of these rules.