Policy holders of healthcare insurance will no longer have to wait a long time for their claims to be settled once measures taken by state-owned non-life insurance companies come into effect.
These companies are involving commercial banks to prevent misuse and diversion of healthcare claim funds by third party administrators (TPAs), say officials of leading insurers.
There have been widespread complaints that TPAs do not issue cheques to claimants on time. They divert the claims funds for other activities, delaying payments to hospitals and policyholders. There have also been instances where cheques issued by TPAs have bounced.
The average time taken to settle a healthcare claim for individuals is anything between a month and 15 days. For hospitals, the TPAs take anything between 45 and 90 days.
While individual policyholders have little recourse, hospitals have started charging differential rates for TPA and non-TPA patients.
In the process, the insurers not only faced flak and footed increased bills but also started losing customers.
The Chennai-based United India Insurance Co Ltd (UI) has stopped providing funds to TPAs towards settlement of claims. It has instructed its bankers -- Bank of America and CitiBank -- to issue cheques in the name of hospitals on receipt of claims data from TPAs.
"Under the new system, the TPAs would upload the critical data after processing the claims. The two banks would make out the cheques in the name of the hospitals and send them to the TPAs for onward transmission to claimants," V. Sekar, general manager, UI, told IANS.
Other general insurers are also considering such an option.
M. Ramadoss, chairman-cum-managing director, Oriental Insurance Co Ltd, told IANS: "We are also looking at such measures to improve our customer satisfaction levels."
According to an official of Kolkata-based National Insurance Co Ltd, who requested anonymity, said: "Officials of Bank of America have made a presentation to us as to how they are operating the system in UI."
The non-life insurer is in talks with other banks as well to get a good deal.
Interestingly, the Life Insurance Corp of India (LIC), which is entering the health insurance segment, has a similar arrangement with select banks.
TPAs are the entities to which non-life insurers outsource their healthcare claims processing activity.
The main USP (unique selling proposition) of TPAs is that they enable cashless treatment for policyholders. It means a healthcare policyholder can get in and out of hospitals without paying any money, provided the ailment and the total bill falls within the purview of the policy.
For those policyholders who do not avail themselves of the cashless facility can send their claim papers to the TPAs for reimbursement.
The TPAs get 5.5 percent of the total premium as their fee.
In order to facilitate claims settlement, and cashless reimbursement, non-life insurers provide TPAs with necessary funds.
According to an industry official, TPAs prepare cheques in the name of policyholders or hospitals and claim funds from the insurer.
When it comes to the number of cashless settlement claims the experiences of the non-life insurers vary.
In the case of Oriental Insurance and UI, a majority of the healthcare claims are settled under the cashless mode, while National Insurance officials say the figure in their case is less than 50 percent.
Although the government insurers have non-TPA serviced mediclaim policy, they are not offered to policyholders, citing lack of manpower to process claims at their end.
The insurers are also pruning the list of TPAs for better supervision and control.
The general insurers agree that it would take them more time to follow the auto industry's two-vendor policy so that the TPAs are assured of volumes and can scale up their expertise and operations.