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Cashless mediclaim policy Pvt hospitals seek government help

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.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

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.

10-day time limit for hospital

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.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

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.

CCI to investigate cashless mediclaim issue

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.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

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.

Health Insurance Companies to extend cashless facility in emergency and trauma cases

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.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

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.

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.

50 % extra premium to get treatment at high-end hospitals

You might have to shell out 50 per cent extra premium to get treatment at the country’s high-end hospitals.

Following the uproar over withdrawing cashless health insurance claims from high-end hospitals, state-owned non-life insurers are working on a product with differential rating that will bare the expenses of the top hospitals.

The four insurers – New India Assurance, United India Insurance, National India Insurance and Oriental Insurance – are designing a product where a person can pay around 50 per cent higher premium to avail the luxury. The health insurance companies censored cashless facility at these hospitals from July 1 for erratic charges levied by them.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is improper way to deal with this issue. By creating a product for treatment at these hospitals at 50% extra premium, the insurers are contradicting their earlier stand that the hospitals are overcharging. It looks like the insurers were under-pricing.

Also if the insurers have stopped the cashless by making statements like the hospitals are inflating bills. Is this not a way to legitimise the so called wrong practices of big hospital?

The question remains about the current policy holders. If any member has a complex disease which can be treated at one of these top hospitals only, how can he get the cashless for the same?

Any efficient network of hospitals will need all kinds of hospitals i.e. Primary, Secondary & Tertiary care hospitals. By removing a particular type of hospitals, the insurers are denying the cashless facility to a particular class of patients which is nothing but discrimination.

Insurers may expand the list of hospitals for cashless facility.

NEW DELHI: Locked in a battle with big healthcare firms over censoring cashless health insurance claims, state-run insurers on Thursday asserted that the facility would be extended only to those hospitals that agree to their rates for medical expenses.

"The purpose of working out such package rates and stabilising the hospitalisation costs, will benefit the insured in many ways," the four state-run general insurance companies -- National Insurance Co, New India Assurance Co, Oriental Insurance Co and United India Insurance Co -- said in a joint public notice.

The selected list of hospitals in Delhi and National Capital Region, Mumbai, Chennai and Bangalore, does not include big chains like Fortis and Max Healthcare and was prepared on the basis of those accepting rate packages prepared by the insurance firms for medical procedures and hospitalisation costs.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This was the resolve & will that was expected from all PSU insurers. Now that all the PSU insurers have come together & demanding the rates negotiations, the cost of treatment for Primary & Secondary treatment would reduce. However, I am not sure about how the Tertiary care is going to be managed without taking in consideration the requirements of top hospitals. They are the only ones which offer the super-speciality treatment for complex medical problems. The hospitals need to look at Cost Plus model where they must find out the cost of procedure & then decide the price. Without having rational thought process of cost & pricing, all debate would be an exercise of demands & rejection of demands.

Mahavir Chopra:

Mahavir Chopra from Medimanage.com

Though, we have always suggested Insurers lobbying against Hospitals for their inconsistent billing menace, this sudden delisting (without any prior meetings, correspondence or warnings to Customers as well as Hospitals) was clearly uncalled for.

Customers are provided the network hospital list at the start of the policy, which they rely on for the entire policy period.Customers have not been prior informed regarding the delisting of hospitals.

Moreover, Government Insurers have not foreseen how this can adversely impact the confidence of future Mediclaim customers. For instance, How would Insurance Companies ensure their future wary customers, that they won’t suddenly delist hospitals again? How do we brokers assure this?

Quality Customers of Health Insurance we have interacted with, do look at the hospital list, to check if it includes hospitals in their locality or the ones they would use in case of an unfortunate need of hospitalization.

I personally feel, Government Insurers should toy with the idea of including the PPN List as a part of the terms and conditions of the policy and promise no ad hoc delisting of hospitals, without prior notice. This will bring in much needed customer confidence.

