Health insurance the road a head

1. HEALTH INSURANCE
Economic growth is an indicator of a country’s well being and development
Empirical evidence suggests that a significant portion of economic growth is contributed by
human capital – the elements of which are level of education and health of the people
Date : 23-March-2018
“Health Insurance – The Road a Head”
Venue: Department of Management Studies
Pondicherry University Karaikal Campus Karaikal

2. Health Scenario in India
• India with a population of 1.3 billion possesses around 18% of the global
population and around 22% of the global disease burden.
• India ranks 154th on the healthcare index Global Burden of Disease Study
(GBD)
• Increase health expenditure by Government as a percentage of GDP from
the existing 1.15% to 2.5% by 2025.
• More than 78 % to 83 % of Healthcare Expenditure in India today is met
out of individuals’ pockets.
• Given the implication that a healthy and productive population has on
economic development, there is need to step up health care funding
mechanism

3. What is Health Insurance ?
Health insurance is a type of insurance coverage that covers the cost of an insured
individual's medical and surgical expenses. Depending on the type of health
insurance coverage, either the insured pays costs out-of-pocket and is then
reimbursed, or the insurer makes payments directly to the provider.

4. History of Health Insurance
• Medical Insurance was first offered in the United States in 1850 and insured
injuries arising from railroad and steamboat accidents.
• In India the formal health insurance started with the ESIS (Employees State
Insurance Scheme) under the ESIS Act 1948 and with the CGHS (Central
Government Health Scheme) 1954.
• In 1981, a limited cover was devised for individuals and families. This was
structured formally in 1986 when 4 subsidiaries of GIC launched the Mediclaim
policy (HDH) both for individuals and Groups

5. Types of Health Insurance Covers
There are mainly four types of Health Insurance covers:
• Individual Insurance : The simplest form of health insurance is the Individual
Insurance policy. It covers the hospitalization expenses for an individual for up to the
sum assured limit. The insurance premium is dependent on the sum assured value.
• Family Floater policy : Sum assured value floats among the family members. i.e. each
opted family member comes under the policy, and it covers expenses for the entire
family up to the sum assured limit. The premium for family floater plans is typically less
than that for Individual insurance cover for each family member
• Unit Linked Health Insurance Plans : Health insurance companies now have
introduced Unit Linked Health Insurance Plans (ULHIP). Such plans combine health
insurance with investment and pay back an amount at the end of the insurance term.
The returns of course are dependent on market performance. for people who can
handle market linked products like ULHIP
• Group Health Insurance/Group Mediclaim Insurance : A group health insurance plan
provides cover to all the members in a single policy. Usually Employers takes such
policies on employees. Upon awareness few institutions, cooperative societies are also
taking such policies

6. Trends - 2005 onwards
A) Common Products sourced by General Insurers:
• Individual Cover
• Family Package Cover
• Senior Citizens Cover
• Overseas Mediclaim
• Diseases specific Covers (Diabetes, Cancer, Cardio etc.,)
• Group Mediclaim Policies
B) Co Branded Health Insurance Products with Banks

7. C) Standalone Health Insurance Companies
D) Life Insurance Companies providing Health Cover
• as an Rider (usually covers few critical illness diseases)
• as an Diseases specific policy (Benefit Products)
• Combi Products (Term from Life and Health from Health/Non Life)
E) Government Schemes : (Governed by different ministries)
• Employment State Insurance Scheme (ESIS)
• Central Government Health Scheme (CGHS)
• Weavers & Artisans Cover
• Universal Health Insurance Cover
• Rajiv Aarogyashri – AP Govt.
• Yeshasvini Scheme – Farmers in Karnataka
• Rashtriya Swasthya Bima Yojana ( RSBY)
• Niramaya Scheme – Disability Health Insurance Etc.,

8. Under penetration of Health Insurance in India
16.60
%3.70%
1.90%
77.80
%
Insurance Coverage
Government Schemes
Group Insurance
• About 78% of the population of India
has no form of health insurance
• Only 2% consciously decided to buy
health insurance
• The protection gap is higher than 78%
because of underinsured
• Source: A 2016 Swiss Re report

