In the past few years, the growth in business and associated competition has resulted in an urgency amongst Insurance companies to ambitiously build large revenue, scale their distribution network, branch network and hence their operations. Quick scaling has its own disadvantages. Urgency of building a "quick" team has resulted in huge holes in the operations and responsiveness process with Insurance Companies. Google "Insurance Complaints India" and you will see that the pages wont end. In addition to the existing Grievance Mechanism in Insurance Companies and the Ombudsman, IRDA has been continously working on creating a convenient infrastructure for Insurance Consumers to make complaints. In addition to the launch of the Grievance Call Centre (Phone no. 155255) almost a year back, with an email facility also (firstname.lastname@example.org), IRDA launched the Online Grievance Management portal - IGMS (Integrated Grievance Management System). This allows Insurance Buyers/Customers to complaint against Insurance Service Providers over the internet.Ofcourse every Complaint that you make to IRDA through any of the medium provide, requires you to first lodge a complaint with the Grievance Cell of the Insurance Company.Here's the Press Release from IRDA: http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo1261&flag=1
On Monday, J Harinarayan, Chairman, IRDA said “The mechanisms are being put in place to improve efficiency in health insurance and administration. Expert committees of industry bodies like CII and FICCI have recommended measures including uniform claim forms, re-authorization. We are also looking into aspects related to billing,” he said. As of July 1 328 hospitals were in the network for cashless facility across four cities namely Mumbai, Delhi, Chennai and Bengaluru. However, they withdrew from the same citing steep charges.
“They (hospitals) have renegotiated rates and as per the last count, over 390 have signed up with the partnership network,” he said.
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Experts from Medimanage.com give their opinion:
The initiatives like Uniform Claims Form, Uniform Pre-authorisation form, though look very simple, will add greatly to simplicity of administration.
Apart from the major reforms like cashless hospitalisation, premium rationalisation, the administrative reforms like this would hugely benefit the customers.
Insurance regulator IRDA today said it will follow the Delhi High Courts direction to take steps on resuming cashless facility to policyholders provided by four PSU general insurers.
Now that HC has given direction, we will follow that, IRDA Chairman J. Hari Narayan told reporters on the sidelines of a FICCI event here.
On Tuesday, the Delhi High Court had asked IRDA to make some arrangement to provide cashless facilities to policyholders, amid the suspension of cashless treatment facility at several big hospitals by four public sector general insurers - New India Assurance, United India Insurance, National Insurance and Oriental Insurance.
The Insurance Regulatory and Development Authority (IRDA) should, as a regulator of the insurance industry, intervene and ensure that such changes do not affect existing policyholders ...,? High Court Justice S. Muralidhar had ruled.
With judiciary getting involved in the matter, the consumers would benefit for the short term but the health insurance industry needs long-awaited reforms. If these reforms are not undertaken now, the insurers will simply charge more premium to recover the losses without bringing in the efficiency drives.
With an inefficient system, nobody benefits in long-term & we continue to hold our view that the changes are MUST.
The idea of differentiated products is good but those should be based on sound underwriting principles with innovation in risk management & a higher premium product for big hospital is not what we need now. The thought process for such products emanates from Insurer’s outlook of If-you-want-big-hospital-you-pay-big-money.
She is the second most populous country in the world. She has been successful in gradually overcoming the global recession and is very much on her way towards achieving a double-digit growth and donning the mantle of being the fastest-growing economy in the world within the next four years. But even as she continues to march ahead and bask in the glory, there are certain challenges which she must meet, before her dream of becoming a power to reckon with, can turn into reality.
Of the many concerns which she must attend to, one of India’s pressing concerns pertains to the healthcare of her billion plus people. The World Bank report has cited health as the most significant challenge that India will face on her way to becoming an economic superpower. The rapidly increasing healthcare inflation, fast creeping lifestyle ailments and the increasing gap between professional and affordable healthcare, make health a costly affair and insurance a pertinent need. Hence, there is a need to undertake serious initiatives and bring about a reform in the way health insurance is handled in India.
With a 20% growth rate, health insurance has turned out to be the fastest growing segment in the non-life insurance industry in India. However, the Government’s attitude towards taking health not as a mainstream agenda for citizens coupled with unregulated nature of the healthcare provider industry, have brought in many concerns.
Measures that are essential for the all-inclusive growth of the Indian Health Insurance market:
Changing the mass perception
Most people have certain notions pertaining to health insurance policies, that keep them from investing in such policies. Some of the most common presumptions are, reimbursement of claims is difficult, certain ailments are not covered in many policies and the ones that are covered have waiting period of at least two years, the waiting period is too long and the terms and conditions included in the health policies are made in a way to provide excuses for non-reimbursement of claims, Health insurance is meant for the rich and educated, it is suitable only for those not over the age of 45. Many even think that health insurance benefits hospitals more than the policy holders. Here, the solution is to spread awareness.
