29 July 2010
By Manthan K Mehta
Mumbai, India
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 will help reduce the cost of medication and equipment by at least 20–30% in cashless claims, as hospitals are overcharging for the same.
While the insurers say that patients will gain through lowered costs and premiums, hospitals are furious. Dr Sujit Chatterjee, CEO, L H Hiranandani Hospital, said,“I feel that some logic has to be used while taking such crucial decisions. The PSUs are probably taking a strategic position to engage the hospitals in accepting their demands. The hospital industry has been painted as a villain for the rising cost of medication. However, the hands of the hospital are tied because of an increase in the cost of equipment,drugs and maintenance.”
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 will inform the insurer, which will order them directly from the supplier and get them forwarded to the hospital.
An official in a PSU insurance firm said,“The health insurance sector needs reforms to reduce the adverse claims ratio. Tie–ups with suppliers are logical as they will drastically cut down the cost of medication for a policy–holder, who will also benefit. The lower the claim amount, the lesser will be the premium.
“We will place bulk orders with medical suppliers. Due to the size of the orders, it will be possible to procure costly equipment, like implant materials (stents, for example) and drugs at lower prices.”
Losing Patience
- Claiming that hospitals fleece patients, PSUs plan tie–ups with drug, equipment suppliers
- Insurers say this will reduce drug and equipment costs in cashless claims by 20–30%
- Once a hospital determines what is needed, it will inform the insurer, which will place an order with the supplier and forward material to the hospital Patient gain? This will lower costs, premiums, insurers say
A TPA source said,“Some hospitals prefer to levy the charge as per the MRP, even though they are procuring the materials or drugs at discounted rates.” A TPA official said,“After cataract surgeries, Intra Occular Lens (IOL) are implanted into the eyes of patients. The cost of an IOL varies from Rs 500 to Rs 4,000, depending on the quality of the lens. However, many hospitals charge 50% over and above the actual cost of the product.”
Similar practices are allegedly adopted by hospitals while carrying out angioplasty. A TPA official said,“For using a non–medicated stent, the hospital can prepare a bill of Rs 1.5 lakh, including the cost of surgery. For the stent itself, the hospital could charge Rs 1.2 lakh to Rs 1.3 lakh. However, the hospital actually procures the stent for Rs 60,000 to Rs 70,000.”
Most of the overcharging allegedly happens when drugs or implants are imported. Another TPA official said,“There is no regulation on price as far as imported items are concerned. Hence hospitals tend to overcharge in cases where imported items are used.”
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.”
Insurers allege that hospitals overcharge patients for drugs as well.“For instance, a patient who has suffered a heart attack has to be administered streptokinase and urokinase (blood–thinning drugs) through injection. The cost of these drugs is around Rs 1,000 to 1,200, but the hospitals claim the cost is Rs 3,500. In some cases, generic drugs are provided to patients while applying the cost of branded drugs. In some hospitals, the cost of the implant varies according to the patient’s room,” an official claimed.”
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