Insurance major admits that regional offices are causing delay in payments   

July 20, 2010

 Major public sector insurer admits that a few local offices have been delinquent, and a few TPAs have been slack in releasing insured amounts

For a long time, hospitals and doctors have argued that when it comes to payment of the cost incurred on medical procedures, insurance companies don't pay hospitals on time. A major public sector insurance company has admitted to these charges and confirms that some of its regional offices and a few Third Party Administrators (TPAs) may have made delayed payments to hospitals.

"We are addressing these issues. There have been some regional offices that are delinquent, resulting in slackness in payments, while some TPAs have been indifferent when it comes paying doctors on time," said M Ramadoss, managing director, New India Assurance.

Delayed payments have been a major issue with hospitals, who have been complaining that they have been getting their dues after nearly six to eight months. Hospitals have been blaming TPAs for these delays, saying that the intermediaries keep the float given by insurers and delay payments. Even insurers have complained that TPAs are not using these funds to settle patients' claims.

Generally, insurance companies maintain a float with a particular TPA for a period of 15 to 30 days for settling claims. When the float is exhausted, the TPA receives additional money from the insurance companies for settling claims.

However, a few private 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. "The TPAs are being slapped from both sides, they can't do much as the payments depend on us," an insurer told Moneylife, preferring anonymity. These insurers also feel that hospitals were over-charging customers.

Insurers who have done away with TPAs say that they are not satisfied with these middlemen in the process. "TPAs have not been able to live up to the service standards that had been expected from them when these administrators were introduced. This has led to various issues, including some doctors and hospitals refusing to work with them. For us, as an insurer, it would be better if we have our own team which can interact both with customers and hospitals directly, to ensure that our clients are getting prompt service. This will help us to address customer issues much faster," KG Krishnamoorthy Rao, Future Generali India's managing director and chief operating officer, had earlier told Moneylife.

However, Mr Ramadoss says that even hospitals need to be partially blamed. Most cashless claims are preauthorised for a certain coverage amount. Hospitals call the TPAs or insurer to confirm the go-ahead for the operation for the said amount. However, if there is any increase in cost, the hospital doesn't consult the TPA or insurer. So at the time of payment, the TPA or insurer is only able to pay the hospital the said amount and not the additional cost incurred. However, the remaining payment is given out after negotiations between the doctors and TPAs or insurer.

Fee charges and payments have been a topic of intense discussion between insurance companies and hospitals. In fact, in the middle of February, policyholders who were admitted to Mumbai hospitals were trapped in the midst of a raging battle between city-based doctors and TPAs, due to various doctors being unhappy with the low consultancy fees being allowed by a few TPAs for reimbursement, under a number of medical insurance plans. — Aaron Rodrigues