What is the first thing that the hospital staff asks you as you try to get your close one admitted? Along with the other questions about name, age, symptoms experienced, there is one question that they do not fail to ask, “Do you have health insurance?” The answer to this question has more implications on your final bill than you can imagine. We try to understand what goes behind if the answer to the question is yes!
The scenario today is that health insurance which is meant to relieve the financial burden incurred as a result of hospitalization actually has become a source of malpractice and mismanagement.
Due to the inefficiency of the Public healthcare system, patients have increasingly started to opt for the private health care institutions their health needs. In the absence of a body controlling their rates, some of the hospitals are found to charge their patients in an ad-hoc manner. There is no rate card that will serve as a bench mark for charging customers. Thus the hospitals have the liberty to charge different rates to different patients gauging their paying power.
Malpractice by Hospitals, Doctors
The gross inefficiency does not end here, some hospitals hike up their fees when it is clear that a patient is covered under health insurance.
Sometimes the doctors hike up their fees as much by 3 times when he is charging an insured patient as the medical charges do not come under the income tax purview.
Sudhir Sarnobat, Co-founder and Director of Medimanage Insurance Broking Ltd gives insights into the way hospitals go about overcharging an insured patient,
No Choice of Room: All hospitals have separate standards for rooms viz of rooms like common, twin-sharing, deluxe and super deluxe. A patient should get to choose his /her room based on their budget and acceptability of comfort required during hospitalization.
Many of the hospitals deny the common and twin sharing class to members who have insurance under the pretext that it’s their policy. Even if the patient is not availing cashless facility, the doctors ask the patients whether they have insurance (and all patients without understanding the implication, nod in affirmative) and then direct them to a room category that is more expensive.
Different rate cards: Some small and medium hospitals maintain different tariffs which are mainly classified in three categories viz. Self-Paying, Insurance (Reimbursement) and Insurance (Cashless). The tariff is lowest for the self-paying patient and is called as base tariff. It’s loaded by 10-15% for Reimbursement Patients and then loaded by another 10-15% for cashless patients. Some big hospitals do have similar practices but they do it in a subtle manner.
Doctor’s Consultation charges: Small hospitals have visiting surgeons whose fees are mostly never published in standard tariff. Some of these hospitals inflate the doctor’s fees based on the patient’s status i.e. charge higher fees for those patients with health insurance. There are two management modalities followed in India, one is Full Time Consultant model where the doctors who are attached at one hospital cannot work for any other hospital. The doctor’s fees are generally fixed in such models. Second model is visiting consultants who are attached to multiple hospitals and admit their patients based on patient’s capacity to pay. Big hospitals have visiting surgeons who do not have fixed fees and hence doctors themselves decide the fees to charge.
Unnecessary Hospitalization: Some hospitals also push an insured patient for admission in the hospital (as only then insurance pays for treatment) where the same may not be needed. This is another form of exploitation of insured patients.
Unnecessary medical tests: Some hospitals go for excessive investigations when the patient is insured. They also make patient get involved in investigation chasing (due to structure of Human body, some or other parameters are going to be up or down based on various conditions). This is normally acceptable so long there is no major complaint from the patient. But in cases where doctors find insured patient’s parameters little excessive, they ask for further investigation and go for treating these parameters through medications and interventions.
With all the kind of malpractices rampant with the hospital bills, it is the insurance companies who are facing enormous losses due to both high claims ratio and fraudulent claims.
What do the TPAs say?
Third Party Administrators are given the responsibility of accepting the claims and settling the valid ones by the Insurance Companies hence we asked, Mr. Madhavan, COO of Mediassist one of the leading TPAs about this problem. Mr. Madhavan said “there is some discrepancy in the charges between the bill of insured and uninsured but only in some hospitals. Initially there was a lot of discrepancy in the charges but after the intervention of the TPAs we find that mostly only Tier 2 Hospitals indulge in it than the Tier 1 companies.” He believes that once the industry observed the trend and presented the hospitals with the data about the inconsistency, the hospitals agreed to follow a tariff and TPA with their consolidated data have a control over the costs.
On where does the discrepancy creep in, Mr. Madhavan believes that it is more in cashless claims where it is a kind of emergency and there is very little time frame in passing the claims, in reimbursement claims the patient pays the bills from his pocket so he negotiates with the hospital and the additional time frame gives a good chance for the TPA to review the case.
Effect of this trend
This trend of overcharging patients with health insurance coverage will affect the customer both in the long term and short term. In the short term, if he is charged for a disease for example for cataract for about Rs. 50,000 then he is left only with Rs.50, 000 cover if he has taken a 1 lakh cover. Thus an overcharged bill has a negative impact on your cover amount especially if it is a family floater or if the sum assured is less.
Sudhir Sarnobat explains the long term effect of extorting money from the insurance cases, he says that the higher cost of treatments of insured patient means that the claims are higher; this he feels will either force the insurance company to limit the benefits or increase the premium. Both of these conditions will affect the penetration or viability of health insurance to people. He says, “The important element of success of insurance is to have the maximum population insured but that gets defeated when insurance becomes unattractive to buy. That further leads to only needy buying the insurance because they only see the benefit in buying costly and restrictive cover, who in turn go for claim which further increases claims.”
What are the TPAs/Insurance companies doing to tackle this problem?
Mr. Madhavan says “We are constantly in talks with the hospitals which are in our network; they share the tariff card with us so we know about their standard charges.” About the Doctor’s consultation fees, he says, “when we make package deals with the hospitals in our network, we not only negotiate the tariff but also fix the rate of consultation charges.”
About the further measures to be taken, he says, “there is lot that can be done to tackle this problem, TPA can convince more hospitals especially the commercial hospitals to give discounts and other measures to reduce the prices.”
On the other hand, Sudhir Sarnobat feels that the problem can be tackled through the education of the insured so that they know what are the limits to the expense for a particular disease for example, if the patient informs the hospitals that the limit on the cataract treatment in his policy is Rs. 20,000, the hospital either has to charge reasonably or the patient shifts to other hospital. The other solution that he provides is that there should be a regulatory board for hospitals like IRDA in insurance that will control the hospitals and bring some transparency in its operations.
With no near end of this problem of overcharging insured patients, the Insurance companies and the TPAs have to do their best to reduce the claims, whatever they do, it is the insured who faces the brunt.