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

Common TPA to process the health insurance claims

Chennai, July 11 (IANS) The four government-owned non-life insurers -- National Insurance, New India Assurance, Oriental Insurance and United India Insurance-- will soon be taking forward their idea of floating a common third party administrator (TPA) to process the health insurance claims.

'We will be issuing a Request for Proposal (RFP) shortly. Our requirements will be specified in the RFP so that interested parties can submit their proposals,' New India Assurance Chairman and Managing Director M. Ramadoss told IANS over phone from Mumbai.

Consulting firm KPMG had given a report on the feasibility of setting up a common TPA by the four companies a year ago.

The four insurers, which together do around Rs.6,000 crore of health insurance business selling several lakhs of polices, are not happy with the manner in which claims are being processed and settled by the existing  TPAs.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

Common claims settling agency will be a death knell for the Third Party Administrators which are approved & regulated by Insurance Regulatory & Development Authority.

Already the Private Insurers like ICICI Lombard, Bajaj Allianz, Star Health & Max Bupa have gone for their own TPAs. Hence the business available for 27 independent TPAs would be negligible & that would be the end of TPAs.

As the TPA is an independent agency, the claims settlement happens in impartial manner. However, with an insurer based TPA, we would see rise in mal-practices & consumer rights violation as all disputed case may not be resolved thru’ proper escalation mechanism. The consumers may have to take those cases up in Consumer Court which may not be a path that all aggrieved member would follow for lack of time & will. This may result in dissatisfaction.

It would be interesting to recall that the insurers used to manage the claims themselves till year 2002 (before TPAs stepped in). As the efficiency levels of the PSU insurers are still very low, it would not be wrong to assume that this TPA will work with similar efficiency levels. Also, with multiple TPAs, there is competition & the TPAs are forced to improve their performance (at least at the corporate sector which amounts to 50% premium). This lack of competitive spirit may further decline the service levels of the insurance claims settlement process.  

Purandar Bhavani:

Purandar Bhavani from Medimanage.com

The PSU insurer's concern about spiraling claims is justified but the means adopted does not seem to make complete sense.
Any decision has to take into consideration the following:
1) Continued availability of affordable health insurance.
2) Ensuring convenient utilization.
3) Benchmarking and standardizing healthcare delivery.
4) Providing practical, achievable and common guidelines to TPAs to achieve the outcome desired by the insurers.

5) Ensuring that the TPAs have the desired bandwidth to offer the solutions.
All of the above are interdependent in varying degrees.

For health insurance to continue to be affordable, the insurers have to recognize the fact that unless they is some mechanism for deciding on and standardizing the healthcare delivery costs, the premiums would only continue to rise. The premiums have shot up over 50% in some age bands in the recent correction. For the mechanism to be in place the onus squarely lies on the insurers and the government. There are such structures in place worldwide and it should not be too difficult for us to implement these. Needless to say, such an activity has to involve the healthcare providers and the TPAs.

Once a rationale is decided, it is then the duty of the TPAs to implement the program and manage it efficiently. The TPAs had been instituted, among other things, for the purpose of ensuring convenient utilization of the health insurance. It is erroneous to say that the TPAs are inefficient. One has to remember that they are always in the line of fire and are still manage the show reasonable well. It is because of the TPAs that there is now a semblance of data available which can be the basis of any analysis. Yes, there should be a re-evaluation of the TPAs and those having robust processes and efficient delivery should be shortlisted by the insurers. This will automatically weed out the inefficient ones. TPAs alone are not to be blamed for high loss ratios. The insurers are to share the blame equally. Currently the 7,000 Cr health insurance premium is divided 60:40 in favour of the corporate i.e. the group policies. Almost all of these policies operate more as a finance mechanism than an insurance cover. All covers from Day 1.

True, there could be rouge TPAs, but that is what an evaluation is expected to find out. A common claims settling agency is also not the right approach.

