Disputes beteween governments and health care

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In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The insured receives a contract called the insurance policy which details the conditions and circumstances under which the insured will be compensated.

The conception of insurance is the spreading of risks for a few individuals, among many. This is done when individuals and businesses pay a premium to an insurance company to cover them in case of a catastrophic occurrence. In other words, we all pay premiums in case something happens to one of us.

Believe it or not, this simple concept is what drives the existence of all insurance companies. As much as we all complain about insurance, we all have it. If something happens, we can't afford to be without it. The attached article from "Business Insurance" magazine, an insurance industry publication outlines some ideas that make me think our insurance rates are going to go a lot higher before they come down at all.

In order for me to make my case, I think it's necessary to review a basic concept of insurance that is referred to in this article. The very concept that I'm referring to is called an underwriting profit. The insurance industry would have us believe that underwriting and rating insurance policies is a complicated procedure. However, when you break it down to its simplest form, insurance is just like any other business. Profits are what's left when you subtract expenses (dollars out) from revenues (dollars in). In insurance terms, this means a combined expense ratio far enough below 100 % to allow for an acceptable profit. In other words, how much is it going to cost to underwrite, issue, and service a policy and how much does the insurance company expect to pay in claims? If there is money left, that's an underwriting profit. If the expenses and losses are higher than the premium collected, that's an underwriting loss.

What is cashless Insurance?

Cashless insurance is service provided by an insurer wherein you are not required to settle the insurance expenses at the time of discharge from hospital. The settlement is done just directly by the insurance company. However, prior approval is required for the insurance claim from the TPA before the patient is admitted into the hospital. The purpose behind buying health insurance is that if you or your family member needs medical treatment, at least the need for immediate finances is met by the insurer company. Cashless settlement policies are aimed to go a step further. Insurance companies tout cashless settlement policies as customer-friendly and convenient. But sometime these companies avoid of responsibilities for paying the insurer the payment of policy. They avoid and ignore by using many terms and conditions for their personal profit. By this, unfortunately, for many who have bought these policies, the experience has not really been joyful. It makes some minus point of views for these cashless insurance policies. As per human tendency people alway goes behind most easiest things and cashless on of this. In cashless policy companies are claims that they will provide you cashless facility during the treatment or hospitalization and they do but as per the policy rules and units and mostly time we misguide by our insurance agent because of his/ her sales targets.

In India mostly insurance companies are providing health insurance policy and there are few who is providing cashless insurance and its premium is little high than other insurance policy and one TPA is involved  in during the settlement. The TPA (Third Party Administrator) authorised to do all paper work and authorized communicator of insurance firm. He have a rights to approve and rejects you insurance claim.

Most of the time we never read the term and condition and trust on our insurance agent and they most of the time miss guide us due to sales target. We should read term and conditions and features of policy or at-least check following things .

Total Units, Daily Room charges, Daily ICU charges, Weekly cash allowance, Minimum hospitalization day, Nearest hospitals, Is policy is cash less, Under cover Disease, Critical illness include or exclude etc.

The concept of cashless insurance is meant to give people the chance of getting the treatment they need without causing any financial strain on the individual. There are a number of means by which this can be done. The concept of cashless insurance in India is one of the means. Apollo Munich offers this facility in more than 4000 network hospitals. Same like ICICI Lombard is offering this kind of facility.

When people cannot afford the basic necessities of life, it becomes a big problem. Many people think that there is little that a person can do to get the needed treatment when he/she cannot afford it. The possible solutions that most persons put forth are related to giving up certain ambitions or needs. However, this is not true. Health insurance plans can easily give individuals the needed edge to deal with the financial strain at such times. Although the concept of cashless insurance in India is growing at a slow pace, it is making medical insurance much easier.

When a person buys a health insurance policy, he/she just has to use the plan to get treatments. The person can pay for the treatment and then get the amount claimed from the company. This means that the individual can get the needed treatment, but he/she has to pay for the same. The financial strain is only avoided after the treatment when the claim is made, and the reimbursement settled. This is why cashless hospitalization or cashless insurance in India is growing. The idea behind the concept is that the individual should not have to pay anything and thus not worry about arranging funds for the treatment.

