Not just big hospitals, but smaller medical consultants and nursing homes are also facing trouble from TPAs. Is it time to cut out the middleman?

Even as top hospitals in the cities have been facing several issues with third-party administrators (TPAs), it now appears that the problem extends to smaller medical consultants and nursing homes in the metros. They are so disheartened by TPAs that they would like to see the end of cashless settlements. A number of them say that TPAs have been playing around with the insurer's money, which has resulted in delayed payments.

TPAs have been receiving money from insurance companies to settle claims; however, insurers have complained that diversion of float funds provided to TPAs is going on. The complaint is that these funds are not being used for settling patients' claims. This has resulted in doctors getting their payments after six to eight months. "They (TPAs) are hand-in-glove with a lot of people and are floating insurer funds," said an official from the Bombay Nursing Homes Association, who preferred anonymity.

"Many medical consultants are of the opinion that they don't want to be a part of these cashless schemes as the present working module is defunct," Rajeev Walwakar, president, Association of Medical Consultants (AMC), told Moneylife.

Medical consultants complain that the current implementation module is not feasible. The payments which doctors have to receive are always delayed. Again, the complete payment is not given. "The working modules have been very disappointing and we haven't received proper payments from TPAs," Mr Walwakar added. This has resulted in many medical practitioners feeling that cashless settlements should be done away with. Also, hospitals and doctors complain that TPAs never answer any queries from doctors on payments.

Medical consultants are also arguing that TPAs have been misinforming their customers. Currently, TPAs have contracts with hospitals, which are added to the preferred provider network (PPN) by insurance companies. "We are not dealing with insurance companies. We are dealing with TPAs, so the issues are with TPAs," added Mr Walwakar.

However, a few insurers whom we spoke to said that TPAs can't be wholly blamed for the current imbroglio, as payments to hospitals depend on the insurance company. These insurers also feel that hospitals were
over-charging customers.

In March, about 1,500 nursing homes and various doctors under the AMC banner had decided to boycott TPAs completely after they had asked hospitals and doctors to work on lower rates.
(See: http://www.moneylife.in/article/8/5146.html).

At the same time, there were unpaid dues from TPAs. Ergo, patients in hospitals covered by these TPAs could not avail of cashless facilities. However, negotiations were on between TPAs and hospitals. But then came the surprising move by public sector insurance companies to scrap cashless facilities at certain hospitals. Insurers have claimed that certain hospitals were inflating bills exorbitantly, leading to significant losses in their business.

Yesterday, a discussion was conducted by members of the Confederation of Indian Industry's (CII) National Committee on Healthcare. Stakeholders including AMC met four public sector insurance companies (including New India Assurance, Oriental Insurance, United India Insurance and National Insurance Company). Out of the four hospitals that were present, three of them - Fortis Hospitals, Max Healthcare and Apollo Hospitals -have their own health-based insurance companies.

Many insurance companies are trying to manage the cost of claims, putting in place better customer service and opting for in-house TPAs. Private insurance companies like ICICI Lombard and Bajaj Allianz have done away with TPAs. By the end of this year, Future Generali will have its own in-house team to service health policies, instead of making customers deal with TPAs for facilitating medical insurance payouts.