Claims Management, Deductions and Third Party Administrators
What the domain tests
The claims journey, the arithmetic of deduction, and the division of duties between insurer, TPA and hospital. Numeric deduction questions are common here.
Core rules
- Intimation must be within the period stated in the policy. Cashless requests go to the insurer or its TPA, which issues pre-authorisation to the network hospital and final authorisation at discharge. Reimbursement claims are settled on submission of discharge summary, bills, investigation reports and prescriptions.
- Standard deductions: non-payable consumables and administrative charges, room-rent or ICU sub-limit excess applied proportionately, disease sub-limits, co-payment, deductible, and disallowances for waiting periods or exclusions.
- Cashless and reimbursement are routes to the same indemnity; they are not separate covers.
- A TPA is licensed by IRDAI and handles pre-authorisation, hospital network contracts, card issue and claim scrutiny. It recommends; the insurer, which carries the risk, takes the repudiation decision and owns the grievance response.
- Timelines are regulated: cashless authorisation speed and settlement deadlines are prescribed, and delay beyond them attracts interest. Unresolved grievances go first to the insurer's Grievance Redressal Officer, then to the Insurance Ombudsman.
Worked example
Sum insured ₹8,00,000, room-rent cap 1% of sum insured per day = ₹8,000. The hospital charges ₹10,000 per day for four days. The admissible bill before the room-rent adjustment is ₹1,50,000. The excess is ₹2,000 of ₹10,000 per day, i.e. 20%, so 20% is deducted proportionately from the admissible hospitalisation charge: 20% × ₹1,50,000 = ₹30,000, leaving ₹1,20,000. A 10% co-payment is then applied: ₹12,000. The insurer pays ₹1,08,000 and the insured bears ₹12,000 plus non-payables.
Traps that cost marks
- Applying co-payment to the gross bill instead of the admissible amount.
- Deducting the room-rent excess as a flat rupee amount rather than proportionately.
- Assuming the TPA can reject a claim; it cannot.