Healthcare providers in Mumbai formed a core committee on Friday to deal with the controversial preferred provider network (PPN) programme unilaterally introduced by public sector general insurance companies under the cashless mediclaim facility.
“The rate for a procedure of cataract is about Rs24,000 under the PPN,” said Dr Sujata Rao, president of the AMC. Thus the maximum reimbursement that a hospital can claim for a cataract procedure would be Rs24,000. “This is not acceptable as only the lens used in the procedure costs that much.”
Because of this discrepancy, 75 of the 120 hospitals withdrew from PPN. “However, the insurance companies are not reporting this,” added Rao. According to Dr Nayan Shah of Paramount Health Services, about 25-30% of a hospital’s occupancy consisted of insurance patients, and hence the insurance companies would soon have to design an array of programmes to address their concerns.
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Experts from Medimanage.com give their opinion:
The hospitals have come to defend their rights however; they also need to bring in discipline among their members who exploit the insurance system. Its fact that hospitals have been charging differential tariff & exploiting the facility meant for common good. While fighting for rights, they also need to build a code of conduct & suggest reprimands for incorrect behaviour. Else, it will become a typical trade unionist approach where power of group is used to extract benefits where ultimately the consumers bear the brunt.
Hospitals, proactively, should build & forward the categorisation criterion (they know healthcare the best & can comment on classification themselves) & ask TPAs to follow that. This kind of self-regulation will help the healthcare industry which is currently not regulated by anybody.
The association of third party administrators (TPA) has decided to move the Competition Commission of India (CCI) against the four public sector non-life insurance companies and their association, called General Insurers Public Sector Association of India (Gipsa), for forming a cartel and abusing their dominant market position in planning their own TPA outfit. “The TPA floated by Gipsa companies will result in cartelization, market dominance and monopolisation,” the TPA association alleged in its letter to the insurance regulator. The association said the move would lead to stopping of fresh investments and huge lay-offs by existing TPAs. “The entire business model introduced by the insurance regulator will get destroyed. This is anti-consumer and anti-competition,” Mahapatra said. When contacted, M Ramadoss, chairman and managing director of New India Assurance, said, “Let us first get the notice. We will then decide what we should do? The TPAs have all the right to do approach the CCI.” “The move will result in closure of all existing TPA companies. This will give rise to an arbitrary increase of premium, refusal of policies to the elderly, restrictions on cashless network, favouritism under the guise of preferred network of hospitals and corruption,” the TPAs alleged in their letter to Irda. “How can an organisation owned by the insurers be a TPA to service their clients?” the association asked.
All four Public Sector Insurance companies coming together & deciding for a single TPA could be interpreted as Cartelisation as these four govt. companies are separate legal entities.
However, the TPAs cannot force an insurance company to use their services & insurance companies have been selecting TPAs for their various offices based on capability, fees charged, claims processing quality & technology implementation. Instead of going for an open tender, all four companies can have a tacit understanding among them & select, may be just one TPA, for servicing all their claims. After-all, we have examples of Pvt. Insurers going in for their own TPAs & hence, you cannot stop Insurers from setting up their own TPA.
So it’s not what is being done that is questioned? It’s about who is doing it & the manner in which this is being done that makes it questionable.
On Monday, J Harinarayan, Chairman, IRDA said “The mechanisms are being put in place to improve efficiency in health insurance and administration. Expert committees of industry bodies like CII and FICCI have recommended measures including uniform claim forms, re-authorization. We are also looking into aspects related to billing,” he said. As of July 1 328 hospitals were in the network for cashless facility across four cities namely Mumbai, Delhi, Chennai and Bengaluru. However, they withdrew from the same citing steep charges.
“They (hospitals) have renegotiated rates and as per the last count, over 390 have signed up with the partnership network,” he said.
The initiatives like Uniform Claims Form, Uniform Pre-authorisation form, though look very simple, will add greatly to simplicity of administration.
Apart from the major reforms like cashless hospitalisation, premium rationalisation, the administrative reforms like this would hugely benefit the customers.
Insurance regulator IRDA today said it will follow the Delhi High Courts direction to take steps on resuming cashless facility to policyholders provided by four PSU general insurers.
Now that HC has given direction, we will follow that, IRDA Chairman J. Hari Narayan told reporters on the sidelines of a FICCI event here.
