Recently, we came across news in an online Publication, in.news.yahoo.com
Chennai, July 11 (IANS) The four government-owned non-life insurers -- National Insurance, New India Assurance, Oriental Insurance and United India Insurance-- will soon be taking forward their idea of floating a common third party administrator (TPA) to process the health insurance claims.
'We will be issuing a Request for Proposal (RFP) shortly. Our requirements will be specified in the RFP so that interested parties can submit their proposals,' New India Assurance Chairman and Managing Director M. Ramadoss told IANS over phone from Mumbai.
Consulting firm KPMG had given a report on the feasibility of setting up a common TPA by the four companies a year ago.
The four insurers, which together do around Rs.6,000 crore of health insurance business selling several lakhs of polices, are not happy with the manner in which claims are being processed and settled by the existing TPAs.
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Experts from Medimanage.com give their opinion:
Common claims settling agency will be a death knell for the Third Party Administrators which are approved & regulated by Insurance Regulatory & Development Authority.
Already the Private Insurers like ICICI Lombard, Bajaj Allianz, Star Health & Max Bupa have gone for their own TPAs. Hence the business available for 27 independent TPAs would be negligible & that would be the end of TPAs.
As the TPA is an independent agency, the claims settlement happens in impartial manner. However, with an insurer based TPA, we would see rise in mal-practices & consumer rights violation as all disputed case may not be resolved thru’ proper escalation mechanism. The consumers may have to take those cases up in Consumer Court which may not be a path that all aggrieved member would follow for lack of time & will. This may result in dissatisfaction.
It would be interesting to recall that the insurers used to manage the claims themselves till year 2002 (before TPAs stepped in). As the efficiency levels of the PSU insurers are still very low, it would not be wrong to assume that this TPA will work with similar efficiency levels. Also, with multiple TPAs, there is competition & the TPAs are forced to improve their performance (at least at the corporate sector which amounts to 50% premium). This lack of competitive spirit may further decline the service levels of the insurance claims settlement process.
The PSU insurer's concern about spiraling claims is justified but the means adopted does not seem to make complete sense.
Any decision has to take into consideration the following:
1) Continued availability of affordable health insurance.
2) Ensuring convenient utilization.
3) Benchmarking and standardizing healthcare delivery.
4) Providing practical, achievable and common guidelines to TPAs to achieve the outcome desired by the insurers.
5) Ensuring that the TPAs have the desired bandwidth to offer the solutions.
All of the above are interdependent in varying degrees.
For health insurance to continue to be affordable, the insurers have to recognize the fact that unless they is some mechanism for deciding on and standardizing the healthcare delivery costs, the premiums would only continue to rise. The premiums have shot up over 50% in some age bands in the recent correction. For the mechanism to be in place the onus squarely lies on the insurers and the government. There are such structures in place worldwide and it should not be too difficult for us to implement these. Needless to say, such an activity has to involve the healthcare providers and the TPAs.
Once a rationale is decided, it is then the duty of the TPAs to implement the program and manage it efficiently. The TPAs had been instituted, among other things, for the purpose of ensuring convenient utilization of the health insurance. It is erroneous to say that the TPAs are inefficient. One has to remember that they are always in the line of fire and are still manage the show reasonable well. It is because of the TPAs that there is now a semblance of data available which can be the basis of any analysis. Yes, there should be a re-evaluation of the TPAs and those having robust processes and efficient delivery should be shortlisted by the insurers. This will automatically weed out the inefficient ones. TPAs alone are not to be blamed for high loss ratios. The insurers are to share the blame equally. Currently the 7,000 Cr health insurance premium is divided 60:40 in favour of the corporate i.e. the group policies. Almost all of these policies operate more as a finance mechanism than an insurance cover. All covers from Day 1.
True, there could be rouge TPAs, but that is what an evaluation is expected to find out. A common claims settling agency is also not the right approach.
1) It is contrary to the concept of instituting TPAs.
2) We are not functioning in a unitary environment. There has to be competition for progress and growth.
3) There is danger of monopoly.
4) The apparatus could become a monolith, another government.
5) Customer satisfaction will be compromised.
6) Fresh ideas will be hard to come by.
A better approach would be to segregate the business into about 6-8 zones and have 1 TPA for each zone. By this, we can
1) Push TPAs to capitalize on local strengths, create strong processes and improve on efficiencies.
2) Achieve greater customer satisfaction.
3) Create an environment of fair play and competition.
4) Create a strong basis for comparison between TPAs.
5) Have new thoughts and ideas coming to the fore which can be better implemented.
6) Eliminate monopoly.
I am hopeful that saner senses will prevail while deciding on a solution and the competent authorities will place the consumer’s interest above all. The cycle of high hospital bills and therefore high claim ratios, therefore higher premiums and restrictions are only making life for the common man that much more difficult. My father’s premium has gone up by 30%. Delisting hospitals and TPAs seems rather a kneejerk reaction and obviously not the solution for stemming high claims.