A health insurance provider or the third party administrator ties-up with several hospitals to provide cashless hospitalization. The hospital then allows insured patients to come in and get treated without paying for the treatment. The patient has to show his/her id proof and proof of the policy and thereafter can get the needed treatment. The hospital then settles the claim directly with the insurance provider. This concept of cashless treatment or (cashless insurance in India) is the ideal healthcare solution that people can avail. The hospitals in the list should be well-reputed and provide good healthcare facilities to people. Apollo Munich has over 4000 hospitals in its network. However, customers can also get the needed treatment in non-network hospitals.

Social Health Insurance, Universal coverage has two dimensions: health care coverage (adequate health care) and population coverage (health care for all) and, coupled with the societal values that underpin it, leaves essentially two financing options-general taxation and SHI. The former implies financing care entirely from general revenue; its viability as the single mechanism to finance universal health coverage is necessarily limited in an environment of competing demands on a severely limited tax base. The SHI is based on income-determined contributions from mandatory membership of, in principal, the entire population with the government subsidizing the financially vulnerable sections. While the SHI is an effective risk-pooling mechanism that allocates services according to need and distributes the financial burden according to the ability to pay (thereby ensuring equity in access), such schemes are difficult and expensive to implement where a majority of the workforce is unemployed or employed in the informal sector.

Types of Cashless claims:

Cashless claims can be of two types:-

Planned: Where the insured is aware of the hospitalisation (situation for which insurer is insured) 2-3 days in advance. In this type, insured make informed the insurer some days earliar for the situation for which he or she want services of the company for insurance by availing the money.

Emergency: Where the insured or any covered family member meets with sudden accident or suffers from bout of illness that requires immediate hospitalisation. In this kind of situation, where the situation occurs immediately like accidents, where money or funding help is needed urgently.

Cashless Insurance & Mediclaim Policy:

Various General Insurance Companies are now offering Mediclaim policy. Mediclaim policy is a health insurance product. Through this insurance product, the insured person can receive a unique benefit - the Cashless Service.

Cashless facility means that the insurance company settles the bill directly with healthcare provider, whether a hospital or a nursing home. The aim behind it is to reduce the direct financial burden on insured individual at the time of hospitalization. Therefore, whatever bill is raised by the healthcare provider, Insurance company settles it directly through a Third Party Administrator. The beneficiary can avail of the cashless facility at any of the hospitals in the insurance company's network by presenting valid documentation on admission. The hospitals in the network are those, which have signed on with the insurance company to honor their insured person's claim of cashless service. To choose the best mediclaim policy from the wide range available in market is a tedious job especially as you need to do comprehensive research before investing. However, your task is becoming easier as these days it is so easy for you to get information online. You can obtain quotes for mediclaim policy online; not only that, you can compare different mediclaim policies. Thus you are able to ensure that you are getting the right cover for your individual needs at a price that meets your budget.

Beginning of Cashless Insurance (Health Insurance) on Indian canvas:

Social security for medical urgencies is not new to the Indian scenario. It is a common practice for villagers to take a collection to support a household with a sick patient. However, health insurance, as we know it today, was introduced only in 1912 when the first Insurance Act was passed (Devadasan 2004). The current version of the Insurance Act was introduced in 1938. Since then there was little change till 1972 when the insurance industry was nationalized and 107 private insurance companies were brought under the umbrella of the General Insurance Corporation (GIC). Private and foreign entrepreneurs were allowed to enter the market with the enactment of the Insurance Regulatory and Development Act (IRDA) in 1999.

In 1999, individual claims by govt. Institution was 733236 Rs. Numbers in breckets are the cases used for the analysis. Pvt. Institutions claims was 914897. These shows that 55.5 % claims was by pvt. Sector. In 2004 total paid of claims was 89.5% by pvt. Sectors.

The penetration of health insurance in India has been low. It is estimated that only about 3% to 5% of Indians are covered under any form of health insurance. In terms of the market share, the size of the commercial insurance is barely 1% of the total health spending in the country. The Indian health insurance scenario is a mix of mandatory social health insurance (SHI), voluntary private health insurance and community- based health insurance (CBHI). Health insurance is thus really a minor player in the health ecosystem.

