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Cashless hospitalisation for Mediclaim holders

Freny Patel

Come July, you will no longer have to shell out a deposit on being admitted to a "network" hospital - a hospital that is in the network of third party administrators - or be worried about having to pay what could be sizeable hospital bills on being discharged.

The state-owned insurance companies offering Mediclaim policies will soon offer cashless hospitalisation treatment - they'll settle the bills through their TPAs.

The insurance companies will initially offer this service to large corporate groups whose employees and spouses will be given personal cards to be used at the time of admission in the network hospitals of the TPAs.

The cashless treatment system will, thereafter, be extended to individuals, depending upon the experience and benefit accrued to the insurance companies.

The General Insurers' (Public Sector) Association of India (Gipsa) has started the ball rolling to shortlist TPAs to offer cashless hospitalisation to the policyholders of four state-owned insurance companies.

A Gipsa official said that the exercise had two key objectives. "One is to set up a cashless hospitalisation system, and the second is to bring down claim ratios and costs by plugging loopholes through interaction between TPAs and hospitals and nursing homes," he stated.

Gipsa has, in its proposal for the empanelment of licensed TPAs, identified an incentive package to bring down the loss ratios for the industry. Today, health insurance under the Mediclaim plan is a loss-making proposition.

Loss claim ratios are upwards of 130 per cent. In the cases of corporate groups, the losses rule as high as 300 per cent.

In a major effort to bring down the losses, Gipsa has over and above the fee structure - which will be a percentage of the premium paid by the policyholder - also offered an incentive of a reduction of 10 per cent of the incurred claim if the assigned TPA brings down the ratio to between 60 per cent and 90 per cent.

The incentive increases to a reduction of 20 per cent of the incurred claim if the loss is brought down to between 30 per cent and 60 per cent.

The insurance companies had raised the premium rates on Mediclaim policies earlier this year by 30 per cent. Some of this was reserved for paying fees to TPAs for their services, an insurance company official said.

The Insurance Regulatory and Development Authority has licensed over 13 TPAs, but Gipsa has invited bids only from those which have been operational for at least a year.

The association has outlined various requirements in its plan to appoint TPAs across four zones. Each will have to tie up with at least five hospitals at the state capital level in its respective zone of operation, as well as two hospitals at other centres. Networking with hospitals will bring about cashless hospitalisation to policyholders.

"TPAs will have to authorise the hospitals within their networks to offer cashless hospitalisation," Gipsa said in its proposal form.

Gipsa expects TPAs to complete transactions and settle claims within 10 days. For this purpose, insurance companies will set up a fund -- similar to the impressed account that currently exists to handle overseas mediclaim policies -- which will be administered by the TPA for servicing the cashless treatment.

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