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17 August 2010
New Delhi, India

Through mutual consultation a broad agreement has been reached between 449 hospitals and insurance companies.
Cashless medical facilities for persons insured with PSU companies have been restored in 449 hospitals in four big cities after hospitals have agreed to charge them at par with non–insured patients.

Minister of state for finance, Namo Narayan Meena, said, "Public sector insurance companies had to resort to rationalisation of rates for cashless facilities as they suffered a loss of Rs 2,000 crore because of overcharging by hospitals in Mumbai, Delhi, Chennai and Bangalore. "

He said if the hospitals were allowed to overcharge, it could result in "serious consequences" leading to insolvency of the insurance companies.

Meena said the cost ratio for the public sector companies was 140 per cent of the premium received under the health portfolio. Citing an example, he said while the private hospitals were billing Rs 1.35 lakh from an insured for caesarean operation, the rate was Rs 55,000 for uninsured and the CGHS rate was only Rs 15,000.

While the standard health insurance policy did not provide any assurance of cashless facilities, it was agreed to extend such a facility through a network of hospitals in some cases, he said.

In the four cities which accounted for over 50 per cent of the malpractices and had led to the problem, a Preferred Provider Network (PPN) of hospitals has agreed to provide the cashless facilities at the rates equal to those paid by non–insured patients, he said.

The four PSU insurance firms – National Insurance, New India Assurance, Oriental Insurance and United India Assurance – had last month stopped the cashless facility in private hospitals, including the expensive ones known as 5–star hospitals.

However, through mutual consultation a broad agreement has been reached between 449 hospitals and insurance companies.

"More hospitals are joining (the PPN)", the minister said adding the problem was limited to the four cities where rationalisation was underway. For rest of the country, the cashless facility was available like in the past, he said.

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