In a strange case, the TPA of United India approved cashless hospitalisation as per a package rate for preferred provider network. But the network hospital billed the insured more than 120% of the approved amount, making a mockery of PPN package
Moneylife Foundation Insurance Helpline received an email from Jyothi Gopal (name changed) about a strange case. United India Insurance third party administrator (TPA) Vipul MedCorp approved a cashless expenditure for her of Rs25,000 for appendicitis surgery. But United’s preferred provider network (PPN) New Hope Indian Speciality hospital billed the insured for Rs65,368.
“I have taken United India Insurance Family Medicare Policy. My son developed sudden stomach pain in June 2012 and had to undergo surgery for appendicitis immediately. I have a floating insurance cover for Rs5 lakh. Though I had insurance cover with same company for almost 12 years, I never approached the company for a single claim. The network hospital billed us for Rs65,368 for the surgery and TPA approved cashless only for Rs 25,000. I made several representations to TPA - Vipul MedCorp and sent many mail communications, visited them and visited United India branch several times. But they kept on dragging the issue. Finally, they sent me a claim repudiation letter in January 2013. I approached United India divisional office three months ago. But, they have informed me that I should approach Ombudsman office as they are helpless since TPA refuses to oblige.”
The question is what is the purpose of the insured going to network hospital if the TPA/insurer approves cashless for less than half of the hospital charges? If the TPA/insurer has really negotiated the package rates with the network hospital, the insured does not have to pay from own pocket.
Vipul MedCorp’s cashless authorisation letter clearly states that the approval for cashless is as per PPN package rate. It adds, “Hospital must collect the excess amount directly from the beneficiary (NOT APPLICABLE FOR PACKAGE RATES).” What is the purpose of TPA letter specifying these words in highlighted capital letters? The case shows that the purpose of PPN hospital is defeated. Why does the insured have to suffer?
Ms Gopal is one of many such victims of partial claim settlement even after availing of services in a network hospital. The hospital room rent was within the limit for the policy and the appendicitis surgery does not have any sub-limit. What is the value add provided by TPA if there is a colossal difference in what it agreed with the PPN hospital for package rates and what the hospital is charging the patient? Why is New Hope Indian Speciality hospital even part of the Government insurance companies PPN?
According to one insurance broker firm, “The true value of a package with network hospitals is that the TPA / Insurers ensure that they charge as per the agreed package rate. They should not make the insured pay the difference between hospital actual charge and package rate. Where the insured is made to pay such difference he is entitled to have the same reimbursed by the TPA / Insured if there is no sub limit in the policy.”
New Hope Indian Speciality hospital bill includes surgeon’s fees of Rs15,000, assistant surgeon fees of Rs5000 and anaesthetist fees of Rs5000, which itself equals the TPA package rate of Rs25,000 for appendicitis. Who is supposed to pay for the hospital bill charges for room, operation theatre, medical supervision, nursing charges, lab charges, pharmacy, doctor visiting charges, laparoscopy charges, ECG and Injection? The TPA and hospital agreement for package rates seems to be just a farce.
Moneylife wrote to TPA Vipul Medicare as well as United India Insurance officials, but there was no response. Can Insurance Regulatory and Development Authority (IRDA) help to ensure that hapless mediclaim policyholders are not taken for a ride due to package rates disagreement between TPA/insurer with its own PPN hospital?
It’s an irony that financial advisors tell customers to buy adequate mediclaim cover as part of proper financial planning. The customer buys Rs5 lakh cover thinking that they have covered their risk. But after paying premium for 12 years, the policyholder is repaid with a nasty surprise of TPA/insurer paying less than half of the hospital bill.
The question that United India should introspect is whether it would have treated corporate mediclaim customer the same way? Corporate mediclaim customers are often rolled a red carpet with additional benefits like maternity and cashless treatment at hospitals where retails customers are kept out. It is because a retail customer does not have any bargaining power. The insurer gives a damn if the policyholder wants to renew the policy or not.
Ms Gopal alleges that the divisional office of United India stated that they are helpless since the TPA refuses to oblige. If true, then it is nothing but a mockery of the system. When did the TPA become so powerful that they can overrule the insurance company which employs them? Hopefully, TPA’s will be cut to size soon since the new health insurance guidelines to be implemented in October 2013 by keeping them away from claims settlement. Insurance companies will be made answerable to the reasons for claims denial/partial settlement. They can no longer hide behind the veil of TPA.