Insurers and 26 TPAs Come Together to Standardise Rates for Common Surgical Procedures

To rationalise the claim settlement process in health insurance, 31 general insurers and 26 Third-Party Administrators (TPAs) have got along to standardise rates for the common surgical procedures including hernia, cataract, kidney transplant, angioplasty, and appendicitis removal. The insurers seem to be sure of pushing through standardised rates with nearly all the hospitals but the hospitals still need to agree to the recommended rates.

The insurers believe that the arbitrary pricing by the hospitals is doing no good to the patients. So, the standardisation will be beneficial for them as they have to bear some out of the pocket expenses even after having a health insurance .

The attempt to fair and uniform pricing is now being controlled by the Insurance Regulatory and Development Authority of India (IRDAI), insurers, and the General Insurance Council. The General Insurance Council is an association of insurers supported by the IRDAI that has formed a committee to make a list of commonly claimed surgeries, which over time will become more comprehensive.

Four general insurers viz, National Insurance, New India Assurance, Oriental Insurance, and United India already have a rate list like this for medical procedures under General Insurance Public Sector Association.

New India Assurance Co’s Chief Executive officer Atul Sahai said, “A majority of hospitals have now agreed to our rack rate because they know we have a wide customer base and it will bring them more footfalls. Of course, some big hospitals initially stayed away. But over the years they have also come into the fold.” He added, “And there are some, who have not agreed to the rates and stayed independent. If our customers decide to go there we can't stop them. We do reimburse”.

The insurance regulator IRDAI has decided to apply the example given above to the private insurers too. On this, the Secretary-general of GI Council says, “Some of the smaller insurers and TPAs may not have the same bargaining capacity or clout as some of the bigger names. So IRDAI felt that it does not make sense for one hospital, for one treatment to charge 7-8 different rates depending on the insurer/TPA — so it has asked us to work on a common rate applicable to all.”

The insurers deemed to have some resistance from the private hospitals. They also believe that they are made to maintain a common rack rate for hospitals because of medical inflation. Insurers say that every year hospitals increase the charges by 10-15%, which the insurers call “soft fraud” as they artificially increase the bills. An official from PSU states, “Ultimately, it is patients who suffer as they end up paying from their pockets despite having insurance.”