Insurers in the National Health Protection Mission (NHPM) will have to return a share of the premium collected from the government for failing to meet a healthy claim ratio. The government has told insurers that they will be under obligation to return part of the premium collected if they fall short of the 85-per cent claim ratio. For any claim ratio below 85 per cent, the insurers can keep a maximum of 15 per cent of the unclaimed premium and return the rest to the government.
This framework was communicated to the insurers during the stakeholders’ consultations on Wednesday.
Indu Bhushan, the CEO of Ayushman Bharat, explained that if only 50 per cent is consumed in medical claims of the total annual premium paid to an insurance company, the insurer cannot take the entire remaining sum. It will have to return 35 per cent of the premium amount to the government at the end of the year, and take the remaining 15 per cent.
Bhushan told The Indian Express: “A decision has been taken that for a claim ratio up to 85 per cent insurance companies can keep the balance. For anything below that, they will have to return the money to the government. That way we will prevent any windfall gains for insurance companies.”
Bhushan said the idea of the scheme is that “beneficiaries should get the maximum benefit, not the hospitals or insurance companies”.
Claim ratio is calculated as the total value of all claims paid by the company divided by the total amount of premium collected in a financial year. A claim ratio of 75-90 is usually thought to be an indicator of a robust claim settlement system by an insurer.
Under NHPM, an annual health cover of Rs 5 lakh will be provided to 10.74 crore “deprived” families as per Socio-Economic and Caste Census (SECC) data. For beneficiaries, it will be cashless at the point of use.
Wednesday’s consultation was attended by representatives from leading general and standalone health insurance companies, and hospitals (super-specialty, general, multi-specialty and hospitals from Tier-1 and Tier-2 towns); and representatives from industry bodies such as CII, FICCI, IRDA, NABH, NatHealth and QCI. Besides Bhushan, joint secretary (health) Alok Saxena and director (Ayushman Bharat) Dr Dinesh Arora represented the ministry.
At the last consultation in Mumbai, held before the Union cabinet approved the NHPM proposal last month, insurance companies had said that the scheme could not be financially viable for them for anything short of a premium of Rs 2,500 per year per family. Sources present at the second meeting said that estimates had “rationalised” since then and are now closer to the Niti Ayog drawn up estimate of an annual Rs 1,082 per family.
One of the concerns insurance companies raised at the meeting was that the reverse bidding — in which the top three bidders are allowed to revise their bids — should not be done for this programme, and the eligibility conditions be relaxed so that new entrants in the insurance sector with less than three years experience can bid as well.
The government has already decided on pre-authorisation for “moral hazard” procedures such as caesarean sections and restriction of some of them to just the government sector. In health insurance parlance, “moral hazard” is the tendency of insured people to buy or be sold additional healthcare interventions irrespective of their actual needs, leading to expenses that do not necessarily add to their well-being, but which bleed the insurer.
Deliberations with the insurance companies were focussed on how to get most competitive rates without compromising the quality of healthcare services and prevent frauds. Representatives from hospitals highlighted the need for timely payments for their services by insurance companies/trust. They were appreciative of the claim management process that have been incorporated in the Mission.