The Insurance Regulatory and Development Authority (IRDA) have adopted the Bombay High Court’s ruling instructing the insurers not to involve the third party administrators (TPAs) in the claim settlement process. The Court, taking up a public interest court case (PIL), accusing TPAs of rejecting or moderately disallowing health insurance claims, directed IRDA to issue a complete guideline to make sure that the insurers meet all the responsibilities to their policyholders during the claim settlement process.
According to the court, since the role of TPAs is limited to help the insurance companies in claim processing apart from handling cashless claims, they cannot interfere in the final settlement. The bench noted that there were instances of TPAs suggesting unreasonably different claim amounts to two patients undergoing treatment in a definite hospital for the same ailment. Also, there are some organizations that set targets for TPAs to decrease the claim amount, forcing the final to either reject or disallows claim to meet the target.
TPA should only focus on offering services to policyholders on the behalf of insuring agency and they cannot reject or disallow claims without valid reasons, the Bench added.
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