No insurance for the insured

As I write, the catfight over cashless health insurance claims continues. The spat between the insurers, hospitals and third-party administrators (TPA) increasingly looks like an ugly variant of a saas-bahu tale, with adjectives and attitude triumphing cogent, coherent arguments. “Unfair”, “unjust”, “retrograde” are among the milder terms that have been flying around. All this would have been entertaining had not the hapless health insurance policy holder been caught in the crossfire.
The public sector insurance companies are not willing to play ball with some of the top corporate hospitals in the country. The insurers accuse these hospitals of trying to fill their coffers through inflated bills and insurance money and have worked out a new “Preferred Provider’s Network” (PPN), much like the preferred bahu. I am not Paul the Octopus and would not dare predict how this saga will end. But even to a non-oracular sensibility, one thing is obvious. While each party has been claiming to fight for the interests of the health insurance consumer, the consumer has been the least consulted entity.
Differences between insurance companies and service providers — the hospitals — is nothing new. Earlier attempts to get both onto the same page led nowhere. Last fortnight, the simmering tension burst out into the open when the four public sector general insurers (New India Assurance Co, Oriental Insurance Co, United India Insurance Co and National Insurance Co) that together command nearly 65-70 per cent of the country’s health insurance market decided to flex their collective muscle. Result: a drastic pruning of the list of hospitals where cashless cover benefit on individual policies was applicable and de-listing of some of the top corporate-owned hospitals across Delhi, Mumbai, Chennai and Bengaluru from the PPN. The state-owned insurance companies say they have been incurring heavy losses due to the bloated bills of these large hospitals and henceforth would do business only with those hospitals that agree to accept the rate packages prepared by the insurance firms for medical procedures and hospitalisation costs.
Unsurprisingly, the hospitals that have been tossed out of the PPN are hopping mad and say patients’ right of choice is being restricted by such moves. Media reports over the past fortnight suggest that the fight between the insurers and hospitals has hugely inconvenienced the general public as settlement claims of many were refused at the hospitals not on the preferred list for such a facility.
More talks are on the anvil between the warring parties. But if a health insurance policy’s primary aim is to provide affordable and timely healthcare to ordinary people, patients for whose benefit the cashless treatment policies are ostensibly formulated need to be on board and part of whatever solution is worked out. This means that the health insurance consumer and the Insurance Development and Regulatory Authority (IRDA) have to be brought onto the discussion’s high table.
Once the crisis is sorted out, there is a list of urgent actions that need to be taken unless we want a repeat of the current imbroglio. First, we need to acknowledge that “regulation” is not necessarily a bad word and a growth-killer. Healthcare pricing in India is highly subjective and often unscientific. The vast majority of clinical establishments in the country are being run without any standards or ethics in the absence of an effective law, points out Gautam Chakraborty, adviser, healthcare financing to the National Health Systems Resource Centre, which provides technical support to the government’s National Rural Health Mission. “This is a far cry from pricing models prevalent in say the United States where the primacy of the private sector is acknowledged but where scientifically designed parameters help assess the cost of a procedure and patient billing”, Chakraborty adds.
The need for quality and price regulations that would create a better system for billing in private hospitals in India is acute. The government is trying to address the quality issues through a proposed law. The Clinical Establishment (Registration and Regulation) Bill 2010 has been approved by the Union Cabinet for the registration and regulation of clinical establishments in the country in order to improve the quality of health services through the National Council for Standards. But legislation alone will achieve little unless we have better-informed consumers and an effective and speedy redress mechanism. Currently, there is a tremendous information asymmetry between the patient and the doctor, a situation that can be open to misuse. If tomorrow a deal is being negotiated between the warring parties, the consumer should know exactly what its implications are for him/her, suggest changes/improvements to protect his/her interests and be part of monitoring mechanisms.
The ongoing dispute over cashless health insurance claims and the proposed solutions raises many questions. In an online post public health analyst Vijay Reddy listed a few: “Who decided the pricing of packages for the new Preferred Provider Network? Was it an independent technical team? What methodology was used in arriving at these figures? In the battle between the hospitals and insurers, is there a danger that the TPA — ostensibly a neutral party — would be rendered redundant?”
There is also the danger of viewing this as a morality tale in which big corporate-run hospitals are the villains. Many of these hospitals are indeed guilty of charging differential rates to the insured and the non-insured and such practices have thrived in the absence of an effective law and regulatory body. The lack of standard treatment protocols and price regulations also influence the actions of many smaller nursing homes.
Most of India’s estimated 1.2 billion people have to pay for medical treatment out of their own pockets. Less than 15 per cent Indians have any kind of healthcare cover. But the current spat points to a larger problem — a nation-wide unregulated health delivery system which distorts prices and diminishes quality for everyone.

Patralekha Chatterjee writes on development issues in India and emerging economies and can be reached at

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