Government’s increasing role
The experience from other countries suggests that if health insurance is left to the private market in India, the poor may become more vulnerable. Hence, an active Government involvement in health is the need of the hour, agrees, Sudhir Sarnobat, Founder, Medimanage Insurance Broking Pvt Ltd, “The Government needs to bring the idea of ‘Healthcare for All’ at the centre of its political commitment and should promote small and medium hospitals’ growth in India. It should not get involved in providing healthcare at the secondary and tertiary care levels as the Government is bad at service delivery”. Also, the existing health insurance programs by the Government must reach the intended beneficiaries. Government should catalyze and guide the development of such social health insurance in India.
Regulator for the Healthcare Industry
Sudhir Sarnobat very emphatically explains the need for regulation, “Government should set up an efficient regulator for the Healthcare Industry and buy health insurance for its population from the insurers. This way government’s money will be utilized to buy healthcare for citizens while the responsibility of efficiency lies with the insurer. This way the Health Insurance portfolio will become very large in India and Health Insurers will innovate products to cater to the diverse requirements of the masses. There should also be a regulator set up to define the eligibility criterion for hospital infrastructure and service delivery parameters. The regulator’s role would be as watchdog for the industry where the interests of individual members would be tackled on priority.” Agrees Mahavir Chopra, Head, E-Business, medimanage.com, as he believes that self regulation by the Healthcare Provider Industry can help bringing in uniform billing for treatments.
The current manner of functioning of the IRDA attracts a lot of criticism from the industry experts and intellectuals alike. Mahavir Chopra laments, “The IRDA currently works in a very ad hoc and reactive manner, and the authority has hardly led a development initiative”. About the absence of government’s active role in increasing the importance of Health Insurance (by buying it directly from Insurers), “IRDA”, says Mr Sarnobat, “can ask the insurers to develop insurance plans for lower middle class and poor of the country and set up targets for Insurers to increase sales of these products.
This could be treated as social sector responsibility by insurers and their urban sector growth should be linked to this. IRDA can also set up a sub-regulatory body to keep check on Healthcare Providers for insurance purpose only.”
A stunning lack of innovation in health insurance products remains one of the prime challenges faced by the sector. To add to this, “health insurance products for the lower middle class population are virtually non-existent” explains Mr Sarnobat. At such times, innovation must rule the roost, for products to be recognized and for sale to be catalyzed. In a well thought out manner, Mahavir Chopra, puts forth the telecom industry’s success as an example of product innovation. “Most health insurance products are push marketing type, rather than the pull marketing type. Most of the Insurance products are sold, but are rarely bought. Innovation can lead to increasing product penetration which in turn can help insurance companies in becoming a stronger part of the payment mode pie of Hospitals, and hence influence charges”.
A complete Database
“There is a lack of a global database of the numerous patients’ health and claims history. This again acts as a deterrent. Insurance Companies should get together to form a uniform database of insured customers. In the West, there is a social security number which tracks health details of each patient. Hence, Universal Identification Number (UID) must be introduced, but if the database is not maintained, execution for healthcare records will be a herculean task” says Mahavir Chopra.
An Insurance Ministry
A separate ministry for the Insurance Industry, just like the Telecom Ministry is set up for the telecom industry, is an interesting idea floated by Mahavir Chopra. He says this can help in bringing a huge focus on the industry. For starters a Health Insurance Sub-Ministry under Health and Welfare Ministry with professional members could also be a welcome initiative, he says.
The growth of the Health Insurance industry can be smoother and faster, if these steps are taken in full measure and there is a healthy Government-private coordination.
Views expressed by experts in this story/article are personal.
Health Insurance being the corner stone of growth for the Insurance Industry; specially the Non-Life side, has been in the news. Huge growth numbers have been regular headlines in all kinds of media. Though Mediclaim is the most important growth driver and prime focus for the Insurance Industry, claims keep soaring taller and taller than the premiums in the PPT presentations of Insurance Companies.
Recently one has noticed an interesting rise in the press articles targetting the TPAs, their disputes with customers and their general misgivings with headlines such as Public Sector Insurance Companies to rationalize TPAs, TPAs to be audited for customer service, TPAs payments to Hospitals to be taxed, Doctors in city blacklist TPAs over fee row, and more!
