Public sector insurers to push for a common claims settling agency

CHENNAI - The four government-owned non-life insurers — National Insurance, New India Assurance, Oriental Insurance and United India Insurance– will soon be taking forward their idea of floating a common third party administrator (TPA) to process the health insurance claims.

“We will be issuing a Request for Proposal (RFP) shortly. Our requirements will be specified in the RFP so that interested parties can submit their proposals,” New India Assurance Chairman and Managing Director M. Ramadoss told IANS over phone from Mumbai.

Consulting firm KPMG had given a report on the feasibility of setting up a common TPA by the four companies a year ago.

The four insurers, which together do around Rs.6,000 crore of health insurance business selling several lakhs of polices, are not happy with the manner in which claims are being processed and settled by the existing TPAs.

The earlier expectations of TPAs trying to bring down the treatment costs by hard negotiations with the hospitals have not materialised.

On the other hand, insurers complain about diversion of float funds provided to TPAs to other group ventures rather than using those for settling claims.

With their claims ratio ruling around 115 percent, the four insurers are focusing on ways to minimise the claims outgo.

One such measure that is drawing flak is the delisting some hospitals where the policyholders can avail cashless treatment - hospitals will directly bill the TPAs or the insurers.

The decision was taken after a detailed investigation by the insurers on over charging by many corporate hospitals. “We took the decision after a year-long investigation,” said Ramadoss.

“We have documentary proof on hospitals charging differential rates — higher for those with a policy and lower for others,” he said.

Hospitals also charge differential rates for diagnostic tests based on the kind of room a patient opts for. A general ward patient is charged lower (not subsidized rate) while a patient in an air-conditioned room is charged a substantially higher sum.

“The costs for such diagnostic tests remaining the same, how can hospitals have differential rates,” wonders Ramadoss.

“Under the Bombay Nursing Home Registration Act, all hospitals have to declare their rate card. But nobody does that,” an insurance industry official told IANS.

“We have not scrapped the cashless treatment facility. It is available in around 350 hospitals in the four metros. There are also many hospitals who want to join our network. The panel of hospitals is expandable,” said Ramadoss.

According to him, the revised rates that have been negotiated with some of the hospitals do not vary much from their earlier ones.

“It should be remembered that higher the claims ratio, insurers will be forced to hike their premium rates. It is only the policyholders who will suffer and not the hospitals,” added another insurance official.

Even the Tamil Nadu government has delisted many hospitals as they were found to be carrying out needless operations, resorting to excess billing and other malpractices under its free insurance scheme.

–Indo Asian News Service