RGJAY: National Insurance denies TPA incentive data requested under RTI

The Maharashtra government has launched Rajiv Gandhi Jeevandayee Arogya Yojana (RGJAY) in order to improve medical access facility for both Below Poverty Line (BPL – Yellow card holders) and Above Poverty Line (APL- Orange card holders) families). RGJAY is already being implemented in eight districts including Mumbai and would be implemented throughout the state in phased manner in a period of three years.

According to Dr Raju Jotkar, assistant director, RGJAY, “In the instance of non availability of a health card (in the eight districts where the scheme is implemented), the beneficiary family can still avail the services at network hospital by producing Yellow/Orange/Antyodaya/Annapurna ration card and photo identity.”

The first level of authorisation for undergoing any procedure will be from the insurer or rather TPA (third party administrator). Is it possible that genuine patients may be denied approval for procedure based on TPA interested in keeping the claims payout down? Dr Jotkar, says, “In the two-layered preauthorization, RGJAY society physicians have an upper-hand as they have an opportunity to see the case, the verdict of TPA doctor and power to accept or reject the verdict (overrule TPA verdict).”

The RGJAY society has paid National Insurance Company premium of Rs333 per family (service tax extra) for about 49.2 lakh beneficiaries, of which two quarterly premiums have been paid till date. It means the society has paid the insurance company premium of Rs82 crore for two quarters ending December 2012.

According to Dr Jotkar, “80% of the premium paid by Maharashtra state to NIC is for claim settlement of network hospitals, while 20% for administration cost of insurer as per memorandum-of-understanding (MOU). Out of the 20% administration cost some portion is passed on by NIC to the TPA for his services, which are not available in-house in NIC. It is learnt that TPA fees range 5% to 8% of the premium depending on scope. It would be prudent to pose this question to NIC for better precision.”

It means that TPAs have got minimum of Rs4.1 crore for six months of their services till December 2012. There could be additional doles given to TPA for reducing claims. Dr Jotkar, says, “No precise idea, but we hear that some bonus is given to TPA which is also substantial.”

This is exactly the information sought by social and legal activist Gaurang Damani from NIC, but his RTI (Right to Information) application has been denied even after the first appeal. NIC stated that the documents cannot be provided under Section 8(d) of the RTI Act, 2005. NIC asked for the TPA’s consent to sharing information on incentive for claims reduction. The TPA objected to it with following reasons—“They being private organization are not required to comply with RTI Act. The disclosure of this information will not serve any public interest. On the contrary it would harm and/or injury to their interests. It could cause irreparable damage to them as their competitors would take advantage of their commercial trade secrets.”

Clearly, NIC took refuge under the TPA consent to scuttle the information sought under RTI. Similar data was given by United India Insurance and New India Assurance in the RTI reply for regular mediclaim policies. The TPA contract states that if the incurred claims ratio is 70% to 90%, then there is an incentive of 10% of the amount by which incurred claim is reduced as against the previous financial year. If the incurred claims ratio is 50% to 70%, then there is an incentive of 20% of the amount by which incurred claim is reduced as against the previous financial year.

This is completely detrimental to the interest of the policyholder whose genuine claims can also be partially paid or rejected just so that the TPA is able to get incentives from the insurance company. By putting this incentive clause, the TPA will obviously do everything possible to limit the claims outgo.

According to Mr Damani, “This is a violation of Section 52(1) of the Insurance Act – Dividing Principle. A claim of one person cannot be used to offset the claim of another person. In short, the insurer/TPA cannot offset losses from one policy against another policy.” Interestingly, the Insurance Regulator and Development Authority (IRDA) has chosen to ignore or keep quiet on this important point in the PIL filed by Mr Damani.


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