TPAs seem to now bring a picture of a monster, in the eyes of the consumer and general public, who is the root cause of all disputes and problems and who must die or atleast be shut down.
Couple this with the Leading Insurance companies terminating contracts with TPAs and started their own in-house claims management cells. For instant last year, ICICI – the largest private insurance company, sacked its long running TPA, to start its own in-house claims management department. In fact not having a TPA (read having an in-house TPA) is the trending USP seen in product brochures, nowadays.
And now with the Consumers suing TPAs, Healthcare Providers blacklisting them along with Insurance Companies Sacking them one question is coming to everyone's minds- is this the end of the road for TPAs?
We contacted some experienced members/veterans from the Indian Insurance Industry to throw some light on the future of TPAs and Claims Servicing in India:
Dr. Abhitabh Gupta:
A Doctor and Radiologist by qualification, Dr. Abhitabh Gupta is a veteran in the Health Insurance Industry. He has designed many innovative Health Insurance products for the Indian Market and is a regular faculty at the National Insurance Academy. Currently Dr. Gupta is the CEO of Paramount Health Services, a leading TPA.
Mr. Sudhir Sarnobat is the Director of Medimanage Insurance Broking – the only dedicated health insurance broking company in India. A seasoned, Healthcare Professional, Sudhir has been closely studying the Health Insurance Market and its operations for years now.
Mr. Sankar has over 30 years of experience in the insurance domain. To his credit, he has been singularly responsible for bringing to fore innovative products into the insurance market. His perspective below, also comes from his experience of being a part of designing various new arrangements in the Health Insurance Industry in India, including the arrangement of the TPA, the topic in question.
Here goes an interesting collage of interesting standpoints, we received for our questions which helped us get clarity and understand the TPA scene better, for today and tomorrow!
Q1. There are regular stories in press on how Insurance Companies and the Regulator focusing on regulating the facilitator to control the claims ratio? What is your take? Is it going overboard?
Abhitabh Gupta: Let’s look at where all this originated. Health insurance used to be a small portfolio and was also a neglected one when TPAs were introduced. It was successfully used as an entry point for other lines of businesses by most of the insurers, especially in the private sector. Portfolio approach was the mantra of those days and health insurance was only a tool. Growth of the company was measured by numbers and top line especially public sector. Since the health portfolio was very small, therefore the losses in it were always neglected. The Health business was picked up at dirt cheap rates , due to portfolio approach. Some mid size policies were even underwritten by top insurers at Re. 1/-, Service levels were talk of the town when private sector insurance companies came up. Business calls were often taken and TPAs were asked to pay the full claims amount in spite of losses while Insurance Companies were compensated by other premiums. The health product was never adequately priced and did not take into account the inflation in health care and technological advances. There were no scientific underwriting guidelines or principles, both for individual and group businesses. Agents and customers utilized this to their benefit. TPAs did not have access to proper past data or proposal forms which were in any case incomplete.
The scenario has changed after de-tariffing. Health, forms almost 25 percent of overall business of insurance companies, which in few years will go as high as fifty percent. The focus has therefore shifted to service, the TPAs and claim control is the new success mantra for insurance companies. Not all TPAs were knowledgeable and therefore partly their inability to create an effective network and control losses has added up to all this.
Sudhir Sarnobat: In the current context , the absence of subsidy and inability to up premiums in the buyers market scenario, has increasingly resulted in Insurers having high claims ratio on Mediclaim. Focus on claims containment was bound to happen, but holding the TPA alone responsible for this would not be correct. The claims ratio is high because there are no clear-cut benefit rationalization wordings in the policy documents of most of the insurers which limits the scope of TPA. Also the major party in this transaction is the Hospital which is not regulated at all. Even for insurance purpose, there are no guidelines set for them.
KS Sankar: I do not see any real attempt by the Regulator regulating the facilitator to control the claims ratio. The Regulator, being a Government Body, if really keen, can certainly impress the Ministry to regulate the Hospitals. Yes, Insurers have started breathing down heavily on the facilitators. What the insurers do here varies widely from one insurance executive to another. The feet-firmly-on-mother-earth types are rightly seeking facilitators to come up with more and more scientific analysis of the claims data as a tool to control the claims ratio. My take is, facilitators can do a lot here but have been doing scarce little. Unfortunately, there are also insurance executives who rhetorically keep proclaiming the facilitator needs to control claims – as if the facilitator has a magic wand. Come the month when the renewal is around the corner, this very insurance executive would want the facilitator to pay all claims and sundry. My take here is, such insurance executives have to come out of their Utopia and in any case, arrest their pendulum swings.
Q2. Is it true that, originally the TPAs were required to rationalize the treatment costs? Why do you think they failed in achieving this?
