Page 20 - The Insurance Times September 2022

modern facilities also resulted in raise in considerably higher
What is PPN system?
treatment cost.
For simple understanding of PPN system, it is a legal and
binding agreement between TPA on behalf of insurer, as one
As at the time of introduction of health insurance coverages
party and the hospitals/Nursing Homes as other party,
only Public Sector Insurance (PSU) companies were present/
whereby such other party agrees that for various
available in the market. Though, health insurance portfolio
procedures, fixed packaged rates will be charged from the
grew substantially for all four companies, the management
patients availing CASHLESS facility under the policy provisions
of Health insurance portfolio for all the insurance companies
and the TPA, on behalf of insurer includes the name of such
become a challenging task for a simple reason that health
hospital in the list of PREFERRED PROVIDER NETWORK
treatment costs were considerably higher.
hospitals which are approved hospitals providing CASHLESS
facility. Hospitals chooses this inclusion in PPN listed hospitals
Commercial aspects of health service providers with better
for the reason that they get more patients, which in a way
facilities have resulted in offering various services at a
is commercial consideration for them.
premium cost. Patients' choice for obtaining best treatment
at modern facilities and modern treatment protocols has
From the above position, ideally, when any patient
also kept treatment costs at higher levels. As a result of
undertakes treatment in such PPN listed hospitals, he should
which the health insurance portfolio remained in red,
be charged as per the agreed packaged rate, neither more
almost all along.
nor less. But in reality, it seldom happens. Invariably,
hospitals charge in excess of agreed rates but the TPA
From the year 2000 onwards, private sector insurers also
settles the claim, either while approving CASHLESS amount
started operating in India. Cautious about the market
or settling reimbursement claim at PPN rates agreed
scenario of health insurance portfolio with the available
between them. Patient is called upon to pay extra charges.
operating results of four PSU companies, they were
It is not that the hospitals/NH cannot charge over and above
reluctant to enter in the market with this portfolio in a big
Package rates under the agreement. Under certain
way. As such, even after entry of private companies in the
circumstances, which are defined by IRDA and for this
market the health insurance coverages were mainly provided
purpose a declaration needs to be signed by the patient
by PSU companies for next decade also. One of the
party, stating that they can charge over and above package
important features of the health insurance policies offered
rates and insured has to bear such additional charges. IRDA
by PSU companies to the general public was that coverages
declaration provides for such additional charges, which
were with subject to capping and limitations.
Hospitals/NH can charge and which is to be borne by the
As the health portfolio remained loss making for almost large insured, are as under:
parts of three decades in all the four PSU companies, an
innovative mechanism for controlling losses was designed "In case, policyholder wishes to avail better facility: Name
and introduced around 2010, which is known as PREFERRED of the Additional Facility/ Provision/ Procedure/ Treatment
PROVIDER NETWORK (PPN) approved HOSPITALS and ………………………………………………………………......…………………
NURSING HOMES. The sole aim was to minimise the losses ……....... which costs Rs. : …..................……………………
under this portfolio of all the four companies, but it was also …………………………….(In words: …………….....………………………
projected by some of the heads of these companies during ………………................…………………………………………………
various interviews that with the expected reduction of claim …………………………………………. ……………………………………………
amounts the corollary effect will be reduction in premium ……………………………………………....……………………………… )
cost for insuring public. Undoubtedly the scheme of PPN was only. On my own option, I wish to avail above better facility
well designed and intended for the objective which was set and I hereby agree to pay on my free will, after being
by the authorities. However, in the long run it proved to be explained in detail by the Hospital authority in my own and
total disastrous and only generated resentment and understandable language about the above mentioned
complains for insuring public and to understand why this Additional Facility/Procedure/Treatment and associated cost
system turned out to be a failure and did not bring about of it, which is over and above the agreed PPN tariff.
the intended results, we have to understand what is the PPN
system, what are the causes of its' failure and how it Further, if I opt to go for final bill reimbursement with
affected customers' confidence on PSU company's health insurance company, respective insurance company will
products? reimburse only as per agreed PPN tariff rates and balance

20 The Insurance Times, September 2022