9. The NSSO survey carried & report submitted in 2016 (Statistics upto 2014), found out
that, more than 83% of Indians are not covered under any health insurance plan, and
only 18 % (Government funded 12%) of the urban population and 14% (Government
funded 13%) of the rural population was covered under any form of health insurance

10. Why under penetration then?
• Lack of Awareness
• Health Insurance exists – the industry itself is in nascent stage
• Cheaper to pay premium than bearing the repercussion
• What is appropriate cover for me?
• Complexity of Products
• Terms and conditions
• Difficult to compare
• Lack of Trust
• Claim rejections
• Poor perception about insurance industry
• Affordability
• Premium ~5K/year for a meaningful family floater
• Expensive health care
• Fraud

11. Cost of Health Insurance depends on
• Age
• Sum assured
• Current Health Status/condition
• Previous Medical history.
• Own Lifestyle,
• Family history of illnesses and affordability.
• Value of benefits of Health Insurance as whole

12. Health Insurance Statistics – Snapshot
• Health insurance in India contributes 9.6% to General Insurance market.
• Health Insurance premiums collection accounted around 24% of Overall
premiums collected by General Insurers and Standalone Health Insurers upto
September 2017
• The rural population spent, on an average, Rs.5,636 for hospitalised treatment in
a public sector hospital and Rs.21,726 at a private sector hospital.

13. Schools of Medicine:
Allopathy
Ayurvedic
Yogic
Unani
Siddha
Homeopathy
Naturopathy

14. TYPES OF TREATMENTS:-
 Outpatient Department (OPD)
 Domiciliary Treatment
 Daycare treatment (procedure)
 Hospitalization (In-patient treatment)
 Domiciliary Hospitalisation

15. BROAD CLASSIFICATION OF COMPLAINTS:-
 Repudiation/Rejection/Denial of total claim
 Short settlement of claims/Partial repudiation of claim

16. Reasons for Total Claim rejection:-
Non-disclosure of Pre-Existing Diseases (PED)
Non-disclosure of PED in ported policies
Hospitalisation not warranted
Hospitalisation < 24 hours
Non-completion of waiting period
Exclusions of the policy
Hospital not satisfying the norms
Administration of injections/infusions (Cancer/Eye/Osteoporosis)
Absence of Active Line of Treatment
Admission for Diagnostic purpose only

17. Grievance Redressal Mechanism:-
Grievance Redressal Mechanism:-
Internal Grievance mechanism:
One appeal to be made
External Grievance Mechanism:
Ombudsman
CD Forum and
Civil Court

18. Health Insurance
Insurer providing Health
Insurance
Insured
Regulator
Health Insurance
Council
Group Mediclaim
Insurance
Government
Scheme
TPA
Health Care
Provider
Hospitals
Doctors
Diagnostics
Individual/Familie
s

19. Snapshot of Role of Third Party Administrators
(TPAs)

20. DIFFERENCES IN THE HEALTH CARE, HEALTH INSURANCE
COMPARED WITH DIFFERENT COUNTRIES
• Budget
• Nature of Health care- Mixed compared with other countries – consumer
protection regulation, subsidies in the tax system, insurance exchanges
• Vast differences in spending as % of GDP
• Out of Pocket Expenditure
• Health Insurance – Mandatory in some countries
• Scope of coverage
• Premium charges- inflation
• Differentiation in states

21. India ‘s Healthcare and Health Insurance
• Rural Vs Urban divide (4%,18%)
• Need for effective payment mechanisms
• Demand for basic primary healthcare and infrastructure
• Growing pharmaceutical sector (NPPA)
• Underdeveloped medical devices sector

22. Key challenges India is facing in the health
care and Health Insurance

23. Unequally distributed skilled human resources

24. Low public spending on health

25. Irrational use and spiraling cost of drugs

26. Healthcare FRAUD

27. Categories of Perpetrators of FRAUD

28. Consumer Related FRAUDS & ABUSES

29. Consumer Related FRAUDS & ABUSES - Continued

30. Distributor Channel Related FRAUDS

31. Provider Related FRAUDS & Abuses

32. BIMA (RI) Kya He ?

33. TPA Related FRAUDS
 Kickbacks from Provider Network
 Collusion with Network for Inflated / Wrong Bills
 Rewards in the garb of early payments / release of payments to Providers /
Consumers
 Directing the Consumer to a colluded Provider
 TPA Employee colluding with Fraudsters