Abhitabh Gupta: Yes, originally the TPAs were required to rationalize costs. In fact several attempts were made by GIPSA (an association of all Public Sector Insurance Companies) and several insurance companies but the TPAs failed due to several issues including lack of clarity on several fronts, lack of unity amongst insurers, no regulatory body of healthcare providers to talk to, TPAs not being adequately compensated vis-à-vis the services that were expected, several TPAs having their own provider chain etc.
Sudhir Sarnobat: The original agreement with TPA is for Claims Settlement only (as the claim settlement mechanism by PSU Insurers was inefficient.) To add value, all, these TPAs were asked to throw in Value Added Service, which turned out to be Cashless Treatment for patients. If you look at the agreement between TPA & Insurer, it talks about Cashless Treatment & efficient claims management only.
KS Sankar: It is true that originally the TPAs were required to rationalize the treatment costs. You know I am privileged to have been hands on associated with the evolution of the concept of TPAs in India. We (meaning insurers – past tense for me) were not expecting the TPAs to mount the wild horse in just a day or two. The road map laid out was (at least in my opinion) pretty scientific. DBMS would become easier with TPAs since all claims data will be pooled and shared. Scientific data mining will empower TPAs to legitimately position and establish instances of hospitals misusing insurance. Without TPAs, the awareness of Hospitals misusing insurance was like Australia – everybody knew it was there, but nobody bothered beyond lamenting about it. The body of TPAs was expected to provide enough data based irrefutable inputs and logic with which insurance industry could go to GOI and push MOF to open the Nelson’s eyes of MOH. You can’t go to the Government talking about what you feel or infer or even know. You need to go to them with data and details that clearly establish what you say. The body of TPAs were expected to provide this teeth to the insurers, and I would say, they have miserably failed. The simplest of the simple things – when claims data was thinly distributed among the 10000+ insurance offices, same hospital charging differently for same procedure could not get noticed. Trust me, unless you and I push them to do it, no TPA by default will notice this either, despite the data having got pooled!
Why the failure? Merrily, all to blame. The customer is still not educated to know insurance is an indemnity and not a bank deposit. Not even that if overcharged for one hospitalization, she ends up with a lower residual for the remaining policy period.
The insurance company, by paying disproportionately low rates of fees to TPAs. Pay peanuts, get monkeys. Add to this the pendulum swing the insurers themselves indulge in that I have referred to above – what better can you expect the monkey to do?
The body of TPAs whose entire concentration is only on hunting for new accounts and thus increasing their revenues at any cost than emerging as a professional body. Turf war has not alone made the TPA market place murkier, but has also created such close chestedness with data that the fundamental expectation of a robust DBMS has itself gone for a toss.
Q3. Insurance Companies haven’t lobbied enough to get Hospitals regulated through the Government. Regulation on TPA, without regulation on Health Providers is almost futile. Comment.
Abhitabh Gupta: I agree. However few things can be still managed. Create a smaller preferred network of good hospitals. TPAs should capture more data which can establish quality parameters at a given hospital. I think insurers and TPAs should agree on reducing their network and do preferential pricing
Sudhir Sarnobat: The revenue generated for Hospital Industry through insurance is less than 15% of their total turnover & hence majority patients are “Self-Pay” customers. Such a scenario, does not allow TPAs to enforce regulation on Hospitals. Also the self-purchased insurance penetration is high only in Urban India & not rural. Govt.’s first priority today is Primary Healthcare & hence, the Hospital’s regulation is neglected. It’s high time that the Industry (Read the Regulator) pushes this issue with Health Ministry which is detrimental to good health of PSU insurers as well as consumer rights at the hospitals. In absence of regulations (or even guidelines), the hospital charges are going up without any improvement (or even responsibility) in quality. Shoddy services are being accepted by un-informed customers, without questioning the prices.
KS Sankar: Insurance Companies are justified in regulating the TPAs to empower themselves with scientific data base and analysis thereof. This is the sine qua non starting point for any lobbying to get Hospitals regulated through the Government.
Q4. Insurance Companies are increasingly sacking TPAs and taking up the claims processing in-house? As a customer’s representative, do you think customers are better off without TPAs in the long run?
