Medimanage – Is this the end of cashless health insurance?
The tussle between public insurance companies and corporate hospitals in the city
is turning out to be a nightmare for medical insurance holders entitled to cashless treatment. PSUs like National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd and United India Insurance Co Ltd, which handle 80% of all the health insurance in the country have struck off almost 150 hospitals across Mumbai, Delhi, Chennai and Bangalore from their list to reimburse cashless insurances. They say that hospitals charge insured patients higher fees than the un-insured, thereby, increasing the chances of fraudulent billing. They have proposed a new policy that will charge 50% extra for customers wanting treatment in premium hospitals.
Today most of the health insurance products are based around the total sum insured'. So people who have coverage, basically believe that 100% of that coverage can be spent on one hospitalisation around one treatment protocol, whereas the ideal situation would be to make it more procedure based. There is a cap on the procedure based on the category of hospitals and based on room category.
With the claims ratio ranging from 110% to 130%, insurance companies have been making huge losses. In fact, the four general insurance PSUs have losses worth Rs 2000 crore on their books from the mediclaim segment alone.
We interviewed Mahavir Chopra, Head - Personal Lines,www.medimanage.com
and Sudhir Sarnobat, Director Operations,www.medimanage.com
. Medimanage is the only dedicated health insurance broker in India.
The TPAs have been losingtheirallpervasivepresence in recent times, what is the cause of this?
Mahavir Chopra - TPAs like other intermediaries are small foliage trampled in the current storm faced by the Health Insurance Industry. Besides, health portfolio being a small part of every Insurance companies' business, it also was cross subsidized heavily against Tariff Fire Insurance premiums. With the removal of tariff on Fire and rise in the Health Insurance premiums as a part of the total portfolio, losses faced by Insurance Companies came to light. Insurance Companies are trying everything in the book to come out this storm.
Most Insurance Companies never provided a clear mandate or real power to TPAs to function as Healthcare intermediaries for Insured Customers. Due to lack of scientific data and negligible negotiation power, they have been reduced from their ideal role as Healthcare Administrators to mere claim payment agencies. It's been a joint failure of Insurance Companies and TPAs, with only TPAs bearing the brunt of the damage.
How does the TPA ban affect the insurers and consumers?
Mahavir Chopra - TPA's job of understanding healthcare, dealing with healthcare providers and processing claims is a specialized function. It removed bias into approval of claims. It wouldn't be an easy task for every Insurance Company to handle the claims at the same cost that they are paying to the TPA. According to us TPAs should remain.
TPAs who would be able to transform to the expectations of business and customers in the current times, would continue to exist and grow.
PSU insurance companies are planning on higher premium policy for high end hospital users - is this a common trend worldwide?
Sudhir Sarnobat- If the insurers have stopped the cashless facility by making statements like the hospitals are inflating bills. Is this not a way to legitimize the so called wrong practices of big hospitals? 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.
What changes do you see being ushered in the next couple of years?
Mahavir Chopra - With healthcare data to a certain extent being tracked now, Pricing is bound to get scientific (premiums will rise).
a) All Insurance Companies would in a way or other embrace the Preferred Provider Network model. Number of hospitals would drop, but quality of service would go up.
b) Claims from lifestyle ailments are becoming more common than those from communicable diseases. Life time indemnity limits on policies. would soon come into picture.
c) Healthcare Savings plans (including Unit Linked ones) from Life Insurance Companies should do well.
d) Some companies which have moved to an in-house claims processing model, will find the cost of processing to be too high, and will again outsource the claims administration to third parties.
e) Hopefully the UID project will bring in structured personal data and create more ways of incentivizing healthy against those who are unhealthy.
In many countries government plays a large role in health insurance, is it feasible in India?
Mahavir Chopra - Government has played a very large role in health insurance in India through its Insurance Companies. In fact, health insurance was introduced to compensate the lack of quality public healthcare India has. In our opinion, more than government participation, Health Insurance should work as a business model for it to proliferate in India. It should be a win-win (insurer and insured), for more companies to enter and create new service benchmarks. Government and the Regulator should facilitate creation of a great business environment for Health Insurance.
/>Just 2% of Indians are covered under health insurance - it is vast marketopportunity, how can it be best tapped?
Mahavir Chopra - If you include captive insurance for government employees, ESIC, RSBY and other Govt. schemes, Insurance penetration in India is around 10%. Any business model works, when it caters to a certain need and has convenient purchase and delivery. The purchase and delivery (claims) for Health Insurance should be as convenient and simplified as possible. New business models including ones which are technology based should be welcomed by the regulator and the industry with open arms.
Medimanage Is this the end of cashless health insurance?
By: Anjali Shukla
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