In the healthcare industry, Third Party Administrator (TPA) companies manage and administer the patient claims process, acting as intermediaries between an insurer and the insured person.

This covers oversight of hospitalization files and the verification of any charged expenses, to determine whether these are payable by the patient, the patient’s employer, or the insurance company.

The history of healthcare TPAs dates back to the late 1960s in the US where, at the time, employers were responsible for the medical and hospital expenses borne by their workers (‘self-insured’). This was a resource-intensive practice and led to the emergence of health insurance companies.

Following the first collapse of the Social Security Fund in the early 90s, these companies began to actively market health insurance and, with the increase in the number of insured persons in the country, this sowed the seeds for implementation of the TPA concept.

Nextcare, an Allianz Partners company, is a market-leading TPA with a presence in the Middle East and Africa, among other countries.

What hinders insurance companies from bill settlement?

We play the role of mediator between the insurance company and the healthcare provider. Following the devastating January 2022 slump of the Lebanese Lira amid the ongoing prospect of economic collapse and the overwhelming insurance policy pricing challenges that we faced, this led to multiple pricing increases across the board. With the dollar value skyrocketing against the local currency, policy values were reduced to just 10 percent of their actual cost. This meant that few options were left apart from creating such a dynamic to avoid further expenses being incurred by the patient and thwarting the possibility of hospitals denying access to patients. Legally, our role is limited to managing claims as stipulated in the terms of the document. Many hospitals did respond to our attempts to address current market challenges, and a specific mechanism was agreed upon that stipulated that a patient may only be charged between 10 and 15 percent of the total cost of their hospital bill.

Following the decision to collect the value of insurance policies exclusively in cash US dollars, to what extent is the insurance market expected to shrink?

Contract renewal rates have indeed shrunk by 15 percent for the major unions in Lebanon. Despite the economic crisis and the lack of liquidity, however, there is  a noticeable rush to purchase health insurance policies. This is primarily due to the inability of a significant percentage of the Lebanese population to  pay hospital bills. It is worth noting that the largest client segment for insurance policies is represented by those with the greatest purchasing power, and this segment of the population has continued to annually renew their policies in spite of the national shortage of access to cash. That said, it is worth noting that policy prices have indeed decreased by 25-30 percent.

How significant is the demand by companies for third-class health insurance policies?

The development of this new category of insurance is important in ensuring access to healthcare coverage by those with limited incomes, as well as to ensure the business continuity of hospitals whose incomes have diminished as a result of the cessation of public sector guarantors such as the Lebanese National Social Security Fund and Employees Cooperatives, amongst others. It has reflected positively for insurance companies, creating added value. On the other hand, the economic conditions in which we live, and the reduced ability of citizens to obtain insurance coverage are expected to lead to a decrease in the size of the insurance market by up to 40 percent.

What are the actuarial pillars that are relied upon in the policy pricing process?

Several factors play into policy pricing besides background studies. Most companies are challenged when it comes to business continuity levels, and their continued ability to serve citizens. Hybrid and creative solutions in the interim are critical, until such time as financial conditions stabilize.

What are the work challenges you face?

Challenges are both financial and technical. The absence of a basic working infrastructure is aggravated by the unprecedented migration of doctors and nurses. This has skyrocketed to unprecedented estimated 3,000 personnel to date. It is hugely important that this crisis is brought to light as it presages the loss of Lebanon’s competency in the health sector. This has strongly motivated us to adopt the cash dollar model in order to preserve what remains of the skilled workforce on the ground.

Is the foreign reinsurance appetite for Lebanon sill the same as it was in the past?

We deal with a significant number of health care reinsurers and, despite the decline in their appetite for the Lebanese market, the correct management of claims and payment of dues in cash dollars are attractive factors. For Nextcare, business opportunity remains positive as we continue to co-operate and collaborate with many foreign reinsurers.

What is new for 2022?

Nextcare recently won a group of unions that include a large number of insured members, in addition to the continued renewal of contracts with many existing partner companies. We were also able to achieve preset goals, growing the number of our insurers to nearly 400,000. We expect the financial year to continue to on a positive, opportunity-driven note, with a number of expansion projects also underway.