Association of third-party administrators intervenes in Bombay High Court PIL DEEPA NAIR

Date- 20 Nov 2014 Source- The Hindu Business Line, MUMBAI http://www.thehindubusinessline.com/industry-and-economy/banking/association-of-thirdparty-administrators-intervenes-in-bombay-high-court-pil/article6618740.ece#.VG9wDv9ir6E.email

The Association of TPAs has intervened in the Bombay High Court public interest litigation (PIL) filed by activist Gaurang Damani seeking clarity on the role of third-party administrators (TPAs) while settling health insurance claims. Most insurers outsource claims processing to TPAs to save on administrative and distribution costs. Damani said 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.

According to Damani, general insurers have limited the cashless service to a few network hospitals and encourage the reimbursement mode of claim settlement.

Damani said currently claims are settled at the discretion of the TPA, whereas they need to only assist in claim processing and the final settlement should happen 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 moved 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 operations in April.