Gone are the days of the bleak appearance of the health insurance programs in the insurance scenario. Now the Indian insurance market resurrects by giving an article of legal clothing by IRDA on its constitution of the Third Party Administrator Regulations.
The third-party administrator is an insurance intermediary licensed by IRDA, to operate on behalf of insurers. Being guided by a code of conduct prescribed by IRDA, his duties are to provide health administration services within the framework of the code fixed by IRDA. A third-party administrator should have Rupees 1 crore paid-up capital.
There must be a qualified medical doctor, and he must be one of the Corporate Directors to obtain a license. TPAs play a role in post-medical claim management. The introduction of TPA mechanisms has given the right identity to the health insurer who was with bleak existence for the past 16 years.
The key objective of TPA is to materialize cashless payment of claims of insures directly to the hospital. TPAs have sought to remove an archaic system of claim settlement with a technology-oriented and customer friendly system of claim settlement. After the introduction of the TPA System, it is learned that the medical claim ratio of the insurers has gone up since the TPAs are showcasing that what technology can do for good quality health care delivery to the distressed calls of the insurer.
Yet for the last fifteen years, the health insurance market remains with a stagnant product and price mechanism, but the cost of medical treatment has gone up by more than tenfold increase of the previously existing cost in the eighties. The problem of the growing cost of medical treatment could be redressed in the health insurance arena by introducing a better product, better pricing, better penetration, and provider management.
The World Health Organization pleads for a repurchasing methodology for health care cost protection. The introduction of third party administrator fulfills such need for a good method of buying health care insurance in which there is an organized delivery of the benefit of health insurance through cashless claim settlement in approved hospitals.
Earlier for the treatment of tertiary ailments like cardiac arrest, a patient has to deposit a huge sum ranging from Rs.75,000 to One lakh which is beyond his financial boundaries and the third party administrator relieves the patient from such bottlenecks and he settles the claim with the concerned hospital and the affected does not need to deposit such huge sum for treatment.
The huge success of the third party administrator mechanism depends upon the quantum of co-operation that will be extended by the approved hospitals in billing the TPA patients like the normal patients, one who has no health insurance.
Usually, the approved hospitals admit TPA patients on the high category which incurs higher charges and some times the sum assured shall be consumed by the bills. Nevertheless, for TPA patients even for ordinary diseases like piles, there is a heavy charge on a daycare basis. Thus, overbilling of TPA patients is a noted phenomenon in a few hospitals, leading to an increase in the medical premium.
The third-party administrator should see that ‘reasonable cost’ is collected by the approved hospitals. It is lucid that TPAs are expected to assure good service to people covered under various health care schemes. Their current services have to be improved a lot with reasonable cost to patients and transparency in operation by the approved hospitals under TPA.
In general, the hospitals do not want the interference of either the insurer, not the TPA since their patients are ready to pay what they fix and take ‘cure’ as the criterion and in most occasions, they pay the bill without objections when they get their diseases cured or duly cared by the hospitals.
So some hospitals deem the TPA and the insurers as hurdles in realizing their lucrative medical bills. Nowadays the hospitals with a high commercial motive on their ventures, go for insisting patients undergo various clinical tests even though the rudimental diagnosis does not warrant such tests. Patients have to pinch their purses for such clinical tests and also they have little competency or no knowledge over the rationality of the treatment given to them.
In such cases, the TPAs, in consultation with the insurance must fix a rationalized ceiling on the cost of treatment for all diseases beyond which the hospitals wouldn’t bill their patients. It will be of immense help to the middle class and poor patients who are stranded in meeting their medical bills when they are stuck with unexpected and dreadful diseases like stroke and cardiac problems. Also, those people must be brought under the health insurance net which is now having a bleak appearance in the Indian insurance scenario.
Even in the case of cashless claim settlement cardholders and normal patients, there is a huge variation between the cost for a similar treatment. TPAs have to sort out such problems and make it transparent that they are to align the interest of the approved hospitals, patients and insurers. In general countries like India with a fabulous growth of population, health insurance is the only way for paying the health care needs. Health insurance when it is underwritten scientifically in India in concurrence with a well-framed legislative and regulatory measures, it has the potential of becoming larger than the consolidated premium on non-life portfolio premiums.
By Dr. N. R. Nagarajan, Reader and Head, Department of Commerce, V. H. N. S. N. College, Virudhunagar,
Published in Life Insurance Today, June 2006
