Insurers, docs, heal thyself

The quality of public sector facility is not adequate to provide cashless service to all under the Rashtriya Swasthya Bima Yojna. Hence, the health and finance ministry will have to work together to find a solution.

One of the greatest successes of non-life insurance industry has been the introduction of cashless servicing of claims under the mediclaim policies in 2001.

A decade back, there was no such product available. The best a policyholder could hope for was to get back the money he spent on hospitalisation after some arbitrary deductions by the administrative officer at the branch. Two decades ago, even this basic mediclaim insurance which provided reimbursement was not there.
    
So successful has been the cashless product that sales of health insurance —demand for the product — has grown by leaps and bounds. Yet, as far as the service providers are concerned, health is a loss-making product. The bulk of the business is with the state-owned companies who have tried their best to control losses.

The first round of loss prevention was at the underwriting stage itself. The companies discouraged older people from buying insurance and also rejected claims for any ailment suffered before the policy.

Having failed to curb losses at the underwriting stage, the insurers are now trying to curb losses by withdrawing benefits after the policies have been sold. For over a month now, PSU insurers have withdrawn cashless treatment at leading tertiary hospitals across the country because of their failure to adhere to a tariff prescribed by insurers.
    
It would be foolish to expect that the present dispute of healthcare costs, exceeding the premium collected, would get resolved by merely hospitals agreeing to schedule rates prescribed by insurers or by the regulator issuing a diktat to continue with cashless cover.

The problems that face insurers have always existed. In the initial years, companies made good the losses by making money on property insurance. Also, because the public sector companies are unlisted and focused on topline there has been a thrust on health insurance which has been contributing significantly to the topline in recent years.
    
Unfortunately, despite the growth and their leading market share, public sector insurance companies have not been able to give focused attention to health insurance through the creation of a health insurance division. The grapevine has it that the present imbroglio over cashless is partly because of the differences between two senior executives entrusted in health in a leading public sector company.

Instead of finding a mid-way solution, such as asking for co-pay or segmenting their policies, public sector insurance companies have chosen to renege on their contracts with policyholders and withdraw the cashless facilities with most of the tertiary-care hospitals. The result of this decision has been a frenzied round of finger pointing which makes it almost impossible to state the problem.
    
Insurers have alleged that hospitals are padding up their bills for policyholders. This is in sharp contrast to the practice in markets such as the US where insurers are able to bargain better discounts. They have therefore decided to flex their muscles and have stayed away from the negotiating table, despite feelers from hospitals.
    
The third-party administrators have all along been having fights with hospitals over the need of tests and billings. This has resulted in TPAs being blacklisted from time to time.
    
Hospitals, on their part, accuse TPAs of interference in medical decisions, needless harassment caused by their verification processes and delay in receiving reimbursement. “The days of naadi shastra are over. Today, we can decide on treatment only after conducting tests.

TPAs cannot apply the wisdom of hindsight and tell us that a particular test was unnecessary,” says the medical director of a leading hospital in South Mumbai, defending the medical practices of using the process of elimination through various tests.
    
Even if the insurance and health-care industry manages to put in place a viable system where cashless benefits are available to policyholders, it does not solve the larger issue. The increased penetration of insurance will make quality healthcare more affordable to the middle class.

In an ideal situation, increased demand would lead to increased supply. But in the case of healthcare, there is a separate set of issues that are causing capacity constraints. This will ultimately make healthcare highly inaccessible for those who are outside the insurance net for whatever reasons.
    
The insurance and healthcare industry will therefore need to work together to make cashless treatment possible under the Rashtriya Swasthya Bima Yojna (RSBY). Also, as healthcare experts point out health insurance cannot take a narrow view of reimbursing hospitalisation costs.

At the lower level, there is a need to increase availability of primary healthcare. For the middle-class, there is a need to manage lifestyles and foster a system of health checks to ensure that ailments are addressed at an early stage.
    
The quality of public sector facility is not adequate to provide cashless services under RSBY. Insurers will need to work on innovative solutions like mobile clinics and teleconsulting. To address lifestyle relationships, health insurers will have to maintain longterm relationships with policyholders and build up a database of individual health records.

The problem of healthcare costs is only going to get worse. Individuals are living longer and this will result in greater healthcare requirements as they grow older. Ultimately, all the constituents, including the health and the finance ministry, will have to work together to have a system in place that works.