Private insurers too may axe cashless mediclaim

Private sector general insurers may follow their public sector counterparts in discontinuing the cashless facility to hospitals that do not agree to the package rates proposed by the insurers.Health has been a loss making segment for the industry.

With public sector insurers taking the lead in removing errant hospitals from their preferred provider network (PPN), the private sector players consider this the right time to follow suit.

Public sector insurers have almost 60 per cent share in the health insurance market.

Private players are waiting for the hospitals and the public sector insurers to resolve the issue before evolving an industry-level framework on PPN. “There has always been a need to control the claims payout in health as the loss ratio in the health insurance segment is as high as 120-130 per cent. For Rs 8,000 crore premium collected by the industry, the claim outgo is more than Rs 12,000 crore. We will look to evolve a basic framework at an industry level to restrict the hospital network,” said an official with a private sector company.

Collective guidance

Mr S.L. Mohan, Secretary-General, General Insurance Council, said that once the issue is settled between public sector insurers and hospitals, the council could help the private companies by giving them collective guidance.

“A basic framework could be evolved by the industry that hospitals would have to agree to for being a part of the PPN,” said Mr Mohan.

A senior official from New India Assurance Company said private insurers have shown interest in joining the preferred provider network.

“With our move, the momentum has been built. Other stakeholders are also likely to follow suit,” the official added.

The four public sector players — New India, Oriental, National and United India — had removed some of the leading hospital chains across Mumbai, Bangalore, Delhi and Chennai from the preferred provider network from July 1. This meant that even though customers could go to these hospitals for treatment, they could not avail themselves of the cashless facility. They would have to make payments and later apply to the insurance company for reimbursement.

Inflated bills

Insurance companies removed these hospitals from the list as it was found that they were overcharging customers, thus leading to inflated bills. The PSU insurers wanted these hospitals to fall in line with the rates prescribed to them to check their losses.

Earlier, each third party administrator would have its own network of hospitals. Now with the agreement among the four public sector players, the 20-22 TPAs servicing the four PSUs will have a common list of hospitals in these four cities.