Times of India
06 January 2011
By Mayur Shetty
Mumbai, India

American health insurance giants Aetna and United Healthcare are in the race to provide cashless service under health insurance in India. The two companies are among nine that have been shortlisted by government–owned general insurers which control close to 80% of the cashless mediclaim market.

The health giants are among the 24 that have responded to a request for joint venture proposals by the General Insurers Public Sector Association (GIPSA) that represents four of the largest health insurers –New India Assurance, National Insurance, Oriental Insurance and United India Insurance. These state–owned companies plan to float a captive third–party administrator (TPA) for managed healthcare services.

GIPSA is seeking a partner that will provide technical support in networking and negotiating with healthcare providers. The other companies shortlisted include Patni Computers and French Coris International, which provides claims management services. Cambridge Solutions and Lason, two BPO firms which are keen on diversifying into healthcare, are in the list. Among the existing TPAs, emeditek and Medi Assist have been shortlisted.

Speaking to TOI, G Srinivasan, chairman, United India Insurance who also heads GIPSA, said that he expected a decision to be taken on a partner in two months. The four companies have taken an in–principal approval from their boards to set up a TPA firm. He said that the objective of setting up a captive was to bring down losses in health insurance.

"When there are many TPAs we are not able to bargain better rates from healthcare providers. We hope to get lower prices for policyholders and also expand the reach of cashless claims service," said Srinivasan. Last year, GIPSA took a tough stance on managing claims by drawing up a list of maximum charges it would pay under various heads.

TPAs were asked to create a preferred provider network which would include only those hospitals that adhered to the tariff. This stance affected thousands of policyholders as most of the tertiary care hospitals refused. Since then, things have changed. "In Delhi, most of the large hospitals have joined the network, including Batra, Gangaram, Saint Stephens. We are waiting for the corporate chains of Apollo, Max and Fortis," said Pawan Bhalla, MD, Raksha TPA. In Mumbai of the five large tertiary care Hospitals Jaslok is agreed to have joined.

Existing TPAs have been up in arms against GIPSA’s decision to have a captive firm. Their main concern was that such a firm would put them out of business. The association of TPAs had filed a complaint with the Competition Commission of India (CCI) that such a captive firm would create a monopoly.

A decision by the CCI is expected next week. However, the initial antagonism appears to have worn off a bit considering that the health insurance market is growing at 35–40% and most TPAs have their hands full managing the business. Also, there are indications that GIPSA may not hand over its entire health insurance business to the captive company to manage. "We have always said that we will not transfer 100% of health business from day one. We will start with a part of the business," said Srinivasan.