Since the opening of the insurance sector, along with the innovation in health insurance products there have also been an increase in service standards.
Most insurance companies, offering health insurance products, provide call centre facilities and personalized claims assistance through their Third Party Administrators (TPAs). While the insured is benefited by better service, insurers are benefited by reduction in their administrative costs by using TPAs. A TPA is an organization that performs tasks related to administration of claims, managing hospital networks and maintaining details and records of membership for health insurance products. Third-party administrators may be captive units of insurance companies or are independent organizations.
The TPAs are remunerated by the insurers, and so policyholders receive enhanced facilities at no extra cost. TPAs are mostly paid a fixed percentage of premium as commission. TPAs have the responsibility to manage the claims process. They collect all bills, pay the dues to the hospital or the policy holder and send necessary documents for the consideration of claim to the insurer. This outsourcing simplifies the claims procedure and provide a one-stop solution to the policyholder. The policyholder also benefits from cash-less hospitalization using membership cards issued by the TPAs. TPAs follow each individual case to minimise false claims and do a comprehensive review of records before paying the health provider.
They maintain constant communication with health care providers and families, and evaluate the outcome of treatment. Access to data gives them an opportunity to design and develop information systems which allow them to analyze trends in hospital admissions, and effective treatment protocols. It is expected that over a period of time as TPAs develop appropriate systems and protocols to minimize unnesessary treatments and investigations, it will lead to more efficient and cost effective services by health providers ultimately leading to lower insurance premiums.
The TPA sector is regulated by the IRDA. Regulations regarding TPAs specify that TPAs must have at least one director who is a medical doctor. The regulations require the CEO to have studied hospital magamement and passed licentiate examinations from the Insurance Institue of India.
While the health insurance sector is expanding with more products and better processes for the benefit of the insured, they are battling a high percentage of claims due to moral hazard and adverse selection. General absence of regulation and lack of standarization in the private health system is resulting in cases of overbilling and fraud.
Data required for acturial analysis is also largely unavailable due to non-standardized treatment norms, and nonuniform costs of procedures across health care organizations in India. These challenges must be overcome to spur further growth and increase the reach of health insurance.
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