The public interest litigation (PIL) filed in the Bombay High Court by activist Gaurang Damani for seeking clarity on the role of third -party administrators (TPAs)at the time of settling health insurance claims has been intervened by the Association of TPAs
The claims are been outsourced by the insurers to the TPAs to save on administrative and distribution costs. TPAs get a commission and incentives for cutting down claims, as a result of which they often work towards limiting the reimbursement sum that the policyholder receives following a claim,he said.
According to Damani, general insurers have limited the cashless service to a few network hospitals and encourage the reimbursement mode of claim settlement. Presently the claims are settled at the discretion of the TPA, whereas they need to only assist in claim processing and the final settlement happens through the insurance company.
Damani argued that, “targets” are given by insurers to TPAs to bring down the overall claim amount.”Average payment for cashless claim is about 20 per cent higher than a reimbursement claim. Obviously consumer is at a disadvantage, he said.
He added that in the insurance contract, the agreement is between the insurer and the policyholder and not with the TPA whose role has to be defined so that there is transparency and the final cheque should come from the general insurer’s end.
Most private insurers have move to an in-house model of claim settlement and reduced the role of TPAs. But the four public sector general insurance companies, controlling 70 per cent of the health insurance market, have floated an in-house TPA called the Health Insurance TPA of India that is expected to start operation in April this year.