On Tuesday, the Delhi High Court had asked IRDA to make some arrangement to provide cashless facilities to policyholders, amid the suspension of cashless treatment facility at several big hospitals by four public sector general insurers - New India Assurance, United India Insurance, National Insurance and Oriental Insurance.
The Insurance Regulatory and Development Authority (IRDA) should, as a regulator of the insurance industry, intervene and ensure that such changes do not affect existing policyholders ...,? High Court Justice S. Muralidhar had ruled.
With judiciary getting involved in the matter, the consumers would benefit for the short term but the health insurance industry needs long-awaited reforms. If these reforms are not undertaken now, the insurers will simply charge more premium to recover the losses without bringing in the efficiency drives.
With an inefficient system, nobody benefits in long-term & we continue to hold our view that the changes are MUST.
The idea of differentiated products is good but those should be based on sound underwriting principles with innovation in risk management & a higher premium product for big hospital is not what we need now. The thought process for such products emanates from Insurer’s outlook of If-you-want-big-hospital-you-pay-big-money.
When faced with a medical emergency, you pay cash or use your credit card, instead of asking why the hospital is not accepting your cashless medical insurance. This is exactly what harassed consumers found out when health insurance companies recently stopped cashless treatment making customers pay first and then get reimbursed.
Health insurers blamed private hospitals of inflating bills that were paid by the insurance companies. On July 1, four public sector insurers New India Assurance, Oriental Insurance, United India Insurance and National Insurance stopped cashless insurance services in some big hospitals in big cities.
Instead of cashless, these insurers are planning to introduce a new variant - Premium Mediclaim. You will be charged a higher premium than a regular health insurance policy to avail cashless facility at major hospitals.
* Evaluate an additional plan- Can use a combination of plans
* Evaluate switching the plan (not a preferred option)
* Create a corpus for health emergencies- Replenish the corpus with the refund from the insurer
* Credit cards can save in urgent times - Own one card with decent limit
As we have repeated maintained that the differential product with high premium for claiming expenses in big hospitals is akin to legitimizing their higher charges for standard procedures. We will continue to maintain our stand that the efficient network needs to have primary, secondary and tertiary care hospitals in right proportion of strength. Then only, the PPN would be a workable reality. Buying another policy with higher premium would not be a feasible idea in long term. We must look at rationalizing the consumption pattern of healthcare seekers thru health insurance. Creation of personal Health Fund (starting at early age) by investing in mutual funds with tax benefits (lock-in of 3 Years) would be a good intermediate strategy to supplement your existing health insurance till the confusion over health insurance benefits is resolved.
The association of private hospitals have sought state government’s intervention to settle the ongoing dispute with insurance companies over cashless mediclaim policy.
The association, which includes hospitals like Jalok, Breach Candy, Hinduja and Hurkisondas, has said that the demands of uniform rates for medical procedures that had been put forth by insurance firms were not plausible. “Rates differ according to available equipment and location of hospitals. Even within hospitals, rates vary according to the class of service patients opt for,” said CEO of Jaslok Hospital Colonel Manesh Masand. He added that costs also vary for different procedures for the same ailment. “Cancer can be treated by focused MRI and through surgery, at exponentially different costs. The choice of treatment is finally up to the patient,” said Colonel Masand.
“Government intervention is required here. Petrol is being made duty free, whereas hospitals have to pay the highest custom duties for all imported equipment. It is important to understand that our costs are determined by all these factors,” said Breach Candy Hospital CEO Major General Vijay Krishna.
The hospital authorities also rubbished allegations of overcharging. “The billing system in private hospitals is fixed and freely available for all patients to see in advance. Where is the room for exceeding the set charges for particular procedures?” said Pramod Lele, CEO of Hinduja Hospital.
As debated earlier, it’s important to have the tertiary care hospitals in the network too. The ratio should be 10% Tertiary care Hospitals, 30% Secondary care Hospitals & 60% Primary Care hospitals. This would also mirror the percentage of claims for ailments that are similar.
It’s true that the cost of equipment, land & infrastructure are high for big hospitals & the same will reflect in the overall billing pattern of the hospitals. The health insurance companies must make up their mind on what is that they wish to execute as reforms & then only this deadlock can be resolved in amicable manner. Till such time, allegations & counter-allegation would continue.
The entry of state government may not help as government has not been efficient in healthcare delivery before & the issues involved here are beyond the govt. official’s domain expertise.
