Health Insurance Companies make mockery on PPN Package Part – 1

Most people buy health insurance policies to safeguard their health in some unforeseen situation, and they are no longer in financial stress when in need. Unfortunately, health insurance companies can sometimes be slow when it comes to processing health insurance claims. In some cases, a delay in a health insurance claim is the result of an insurer investigating a claim and deciding that it does not fall within the health plan’s scope of coverage. But in other cases, delays are the result of miscommunication.

What does TPA have to do?

Many have heard of TPA (Third Party Administrator) which is intermediary between Insurance Company and Insured Person to facilitate claim settlement. But what if they only work to support insurance companies?  TPA does not have power to accept and reject claims; however, we found examples of TPAs making not just recommendations to the insurance company, but also sending claim rejection letters to the insured. It means that there is a need for the IRDA to ensure that there is compliance with guidelines.

A TPA is an intermediary between the insurance company and the policyholder. Their job is to simplify the claim procedure under health insurance policies. As we know there can be two kinds or types of claim: a) Cashless and b) Reimbursement.

         TPA is the link between the insurer and the policyholder in case a claim is made.

         TPA is chosen by a health insurance firm.

         TPA makes the claim process easy by dealing with the documents and settling the hospital bills. TPA’s are licensed by the Insurance Regulatory and Development Authority of India.

         TPA can be in link to various policyholders. 

         ​These are associated with the smooth settlement process.

These all are functions of TPA, but what if they are not doing their job in accordance with these functions?

The Sastry committee report of 2009 specified that TPA can only process claims. IRDA has classified TPA’s as Intermediatories under section 42D of the Insurance Act, which does not specify about their role in settlement of claims. Health Services Regulations, 2001, section 21 Code of Conduct of the TPA’s, also makes no mention of TPA’s being allowed to settle or recommend claims. They can only process claim documents.

In one of the case of claim settlement in line with TPA, Bombay High Court has noted below;

On 16 December 2014, hearing a PIL filed by social activist Gaurang Damani, the Bombay High Court (HC) had directed the General Insurance Company/TPA to inform the policyholder for the reasons behind rejecting the claim or partially disallowing the claim under section 12(d)(ii) of the Insurance Regulatory and Development Authority (IRDA) Health Insurance Regulations, 2013 and also the remedies available to the policyholder. It is unfortunate that despite health insurance guidelines requiring that the policyholders know about reasons for denial or partial claims settlement, Bombay HC had to reinforce the same.

The prayer in the additional affidavit filed by Mr Damani states, “It is the petitioner’s humble prayer that clause 12(b)(i) of the gazetted regulations be immediately rectified in the spirit of the discussions held in the high court and also in reference to the documents submitted by Respondent No. 2 (IRDA) itself, to the high court. The words of the aforesaid clause ‘recommend to the Insurer for the payment of claim settlement’ should be removed at the earliest in the interest of justice, equity and fair-play.” 

Beside TPA there are so many loopholes, health policy holders have to face, please note that these loopholes will come into picture when you are about to proceed with your claim settlement. Before going ahead to emphasize loopholes, I would like to ask the question: how many of you are aware about PPN and Non PPN Package in health insurance? I am sure this one sounds tricky, but this is the reality of health insurance that no one even the insurance company, is not going to tell you until/unless you are hospitalized and your final bill arrives. This is collusion between Insurance Company, TPA and Hospitals. Many of you have come across drastic overcharged hospital bills and your claim was partially rejected by stating that in our PPN Package this is not covered despite having the highest sum assured policy. In reality, you pay a premium for a bigger sum assured but when time comes; they come with a package deal which you are not at all aware of and then the lengthy process of claim settlement and reimbursement start. Although there is a standard procedure to make a complaint against an insurer, often in the want of time or lack of knowledge, aggrieved policyholders accept insurance company’s rejection of their claim…