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New India Assurance Launches premium Mediclaim product

MUMBAI: Leading state-run general insurer New India Assurance Company today said it will soon launch a new premium Mediclaim product as a part of its efforts to resolve the issue over the cashless health cover, which the state-run players had discontinued early July alleging inflated billing by hospitals.

The move is also aimed at bringing corporate hospitals under its fold, Ramadoss said, adding it is adding three Delhi-based leading corporate hospitals-Gangaram, Max and Medicity to its empanelled list of hospitals for this scheme.

The IRDA Chairman's remarks came a day after the Delhi High Court asked the insurance regulator to sort out the imbroglio over the cashless facility to policyholders in major hospitals across the country. The regulator, however, held the view that it could do nothing in this regard.

"We have long moved away from the administered price regime and it is for the market forces to determine the price of their products," Narayan further said, adding there might be co-payees or higher premium products for these five-star hospitals, which the insurers should decide.

Clarifying on the PSU insurers' recent decision to discontinue cashless policies, Ramadoss said, the company was never against cashless claims but wanted some clarity on the tariffs being charged by most of the hospitals empanelled, which the insurance industry felt were inflated.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:  

Sudhir Sarnobat from Medimanage.com

Though the idea may sound promoting the Free Market regime, there is inherent flaw in the thought process.    

  • In India, when the insurance is still not reached to masses, we are already jumping to provide benefit for Class. This way, we are also promoting the thought of luxury lifestyle in healthcare when thousands of people do not have basic access to healthcare.

 

  • How an ordinary person will know when he will need treatment at “Premium Corporate Hospital” hospital? The basic mistake is in classifying these hospitals as “Big Corporate Hospital”. They are tertiary care hospitals & are competent to handle complex cases. A person cannot predict when s/he will have disease that can be treated only at such hospitals. Then how such person will decide in life whether to buy such product or not.

The insurers should classify the ailments as primary, secondary & tertiary care and then accredit the hospitals on same basis. Then insurer could define the rates at such hospitals & ensure that quality treatment is made available at such hospitals for given price. If the customer still wishes to go to Tertiary care hospital (as per insurers, Big Hospital), s/he can do so but should be paid only the amount that one would spend at secondary or primary care hospital.

Mahavir Chopra:

Mahavir Chopra from Medimanage.com

I agree with Sudhir.

When does a common man like you and me take decision of going to a Corporate Large Hospital. It’s in most cases when the case is complex or an emergency. Like Purandar once said, If someone suffers from a stroke he needs to be taken to a place where an MRI can be carried out. He cannot avoid going to a large hospital just because his policy does not cover this hospital.

The mass population does not look at going to a large hospital for small surgeries like a cataract of a hernia operation, he/she would go to a local nursing home through reference of his/her general physician. What is being done here is penalizing everyone for some people with hideous intentions to misuse the insurance for cashing the best out of the coverage. More scientific caps/limits to common treatments would help in getting control over such claims. In addition to room rent limits which already brings in some amount of control, the associated costs increase due to higher room rent should be brought under capping under the policy wordings.

Purandar Bhavani from Medimanage.com

All kinds of news are currently floating in the media and the industry regarding the Cashless Mediclaim. After PSU Insurance Companies taking a stand to stop Cashless at some high ended hospitals in top cities, as a reverse salvo Hospitals in Mumbai have united against Insurance companies and decided to refuse cashless hospitalization.

There is always a danger of adverse reactions against unilateral decisions. A PPN can be successful only if it is a buyer’s market. Else there has to be a genuine consensus between the carriers and the providers. Here are some facts to get a perspective:

  • Currently India has beds to population ratio of 0.9 : 1000. The recommended WHO beds to population ratio is 3 : 1000 and in India, the recommended ratio is 2 : 1000. This deficit is over 50%. Critical care beds are generally 20% of the total beds. In India apart from the new breed hospitals most centers have up to 10-13% so one can imagine the paucity of critical and life saving beds in India.
  • Insurance penetration is mostly in the urban and semi urban sector and among the middle class and above population.

  • Internationally, in the USA the current government is looking at 85 cents per dollar claim out go. Brazil, an economy similar to ours also has a similar outgo. In comparison, Indian health insurance claims are about 130%.
  • All the beds are not equitable. A general ward in a government hospital is crammed beyond capacity and sometimes over 1 one patient per bed. The nurse to patient ratio is probably 1 nurse for 15 patients. As opposed to this the private hospitals have a better nurse to patient ratio and super-specialty hospitals have close to 3 nurses per patient.
  • In the absence of a concerted governance mechanism, all the players (Carriers, TPAs and Providers) are pulling in their own direction stretching this social measure to break point.

Summary

  • India is clearly not a buyer’s market and the healthcare providers will continue to dictate the price at least for some time.
  • Insurance companies are here to making profits albeit marginal on this portfolio, but certainly losses are not acceptable.
  • With over 80% of the paid claims being for private hospitals, the preference of the customer is very obvious. This is a reality and hence a consensus most desired. One of the methods to do this is the RBRVS. This is the Resource Based Relative Value System. Giving a layman perspective, in this system, the pricing is done based on the resources used for a particular procedure. The insurer could identify a hospital well know for quality and ethics as the bench mark. In tandem with this hospital, the insurer could identify various procedures, the complexities involved, the resources utilized and the costing. This should cover the entire spectrum of hospitalization. Once this is done a tariff card can be brought out. This tariff is a relative value and will change with the type of hospital and the region.
  • A strong governance mechanism should be put in place (this is the responsibility of the health ministry) to ensure that at the end of the day the average citizen is not taken for a ride.

