Cashless Settlement under Mediclaim Insurance

 What is TPA and PPN ?

Third Party Administrator (TPA): It is an intermediary company between an insured and the insurer or the insurance company. Approved by the Insurance Regulatory and Development Authority of India (IRDAI),

It helps the insured in getting cashless claims for hospitalisation under mediclaim policy.

Preferred Provider Network (PPN): For some hospitals, the health care charges for health insurance policyholders are quite higher than the reasonable rate of treatment. Keeping this in mind, insurance companies have a Preferred Provider Network (PPN) of hospitals which agree to work at rationalised rates for specific procedures.

What is the PPN rate in health insurance?

Health insurance is a technical concept wherein there are a lot of complicated jargons used in the policy. That is why a customer is to be guided on the meaning and implication of the technical concepts of their health insurance plan. Guidance is sought two times – one when a customer buys the policy and two when there is a claim. In fact, at the time of claim, a client wants help to understand the claim process.

Health claims, as you must know, are settled in two ways–

Cashless settlement

Reimbursement

Cashless settlements are the easiest as the hospital bills are directly taken care of by the insurance company. As such, a client does not have to bear the financial burden of medical expenses. In fact, if client buys a health insurance plan offered by public sector health insurers, he gets the benefit of PPN rates. Do you know what the benefit is ? Let’s see-

What are the PPN and PPN rates?

PPN in health insurance stands for Preferred Provider Network. It is a network of hospitals which are tied up with the health insurance company to provide cashless health claim settlements to policyholders.

PPN rates are specialized rates listed by PPNs for customers of public sector health insurance companies with which the insurance company has a tie-up. PPN rates are specified for a list of specified illnesses only.

When does the PPN rate apply?

PPN rates would be applicable only if –

1. The health plan is bought from a Government health insurance company. There are four such companies which are –

The New India Assurance Company Limited

Oriental Insurance Company Limited

United India Insurance Company Limited

National Insurance Company Limited

2. The illness is a listed illness as prescribed by the insurance companies

3. Medical treatments are taken at the networked hospital of the insurance companies (PPN)

PPN rate v/s Cash rate v/s non-PPN rate

Now you know what PPN rates are. But do you know how they are different from other rates applicable in health insurance claim settlements?

Every hospital, which has a tie-up with an insurance company, maintains three different rates for the same treatment. They are–

PPN rates applicable for claim settlements under plans offered by public sector health insurers

Cash rates applicable if there is no health insurance claim and the treatment costs are payable by the patient in cash

Non-PPN rates applicable for claim settlements under plans offered by private health insurance companies which are tied-up with the hospital

Let’s understand with an example–

Hospital ABC has three rates for angioplasty–

PPN Hospitalization rate	Cash rate	Non-PPN Hospitalization rate
INR 1.5 lakhs	INR 2 lakhs	INR 2 lakhs or more

Fig: Example Table

For the example mentioned above, if a customer has a policy issued by any of the four Government health insurance companies, the claim for angioplasty would be at INR 1.5 lakhs. In the absence of a health plan, or in case of reimbursement claims, the applicable rate would be INR 2 lakhs. If a customer has a health plan offered by a private health insurance company, the claim could be more than INR 2 lakhs.

This has also been stated in a MoneyLife article by M.Ramadoss, Chairman, New India Assurance Company that “insurer-funded healthcare cost is more than individual funded cost”. The PPN rates have come into play to handle this situation.

The bottom line

If a clients buy a health insurance plan from public sector health insurance companies, educate them about the concept of PPN rates. This would help them avail cashless claim settlements at the networked hospitals and also result in reduced claims. Since the claims would be reduced, the amount of remaining sum insured would become higher which can be used by your customers for future claims.

 

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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