Page 27 - The Insurance Times August 2024

Claims Service and the concept of Third to identify themselves with one or more insurance companies
and have to enter into an agreement with the Insurance
Party Administrators companies and providers. They are not allowed to enter into

The most important function of the Insurers being its claim any business activities, to do marketing and are also not
settlement. It is the litmus test for the Insurance company allowed to advertise without the permission of the insurance
which helps in building up its reputation to gain the trust of companies. The selection of the hospital is the privilege of the
the customers. Inadequate service, delays in service and patient and the TPA assists in the hospitalization process by
repudiation of claims are the major concerns from the issuing pre-authorisation letter to the providers for cashless
customer perspective which an Insurer needs to manage by claims and pay the claim on time to the hospital by liaising
prompt and diligent services to the Insured customer. In with the insurance companies .The policyholder can choose a
order to effectively manage claims, avoid delays, unjustified non-network hospital too, for which the claims are paid
repudiations and bring down the cost of health care the through reimbursement procedure.
prologue of TPAs (Third Party Administrators) was
introduced in the health insurance sector with the enactment Most of the public and private sector companies hire TPAs
of TPA regulations, 2001. for claims management. Currently, there are 22 registered
TPA having network with 1,90,340 hospitals in India.
The concept of TPA had its origin in the United States (US),
where the concept of managed health care was introduced Health Services provided by a TPAs in
in 1973 to keep the medical cost affordable and under
control in US. TPAs in India are licensed by IRDAI and can India:
be engaged, for a fee or remuneration by the insurance Servicing of claims under health insurance policies
company to provide health services. They were set up to (Cashless/Reimbursement)
support the insurance companies at the back end for Servicing of claims for Hospitalization cover, if any, under
providing prompt claims management by networking the
Personal Accident Policy and domestic travel policy
hospitals and provide cashless hospitalisation service to the
insured customer. Though TPAs were set up on the lines of Pre-insurance medical examinations in connection with
Health Maintenance organisations (HMO) in the US, they underwriting of health insurance policies
are quite different in their operations. Health services matters of foreign travel policies and
health policies issued by Indian insurers covering medical
HMOs under the US managed care system, provide treatment or hospitalization outside India
comprehensive health care services to their members and Servicing of health services matters of travel or health
are remunerated by fixed periodic payment. In the US, HMO or medical insurance policies issued by foreign insurers
members under the managed care system select a "primary for policyholders who are travelling to India
care physician" from the list of approved providers. These
physicians act as "gatekeepers" and coordinate for all the
basic health care needs of their patients. A specialist care Status of Heath Insurance claim
can be availed by the members only on referral by their settlement in-house and through TPA in
physician. This keeps a control on unnecessary care and over India
treatment and thereby control the cost of care.
As per IRDAI report 2022-23, the number of health
HMOs also control the costs by providing care only within a insurance claims settled by General and Health Insurers was
restricted geographical area. Visits to doctors or hospitals 2.36 crore and paid Rs. 70,930 crore towards settlement of
outside the network are covered only in emergency or when these claims. The average amount paid per claim was Rs.
the patient is travelling. These HMOs are independent 30,087. In terms of number of claims settled, 75 per cent
organisations, and are allowed to underwrite the risk. of the claims were settled through the TPA balance 25 per
Hospitals also provide the HMO service and they admit the cent of the claims were settled through in-house
patient in the hospital of their choice to curtail the cost. mechanism. In terms of mode of settlement of claims, 56%
of total number of claims were settled through cashless
In India , TPAs are required to get a license from IRDA and mode and another 42% through reimbursement mode and
maintain a minimum equity paid-up capital of ? 4 crore and 2% of the total claim amount were settled through "both
also maintain a net worth of Rs. 1 crore. They are required cashless and reimbursement mode".

The Insurance Times August 2024 25