Some community healthcare schemes in india:

The Insurance Regulatory and Development Act (IRDA) 1999

The IRDA was passed in December 1999 by Parliament. The Act allows for the entry of private sector entities in the Indian insurance sector, including health insurance, and envisages the creation of a regulatory authority. The IRDA is supposed to protect the interests of the policyholders, promote efficiency in the conduct of insurance, regulate the rates and terms and conditions of the policies offered by insurers and direct the maintenance of solvency margins.

The IRDA provides sufficient protection for capital and solvency margins. There is an entry requirement of a minimum capital of Rs 100 crore. Then there is a minimum lower bound of Rs 50 crore for the solvency margin along with a requirement of 20% of net premiums or 30% of the average of net incurred claims in the 3 preceding years. The IRDA has wide powers for accounting and auditing insurers. The Insurance Act does not allow

the insurers to undertake additional business that is not directly linked to insurance. It discusses the liquidation of a company but does not talk of a Guarantee fund.

The IRDA specifies a code of conduct for the insurance agents and also allows for a Tariff Advisory Committee to oversee premium rates, insurance plans and to prevent discrimination. However, there is no specific clause for the consumer, who has to use the CPA of 1986 to redress any complaints. The IRDA does not have much to say about the

relationship between the insurer and the provider. Though the Tariff Advisory Committee can make recommendations the IRDA also does not have much to say about rating the premium. The IRDA does not also specify the benefit packages. It however allows for the entry of re-insurers in the market. Its main two functions are maintaining market standards, and oversee solutions & market possibilities.

Dispute of Govt & hospital about cashless insurance

The association of private hospitals have sought state government's intervention to settle the ongoing dispute with insurance companies over cashless mediclaim policy.

The association, which includes hospitals like Jalok, Breach Candy, Hinduja and Hurkisondas, has said that the demands of uniform rates for medical procedures that had been put forth by insurance firms were not plausible. "Rates differ according to available equipment and location of hospitals. Even within hospitals, rates vary according to the class of service patients opt for," said CEO of Jaslok Hospital Colonel Manesh Masand. He added that costs also vary for different procedures for the same ailment. "Cancer can be treated by focused MRI and through surgery, at exponentially different costs. The choice of treatment is finally up to the patient," said Colonel Masand.

"Government intervention is required here. Petrol is being made duty free, whereas hospitals have to pay the highest custom duties for all imported equipment. It is important to understand that our costs are determined by all these factors," said Breach Candy Hospital CEO Major General Vijay Krishna.

The hospital authorities also rubbished allegations of overcharging. "The billing system in private hospitals is fixed and freely available for all patients to see in advance. Where is the room for exceeding the set charges for particular procedures?" said Pramod Lele, CEO of Hinduja Hospital.

The hospital authorities said that if the government approved some nodal agency for rating hospitals, they were willing to subscribe to rates as per these gradations. They added that they were open to dialogue with insurance companies to resolve the deadlock. "Our beds are full. Striking off cashless treatment has not really affected our inflow. But in this conundrum, patients are suffering, as we are forced to turn away many who produce cashless mediclaim cards," said Lele. He added that hospitals were willing to negotiate rates, provided insurance firms take the comprehensive cost of healthcare into account. Public sector insurance companies had alleged that hospitals were billing patients higher and extending their stay in hospitals if they were insured under the cashless treatment policy.

Govt. Opinion about cashless insurance: Reason of dispute

Govt of India Taking serious note of several insurance firms withdrawing cashless facility from certain private hospitals, Delhi Government said it would take every possible step to ensure that people are "not held to ransom" in the "fight" between hospitals and insurance firms.

Chief Minister Sheila Dikshit, promising to look into the issue, said her government needed a week's time to try to find a solution.

Terming it as a "serious issue", Delhi Health Minister Kiran Walia said the decision to discontinue the facility on the ground that hospitals often submit inflated bills to the companies for treating people having cashless insurance cover has "impacted a large number of patients.

"We are really concerned as we know the impact. We cannot allow somebody to hold the patient to ransom in the fight," Walia said.

