24 firms apply for common TPA regime: NIAC chief

New India Assurance Company chairman and managing director M Ramadoss Wednesday said the four public sector general insurers have received 24 applications so far to set up the proposed common TPA regime.

Mumbai: Leading state-run general insurer New India Assurance Company chairman and managing director M Ramadoss Wednesday said the four public sector general insurers have received 24 applications so far to set up the proposed common TPA regime and expressed hope that they will be able to finalise the candidate by the end of the month.

Speaking on the sidelines of a meet on `Insurance IPOs and valuation`, organised by the Bombay Chamber of Commerce and Industry here, Ramadoss said, his company would soon launch a premium health insurance product that would enable policyholders to avail of treatment at five-star hospitals, by paying a higher premium.

To a specific query on whether any foreign firm has put in application for setting up joint TPA, Ramadoss declined to answer saying, "I am not directly looking into it."

There are 27 TPAs (third party administrators) registered with the regulator Irda currently. The health insurance segment generated over Rs 7,000 crore of premium last year, of which about 70 per cent were generated by the four state-owned insurers.

Early September, the four state-owned general insurers -- National Insurance Company, New India Assurance, Oriental Insurance and United India Insurance--extended the deadline for submitting applications for setting up a common TPA for three more weeks to September 24, as the impasse over the suspension of cashless facilities continued.
"The deadline for EoI has been extended to September 24, from September 3 earlier," General Insurers Public Sector Association (Gipsa) Chief Executive AK Singhal had told earlier this month.The partnership TPA is expected to commence operations by June 30 next.

TPAs are firms to which insurers outsource servicing of health claims.After insurers issue the policy, almost all the back office work, including networking with healthcare providers, are undertaken by TPAs.In return, they get around 5 percent of the premium as fees.

For the delay in finalising the new TPAs, industry insiders point out that the current regulatory norms do not allow one person to hold two TPA licences. Also, the reported networth of a company seeking a TPA licence is Rs 250 crore, which the industry feel is too high. Further,it is still not clear whether Irda would allow firms to continue with their existing TPAs even after they enter into a partnership with the Gipsa.

The TPAs are also concerned that since the PSU insurers are the major players, most of the business would go to the new common TPA, thereby leaving only the private sector insurers for the old TPAs. Among private players, ICICI Lombard and Bajaj Allianz General Insurance, which account for 80 percent of mediclaim business among private insurers, have their own health administration divisions.

The spat between PSU insurers and corporate hospitals over the cashless facility has entered the fourth month as corporate hospitals are still unable to come to an agreement with public insurers over the standardised rate for different procedures.

And the fact that the regulator Irda is not ready to intervene is also dragging an amicable resolution, despite in August the Delhi High Court had directed to Irda to make arrangements for cashless treatment.

Industry watchers on the other hand point out that both the sides are dillydallying as there is hardly any impact on their businesses due to row.
The problem started when on July 1, 2010 the four PSU insurers took off about 150 hospitals from the list of preferred provider network and cried foul over different hospitals charging different rates for same treatment besides sending out inflated bills to insurers, forcing them to discontinue the cashless scheme.

There are also media reports that private insurers may also join their state-run counterparts to negotiate rates with corporate hospitals as most of them are barely able to keep their neck out of the water till now. Recently, Bajaj Allianz chief executive Hemant Kaul had said that the industry was not making money on mediclaim policies.


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