Now you see it, now you don’t

This week saw the bizarre suspension of cashless hospitalisation services to clients of two insurers by the Association of Healthcare Providers (AHPI). The insurers cried foul. Their self-regulatory organisation, General Insurance Business Council rose up in their defence, calling out the ‘abrupt’ and ‘unilateral’ public announcement ‘without dialogue or resolution’. It added that the move hurt the common man and urged that it should be rolled back.

AHPI’s move was reportedly because insurers were not re-negotiating treatment package rates while hospitals were facing huge cost inflation. One hears from hospitals that they are being pressured to accept five-year contracts on package rates by insurers.

Insurers empanel hospitals – add them to their preferred provider network – and the insured can avail cashless treatment at these establishments. Being part of the network entails hospitals treating the policyholders of the insurers at pre-negotiated package rates for various treatments, procedures and surgeries.

More patients

Hospitals sign on since this opens the door to customers, especially the paying ones. The recent crisis was resolved after talks and suspension of cashless service was revoked.

Meanwhile another insurer suspended cashless facilities at one of its hospital partners, a chain of hospitals as ‘package rates have not been renegotiated for a length of time.’ In all the above cases its not as if the claims will not be paid. The insured has to settle the hospital bill and make a reimbursement claim.

The face-off brings to sharp focus the inequality between a highly- regulated insurance industry where the regulator wants all hospitalisation claims to be cashless. Meanwhile, there is no regulation on pricing for the healthcare sector.

In the initial period of health cover in India, hospitals overcharged the insured patients who went along as they had paid for insurance. Now, the tussle between the two has taken a different hue. One dimension is the problem described above. Another is insurance or not, hospitals charge preferred rates, letting insured claim cashless treatment for the negotiated rate while billing them separately for the difference.

Another departure hospitals make, is to ask patients to deposit the full package cost up front pending receipt of payment via insurer’s cashless system. After that they will refund the patient. Hospitals say this is because, having treated and discharged the insured patient, they wait for an indeterminate time for payments as insurers raise query after query.

An ecosystem has several players and all of them have to find a solution that meet their needs and is also win-win. Without such a dynamic equilibrium, the system will not work.

(The writer is a business journalist specialising in insurance & corporate history)