34. Other FRAUDS Globally Observed
 Primary Care – Pharmacy, Diagnostic Centers
 Coding – Bundling & Unbundling
 Higher Codes
 Viatical Frauds

35. Dealing with Provider FRAUDS
 Cost Control Techniques & Tools
 Utilization Reviews & Medical Audits
 Care Pathways
 Preferred Networks & Network Contracts
 DRG based Payments
 Investigators Services
 Creation of awareness amongst Providers
 Legal Remedies
 Blacklist of errant providers & publishing the same

36. Dealing with Insurer FRAUDS
 Complaints to Regulators
 Media exposure of errant insurers
 Complaints to Consumer forums, Judiciary

37. Future frauds
• OPD
• Pharmacy
• Care pathway fudging
• Wrong medical info for preauth
• Incentivizing the patient for inflated billing
• LTC product

38. Why To Investigate?
 To control the claim ratio (ICR)
 To understand the behavior of hospitals in Region
 To identify the adverse claims behavior
 To identify the nexus if between any hospital and agent / client
or other intermediary
 To confirm hospital eligibility as per the policy conditions
 To control prolonged hospitalizations and over-billing / over
stay
 To identify good hospital who are willing to work on
reasonable SOC under TPA network of hospitals
 To synchronize and educate hospitals / patients to utilize the
policy in proper manner

39. Case 1 : Claim Amount:Rs.25144
Case Details: Manipulation in main hospital bill to increase the
claim amount

40. Case 2 :Claim amount:Rs.110480
Case details: Hospital bill amount was enhanced.Revised bill obtained
from the hospital

41. Case 3 : Claim amount:Rs.26850 Policy type:Individual
Case Details: As per written confirmation from the Pathologist the pathology reports
have not been signed by him and the signature and rubber stamp have been
manipulated

42. Global & Indian Scenario of Healthcare FRAUD
& ABUSE
1 unit out of 7 spent goes to Fraud & Abuse.
16 billion USD in Medicare in 2008 – estimate
About 36 billion losses to U.S Health Insurance per year
In India, estimated loss is 1000 crores & increasing

43. Latest Budget Highlights onHealth Insurance
• Under Section 80D & 80DDB, the insured person who takes out the policy can claim for
tax deductions.
Hike in deduction limit for health insurance premium and/ or medical expenditure from
Rs. 30,000 to Rs. 50,000 under section 80D.
Increase in deduction limit for medical expenditure for certain critical illness from Rs.
60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to
Rs. 1 lakh for all senior citizens, under section 80DDB.
• World’s largest Health Protection Scheme covering over 10 Crore poor and vulnerable
families launched with a family limit upto 5 Lakh rupees for secondary and tertiary
treatment. Ayushman Bharat - National Health Protection Mission (AB-NHPM)
• Premium Likely to have a ceiling of Rs 2,000 on the annual premium per family
• The Premium share between Centre and States will be 60%-40%.
• It will include all existent ailments as well

44. Known Risk Factors for Cancer

45. Possibilities of an Cancer

46. Conclusion
 India has a great opportunity to spearhead a viable and competitive health
insurance sector and encourage the development of a sound high quality health
delivery system .
 What is required is a good understanding of the actuarial and other risks in the
business , a long term vision for those entering it, simple product design ,
supportive regulation and sustained customer education.

47. References
• http://mospi.nic.in/national-sample-survey-office-nsso
• www.healthdata.org/gbd
• https://www.irdai.gov.in
• http://actuaria.in (Mr Sumit Ramani)
• Inputs from Dr Vijaya Bhaskar (Health Insurance Expert) Bengaluru
• Inputs from Dr Nayan V Shah (Paramount TPA)
• Inputs from Office of Insurance Ombudsman Professional Expert Mr Shankaraiah

48. Thank You
Presented by
Jaswanth Singh G
Insurance Domain Consultant and Adjunct Faculty for
Insurance Studies & Pensions
jasshu7@gmail.com +91 9449049107
+91 8310765785