Insurers to buy equipment

MUMBAI: After curtailing the list of hospitals eligible for cashless mediclaim, public sector health insurance companies are going further by proposing to order and pay for medicines and medical equipment themselves. They claim the move would help reduce the cost of medication and equipment by at least 20-30% in cashless claims, as hospitals are overcharging for the same.

The PSUs are planning direct tie-ups with suppliers of medical equipment and medicines. Once a hospital determines the equipment and drugs a patient needs, it would inform the insurer, which would order the items directly from the supplier and get them forwarded to the hospital.

An official in the General Insurance Public Sector Association said, "We are planning to work on the inventory management system so that items like implants and drugs can be provided to patients at a reasonable cost."

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

The insurers need to focus on their core competency of “Risk Understanding” & “Risk Underwriting” and should not get involved in service delivery. The insurer, by virtue of being a consolidated buyer, has every right to ask volume discounts for the services that they are purchasing & hence, they should ask for correct prices to be levied by the hospitals for the procedures undertaken.

The insurers should act more like a cost accountant wherein they should demand the detailed break-up of the charges by the hospital for a particular package. They then can identify the market prices of various consumables used during the procedure & identify the discounts possible thru’ volume buying. However, they should refrain from advising what doctors should “use” as that would be trespassing into another specialist’s territory.

Also, the insurers are neither equipped to handle the logistics requirements for these kind of interventions into the healthcare delivery system nor do they have the clinical expertise to make suggestions. These are the reason we think that this suggestion may not go through eventually.  

Purandar Bhavani:

Purandar Bhavani from Medimanage.com

This is a brilliant idea and it stops at that. The problem is who is going to make it work? How is it going to work?

Health care is a business and all most all service providers are there in it for making profits. Should one tell the other how much money to make? Should the insurers be bothered about how much money the hospital is making or their own bottom line? These are issues that can be debated forever.

The problem is most of the focus has been on how the hospitals are “overcharging” than how health insurance becoming unaffordable will impact the common man. Steps have already been taken by insurers by putting caps and co-pays to control claims but if these measures do not work, the premiums will rise and this cycle will continue and we could soon see a US like situation where you may not have food to eat but “pardner you gotta have your health insurance”.

In my view the insurers should not get into controlling healthcare delivery. Their job is to underwrite the risk at a price they deem fit. Having said this if we do not arrest this malicious cycle now there will come a time when the government will have to provide subsidies to consumers to be able to afford insurance.

If there can be low cost airlines and low cost housing cant there be low cost healthcare? It is possible and there are ways to do it.

Recently, we came across news in an online Publication, businesswire.com

The economic downturn has barely touched India healthcare, says AMI

Healthcare Sector to spend more on IT

KOLKATA, India-- With the growth of the India middle class, there is a shift toward private healthcare services. And the health insurance sector is maturing, offering greater scope and reach. India’s medical tourism is also booming. “In other words, the stage is set for establishing greater operational efficiencies, compliance with government regulations and uptake of latest technologies,” says Chakravarty.

Computing spending drives over half the overall IT spending for this vertical. As hospitals build and upgrade their IT infrastructure, spending on basic computing products will increase. As the healthcare industry matures, there will be a need for enhanced communication amongst doctors for collaboration and information exchange. Not surprisingly, Internet usage has grown over the years, and internet spending makes up approximately 13% of this total market.

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Experts from Medimanage.com give their opinion:

KS Sankar:

K S Sankar from Medimanage.com

Purely from the customer (read, patient) perspective, I see this as a double edged sword. The burden of US$250M will certainly get passed on to the patients; The investment, going by the report, seems to be going primarily into improving efficiencies of internal managerial processes than healthcare delivery per se. Eventually when economies out of these improved computing methodologies, etc. accrue, I see every chance of the advantages of these being retained by the healthcare providers than being passed on to/shared with the patients, if the healthcare industry’s past behavior is anything to go by.

In one sentence, therefore, I see this causing only a spurt in healthcare costs.

Corporates, prepare yourselves to pay even higher health insurance premiums next year. And you individuals may not be an exception to this soothsay.

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

In India, earlier the outlook towards hospital was that of a Philanthropic Initiative. This has now changed to as profitable business. With business at core, the customer has become important (but we still see this industry majorly lacking in customer service & the reason is Demand-Supply imbalance and patient fear/loyalties) & so is the business efficiency. World over, technology is being used for better customer service (thru understanding the behaviour which is captured thru data) which results in better revenue OR for improving efficiencies which helps an institution to lower cost &/or cater to larger groups at same cost.

Hospitals are following the same rule & embracing technology like fish takes to water. This will also increase the capex for all hospitals & thus the healthcare cost would definitely rise initially (more than 80% of healthcare in India is paid out-of-pocket & delivered by Private sector). This would result in more demand for health insurance products like Mediclaim.

 

 

 
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