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Health insurance firms must settle claims directly with policyholders, rules court

Deepa Nair
Comment (2)   ·   print   ·  

Insurance companies will be required to pay health claims directly to consumers, according to a Bombay High Court judgment delivered on a public interest litigation. Earlier, such claims (reimbursements of cashless settlements) were done through intermediaries called third party administrators (TPAs).

Most insurers outsource claims processing to TPAs to save administrative and distribution costs. As TPAs would get a commission for cutting down claims, they often questioned the treatment and tests the insured had to undergo.

Consumer complaints

With rising consumer complaints against TPAs, activist Gaurang Damani filed a PIL in the Bombay High Court last year, seeking clarity on their role. “There is no tri-partite agreement among the policyholder, the insurer and TPA; while TPAs are only hired to process claims, in practice, they’re often settling claims,” said Damani.

“Often, insurers offer TPAs incentives for rejecting claims. Last month, the High Court observed that this worked against consumer interest,” said Damani. The Insurance Regulatory and Development Authority (IRDA) has informed the court that it would take such insurance companies to task. “TPAs cannot settle claims, only insurers can. There won’t be any incentive given to TPAs,” said M. Ramprasad, Member, Non-Life, IRDA, representing the regulator at the hearing. The insurance regulator has specified the role of the TPAs in the health insurance regulations which will be notified after Parliament approval.

Own TPA

Incidentally, the four state-run public sector general insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — which control 70 per cent of the Rs 13,000-crore health-insurance market, are looking to promote their own TPAs to reduce consumer complaints and disputes. Private companies such as ICICI Lombard, Future Generali and Bajaj Allianz General Insurance have shifted to in-house settlement of claims.

Next, Damani is looking to take up the issue of transparency in the amount an insured can get for specific ailments. “The policyholder will have clarity on which hospitals to go; the hospitals too will know how much they would get,” he added.

deepa.nair@thehindu.co.in

(This article was published on February 13, 2013)
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Comments:

The current system of health care modeled on american system is doomed and will only fatten the pockets of private hospitals,testing labs,doctors and certain top echelons of insurance companies.All of them are in the loop of the loot.The costs of insurance premium has been going up substantially every year far higher than the inflation rate.I am warning public be wary of your illness.many of it can be addressed without going to a doctor.If still you want to go to a doctor, select a physician who is old school and does minimum investigations.Don't go to crooked doctors or hospitals.The modern day new doctors especially ones below 60 years of age are businessmen.They have invested money to get trained abroad and they need to maximise their earnings like all businesses do.Hospitals/test labs have invested money on expensive equipments and they need to put them to maximum use.Why are we subjecting our body to these crooks?

from:  shiv
Posted on: Feb 14, 2013 at 07:50 IST

it will be a great relief if the claims are settled directly by the Insurance Company rather than routing/ depending on the TPA. The Insurance Company may also devise a simple claim form containing only the minimum details required which can easily be filled up by the beneficiary.

from:  Narayanan
Posted on: Feb 14, 2013 at 17:18 IST
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Budget 2015 highlights

  • Following are the highlights of the Union Budget 2015-16 presented by Finance Minister Arun Jaitley in Parliament today:
  • No change in personal Income Tax * Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000
  • Transport allowance exemption hiked to Rs 1,600, from Rs 800 per month
  • Additional 2% surcharge on people earning over Rs 1 cr; to fetch Rs 9,000 cr
  • Wealth tax abolished
  • Direct Taxes Code (DTC) dropped
  • Rs 50,000 deduction for contribution to New Pension Scheme
  • To lower Corporate Tax to 25% over next four years
  • GAAR implementation deferred by 2 years to April 2017
  • Service Tax rate hiked to 14%, from 12.36%
  • Tax free bonds for roads, railways, irrigation projects
  • 2015—16 growth between 8—8.5%, double digit growth feasible
  • Retail inflation close to 5% by March, room for monetary policy easing
  • To achieve fiscal deficit of 3% of GDP by 2017—18
  • Fiscal Deficit target 3.9% in 2015—16, 3.5% in 2016—17
  • Revenue Deficit to be 2.8% in 2015—16
  • Current Account Deficit for 2014—15 to be below 1.3% of GDP
  • To introduce comprehensive law to deal with black money
  • Benami property transaction bill to tackle black money transaction in real estate soon
  • 100% deduction for contribution to Swachh Bharat, Clean Ganga projects
  • GST to be put in place by April 1, 2016
  • Internationally competitive direct tax regime to be put in place to incentivise saving
  • Incentivise use of credit, debit cards; disincentivise cash transaction to curb black money.
  • The Finance Minister has covered good ground, but more needs to be done »

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