Before commenting on the subject of this column, I would like to go into the genesis of the concerns which are embedded in the same. Health insurance became available to the retail customers by way of Mediclaim policy launched in 1986.

From then till now there have been various developments including the cashless facility which was introduced in the year 2002.

This facility has come as a boon to the common policy holder and has been possible because of the desire of the insurance companies to provide this facility to their customers when they need to be hospitalised. This is a very noble cause and it should have been the endeavor of all stake holders to make the same a success.

Many times the limits available to the policy holder get exhausted

But what is happening does not suggest that. It is common knowledge that some service providers have different rates for patients having a health insurance policy and those without insurance. It has been seen that difference between cashless and other than cash less (reimbursement claims) for similar procedures can be between 30% to 50% higher for cash less settlements. Many times the limits available to the policy holder get exhausted by way of unnecessary procedures and inflated bills in the very first hospitalisation. The limits available to a policy holder for hospitalisation are fixed for the year. If insurance policy is stripped of the limits in the very first hospitalisation any unfortunate second hospitalisation during the same policy period can be financially debilitating for the customer.

For the insurance companies hospitalisation insurance is becoming unviable and most of them have been booking huge losses. The claims, which used to be in the range of 75% to 80% of the premium before cashless service was available have jumped to more than 100% for most of the Insurers.

Added to this is the cost of business procurement, the cost of providing cash less service and management costs and the outgo for many insurers is more than 120-130% of premium. This means for every hundred rupees of premium which an Insurer gets he spends Rs120-130. This is obviously not the business model that any commercial organisation can sustain for long and is bound to eventually increase the cost of insurance.

Premium for health insurance should be low

Ideally, the premium for health insurance should be low so that more and more people can afford it. Without any insurance coverage an unfortunate hospitalisation can destroy a common man financially. It should therefore be an effort of all concerned to make health insurance affordable to the vast population of our country.

It is with these twin objectives, that is, ensuring that the limits available to an insured person do not get stripped in the very first hospitalisation and also the cost of insurance does not become unaffordable that the PSU insurance companies decided to take the initiative of having a preferred providers network (PPN) of those service providers who charge reasonable rates for some common procedures.

This exercise has at the moment been started in four cities such as Delhi, Mumbai, Bangalore and Chennai and it will be gradually extended to other cities. The cash less facility will be normally available only in these hospitals and this may be the embedded concern in the subject of this column.

There is a possibility of change in the network hospitals during the policy period

However, many hospitals have already agreed and the process of talking with the other hospitals is also on. Although there may be a few hospitals which are adamant and not prepared to discuss yet a large number of hospitals are reasonable and willing to look at this. In normal course also there is a possibility of change in the network hospitals during the policy period and the same is available on the websites of the TPAs. Besides this the information can be obtained telephonically from the TPAs. Presently, the list is also available on the websites of the PSU insurance companies.

At the moment adequate number of good hospitals are in the network in the above mentioned cities and in case of a planned hospitalisation we do not anticipate any discomfort to the customers as the information can be had from the TPAs or the web sites of TPAs or Insurers at any time.

In all cases of emergency hospitalisation the cashless facility is allowed

An emergency hospitalisation, which is the subject of this column, would mean an immediate hospitalisation arising from a process required after an accident or any sickness for which the patient needs to be admitted directly to ICU.

In all cases of emergency hospitalisation the cashless facility is allowed in whichever hospital the patient is admitted whether the hospital is in the preferred providers network or not.. The public sector insurance companies have given strict instructions in this matter to the TPAs.

Source : The Economic Times