1) It is contrary to the concept of instituting TPAs.
2) We are not functioning in a unitary environment. There has to be competition for progress and growth.
3) There is danger of monopoly.
4) The apparatus could become a monolith, another government.
5) Customer satisfaction will be compromised.
6) Fresh ideas will be hard to come by.

A better approach would be to segregate the business into about 6-8 zones and have 1 TPA for each zone. By this, we can

1) Push TPAs to capitalize on local strengths, create strong processes and improve on efficiencies.
2) Achieve greater customer satisfaction.
3) Create an environment of fair play and competition.
4) Create a strong basis for comparison between TPAs.
5) Have new thoughts and ideas coming to the fore which can be better implemented.
6) Eliminate monopoly.

I am hopeful that saner senses will prevail while deciding on a solution and the competent authorities will place the consumer’s interest above all. The cycle of high hospital bills and therefore high claim ratios, therefore higher premiums and restrictions are only making life for the common man that much more difficult. My father’s premium has gone up by 30%. Delisting hospitals and TPAs seems rather a kneejerk reaction and obviously not the solution for stemming high claims.  

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

Health insurance policyholders may face problems as I-T dept seals TPA accounts

Several health insurance policyholders may face problems in getting cashless hospitalisation as the income tax department has sealed accounts of several third party intermediaries (TPAs) for non-payment of tax deducted at source (TDS).

Industry officials say TPAs whose accounts have been sealed are Mumbai headquartered Pa­ramount Health Services, United Healthcare Services, Dedic­ated Health Care Ser­vices and Health India TPA.

Industry sources said sealing of accounts means that the TPA cannot render its services till the issue is settled. TPAs are inte­rm­ediar­ies between the ins­ured, ho­spital and the insu­rance fi­rm and facilitate hospitali­sation of the insu­red by pay­ing the hospital from fu­nds allocated to them by insurance firms.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is purely the area of failure to fulfil the obligation of deducting the TDS from the payments made to Hospital.

Though the insurance claims pay-outs to individuals are not treated as income, the pay-outs to hospital are treated as income by the hospital & the TDS should have been applied. This was not done by the TPAs & hence, the Income Tax department has taken this action.

As the TPAs in South have been able to manage a Stay on the order, there is a precedent & the issue should get resolved without any major disruptions. Also as IRDA (which regulates TPAs) & Income Tax Dept. both report to same ministry, an amicable solution can be identified to ensure that policy holder is not hassled unnecessarily.

Recently, we came across news in an online Publication, business-standard.com

Withdrawal of cashless service for Mediclaim.

The decision by public sector health insurance companies to deny cashless services to their clients has been criticised by Fortis, a leading corporate healthcare chain.

Chains such as Fortis generate a significant portion of their revenue through health insurance policy reimbursements.

The Federation of Indian Chambers of Commerce and Industry was also critical. Pointing out that private insurance firms are managing to offer cashless services to policy holders, it wanted public sector firms to review their decision to suddenly withdraw this facility. “Withdrawal of an important component of a financial contract without sufficient notice is not fair and just,” it said. National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd and United India Insurance Co Ltd have said many leading hospitals are charging exorbitantly for treatments offered to insurance-protected patients. The hospitals say the problem is not with their fare structure, but with the policy packages offered by the insurance firms.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

Though there are cases of inflated billing from hospitals, that’s not the sole reason for higher claims. An Hernia is a secondary care surgery but often, insurance patients get this done in Tertiary care hospital because there is no norm that restricts the person from not visiting such hospitals. The normal cost of 30-35 K goes up to 60-70K because the overheads of such hospitals are higher. This generally inflates the cost but cannot be termed as wrong-doing by the hospital.

The higher claims ratio has two components: One is Premium & the Other is claims. For better claims ratio, the correct premium pricing is also an important factor. The way the premium pricing is done currently is also faulty & hence, that’s an area which needs to be looked into too.

 
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