If an insurer engages the services of only one TPA, then the policyholder will have to stick with the TPA fixed by the insurer.
In order to streamline the claim management processes in health insurance, the insurance regulator has now allowed policyholders to choose the third-party administrator (TPA) from the list of those engaged by the insurance company. In case the service of the TPA is terminated by the insurer, then the policyholder can choose another TPA. The policyholder will be allowed to change the TPA at the time of renewal.
In case a policyholder does not choose a TPA of his choice, then the company will allot him a TPA of its choice. However, where the insurer engages the services of only one TPA, the policyholder will have no option but to stick to that TPA. The regulator has underlined that based on health insurance product and geographical location of the policyholders, the insurer can limit the number of TPAs amongst whom the policyholder may choose.
How claims are settled
In health insurance, a policyholder’s claim are settled either by a TPA or the insurer’s in-house claims processing department. A policyholder needs to first inform the TPA in case of any claim. A TPA is an intermediary appointed by an insurance company to facilitate the settlement of claim. They will seek all the bills and documents provided by a hospital to process the claim with the insurance company. However, they are not responsible for any claims rejection as that is done by the insurance company.
During 2017-18, there were 27 TPAs registered with Insurance Regulatory and Development Authority of India (Irdai).
General insurance and standalone health insurance companies also have their own in-house department to settle claims. It helps policyholders as they can directly get in touch with the company for claim settlement and the turnaround time is quick. So, the efficiency in processing and settling claims is better if it is done in-house. Private insurers such as Max Bupa Health Insurance, Bajaj Allianz Health Insurance and HDFC Ergo General Insurance have in-house claims processing.
However, TPAs have their own list of network hospitals which make it easier for a policyholder to go for cashless treatment. The regulator’s annual report for FY 2017-18 shows that non-life and health insurers have settled 1.45 crore health insurance claims and paid Rs. 30,244 crore towards settlement of health insurance claims. The average amount paid per claim was Rs. 20,793. In terms of number of claims settled, 71% of the claims were settled through TPAs and the balance 29% were settled through in-house mechanism. In terms of mode of settlement of claims, 49% of total amount of claims paid were settled through cashless mode and another 44% of the claims were settled through reimbursement mode. Insurers have settled 6% of their claims amount through both cashless and reimbursement mode.
Irdai has mandated that the net worth of TPA should not fall below Rs. 1 crore during the period of registration. The TPA must have adequate technological capabilities, data security and human resources in place. Where TPAs maintain files, data and other related information pertaining to the settlement of claims in electronic form, maintenance of the data in physical form is not required.
Before selecting a health insurance policy, one must check the features such as exclusions, waiting period, co-pay, sub-limits, incurred claim ratio. And before choosing a TPA, policyholders should check the claim settlement processes.