Faceoff between hospitals and Health Insurance companies

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Recently many health insurance companies removed the name of many big hospitals from list of the Preferred Provider Network (PPN). They claim that hospitals have been inflating their bills for patients who have mediclaim policies offering cashless facility. Most of these hospitals are from metros like Mumbai and Delhi. Since the news broke,  it has caused paic among policy holders and they are running from hospitals to Third party administer (TPA) and from TPA to insurance company. This has led to the chaos among patients who holds these health insurance policies and they are not able to understand the logic behind this move. Due to overstating of bills by major healthcare providers, the industry ended up paying Rs 11,000 crore on the premium collection of Rs 8,000 crore.

Health insurance companies held a meeting with representatives of healthcare industry which was organized by Confederation of Indian Industry (CII). They are proposing the insured need to pay some part of the total bill. They are also saying that they will list only those hospitals which will accept their rates of medical expenses.  “The purpose of working out such package rates and stabilizing the hospitalization costs will benefit the insured in many ways,” the four state-run general insurance companies — National Insurance Co, New India Assurance Co, Oriental Insurance Co and United India Insurance Co — said in a joint public notice.

Cashless schemes are one of the most favorite products of customers. Due to high medical expenses, demand for this product has gone up significantly. Under this scheme, insured doesn’t need to pay the hospital, in case hospital is listed with the insurance company as preferred provider network (PPN). Insurance companies have faced severe losses because of the inflated bills of these hospitals.  There is no standard pricing structure in health care industry and due to this, various hospitals charges various prices for treatment of similar disorders/medical ailment. This has cause dissatisfaction among health insurance provider and they have decided to delist those hospitals which they believe that, are overcharging.

In between this entire tussle, policy holders are facing the heat of this face off. Many claims are having been rejected, If a hospital is not listed under cashless scheme, then policy holder will first have to pay the bill and then, he will claim this as reimbursement. With effect from July 1, the PPN model was made operational in Mumbai (74 hospitals), Delhi NCR (131 hospitals), Chennai (65) and Bangalore (58). The four state-run companies also made it clear that their move to restrict cashless facility to approved hospitals would bring down the costs for the insured.

“Lower cost of every hospitalization will leave a larger balance in the sum insured in the policy for future hospitalization within the policy period.”

“Lower cost will also reduce loading on policy premium at the time of renewal,” they said, while adding that their step was “in the interest of all health insurance policy holders.”

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