State governments likely to pick up tab for higher premium
Insurance premium for the National Health Protection Scheme (NHPS), to provide an insurance cover of around Rs 5 lakh to 10 crore families, will not be capped at Rs 1,082 or thereabouts as was indicated earlier. At a meeting with insurance/reinsurance companies held last week, the government indicated that the ceiling has not been fixed as yet, but if it is, say Rs 1,100 and the insurance bid is for Rs 1,700, the difference will be picked up by the state government. This was a key concern of insurance companies that had pointed out the cap being talked of was too low and any scheme based on this would run into large losses.
The government may relax the eligibility criterion in order to bring in more competition.
Insurers argued against the reverse bidding clause, but government officials said this was to create competition among the bidders. One official present at the meeting said, “We explained that tender document demands a certificate from actuary along with the initial pricing to ensure that a sustainable price is being quoted but the reverse bidding method defeats the whole purpose of such certification. Additionally, there is a profit refund clause in the tender and therefore there is no need for a reverse bidding.”
Under this clause, 85% of the profit insurance firms make has to be returned to the government. Insurance companies also pointed out that a 15% margin was too low and should be raised.
Also, given how the claims ratio rises over a period of time, insurers asked that this profit calculation be done at the end of the contract period, usually two to three years.
Given their experience with fraud in various health insurance schemes across the country, the insurers wanted more powers to empanel and de-empanel hospitals registered for the scheme. They wanted to decide the parameters for empanelment/de-empanelment, and one suggestion that came up in the meeting was that hospitals being investigated for fraud should be temporarily suspended. The government said that de-empanelment could not be done by in insurance companies alone and that this was better done by a panel in which there was one representative of the insurance company.
Insurers also pointed out that too many insurance packages were on the pre-approval list and this weakened the control they had on the scheme. Insurers have been asked to submit the list of the packages they feel are most prone to abuse, based on which the government will take a call.