'TPAs Acting as Insurance Firms'

Dear Viewers,

Third party administrators (TPAs) are functioning as de facto insurance companies and settling mediclaims that they are not authorized to do, the Bombay high court was told on Tuesday 29th Sept, 2011.

A division bench of Chief Justice Mohit Shah and Justice Roshan Dalvi was hearing a petition filed by social activist Gaurang Damani highlighting the plight of more than 7 crore consumers of medical insurance, especially after TPAs stopped offering cashless benefits. The Insurance Regulatory Development Authority, the regulatory body, has filed an affidavit stating that it was not a silent spectator to the dispute that arose between insurers and hospitals and the row had been settled; the hospitals have now agreed to negotiate treatment rates, IRDA advocate Paritosh Jaiswal has submitted in court, adding that approximately 170 hospitals in Mumbai are now offering cashless benefits.

However, Damani cited 1,500 nursing homes and hospitals in the city that have stopped offering the cashless facility. "Cashless was the best option for mediclaim policy holders. Suddenly, in July 2010, the offer was withdrawn," said Damani, adding that every year, premiums of Rs 11,000 crore were paid as medical insurance.

According to him, medical insurance was not classified as life or general insurance policies and there is no specific guideline to process the claims. "Settling claims is the core activity of insurance companies and not that of TPAs, who are mere intermediaries," said Damani. "TPAs are acting as de facto insurance companies and even writing cheques to consumers." Damani says TPAs are offered financial incentives to reduce claim ratio and given discretionary powers that they abuse to settle the same claims at different rates.

He cited instances where TPAs had settled for different rates when they claimed reimbursement for the same illness at the same hospital. TPAs have also reportedly held on to cheques, delaying payments to consumers. "The TPAs operate arbitrarily," added Damani.

The judges have now directed Damani to prepare a note, suggesting some ways to resolve the problem amicably, and submit it in 10 days.

.....EDITOR