New MoU to be signed between hospitals and TPAs

Syed Falaknaaz - Mumbai

The discontentment between private hospitals and Third Party Administrators (TPAs) would evaporate soon with a new agreement between them to be inked in the first fortnight of this month; aimed at easing the former’s business risk, pressure on working capital and interest losses due to delayed payment.

The new memorandum of understanding (MoU) between the healthcare providers and Third Party Administrators (TPAs) is the result of consensus on various issues pertaining to timely payment following a series of meetings between the Association of Hospitals (AOH), a body of 39 of the largest Mumbai-based trust hospitals, the Association of Medical Consultants (AMC), the General Insurance Corporation of India, public sector insurance companies represented by New India Assurance Company Ltd and Oriental Insurance Company Ltd, General Insurers Public Sector Association of India (GIPSA) officials, and the TPAs.

The MoU contains various clauses to facilitate the timely payment of hospital bills by the TPA’s. Prime among them is the bank guarantee clause wherein if the TPA refuses to pay the amount, its guarantee will be revoked. On the same lines, a TPA is supposed to pay within 30 days after receiving the bill and documents. In case it delays the payment for more than 30 days, it will have to pay the amount with one per cent interest a month or 12 per cent interest a year.

Besides, the memorandum also lays stress on establishing a desk within states for communication between the providers and the TPAs, as several TPAs are outstation. There are suggestions on formation of a review committee comprising members of insurance companies, TPAs, AMC and AoH which will meet every month to solve disputes between the providers and the TPAs.

Nayan Shah, director, Paramount Healthcare, a nodal TPA for the country’s western zone told Express Healthcare Management, “Earlier, every TPA had a different MoU containing different clauses, but it’s the first time a mutually acceptable standardised MoU for all TPAs have been drafted. The draft is being seen by the insurance companies after which it will signed.”

Earlier last month, the medical fraternity and hospital associations had taken up their cause with the Insurance Regulatory and Development Authority (IRDA) and various non-life insurance companies to facilitate direct payment of medical insurance bills due from insurance companies.

Healthcare providers feel that the convoluted payment route through the TPAs has been creating excessive delays resulting in loss of interest on the amount. Apart from this, they also face an enormous business risk when dealing with TPAs for payment.

Says Dr Bipin Pandit, president, Association of Medical Consultants, “The problem is cashless service. TPAs do not deliver the money on time, resulting in blockage of huge sum of money and as a result, hospitals face problems in functioning. Timely payment will help hospitals ensure operational and financial efficiency.”

Hospital associations had earlier suggested direct reimbursement from insurance companies, a suggestion promptly rejected by the latter. GIPSA general secretary SK Mahapatra says, “Insurance companies don’t have the expertise in reading a prescription. We need TPAs to direct patients to the specialists concerned. Three years ago, who knew about TPAs, previously we had placement claimant and hospitals.”

AMC immediate past president Dr Ketan Parikh, however, says, “There was a time when TPAs were found taking roles not assigned to them. They were at one time found dictating treatment protocols and diverting patients to particular doctors. Now the issue is payment. The proposed MoU is expected to ensure timely payment.”
— falak@expresshealthcaremgmt.com