So, there you are, with a year-old health insurance policy and a spotless medical record. And then an out-of-control motorist rams into you, and you find yourself in hospital with multiple fractures and assorted cuts and bruises.
That’s okay, you think. Bones mend, and the insurance company will pay the bills, so all is not as bad as it seems. Until you realise that the insurance company is not going to cough up because of a technicality—something to do with the policy wording or with the hospital you’re in.
You kick up as much of a fuss as you are able to from a hospital bed, but the only reply you get is that the insurance company has outsourced the entire process to a third-party administrator or TPA. And by the time you manage to get through to them, the accident is just a memory and the bills a nightmare.
Is this the norm, you wonder, as you look at an account that you’ve had to wipe out to pay the hospital bills. But when you ask around, you find that your bad case is more the exception than the rule. By and large, TPAs make the entire claims process fast and easy. The entire system of TPAs came into existence some six years ago, although insurance companies have had a loose, informal outsourcing arrangement with third parties for over 20 years now.
“The very reason convenience for which I had taken the policy was defeated. I was quite disillusioned by this clause”
Had health insurance, and decided to get a necessary surgical procedure done at a government hospital, as the doctor there was also a friend. However, the insurance company refused a cashless settlement, forcing him to pay the bill from his own pocket and then make a claim.
“Third-party administrators are selected after close scrutiny as they are our representatives dealing with policyholders”
—M Ramadoss, Chairman and Managing Director, Oriental Insurance Company
“TPAs are also helpful in undertaking medical checks on prospective policyholders before offering them a policy”
—Manik Nangia, Corporate VP and Head—Product Management Group, Max New York Life Insurance
This formal acknowledgement of outsourcing means that the insurance company’s core business is product development and sales. Gopal Verma, MD, Emeditek, a Gurgaon-based TPA, says: “A lot has happened for the good. It’s the way one looks at it. There are many policyholders who have got treated at good hospitals without worrying about payments and claims.”
So, how exactly does a TPA touch your life? Except selling, TPAs will play the role of facilitators, right from issuing an identity card to settling your health claims (See TPA checklist). Insurers work with a panel of TPAs to make the most of the outsourcing option. Says M Ramadoss, chairman and managing director, Oriental Insurance Company: “We look at TPA selection closely as they become our representatives once the policy is issued.”
Structurally, insurers have a panel of TPAs, who typically offer their services in various cities. So, whenever you buy health insurance, you are referred to a TPA who will be your points-person for settlement of claims in your city. The TPAs in turn have a panel of hospitals and nursing homes at which you can avail of medical facilities. The larger the network and the more reputed the hospitals, the better for you. “We have to locate hospitals across the country to get the best rates and services for policyholders’ benefit,” explains Pawan Bhalla, MD, Raksha Third Party Administrator.
How does this work? Essentially, when you require hospitalisation, you must seek to be admitted to one of the hospitals in your TPA’s network. A toll-free call to the TPA to keep the company informed about the hospitalisation (see pg 56) will ensure that a cashless settlement takes place.
Your TPA will settle the hospital bill, and it's then the TPAs concern to have your claim settled by the insurer. If the hospitalisation is due to a medical emergency (as opposed to, say, a planned surgery), and you are unable to inform the TPA, you can be admitted to any convenient hospital. However, if the hospital is not on the network, you might have to pay the bills and wait for your claim to be processed.
Says Hyderabad-based Prashanth Reddy: “Imagine walking into a hospital for treatment and walking out treated, paying not a single paisa.” Reddy had a good experience with his TPA when his father needed hospitalisation, and is delighted with the benefits of cashless settlement. Apart from the obvious advantage of not having to pay money out of your pocket or worry about the claims settlement, this arrangement has other merits.
“TPAs help you access quality healthcare across cities and removes geographical barriers,” says Ramadoss. With geographical boundaries gone, your policy is not restricted to the city that you live in or bought the policy from. This is particularly is useful for many people who are frequent travellers.
|Click here to see: Illness to wellness via third-party administrators|
The bitter pill: However, it’s not all smooth sailing with TPAs. There are definite cases of slip-ups. In 2005 June, when Sridhar Sivaraman, walked into Nanavati Hospital in Vile Parle with his 55-year old father who complained of chest pain, he was hoping for an easy claims process, when the hospital administration asked for his insurer and TPA.
“The hospital asked for a deposit, something that I felt was not necessary with the policy that my father had,” says Sivaraman. When he asked why he was being asked to pay, he was told that the TPA assigned to him was known to delay claims, and was therefore in the hospital’s bad books.
Get the Right TPA
If finding the right insurance plan is a battle, zeroing in on the right TPA is half the battle won. Here are a few questions to you should ask before choosing your policy’s administrator
• Can you visit non-network hospitals?
• In case of emergency, can the TPA be informed about hospitalisation post admission?
• Are hospitalisation benefits available in cities other than your city or residence?
• How are pre- and post-hospitalisation medical expenses paid for?
• Can one be transferred from one hospital to another in the midst of a treatment and yet avail of cashless settlement?
• Ask TPA for suggestions for specialists to be referred to for unique ailments that you may be encountering
• Know your liabilities, especially when the claim amount is to be higher than what you are covered for
Then there’s the case of Noida’s Daleep Kumar, who was being treated by a doctor friend at a government hospital. Kumar was advised surgery, which he decided to undergo, thinking his insurance would cover all costs. “However, to my dismay, I realised that the TPAs make cashless settlements only with private hospitals. There is no way a policyholder can enjoy cashless facilities in government hospitals.” Luckily for Kumar, he could afford to pay the bills and wait for the claim to be settled. There was really no point having a TPA, as far as Kumar is concerned.
The number of complaints against TPAs is growing, and some insurance companies have gone as far as managing claims on their own. Says Shreeraj Deshpande, head, health and travel insurance, Bajaj Allianz General Insurance: “Our reputation was at stake and we felt that we would take care of the TPAs role in several zones where we were facing unpleasant policyholder ire.”
Some policyholders complain that hospitals charge different rates if you say you will be claiming insurance. “This allegation is baseless. For the volumes that we have, the economies of scale will only reduce costs and not increase it. Such perceptions can be broken by hospitals,” says Bhalla.
In fact, Bhalla goes on to add that, “To some extent standardisation in healthcare costs need to be attributed to TPAs.” After all, when a TPA negotiates and brings in hospitals under its network, it takes into account several costs and shares it across healthcare providers, bringing in some method in the madness. This also means that insurance companies still allow and permit reimbursements on health claims.
“What most policyholders don't realise is that we as facilitators can offer only what the policy document promises. Claim refusals are more to do with policy coverage, which we can’t deviate from,” says Verma. The good news is that the complaints against TPAs’ low quality standards has fostered the setting up of standalone health insurance companies, which control and manage the entire value chain from product design and pricing to claims settlements.
However, till such time there are enough standalone companies, TPAs are our best bet. The checks and balances maintained between the hospitals and the insurer with the help of TPAs will prove to be useful in maintaining healthcare records of policyholders and bring in some level of standardisation of healthcare claims and costs.
Choose your cover
Your medical needs will dictate the kind of cover you opt for. Here’s a selection of medical insurance policies offered by leading insurers
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