Cashless Chaos: Making Sense of it All

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Cashles Chaos: Making sense of it all

News Flash:  “The General Insurance Public Sector Association consisting of four major state-run insurance companies - United India, New India, Oriental Insurance and National Insurance have decided to stop cash-less hospitalization in most hospitals”

Shock and outrage are the two words that describe the reaction of most of the customers and media reports on this piece of news.  We demanded to know how insurance companies could take such a decision one fine day, and what would the customer do. 

Before creation of PPN (Preferred Provider Network  by the Public health insurance companies, media and the industry experts were congratulating the sector for the phenomenal growth. It is this decision which has caused a huge backlash from all around- ustomers, hospitals, media and other insurance experts.

Cashless Chaos: The Blame Game

Let’s understand the issue:

There have been various reports about overcharging by the hospitals and the lack of standard pricing. The TPAs as well as the hospitals have been blamed by everyone for being the perpetrators for the huge losses faced by the insurance industry in their health portfolio. And now, without as much as a warning, the public health insurers have delisted most of the hospitals from their existing network of hospitals, creating PPN.

Insurers’ Stand: Insurance industry faces losses amounting to  thousands of crores each year now. Last year the losses further skyrocketed  and for these losses the Insurance industry is blaming the lack of standardized pricing in hospitals along with the trend of hospitals to overcharge the insured patients.  GIPSA has also criticized the TPAs overall efficiency in keeping the claims down.

Hospitals’ Stand: The corporate hospitals believe that they are being unfairly targeted by the health insurance companies., They argue that the price they charge is proportional to the quality of care they provide. Since the kind of care in a 100 bed hospital with latest technology will be different from that in a 15 bed hospital, cost of healthcare in a large, private hospital is more.

TPA’s Stand: TPAs are being blamed of everything from inefficiency to not controlling fraudulent claims. There is immense amount of pressure on TPAs to bring down the claims and there is talk that the PSUs may opt for a single common TPA. Abhitabh Gupta, CEO, Paramount TPA says “ TPAs cannot be blamed for the losses primarily because, most of the PSU Insurance companies had underwritten health insurance at an extremely low cost sometimes even selling Rs. 1 policies, so it is but natural that they would suffer from losses. Further medical inflation has been increasing at a rate of 10-15 % while the premiums are not increasing at the same rate.” He says TPAs weren’t given the rights to meddle with the treatment and unless there is some change in their role, TPAs can’t do much.

Customer’s stand: Customers are caught in the crossfire between Hospitals and Health insurance companies and they feel cheated. Since Cashless facility is now limited to extremely small number of hospitals; customers have to pay the medical bills from their own pockets and then claim reimbursement.

With Brokers being the neutral catalysts in the health insurance domain, we sought theopinion of Sudhir Sarnobat, Founder of Medimanage Insurance Broking Pvt. Ltd on this issue:

Whether Health insurance companies are justified in delisting the hospitals in the middle of the policy:“The policy periods are of one year and at any point you take a decision, itwill be mid-term for some members and hence, we cannot hold insurer responsible for this. People look at benefit of insurance claim and that’s the core product which insurer is not refusing. If insurer finds issues with non-core benefits, they have the right to tinker with them.

Also, Health Insurance in India is currently in nascent stage and hence, the stable decision making would take a little time. One MUST not forget that this portfolio is loss-making and hence, under pressure to reduce losses, insurers are taking some sudden decisions as they are not too worried about consumer reactions”  

Blame game between insurance companies and hospitals

On Corporate Hospitals taking advantage of the system:I think that these corporate hospitals have taken advantage of the system and not offered negotiated rates when insurance is their single largest customer. It’s actually clash of egos and I think after 3-6 months, both Insurers as well as Hospitals will come to sense and will resolve this in an amicable manner when the industry bodies will act as mediators. I think IRDA may also step in”.

 On Grading of Hospitals: “The grading is a very common concept and it will help manage the cost of treatment well and will help in creation of centers of excellence. Why should a person go to Lilavati (Premium hospital in Mumbai) hospital for Hernia just because he has bought 5 Lakh or 10 Lakh cover. It’s a secondary care procedure and hence, should be managed in a  secondary care hospital.”

On the impact of this move on the customer: This (move) may bring the malpractices and over-billing to check. However, I would maintain that you need to have tertiary care hospitals in network as smaller hospitals do not have the facilities, infrastructure and manpower to manage complex procedures. “

On 10.3% of Service tax for Cashless Facility: “That’s not fair as its an additional burden. It’s discriminatory as it’s meant for Cashless Insurance patients only. But as it’s a decision by Union Government, the consumer forums/bodies should take it up with Government.”

On whether this move to curtail hospitals in the Network list will make Health insurance unattractive:
“It’s a need of the hour and once the insurance penetration and clout increases, hospitals will try to be compliant with Insurers’ requirements. This would bring in cost consciousness along with customer focus. The churning what we are seeing now is good for long term sustained development of the industry and hence, one should not look at this as negative or unattractive”

 

Timeline for Cashless Hospitalization issue:

July 1: GIPSA (General Insurance Public Sector Association) delists most of the Private hospitals in Delhi, Mumbai, Bangalore and Chennai from their PPN (Preferred Provider Network) list. (Of the 800 hospitals in Mumbai only 90 remained)

July 13: Insurance Company leaders and Top Corporate hospitals met to increase the number of hospitals in the list.

  • It was decided that there would different grades of hospitals depending on the quality of health care provided; there would also be a common rate card across the hospitals.
  • It was decided to revive the cashless facility on a case to case basis.

July 15: A Public notice by Public Insurance companies made it clear that Cashless Facility will only be resumed once the hospitals adhered to the conditions of the Insurance companies. 

July 18: There is news that even Private insurance companies are looking at joining the PPN Network.

 

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