Inflated bills hit mediclaim schemes

It8217;s not an isolated case. And, this trend is bleeding insurance companies. The claims ratio total reimbursement outflow a year as a proportion of the gross premia receipts has spiralled from an already high 94 per cent in 2002 to 140 per cent this year.

Explains Dr Nayan C Shah, MD, Paramount Healthcare Services, a nodal Third Party Administrator TPA for the country8217;s western zone, 8216;8216;90 to 100 per cent is the incurred claims ratio. To that is added 20 per cent administrative expenses of the insurance company and 15 per cent agent8217;s commission, thus bringing the claims ratio to 135/140 per cent.8217;8217;

A ratio of 140 per cent is unsustainable 8212; in fact, a ratio of 80 per cent makes a product unviable. Simply put, if an insurance company is collecting Rs 100 crore as premium, it paid off Rs 140 crore as claims, when it should pay no more than Rs 80 crore to stay viable.

A part of this high ratio can be explained by the severe competition that has brought down the price of corporate mediclaim policies, eroding the actuarial premium base. But the bigger problem in the claims ratio exceeding prudent norms, say industry insiders, is large-scale malpractice and a regulatory environment that is largely on paper. TPAs, who act as intermediaries between the hospital and the insurance company for reimbursement, told The Indian Express with documentary evidence of specific cases, the blatantly increasing medical malpractices by doctors, consultants and hospitals in the metros.

On conditions of anonymity, TPAs admit that inflated medical bills is a countrywide phenomenon 8212; Mumbai registers the highest claims. Says a Mumbai-based TPA: 8216;8216;We have observed massive inflation in charges of hospitals and doctors. Doctors charge higher consultation fees from insured patients, going up to Rs 10,000 for an evening visit by a cardiologist in a south Mumbai hospital.

There are bills showing treatment by several doctors for a sickness which can be treated by one doctor.8217;8217;

On the same lines, nursing homes, which charged Rs 1,000 as bed charge a day in November 2003, are now charging Rs 2,500-3,000 per day. Insurance insiders say that the cashless service, now having completed two years, has given sufficient time to healthcare providers to learn to manipulate billings. Citing another case, a leading TPA said that the owner-doctor of a nursing home in central Mumbai has insured not only his entire family but also his staff and filed high claims for small surgical procedures.

Says S K Mahapatra, General Secretary retired, General Insurers Public Sector Association GIPSA, 8216;8216;Medical billing has gone beyond all reasonable norms.8221;

The first to suffer will be the insurance companies. Says Dr R K Kaushik, Manager, Head Office, The New India Assurance Co Ltd, Mumbai: 8216;8216;These are sporadic cases. You will not see it happening with the bigger hospitals.8217;8217;

Representatives of the medical community have their own axe to grind with the TPAs and their way of working. Says Dr Sanjiv Malik, National President Elect of Indian Medical Association: 8216;8216;I get a lot of complaints against TPAs which do not reimburse the hospitals on time. But if you are telling me that a doctor is charging Rs 10,000 for an evening visit, then it8217;s obnoxious.8217;8217; Clearly, need of the hour is for the regulator Insurance Regulatory and Development Authority IRDA to curb these practices. It has recently constituted the Health Insurance Working Group that is working to categorise and standardise rates throughout the country, a sensitive issue with some people in the medical profession.

Says Joe Curian, spokesperson for an association of 39 trust-run hospitals in Mumbai: 8216;8216;Standardisation of price can be done if cost inputs are identical.

It will kill entrepreneurship and competition.8217;8217; Suggests Mathew Verghese, Member IRDA, currently handling health insurance: 8216;8216;The concerned TPAs should take action and there should be a regulatory body to keep a check on hospitals.8217;8217;

While the debate continues, these unviable claims ratios will result in one of two things: mediclaim companies going out of business or the premiums charged being hiked substantially.