She said some health insurance companies stopped the cashless facility with effect from July one for treatment in some of the city hospitals citing submission of inflated bills by the hospitals. "We will do something. Give us some time. We will hold talks within a week and try to find a solution to the problem," Dikshit said.

Noting that the issue has legal aspects and involves the Union Government, Walia said the "Delhi Government was examining whether it could resolve it".

"We will do whatever little we can do. We will take every possible step to ensure that people do not face difficulties. It is a serious issue. You cannot throw the baby with the bath water," she said.

People having cashless health insurance policy do not require to pay any amount for treatment at the hospitals covered under the scheme as the hospitals get the cost of the treatment from the insurance companies.

Effects on citizens perception by this dispute

This dispute between Govt. And hospitals and pvt. Insurence services sectors, effect on senior citizen perception about trust on these cashless insurance polices. I read a news-letter about the same view. It was that The Confederation of Senior Citizens Associations of Delhi has written to the Insurance Regulatory and Development Authority (IRDA) to look into the issue. In a letter to IRDA Chairman Hari Narayan,

J.R. Gupta, chairperson of the confederation, has said that a number of complaints have been received on how senior citizens have been denied treatment in private hospitals and "are forced to make the payment on spot although they have in their possession the cashless policies."

The confederation, which represents over nine lakh senior citizens all over Delhi, has already brought the issue to the notice of Delhi Chief Minister Sheila Dikshit.

Curbing cashless claims is a violation of terms of contract, Mathew Cherian, CEO, HelpAge India, a non-profit organisation working for better healthcare for the elderly, told HT. "The contract to provide cashless benifits has been given to subscribers at the time of purchase and it cannot be scrapped suddenly," Cherian said.

State-run insurers had said the facility of cashless benifits would be extended to those hospitals that agree to their rates for medical expenses.

Claims to premium ratio is 180 per cent in group health , resulting in huge losses for the insurers, reports said.

Dispute settlement between State Govt. And various Pvt. Insurance Sectors

In the Pvt. Sector hospitals and insurance companies which are offering these schemes has difference policies which raised dispute between govt. And other private entites. For that many agreements are being done by state govt. And pvt. Institutions. Like as, Department of Health & Family Welfare, Government of Chhattisgarh and The Oriental Insurance Company Limited got dispute on the giving benefits to the BPL card holder. Govt. Agreed that they will pay to company premium payments on every BPL card holder and in return, the company will give the benefits according to agreement, which is done.

The Government hereby agrees to payment of premium of Rs. 569.33/- per

enrolled BPL household (inclusive of Central Govt. Service Tax @ 12.36 %) as health

insurance premium for the Beneficiaries in the aforementioned districts. The premium also

includes the cost of the smart card issued to each Beneficiary household. The Government

undertakes to pay the premium in the following manner:

a) First Installment of Rs. 30/- paid by the beneficiary directly to the insurance company.

b) The second instalment (Rs. 97.33) would come from the State Nodal Agency to the

insurance company in the nature of 25% of (569.33-60= 509.33) = [127.33-30].

c) The second instalment (Rs. 442.00 ) would be paid by the Central Government through

the State Nodal Agency as per the following formulation:

75% of (569.33-60=509.33) = (382+60)

d) Premium for Maternity Benefits after approval from GOI

The premium shall be paid based on number of cards issued; this payment shall be made on a

monthly basis upon submission of list of Beneficiaries as per the format to be prescribed by theGovernment.

In consideration of the premium payment, the Insurer hereby agrees to provide health insurance coverage in the districts of Raipur, Durg, Bilaspur, Rajnandgaon, Sarguja, & Bastar to the Beneficiaries under Rashtriya Swasthya Bima Yojana on the terms, conditions and in the manner set out in this Agreement.

A BPL household which has had a smart card issued will receive Benefits under the

scheme from the first day of the next month (1ST July 2009 to 30th June 2010), subject to payment of the first installment by the beneficiary [e.g. someone enrolled in January, their coverage would start February 1).

The Scheme shall commence operation from the first of the month after the next month from the date of issue of smart card. Thus, if the initial smart cards are issued anytime during the month of June in a particular district the scheme will commence from first of July. The scheme will last for one year till 30th of June next year. This would be the terminal date of the scheme in that particular district. Thus, cards issued during the intervening period in the district will also have the terminal date as 30th June of the following year.

