Govt and insurance firm sharing of profits, as well as costs, will ensure claims are met while keeping a check on frauds
With less than a year to go before the next elections, the government is understandably in a hurry to get its ambitious National Health Protection Scheme (NHPS) off the ground—NHPS is to provide free treatment for various types of surgeries that can cost up to Rs 5 lakh for 10 crore households every year, with the Centre and state governments paying the annual insurance premium. It is critical that the scheme be designed well since that will help meet the combined objectives of getting free treatment for as many people as possible while, at the same time, minimising attempts to defraud the insurance company.
The latter, ultimately, is a cost for the government since, as was seen in the case of Rajasthan’s Bhamashah health insurance, with insurance claims continuously rising—and the insurance company suspecting a fair amount of fraud—the insurance company jacked up the premium 3.4 times after the first phase of two years was over.
Putting in a profit-sharing clause—say, if the claims ratio falls below 80%—will limit the insurance company’s incentive to not pass legitimate claims as a large part of the profits will go back to the government. Similarly, putting in a loss-sharing clause, say, once claims reach 120%, will mean that the government will work alongside the insurance companies to keep claims down as it will have to bear a large part of the losses—this means working together to, among others, limit fraud, and ensuring that primary health centres work well as this lowers the need for hospitalisation.
In this context, it has to be pointed out, that the NHPS must have a strict de-empanelment process for hospitals believed to be perpetuating fraud. The problem here is that, in the proposed NHPS setup, insurance companies have limited influence. The draft consultation paper speaks of a state empanelment committee (SEC) and a district empanelment committee (DEC) that will deal with this.
The SEC, however, has just one nominee of the insurance company among its six members; it will be one of three members in the case of the DEC. Given the constant tension between the insurance company and the government in the Bhamashah case, the balance needs to be fixed. In a recent case, New India Assurance Company de-empanelled 66 hospitals in Rajasthan for fraud, but this was revoked by the government within a few hours on grounds that this was “completely unilateral, arbitrary, mala fide and in clear violation of the provisions of the (agreement).”
While the government feels that the insurance company has not given the hospitals a chance to present their case, the insurance company points to the frequent rejection of claims from these hospitals as proof enough. Since empanelment and de-empanelment are critical, this process needs to be as foolproof as possible in the NHPS.
The central government’s inability to come to an approximate cost of the scheme is another big problem. At first, an arbitrary cost of around Rs 1,050 per family was floated, though in a meeting with insurance firms, the government subsequently said this was the cap for just the Centre’s share; later, the Rs 1,050 figure was, once again, trotted out as being the total cost for the Centre and the states. Given how rates vary dramatically across states, it is not clear how the premium has been frozen—for instance, Rajasthan offers a Rs 3 lakh tertiary care cover and charges Rs 1,263 per family, Goa offers a Rs 4 lakh cover but has OPD facilities as well, and the premium is Rs 2,800, Jharkhand offers a Rs 2 lakh cover and the premium there is Rs 1,060. With less than two-and-a-half months to go—the scheme is to be rolled out on August 15—the government has a lot of ground to cover.