A TPA has two main functions. First, it manages the network of hospitals on behalf of the insurer. It adds or removes hospitals from the insurer's network based on customer demand and experience with the hospital. It also services the customer's policy and helps him get his claim. It collects all the documents from the customer — discharge papers, medical reports, bills, etc — and passes all the necessary information to the insurer, along with a recommendation on whether the claim should be paid. The final decision on whether to pay the claim, however, rests with the insurer.
Experts say that even if Irdai upholds its earlier order in the E-Meditek case, customers do not have much to worry about. "Even in its first order, Irdai had mentioned that E-Meditek should continue to offer services to current customers. So customers are unlikely to suffer any disruption of service. Moreover, customers can always turn to the insurer in case they have any issues. And if they have complaints about the quality of service, they can go to Irdai," says Mahavir Chopra, director-health, life & strategic initiatives, Coverfox.com.
Another question that arises is whether customers should try to evaluate the quality of the TPA at the time of purchasing a policy. Experts say this is not necessary. "In the first place, it will be very difficult for the customer to do this kind of evaluation. Moreover, while all public sector insurers use TPAs, many private sector insurers do not. Many of them prefer to manage this function in-house. Insurers also change their TPAs from time to time," says Kapil Mehta, co-founder and managing director, SecureNow Insurance
Broker. Mehta says that he prefers insurers which manage the claims process in-house, as they have better control over the process and are more accountable. "Suppose that you have submitted your documents with the insurer for reimbursement. Two weeks later, if you make an enquiry about the progress of your case, the insurer will have to give you a definitive answer. He cannot pass the buck, as happens if there is a TPA," says Mehta.
Other experts, however, differ. "One can't generalise that if the function is outsourced the customer will have a poorer experience, and if it is managed in-house he will have a better experience," says Chopra. Instead of trying to evaluate the TPA, the customer should go by the insurer's track record. "The primary contract is between the insurance company and the insured. The customer should focus on the claim settlement ratio and turnaround time of the insurer. The TPA is an extended arm of the insurer.
Whatever commitments an insurer gives to its customers is based on the commitments it has taken from its TPA," says Sukhesh Bhave, deputy vice-president, accidents and health claims, SBI General Insurance. Chopra says that brokers, who handle the claims process on behalf of their customers and have experience of working with multiple insurers, are one source from which you can find out which insurer's claims processes are better.
Focus on insurer's claim settlement record
Even if a TPA's licence gets suspended or cancelled, the regulator will ensure that there is continuity of service for customers
When buying a policy, do not try to evaluate the quality of the TPA. Go by the claim settlement track record of the insurer, instead
Some experts say it is better to go with an insurer that handles claim settlement in-house, as he is more accountable
Others say there is no guarantee of better service, whether the process is handled in-house or is outsourced
A trusted advisor, such as a broker who has dealt on his customer's behalf with many insurers, will be able to tell which insurer's claim settlement process is better