Regulator may phase out your mediclaim middlemen

Third party administrators (TPAs), those middlemen who handle your medical insurance claims, may soon be out of business. Reason: they are not delivering the goods.

The chairman of the Insurance Regulatory Development Authority (IRDA), J Hari Narayan, on Thursday indicated that the TPA system may soon be phased out and insurance companies asked to handle the business on their own.

“The TPA system remains a concern as they are not performing as per customer satisfaction,” Narayan said, adding that despite the promises, the end users, particularly those who have availed of cashless medical facilities, are facing the brunt of inefficient services. Narayan was in Pune on Thursday to attend a two-day conference on health insurance and care organised by the National Insurance Academy (NIA).

“The way the TPAs are running their business has posed a threat to the entire medical insurance sector. Almost 80% of the health insurance industry is facing a threat due to the functioning of TPAs,” he said, adding that a couple of insurance companies have stopped outsourcing their business of dealing with customers.

According to Kanchana TK, vice-president of Marsh Insurance Brokers Private Ltd, “More than the insurance companies, it is a concern for end users, who are being forced to pay hospital bills despite availing (themselves) of the cashless facility. If cashless transaction is not happening, it is the customer who is facing the problem and in turn the insurance company is facing a huge loss as they have to settle larger claims.”    

Marsh is a leading insurance broker and risk adviser and provides advice and transactional capabilities to clients in over 100 countries.

Senior faculty member of NIA Abhijit Chattoraj said that there have been increasing instances where TPAs were found to have forwarded inflated medical bills to insurance companies.
The services provided by TPAs include cashless service at hospitals, telephonic support to policyholders and management of claims and reimbursements.

Akshay Mehrotra, head (marketing) of Bajaj Allianz, said, “We were the first in India to launch our in-house system instead of depending on a third party. This way the customer can enjoy a seamless treatment without much hassle.”

He said the company has a direct tie-up with hospitals across cities. “Being associated with hospitals gives us complete information about the cost of treatment and surgeries,” Mehrotra said, adding that some of the major complaints received against TPAs were undue delay in settling claims and rejection.

Sanjay Datta, head of customer service at ICICI Lombard General Insurance, says that his company uses TPAs and also does it own thing. “We are following a mix of both in-house as well as TPAs. A majority of it is managed in-house, but wherever required we use TPAs.”