Loss Making TPAs

THIRD PARTY
ADMINISTRATORS
Introduction to TPA
1. The advent of Third Party Administrators (TPAs) is expected to play an important
role in health insurance market in ensuring better services to policyholders.
2. Health insurance is emerging fast as an important mechanism to finance the

healthcare needs of people.
3. The health infrastructure in India is facing daunting challenges of meeting the

health goals and complexities emerging from the changing disease pattern.
4. TPAs are presumed to infuse new management system and enrich knowledge base
of managing healthcare services and cost.
5. TPAs potentially have a wider role to play in standardization of charges and

managing cash-less services in health insurance.
Introduction to TPA
1. The influence of TPAs to a large extent would be determined by their activities, the
way they organize their services and their revenue generation model.
2. In present form, TPAs earn their major revenue from fees charged as commission
on insurance premium.
3. The job of TPA s is to maintain a database of policy holders and issue identity
cards with unique identification numbers to them. They also handle all the policy-
related issues, including claim settlements for the policy holders.
4. The TPA's are expected to provide value-added services to the consumers, like
arranging ambulance services, medicines and supplies, guiding policy holders for
specialized consultation, and providing information about 24- hour help lines,
health facilities, bed availability, organization of lifestyle management and well-
being programs.
5. With the advent of TPA, the insurance companies aim at ensuring higher
efficiency, standardization of charges, greater awareness and penetration of health
insurance to a larger section of the people.
6. The TPA undoubtedly aims to give the health insurance industry the required boost
in India.
The Services Provided by TPA are
 ID card: TPA provides ID cards to all their policyholders in order to validate their identity at
the time of admission.
 The TPA's undertakes "Pre-authorization" before a surgical procedure to ease claim

processing
 24 hours customer support services: The TPA provide assistance through their 24 hrs call
center that provides information regarding policyholder's data, provider network, claim
status, benefits available with existing cardholder, etc All these details are furnished on
request.
 Cashless Hospitalization: Each policyholder is provided with a list of empanelled hospitals

where in he/she can avail cashless hospitalization.
 Claim Management: On behalf of the insurance companies TPA administers and settles
claims for hospitals and policyholders.
 Policyholders have the privilege of expressing their grievances to the concerned insurance
company or at the consumer's court if they are not satisfied with the services of a TPA.
The specialized functions of the TPA include:
 The TPA keeps and maintains all the records of medical insurance policies of an insurer.
 The TPA issues identity cards to all the policyholders. The policyholders will have to show the
identity cards to the hospital authorities before availing any services from the hospital.
 In case of a claim, policyholders will have to inform the TPA on a 24 hr toll- free line provided
by them
 After informing the TPA, the policyholder will be directed to a hospital where the TPA has a
tied up arrangement. However, policyholders have the option to be admitted at another hospital
of their choice in which case, payment will be on reimbursement basis.
 TPA pays for the treatment; they issue an authorization letter to the hospital for the admission
of the policyholder in the hospital.
SPECIALIZED FUNCTIONS
 At the point of discharge, all the bills will be sent to the TPA while
they are tracking the case of the insured at the hospital.
 TPA makes the payment to the hospital.
 TPA sends all the documents necessary for consideration of claims,

along with the bills to the insurance company.
 The insurance company then reimburses the TPA

Loss making TPAs
Problems
1. The medical condition of the member is never
declared correctly most cases during purchase
of the policy.
 During the pre-authorisation process the TPA receives
information that has been "filtered" by the member, the
doctor and the hospital.
 The large number of rejections at many large hospitals is

due to misdeclarations by the member, treating doctor
and the hospital.
Problems
 There are mistakes committed by half
educated ayurvedic, homeopathic and
doctors with little medical knowledge.
 There has to be transparency of

information between the members,
hospitals, TPA's and the insurers. Else, all
TPA's will err on the side of rejections.
Problems
 Industry experts rue that there is no
regulatory body to keep a watch on
healthcare providers. Also when a person
buys a policy, no HIV test is done. Besides,
the pre-medical tests are also minimal.
Problems
 TPAs across the country on conditions of
anonymity (for fear of losing business with
hospitals) admitted that inflated medical bills
is a countrywide phenomenon.
 Severe competition has brought down the

price of corporate policies, eroding the
actuarial premium base.
Problems
 Hospitals too have problems with TPAs.
 Each hospital has its own policies. The

matter of charging a patient is between the
doctor and the patient. But every hospital
should standardise the doctor's fees.
Problems
 Hospitals face, timely payment issues with the
TPA. Many excuses cited by TPAs are
bureaucratic. They cite reasons such as miss-
spelt names and hospital signatures.
 TPAs have a fast turnover of employees and poor

infrastructure and response time, all TPAs do not
have a 24-hour helpline, which they are obliged to
have.
Solutions
 Work should be handed over to the TPAs who
can have their own medical boards and inspectors
to bring efficiency in the system.
 TPA as intermediary should share the premium of

Mediclaim to provide better customer care
service. There should be a standard agreement
MOU format between the General Insurance
Company (GIC) and TPAs. The hospitals can sign
an MOU with TPA on the standard format.
Solutions
 The TPAs need funds to issue I-cards, customer
education brochures and run a call centre for
customer queries or emergency calls.
 TPAs should work on behalf of an insurance

company and the administrative expenditure
should be borne by an insurance company.
 Development of a good customer care attitude will

definitely give a boost to Mediclaim business and
provide quick relief to the policy holder.
Solutions
 The TPA must keep a list of basic permissible charges
under the Mediclaim policy for ready reference. This
charge list can differ from city to city as the charges
can differ from hospital to hospital. The law of average
can take out the basic permissible charge list from city
to city.
 It requires the basic permissible charges throughout

India if the premium has to stay at one level.
Solutions
 The principal of uniform premium and uniform payout should
be adopted. The customers should be educated on these
lines.
 There should be no clash between the TPAs and the

hospitals if this uniformity is announced.
 In our country the Law of Average stands better than the Law
of Actual. The patient is reimbursed the stipulated actual or
average charges, whichever is less.
Solutions
 Uniform premium for uniform claims should be the
overall criteria. The excess amount should be
payable by the insured.
 The role of TPA is really great as intermediary

between every complaining customer and the
conservative insurance companies except for the
proper allocation of funds for the TPA and money
drain situation. It will be TPAs who will do the
running for the sick customer and bring relief or
claim to his or her residence.
Thank You.

Loss Making TPAs

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THIRD PARTY

2. Health insurance is emerging fast as an important mechanism to finance the

3. The health infrastructure in India is facing daunting challenges of meeting the

5. TPAs potentially have a wider role to play in standardization of charges and

 The TPA's undertakes "Pre-authorization" before a surgical procedure to ease claim

 Cashless Hospitalization: Each policyholder is provided with a list of empanelled hospitals

 TPA makes the payment to the hospital.

 TPA sends all the documents necessary for consideration of claims,

 The insurance company then reimburses the TPA

 The large number of rejections at many large hospitals is

 There has to be transparency of

 Severe competition has brought down the

 Each hospital has its own policies. The

 TPAs have a fast turnover of employees and poor

 TPA as intermediary should share the premium of

 TPAs should work on behalf of an insurance

 Development of a good customer care attitude will

 It requires the basic permissible charges throughout

 There should be no clash between the TPAs and the

 The role of TPA is really great as intermediary

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