The date of commencement of insurance for the cards issued during the intervening period

will be as follows:

Smart card issued upto

Insurance will start

Policy period


1 June 2009

1st July 2009

30th June, 2010


2 July 2009

1st August 2009

30th June, 2010


3 August 2009

1st September 2009

30th June, 2010


4 Sept 2009

1st October 2009

30th June, 2010


4 Sept 2009

1st November 2009

30th June, 2010


6 Nov 2009

1st December 2009

30th June, 2010


7 Dec 2009

1st January 2009

30th June, 2010


The Government hereby agrees to provide the Insurer with the complete and updated list of BPL households as per the 2002 BPL census (as subsequently updated or revised) in thedistricts of Raipur, Durg, Bilaspur, Rajnandgaon, Sarguja, & Bastar. The list shall be

provided in both printed and electronic form in pre-determined format as prescribed by the

Central Government. It should contain the full list of household members of each BPL


The Insurer shall enter into an agreement with a smart card provider in order to fulfill the Insurer's obligation for issuing compliant smart cards to beneficiaries under the scheme.

For the purposes of the Parties to this agreement, the Insurer will be responsible for

issuance of compliant smart cards, with such obligations and remedies as necessary

between it and the smart card provider to be agreed between them.

The Parties mutually agree on the following with respect to enrollment:

The enrolment of the beneficiaries will be undertaken by the Insurance Company selected by the State Government and approved by the Central Government. The Insurer shall

enroll the BPL beneficiaries based on the soft data provided by the State Government/Nodal Agency and issue Smart card as per Central Government specifications through Smart Card Vender and handover the same to the beneficiaries atenrolment station level/village level itself during the enrolment period.

The insurance company shall under no circumstances make any changes to the BPL data except for capturing the fields given by the govt. Data.

Further, the enrolment process will continue as per schedule agreed by the Government /

Nodal Agency. Insurer in consultation with the State Government / Nodal Agency will

chalk out the enrolment cycle up to village level by identifying enrolment stations in a

manner that representative of Insurer, Government/Nodal Agency and smart card vender

can complete the task in scheduled time. The process of enrolment shall be as under:

(a) The Insurer will download the BPL data for the selected districts from the RSBY

website. This data would have been uploaded by the nodal agency in the pre-defined

format after self verification.

(b) The Insurer will arrange for preparation of the smart card as per the Guidelines provided

in Annexures. The software for issuing smart cards and usage of smart card services

shall be the one approved by the Central Government.

(c) A schedule of programme shall be worked out by the Government/Nodal Agency in

consultation with the Insurer for each village in the district.

(d) The nodal agency will ensure availability of sufficient number of FKOs to accompany

the enrollment teams as per schedule.

(e) Advance publicity of the visit of representatives of the State Government and the

Insurance Provider will be done by the Insurer and State Government/Nodal Agency in

respective villages.

(f) List of BPL shall be posted prominently in the village by the Insurer.

(g) The representatives will visit each enrolment station/village in the selected district

jointly on the pre-schedule dates for enrolment and issuance of smart card.

(h) At the time of enrolment, the government official will identify each beneficiary in the

presence of the insurance representative.

(i) At the time of handing over the card, the INSURER will collect the registration fee of

Rs.30/- from the beneficiary.

(j) This amount will be adjusted against the amount of premium to be paid to the INSURER

by the Nodal Agency.

(k) The Insurer's representative will also provide a pamphlet along with Smart Card to the

beneficiary indicating the list of the networked hospitals, the availability of benefits and

the names and details of the contact person/persons. To prevent damage to the smart

card, a plastic jacket should be provided to keep the smart card.

(l) The beneficiary will also be informed about the date on which the card will become

operational (month).

(m) The beneficiary or the eligible person of the family will be entitled for cashless

treatment in designated hospitals on presentation of the Smart Card

(n) The Insurer shall inform enrolled Beneficiaries of their local intermediary institution and

provide information to them on a schedule of information and education sessions to be

provided by the intermediary institution.