Page 31 - Life Insurance Today FEBRUARY 2016

Insurers negotiate
with hospitals to
bring down rates
E ven as healthcare costs keep
rising year after year, health
insurers have managed to
bring down medical inflation
rates by half on policies settled via the according to data provided
cashless route. It has achieved this
through negotiating predefined rates
with hospitals on major surgical
procedures.
For instance, for appendicitis surgery,
if the rack rate is about Rs. 30,000, a
patient with a cashless package could
be charged Rs. 25,000.
Under the cashless facility, the health
insurance company settles the bill
directly with the network hospital,
unlike reimbursement policies where
the policyholder first pays for the
medical expenses from his pocket and
later gets reimbursed by the insurer.
Amit Bhandari, Head – Health
Underwriting and Claims, ICICI
Lombard, said that his company has
been increasingly negotiating and
entering into agreements on package
rates with hospitals, which are locked
in for two years.
Medical inflations
So, while the rate of medical inflation
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is currently around 15 per
cent, insurers managed to
cap it at 5.5 per cent during
2014-15 for cashless claims,
by ICICI Lombard, the
largest private general insurer. In
2011, the four public sector general
insurers, which control 70 per cent of
the Rs. 20,000-crore health insurance
industry, in a bid to contain losses
resulting from inflated medical claims
from hospitals decided to standardise
rates for around 42 medical
procedures across various categories
of hospitals for settling cashless claims. as the insured market grows,
Preferred provider network
Consequently, the General Insurance
Public Sector Association (GIPSA)
restricted their cashless service only to
hospitals that accepted these price
bands called the PPN (preferred
provider network). While the step to
set up a PPN was vehemently opposed
by most large hospitals, insurers say
that they have now become more
receptive. Incidentally, officials from
GIPSA met in November, 2015 to
discuss the progress and expand the
PPN network of hospitals.
Segar Sampath Kumar, General
February 2016
Manager at New India Assurance, the
largest domestic general insurer, said
that the PPN network currently has
around 1,000 hospitals and has helped
insurers get a discount of a minimum
15 per cent in all major surgical
procedures.
He said that general insurers have also
been blacklisting those hospitals that
have been consistently overcharging
insurers.
KG Krishnamoorthy Rao, MD and CEO
of Future Generali Insurance said that
hospitals, including the large ones
which were earlier resistant to come
on board, are keen to join the cashless
bandwagon.
Insurers, however, admit that they are
still in the evolutionary process of
monitoring hospitals as they often
charge insurers more than the pre-
defined rates citing complications in
procedures. (Source : Business Line)
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