The decision by public sector health insurance companies to deny cashless services to their clients has been criticised by Fortis, a leading corporate healthcare chain.
Chains such as Fortis generate a significant portion of their revenue through health insurance policy reimbursements.
The Federation of Indian Chambers of Commerce and Industry was also critical. Pointing out that private insurance firms are managing to offer cashless services to policy holders, it wanted public sector firms to review their decision to suddenly withdraw this facility. “Withdrawal of an important component of a financial contract without sufficient notice is not fair and just,” it said. National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd and United India Insurance Co Ltd have said many leading hospitals are charging exorbitantly for treatments offered to insurance-protected patients. The hospitals say the problem is not with their fare structure, but with the policy packages offered by the insurance firms.
The confrontation is not direct, as health insurers have no agreements with the hospitals and handle insurance claims through third party administrators (TPAs). The decision of stopping cashless services were also made known through TPAs, who trimmed the list of the hospitals eligible for offering cashless services after they found questions asked by insurance firms on the bills they produced for encashment.
“How can someone unilaterally claim that our price points are high?” asks Vishal Bali, CEO of Fortis Hospitals. He said there had been no attempt (by the insurance companies) to understand the cost involved in setting up a world-class facility. “Is there scientific evidence to say that a price point is high? High claims are not because of high price,” he said.
Hospital companies say the insurance companies do not have a system to offer differentiated products on risk basis. “The fundamental problem is that all insurance policies are value-based and not ailment-based. As a result, people with the smallest ailment often have the tendency to go for the most expensive treatment and bill it to the insurance firms. How are we responsible for that?” Bali asks. The hospital managements are suggesting the TPAs and insurance firms put their desks and representatives inside the hospitals to process each claim of a doubtful nature.
Insurance firms, however, feel overcharging is seen even after TPAs have worked out differential costs for the same treatments, after segmenting the hospitals on the basis of location, infrastructure and facilities. They say that for every Rs 100 premium, they have a claim of Rs 140.
“There is no margin in this business. The situation has worsened from July 1, as TPAs have been asked to include 10.3 per cent service tax also in the bills. There has to be tighter scrutiny over the billing pattern of hospitals which charge less for cash payment and charge more for insurance reimbursements,” a PSU health insurance official said. The hospitals justify the stand on the down-payment of cash, alleging that TPAs take up to six months to clear hospital bills.
