Health Insurance Move to Check Abuse
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13 July 2010
In order to crack the whip on hospitals that abuse patients who have a health cover, public sector insurers have prescribed rates for certain surgeries conducted by hospitals. The move will help insurance companies, TPAs and patients in getting the right value for their money.
What is the role of Third Party Administrators (TPAs)?
TPAs are intermediaries between insurance companies and customers. These organisations are responsible for processing insurance claims, empanelling hospitals and negotiating rates for treatment on behalf of insurance companies. At present, there are 26 TPAs operating in the country.
What is the latest move by public insurance companies?
Health insurance is a loss-making portfolio for almost all the insurance companies. To rein in costs and abuse of insurance policies by hospitals, four public sector general insurers – National Insurance, New India Assurance, United India and Oriental Insurance Company – have prescribed rates for a number of surgeries. Since most of the top-notch hospitals did not agree with the rates, they have been de-listed from the network of PSU insurers.
What does it mean for customers?
The move is likely to benefit insurance companies as well as the insured. Hospitals now will not be able to charge higher sums from people who have health cover and make adequate use of the sum insured. However, a major fallout of this decision is the shrinkage of empanelled hospitals. For now, the four PSUs have have a tie-up with only 103 hospitals in Delhi and around 350 in India. Most of the top-notch hospitals in the country such as the Apollo, Ganagaram, Hindujas, Lilavati, Breach Candy or Max are not on the network of these insurers. Therefore, if an insured patient decides to get treated at any of the non-network hospitals, he will have to shell out from his pocket and then claim reimbursement from the respective insurer.
What are the changes prescribed?
To prevent abuse of patients that have a health cover, insurance companies have prescribed upper limits on certain surgeries. This is on the lines of CGHS (Central Government Health Scheme), wherein the government has penciled in the rate list for treatment in network hospitals. For now, public insurance companies have prescribed package rates for 42 procedures only. These are planned surgeries such as cataract treatment, gall bladder surgery, delivery (normal and caesarean), open-heart surgery, etc.
Why such a move?
The move is meant to arrest the rate of abuse of insured patients and at the same time bring down the claim ratio in the health insurance space. Insurance companies had noticed that patients with insurance covers were charged higher than others. This practice is neither in the interest of the patients, as they are left uninsured for the remaining part of the policy year, nor the insurance companies, who have to pay extra. For a premium of Rs 100, insurance companies on average are incurring an expenditure of Rs 120. To curb such malpractices, insurers have now prescribed these rates.