Time for a reality check on solutions for health insurance

SK Mahapatra

Lately, the health insurers have been running a reality check on the healthcare players and the intermediaries. The state-owned companies was shocked by the declining margins in health insurance products and untrammeled billings of hospitals in the network of medical providers by the licensed TPAs.

As per the MoUs between the public sector insurers and the TPAs, the insurers were to benefit from the professional management and gatekeeper’s role of the TPA. TPAs are expected to bring about a system of checks and balances, exercise cost containment to maintain the financial viability of the health insurance products. This has not come to pass due to one reason or other. Some attribute the problems inherent in the Mediclaim Policy design itself.

Sometime back, a legal opinion was taken to discontinue the scheme and replace it by a more contemporary product. While policy conditions remain archaic, the MoU and subsequent developments in the healthcare domain has undergone changes for which the role of the TPA, remain optimally unrealised, to the dissatisfaction of all concerned.

Interestingly, the TPAs were barred from either indulging in any marketing activity or playing the role of an activist in designing or underwriting any product, although by virtue of their experience, they were well equipped to contribute positively.

Therefore, the recent review by the insurers show that the control of the medical processes and supply chain in the medical world are still being dictated by the all powerful lobby of medical consultants, instead of the accredited TPAs.

All the past attempts by the TPAs to develop hospital specific treatment packages for common ailments, despite willingness shown by hospital management have been stymied by the very same lobby. Now, the lobbies, i.e. hospitals and consultants want the Members of Association of the Public Sector Insurers, to negotiate with them directly and not through individual TPAs (there being no common forum of TPAs). This has put the insurers in the government sector in a quandary. The hospital lobby is rather peeved at not being consulted by the IRDA, preceding introduction of cashless facility, as it has implications for their business.

Areas of conflict between TPAs and healthcare providers

There exists a document between the TPA and the hospitals in the network, that is crucial to the operation of the cashless treatment facility, extended to the holders of Mediclaim policies. The MoU provides for protocols relating to admission of insured patients, admissibility of expenses for reimbursement to the hospitals, within stipulated time frame etc. Nevertheless we hear complaints galore from the hospitals like the following:

• Delay and mistakes during pre-authorisation by TPAs.
• Problems during discharge of the patients.
• Problems in billing.
• Problems in dispatching bills by the hospital.
• Account keeping/records by TPA.
• Delay in releasing funds from TPAs
• Policy holders being not fully aware of the cashless facility guidelines.

Studies conducted have shown lapses on micro matters, the protocols not being adhered to by all parties in the chain of service. Thus, every one has some level of dissatisfaction or other. Looking at the process followed, there remains a huge gap, due to semi manual procedures on both sides. Foreign insurers in health products have robust e-platforms, so also their network hospitals.

The BPOs sitting far away from the country and servicing them do not face the kind of gaps, being experienced by the TPAs in India for servicing domestic customers. Regrettably, the very same high-tech hospitals using advanced technology and skills, do not invest in IT adequately to improve their receivables, manifest transparency in their relationship with the TPA, and help improve the healthcare solutions to the indigent and the weaker section, who rely largely upon the insurance schemes.

Efficient system of claims management required

The insurers are not equipped to negotiate with the Association of Hospitals and Consultants without the assistance of the TPAs. By virtue of the subsisting agreements, the insurers are not to take up such an exercise, a function requiring core competency reserved for the TPAs, backed by solid database and costing models at their disposal. They have engaged a NGO to test out classification of hospitals and pricing bands. It would be a waste of efforts that has gone into such preparatory work by the nodal TPAs set up in 2002/03, under the guidance of the Union Ministry of Finance.

The medical community, often allege that the TPA have conducted themselves by and large, in varying degrees of unprofessional man ner, as much as the Insurers have been non-serious in the application of the concept behind the BPO like operation of health claims management intermediary. While the TPA system came to the Indian market in the post regulatory period of the Insurance domain, the concept has been in vogue in the Western world of healthcare for long. It has been recognised by the Regulatory authority that the subject matter of health insurance is a niche market and a more efficient system of claims management is required for the growth of the sector.

The needed regulation of the medical providers in the country, compatible with health insurance for the masses, calls for initiative from the insurers and their regulators. The tools of control, medical audit- cum- gatekeeper’s role, depositories of database for analysis and underwriting, currently are on the shoulders of the TPAs.

Attitudinal change in domain regulators needed

Thanks, however, to the abdication of the regulatory intervention, the role and responsibility of the TPAs are in a mess. The classical approach of the PSU insures, in the face of unchecked medical billings by the hospitals under the cashless mode, have turned to be a lame game of sorts.