NEW DELHI: The standoff between insurance companies and private hospitals over cashless treatment continues, defying hopes of millions of Mediclaim policy holders for an early resolution. The four major public sector health insurance companies, which control 80% of the business, have now set a 10-day deadline for four major chains of hospitals — Apollo, Fortis, Max and Medanta — to come up with their packages for common treatments to avail cashless services. The tough-talking by PSU insurers — National Insurance Company, New India Assurance, Oriental Insurance and United India Insurance Company — came after month-long negotiations failed to bring these hospitals on board for standardized treatment packages. These hospital chains, along with 100-odd other hospitals in Delhi NCR and a similar number in Mumbai, Bangalore and Chennai, had been taken off the network of hospitals for cashless services on July 1. The withdrawal of cashless service was a delayed action against hospitals that were allegedly overcharging for treatment. The IRDA chief blasted 5-star hospitals for inflating bills and justifying their costs in the garb of quality service. Harinarayan said if a treatment costs $50,000 in US and the same comes for $5,000 in India, the latter cannot be termed inferior simply by the difference in their costs. His remarks came in response to Shivendra Mohan Singh of Fortis chain who said insurers could not make a common package and club 50 hospitals all providing different quality of services.
Though the efforts being made are progressing well, the insurers should apply the rule for all insured members, without discriminating them on basis of Individual or corporate member. The packages & low rates applied for are basically outcome of volume of business given by the insurers to the TPAs. The amount of noise that is made by the hospitals about this decision by the insurers & TPAs confirms that the big hospitals need the insurance business badly & that’s what will bring them to the negotiation table & make them refrain from activities which are unethical.
Insurance companies & TPAs have partly achieved their objective & they should now continue the focus & get the packages at discounted rates approved from the hospitals. However, in long term, they need to restrict the cashless to few hospitals which would result into more volumes at those hospital which can result into reduction into the rates further.
The Competition Commission of India (CCI) may take up the cause for consumers who have been hit hard due to the new arrangement entered into by leading insurance companies. In the new arrangement, the insurance companies will stop making direct payments to hospitals on behalf of their policy holders a pre-requisite as per the cashless mediclaim policy they offer.
According to CCI sources, though the commission is yet to take a final call, however, it may soon start a thorough review of the matter to see if there have been any breach of the Competition Act, 2002.
Earlier this month, leading health insurance companies that provide mediclaim policies withdrew the cashless arrangement with all major hospitals, including private hospitals like Fortis, Apollo and Max in Delhi and NCR, thereby forcing the consumers to shell out the entire money on the spot.
Under the Competition Act, CCI is empowered to take up suo moto cases and if enough evidence is found can even order an investigation. MM Sharma, head, competition law practice at Vaish Associates, a corporate law firm, said on two fronts there appears to had been a breach of sections 3 and 4 of the Competition Act.
This is an interesting example where combined withdrawal of a particular service by state-owned insurers is seen as monopoly mal-practice. However, cashless is an service which is offered as extension of pay-out of claim. The addition & deletion of hospitals is continuous process & if insurers find that some hospitals are indulging into unfair trade practices which are harming their interest, they are free to take action against them. Not paying a claim at such hospital can be breach of policy condition but non-issuance of cashless cannot be termed as same.
MUMBAI: In a major relief to health insurance policy-holders, public sector insurance companies have announced that cashless treatment will be extended to all hospitals in emergency and trauma cases. During a healthcare meeting with the Confederation of Indian Industries (CII) in New Delhi on Friday, New India Assurance Company chairman M Ramadoss said a patient who requires emergency and trauma services will be attended to through the cashless scheme in all TPA-empanelled hospitals. An official from the PSU said that emergency and trauma cases will have to be certified by third party administrators (TPAs) in order to avail of the cashless benefits. There are a total of 24 TPAs which are linked with the Gipsa (General Insurance Public Association), a body comprising the four public sector general insurance companies — New India Assurance Company, National Insurance Company, Oriental Insurance Company and United India Insurance Company. The official said that planned or elective surgeries such as bypass, knee replacement and cataract among others, do not fall under the category of emergency or trauma cases.
This is a welcome change & as we had always maintained, a dialogue between insurers & the hospitals only can bring this imbroglio to successful resolution.
As mush the hospitals need the Insurers to maintain their revenues, the insurers need the Tertiary care hospitals to ensure that the high-cost treatments are offered to their customers on cashless basis. The changes in the health insurance market are just beginning & the industry will have lots of up-downs In near future and will continue to remain in news.
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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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.
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.