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Effectiveness of Third Party Administrators in Context to Indian Health Dr Chhavi Anand

Effectiveness of Third Party Administrators in Context to Indian Health Dr Chhavi Anand

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Categories:Types, Research
Published by: editorialelets on Nov 19, 2011
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This paper was submitted for eINDIA 2011 conference Page 1
Effectiveness of Third Party Administrators in context to IndianHealth Insurance
 Author : Dr. Chhavi Anand 
To understand the effectiveness of Third Party Administrators in Health Insurance in context toIndia.
The methodology involves extensive review of literature about the TPA scenario in India. Itinvolves secondary research from research papers across India that have thrown light on thehealth insurance market in India and effectiveness of TPA in India.IntroductionThird Party Administrators (TPAs) is expected to play an important role in the health insurancemarket in ensuring better services to policyholders. In addition, their presence is expected toaddress the cost and quality issues of the vast private healthcare providers in India. However, theinsurancesector still faces challenge of effectively institutionalizing the services of the TPA. Thefindings of a survey in Ahmadabad revealed the experiences and challenges perceived byhospitals and policyholders in availing the services of TPA in Ahmadabad. The major findingswere: low awareness among policyholders about the existence of TPA; policyholders mostlyrely on their insurance agents; policyholders have very little knowledge about the empanelledhospitals for cashless hospitalization services; TPAs insist on standardization of fee structure of medical services/procedures across providers; healthcare providers experience substantial delaysin settling of their claims by TPAs; However, there is an indication that hospital administratorsforesee business potential in their association with TPAs in the long-run. There is a clearindication that the regulatory body needs to focus on developing mechanisms which would helpTPAs to strengthen their human capital and ensure smooth delivery of TPA services.
This paper was submitted for eINDIA 2011 conference Page 2
A Study of Provider‟s Perceptions in Delhi & the NCR by
 Rohit Kumar, K. Rangarajan, Nagarajan Ranganathan.This study examines the Indian health insurance market by empirically
observing the provider‟s perceptions and its relationship with the insured, the insurer and the
third party administrators (TPAs). The study tries to find out the awareness level among theinsured population and their attitude towards treatment cost. It then examines the role of TPAsand the impact of cashless services on the cost of treatment by studying a few cost drivers. Apart
rom studying the provider‟s per 
ceptions it also tries to look at some of the evidence of moralhazards and that of fraudulent activity. The findings suggest that the awareness level regardingpolicy terms and condition is low among the insured population and most of them do not carefor the cost of treatment. The providers increase their rates quite frequently and prefer themiddle income group for extending cashless benefits. The TPA model has not been successful inbringing down the claim cost but has helped in providing unbiased services including cashlessbenefits. The price structure of healthcare services are linked to the room rent category and mostof the insured patients, who are more demanding, prefer staying in higher category rooms. Theconcept of cost-sharing by the insured will help tackle this issue to some degree. The Indianhealth insurance market is not immune from supply-side moral hazards and fraudulent activitiesand there is a need to craft different strategies to tackle them. There exists an opportunity for theinsurance companies to build long-term relationships with the preferred healthcare providers by
using technology and by understanding each other‟s roles in serving the common client.
Third Party Administrators
The introduction of Third Party Administrators (TPAs) is considered to play a vital role inhealth insurance industry. The escalating growth of private voluntary insurance companies in thehealthcare market has led to rising cost of healthcare services. The Insurance Regulatory andDevelopment Authority (IRDA) of India have opened the gateway to Third Party Administrators(TPAs) to ensure better services to policyholders. The need for TPAs arise to ensure quality careand better services to policyholders and to lessen some of the negative consequences of privatehealth insurance. However, given the demand and supply side complexities of private health
This paper was submitted for eINDIA 2011 conference Page 3
insurance and health care markets, insurance intermediaries face immense challenges. IRDA hasdefined the role of TPAs as one of managing claims and reimbursement; their role in controllingcosts of health care and ensuring appropriate quality of care remains less defined. TPAs areexpected to ensure better efficiency, standardization of charges and more penetration of healthinsurance in the country.
Services offered by Third Party Administrators
ID card
: TPA provides ID cards to all their policy holders in order to validate theiridentity at the time of admission.
The TPA's
undertakes "Pre-authorization"
before a surgical procedure to ease claimprocessing
24 hours customer support services
: The TPA provide assistance through their 24hrs call centre that provides information regarding policyholder's data, providernetwork, claim status, benefits available with existing cardholder, etc All these detailsare furnished on request.
Cashless Hospitalization
: Each policyholder is provided with a list of empanelledhospitals where in he/she can avail cashless hospitalization.
Claim Management
: On behalf of the insurance companies TPA administers andsettles claims for hospitals and policyholders.Policyholders have the privilege of expressing their grievances to the concernedinsurance company or at the consumer's court if they are not satisfied with the servicesof a TPA.
Regulation of Third Party Administrators
IRDA has approved
services of TPA‟s as Insurance intermediaries(2001)
IRDA has drawn up a code of conduct for
the TPA‟s & put stringent conditions for 

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