Third Party Administrators and Health Insurance in India: Perception of Providers and Policyholders

Abstract

The advent of Third Party Administrators (TPAs) is expected to play an important role in health insurance market in ensuring better services to policyholders. In addition, their presence is expected to address the cost and quality issues of the vast private healthcare providers in India. However, the insurance sector still faces challenge of effectively institutionalising the services of the TPA. A lot needs to be done in this direction. Towards this the present paper describes the findings of a survey study, which was carried out with the objective to ascertain the experiences and challenges perceived by hospitals and policyholders in availing services of TPA in Ahmedabad, Gujarat. The major findings from the study are: (i) low awareness among policyholders about the existence of TPA; policyholders mostly rely on their insurance agents; (ii) policyholders have very little knowledge about the empanelled hospitals for cashless hospitalisation services; (iii) TPAs insist on standardisation of fee structure of medical services/procedures across providers; (iv) healthcare providers do experience substantial delays in settling of their claims by the TPAs; (v) hospital administrators perceive significant burden in terms of effort and expenditure after introduction of TPA and (vi) no substantial increase in patient turnover after empanelling with TPAs. However, there is an indication that hospital administrators foresee business potential in their association with TPA in the long-run. There is a clear indication from the study that the regulatory body need to focus on developing mechanisms, which would help TPAs to strengthen their human capital and ensure smooth delivery of TPA services in emerging health insurance market.