The various options being tried out is confined to the following choices:

1. To increase the premium rates to match the claims ratio, which may not be in the interests of consumers.

2. A sound and pragmatic management strategy, creative underwriting/and sales strategy targeted at higher age group individuals.

3. Simply rotating one TPA by another, thus damaging the service system base, causing confusion to health insurance policyholders. Such thoughtless rotation in place of sound long term planning could create credibility gap with the investors in the new domain of health claim management companies. When more and more BPOs in India are servicing overseas insurers in health insurance at competitive cost, we in the Indian insurance sector, are scaring away the TPAs to close shop, due to lack of planning and knee jerk policy shifts. All players are using them as punch-bags.

It is to be understood that a low margin business like TPA or BPO, could deliver on the basis of volume. We have too many small TPAs, with uneconomical size of insured population, unable to ramp up volume for the network hospitals, where they could drive a bargain for lower cost. The companies dealing with health products are asking for bargains from the hospitals without looking at the utilisation of the beds in the market, between the insured and uninsured population. The size of the billing for the insurance companies has not attained the critical mass, no where near the CGHS or defence ministry referrals, to command negotiating power.

4. Complaining and cribbing about the no-cooperation of the AoH and suffering from escalating scales of treatment costs in metro cities, has given rise to a possibility of going back on the progressive feature of ‘Cashless option’ in Mediclaim. It would be disastrous for the middle class and the poor and should be resisted by the IRDA.

5. To revert to the old system of re-imbursement would be causing hardship to the millions of claimants. The unpopular new policies floated by the companies, (without TPA – NO Cashless option), has shown what the market wants, particularly the middle class take policies for mitigation of financial burden, per cash less option. The PSU and private general insurers, being non-serious health insurers, suffer from serious medico - legal handicaps. The usurious hospitals and unethically oriented section of the medical consultants have exploited the gaps in the systems, instead of modeling a win-win mode of settlement, as suggested by the TPA-insurers.

The modifications, being contemplated in some quarters, is no doubt regressive and needs mature review. The subject of health insurance is no doubt a non core business with general insurers. Doctors and hospitals are inimical to the questioning by TPA and insurers, and the government health authorities have no clue to the dynamics of commercial health insurance. The Union Government of the day is, however, more interested in Rural Health Mission, leaving the commercial health insurance, regrettably, to the vagaries of market place.

Convergence of interests of all stake holders needed

It is now up to all the concerned stakeholders of Universal healthcare domain, to come forward with holistic objectives and remove the roadblocks. The visionaries, who brought the mass healthcare scheme, for our country and provided tax incentives to motivate the holders of policies, should have visualised a more orderly way of the operation of the scheme. It is time for the Finance / Health ministry to intervene in Public interest

The regulators of the domain both health and insurance must seek grounds of convergence to work towards a milieu that is conducive to the spread of insurance protection and provide the much needed financial protection for expensive medical event to the teeming millions, both in the formal and informal sector.

The tourism policy makers have assisted the hospital sector to provide 5 star treatments to the foreigners, the rest of the public hospitals remain decrepit in state capital/district headquarters.

The private sector’s share in hospitalsation is going up, so also the scale of medicare packages, unaffordable to the common man, without satisfactory insurance and cost effective treatment.

The time has come to look at the size of the potential market and ameliorate the hospital infrastructure at select dist places, offer financial incentives to attract talents and investors to the non-metro centers. The success story of up-scaled hospitals at Manipal and the Lingayat Trust Hospital at Dharwar, are eye openers.

Accreditation of Apollo, a welcome initiative

Paradoxically, the initiative for standardisation has come from the Tourism Ministry of the government of India and not from the domain regulators, in an attempt to boost medical tourism. The idea of standardising medical care in the hospitals in the country has been a distant dream. Even 5 star hospitals like Apollo some three years back shied away from seeking JCI seal, but the globalisation wave has impelled them to seek international accreditation from JCAHO. This is a milestone indeed, in the annals of Indian medical domain.

After the first Indian JCI accreditation of Indraprastha Hospital, New Delhi effective from June this year, there is a line up of metro, non-metro hospitals to get a pie of the medical tourism market. All of them would aim at hospital insurance schemes, for that is what drives the volume of admissions in the hospitals. If the Indian hospitals are not farsighted enough, they have to face up to the incursion of investment coming from the foreign hospitals from US and Singapore.

This might bring the most needed self regulation in the medical providers and a sense of purpose. It would be a paradox if top Indian hospitals driven by volume and profit, lay the proverbial red carpet to foreigners, while the domestic indigent population, go hunting for quality and affordable health care delivery.

The writer is a veteran non-life executive and has been Ex-GM GIC of India and Secretary general of GIPSA