Abhitabh Gupta: Insurance companies are not sacking TPAs, for service issues or better control, but for their own brand building. I am sure they are incurring higher costs than outsourcing it to TPAs. Lately we have seen many corporates smoving out of such insurers and opting for TPAs. I am hopeful that insurers will reverse their decision in due course. Individual companies will never be able to match the pricing ability of a TPA due to the lack of volumes and therefore also not being able to match bulk discounts offered to TPAs by providers
Sudhir Sarnobat: Claims settlement by Insurer is anti-consumer as we see adamant & irrational claims settlement by Insurers when the Underwriter & Claims Setter is same. This can even be dangerous for corporate customers as they will be held at ransom for outstanding claims when the company wants to move away from Insurer A to Insurer B. If there are issues with TPAs claims settlement, it’s because of the absence of clear-cut guidelines and no proper audit/checks on performance by TPAs. If you cut your finger, you don’t chop off your hand & hence, just because there are claims issues by TPA, abolishing entire TPA eco-system is not the solution. I believe that if Insurers are starting their own TPAs, it’s not for efficiency improvement (except for Bajaj Allianz who took the plunge of self-TPA very early, all other insurer’s TPA’s efficiency & service levels are almost pathetic) or love for customer satisfaction. It is emanating more from trying to control the consumer & his/her claims.
KS Sankar: TPAs are not being done away with – Insurance companies are becoming their own TPAs, that’s all. The advantages to the customer in terms of cashless hospitalization, single point claim settling contact, etc. have come to stay. Saying customers are better off without TPAs is like saying we were better off under the British Rule. Your generation might have been luckily spared this but in my times some old people by my standards used to make statements of this kind. My blood used to boil then, it does even now if someone says she is better off without a TPA. We (again in my past tense) took up this challenge and gave the option to the insuring public to take a policy with or without TPA services. For all the yelling and shouting about TPA inefficiency, when it came to the crux, trust me, there were no takers whatever for the non-TPA option, despite premium being lower by about 6%.
Q5. Healthcare Providers are black-listing TPAs for various reasons, specially payment or authorization delay
Abhitabh Gupta: There could be some TPAs who do not have adequate infrastructure which could lead to such an issue. Mostly these situations arise due to delay in payment by the insurance companies to TPAs.
Sudhir Sarnobat: Hospitals are giving a knee jerk reaction for an issue or problem, responsibility for which they need to own up too. The hospital industry, without any regulations, has failed to self-regulate themselves. The mal-practices, instances of charging high prices, medical negligence, ethical issues are not being tackled by the industry. Instead of creating better & workable understanding or framework, they are looking at banning the TPA. Its same like Insurer’s approach of dropping the TPAs. The payment delay is majorly due to delay for payment from Insurers to TPA as well as disputes in billings where the hospitals ask for authorization on basis of information provided during admission and the actual diagnosis/treatment is totally different. Most of the hospitals too have not invested enough time & resources in understanding the insurance policy wordings/requirements and hence, have issues on payments. Those few corporate hospitals who have made efforts of understanding the insurance policies, unfortunately use this knowledge to take advantage of the cashless facility.
KS Sankar: This was also expected to happen even while we were at the drawing board of the TPA model. It was expected TPAs will develop enough robustness to weather this storm in the tea cup. We expected what with the rate at which Hospitals are springing up, the vast majority, especially of the newer generation Hospitals will entertain TPAs. And this expectation has come true. Therefore, the storm kicked up by some of the Healthcare providers is only inside the tea cup. Having said this, the insurers need to take onus for two things – the expected rate at which more and more people were to have been brought under Health Insurance which will make life difficult for Hospitals not to recognize the TPAs (Insurer representatives) not being even neared, leave alone achieved. And avoidable inefficiencies in payments to healthcare providers that gave some healthcare providers the stick to beat the system with.
Q6. Is it the end of road for TPAs?
Abhitabh Gupta: TPAs are here to stay but they will have to change from their current role and graduate to actual medical management by implementing clinical protocols at network hospitals etc
Sudhir Sarnobat: Unless all the stake-holders (especially consumers & hospitals) do not take this issue up, TPAs will be favorite punching bag of members and will get all the blame. With more than 27 TPAs in system & PSUs who are not geared to handle claims on their own, I don’t think its end of the road for TPAs. But if the TPAs don’t take initiative, leverage the media to bring forward their point of view and clean-up their own house to improve efficiency, it will not be long before that Insurers will start looking for alternates and that would be like going from the Pan to the Fire.
KS Sankar: I hope it shall soon be the end of the road for TPAs as they exist today because I hope that would be the beginning of the customer friendly road for new generation professional TPAs. I expect quite a few TPA companies to die as I do expect the TPA concept to evolve and flourish.
Final take: The current scenario has put huge pressure on TPAs and their future. Tough times will definitely shake off the weak links in the TPA community. As always, constraints also brin in various opportunities, including opportunity to innovate and fight back as a leader.
Hope you got a good perspective of the whole story.
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