Page 22 - The Insurance Times September 2022

time of consideration of cashless application or at the time of It appears that authorities of the four PSU companies are
claims submitted by the insured for reimbursement. The TPA deliberately ignoring all these negative aspects of the system
authorities, without bothering to check the bills for correctness with a wrong notion that it is helping in loss ratio control
of amount, and as per the agreement or justification for any but not realising that how harmful this strategy is going to
extra charges, approves cashless authorisation or settle the be for the health insurance portfolio of the company in long
claim for reimbursement on PPN rates and the insured is run.
saddled with bearing such extra charges.
Impact of Health Insurance options
Adverse affect of PPN system Now, if we look into present scenario of health insurance

This is a mockery of PPN system and the consequences are market, we find that the private sector general insurance
that the hospitals/nursing homes merely go on violating the companies had initial cautiousness, but in the last decade
agreement and get scot-free due to total inaction on the many companies have come out with various health
part of Insurer/TPA and the insured is burdened with bearing insurance products. Specially in last five years many
such extra cost. It is not that there is no system to address standalone health insurance companies have come-up and
such lacune. Authorities have set-up nodal authorities at all started aggressively selling many innovative health insurance
four regions to consider any grievance which is being brought products. The biggest change in market scenario was that,
to their notice and corrective measures have also been taken whereas PSU companies' products had features of capping
at their end. But cases of such grievance are very nominal and various sub-limits as also indemnity based on PPN
as against violation of agreement by hospitals/nursing system, the products of private insurers were much-much
homes. This is also because many insureds and many more attractive.
intermediates are not aware as to what to do when they
face cases of overcharging in the prevailing situation. The premium cost for such innovative products is
comparatively higher than the premium rates of PSU
Main question is why does not the TPA check the violation, companies. However, most important features are that
when bills are presented at first instance for processing. provisions of most of the policies are free of any capping or
Settlement at PPN rates with insured and calling the insured limitations. The Bonus feature of various policies increases
to bear the extra charges instead of preventing hospitals/ sum insured and makes it double the amount as early as
nursing homes from charging beyond agreed packaged rates within two years of commencement of the policy.
has resulted in two ways anomaly. One, the hospitals/nursing
homes gets scot-free for violation of agreement and continue In this scenario where, due to deficiencies of PPN system,
to indulge in more such violation and secondly insured as narrated above, and the various capping and sub-limits
remains disgruntled and dissatisfied. under the policies of PSU companies, large number of
insured becoming disgruntled and for the reason of the
Another important aspect of PPN system is that Insurer and, availability of attractive options under the products of
on their behalf, the TPA, applies PPN rates for settlement private sector companies, business under health insurance
of claims in the cases of treatment taken at NON PPN portfolios of PSU companies started shifting in substantial
hospitals under the provision of "Customary and Reasonable manner to private sector health insurance companies.
Charges" clause of the policies. Since, Non PPN hospitals
have no agreement for package rates and their bills contain Private sector insurers including standalone health insurance
charges according to their own schedules rates. Settlement companies adopted a different strategy and their focus was
of such bills on PPN rates again leaves insured to bear the to provide maximum coverage with reasonable pricing.
extra charges and there are no way hospitals/nursing homes
Even, under their policies, where there are no capping or
can be called violator of any agreement. Such Nodal sub-limits and there are provisions of increase of sum insured
Authority system can also not do anything is such cases. through attractive No Claim bonus systems, they also
Insured is the only sufferer in such cases. provided optional covers for OPD expenses, Dental
Treatment cost and even reimbursement of cost of NON-
Voilation of principle of indemnity PAYABLE consumables under various Add-ons. In their

On the part of insurer, creating a situation where insured is underwriting system they will examine proposals thoroughly
called upon to bear extra charges is a clearcut violation of and wherever required, through medical examinations,
'Principle of Indemnity' under the contract of insurance. before accepting it and offering policy. In this method, it is

22 The Insurance Times, September 2022