Given the problems cited by various insurance companies in government-run health insurance schemes—Niti Aayog had a meeting on this on April 12—it is not surprising the government has chosen to use the ‘trust’ model instead of insurance companies in its Ayushman Bharat scheme that is to be launched across the country on Sunday. More than 20 states have opted for the trust and several are using a hybrid model where, say, up to a value of Rs 50,000 per family, the claims will be serviced by an insurance company while those above this will be looked after by a trust. In the ‘trust’ model, both the Centre and the states will put in their share of the premium to be paid for each family—central premium has been capped at Rs 1,110—and this money will be used to pay hospitals for the treatment of 10 crore families across the country.
While New India Assurance Company had detailed the problems it was facing in the Niti Aayog meeting, as FE has just reported, the PSU insurer has just terminated its insurance of Rajasthan’s Bhamashah scheme, citing regular breach of contract that was leading to large-scale fraud and spiralling insurance claims. The incurred claims ratio (ICR), or the ratio of claims to the premium received, were 90% in the first year of the scheme in 2015-16 and rose to 176% in 2016-17; while New India raised the premium from Rs 370 per family to Rs 1,263, ICR rose from 40.5% in December 2017 to 118.8% in the first 12 days of September 2018.
According to New India’s termination letter, for instance, it has never been given detailed lists of the beneficiaries, along with their Aadhaar numbers, so that it is in a position to verify if the people getting treated are the genuine beneficiaries. Similarly, while the contract said that Aadhaar biometrics would be used for verification, in a very large number of cases, this was overridden. Nor were live photographs taken at the time a patient was admitted or discharged from the hospitals. Indeed, while New India reported various instances of fraud to the Rajasthan government, it says no serious attempt was made to fix this. Indeed, in June, New India de-empanelled 66 hospitals it suspected of making fraudulent claims, but within a few hours of this, the state government overruled it, saying the de-empanelment was “completely unilateral, arbitrary, mala fide and in clear violation of the provisions of the … agreement” between New India and the government since the “clauses related to de-empanelment can be invoked by none other than” the Rajasthan authorities.
So, as the government embarks upon the Ayushman Bharat scheme on Sunday, it needs to ensure it has internalised the lessons of Rajasthan and other schemes like RSBY and has found ways to ensure fraud-control is very strict. Unlike in the case of Rajasthan where, because its profits were on the line, there was an insurance company that was battling against fraud, in the trust model, there is no such independent gatekeeper. Indeed, several states have appointed third-party administrators (TPAs) to do fraud mitigation, but this seems a conflict of interest since, till now, all insurance fraud either happens with the connivance of the hospitals and TPAs or because of the TPA’s inability to detect fraud.