HEALTH INSURANCE &

THIRD PARTY ADMINISTRATION

Presentation By-Neha BhakerPoonam Dehariya

Guided By-Dr. Sunil Chandiwal

What is Health Insurance ???

Health insurance means risk coverage to provide financial shelter in the event of medical treatment incurred out of a sickness.

Health insurance is one of the fastest growing areas in the insurance industry and is expected to grow to Rs.30,000 crores in 5 years from the current Rs. 8,100 crores.

Why is Health Insurance important?

Rising medical costs Sharing of health related risk uncertain hospital bills Expensive/quality health care services Money value – Sick Vs Healthy Family health insurance Tax benefit Productivity of workforce Removes some of the burden from the state Keeping pace with the customer needs while

achieving profitability

The Indian Health Scenario

Total Expenditure on health in India is nearly 6% of the entire GDP

Private health care expenditure is 4.25 % of GDP. At present the insurance coverage in India is

negligible. Over the period the private health care

expenditure has grown at the rate of 12.84 % per annum.

Indian health insurance industry stands at INR 8,100 crores with only a small Section of the total population (around 2%) being covered so far.

CAGR of around 35 % (FY2002-08)

Source: Business World (India) – Oct 2007Source: Business World (India) – Oct 2007

Low penetration of Insurance and Low Govt. expenditure in Low penetration of Insurance and Low Govt. expenditure in India . . .India . . .

Has resulted in high Out-of-Pocket spendHas resulted in high Out-of-Pocket spend

Perceptions about Health Insurance in IndiaWhat is INSURANCE ? Buying a Promise

Health Insurance: Key Stakeholders

Health Insurance Industry

Government

Distribution channel partners

NGOs / SHGs / MFIs

Media / Telecom

Customer

Insurance companiesTPAs

Health Providers

IRDA - regulator

Introduction to Health Insurance Policy

Provided by both private and public Cos. Voluntary medical insurance program that

provides for reimbursement of hospitalization/domiciliary hospitalization expenses/disease suffered/ accidental injuries sustained during policy period.

Includes : Family floater (for families) mediclaim. Health insurance or mediclaim for individuals and for

senior citizens. Overseas travel insurance.

Mediclaim Policy Instituted in 1986. Eligibilty criteria - 5 to 80 years of age. Premium – depends on age and sum insured. Benefits – hospitalization benefits from Rs.15000

to a maximum of Rs. 5,00,000. Providers – any hospital with 15 beds or more Exclusions – any pre-existing disease Payment mode – reimbursement of bill by Co. or

by TPA is also possible. (premium – 6%)

Need For H.I Policy

According to Money Digest 2003:

1 in 3 person will develop some life threatening cancer.

1 in 4 person will contact heart disease before they retire.

1 in 20 person risk the chance of having stroke before the age of 70

Need For H.I Policy contd…

According to World Bank Report: 85% of the working population in India do

not have Rs.5,00,000 as instant cash. 14% have Rs.5,00,000 instantly but will

subsequently face financial crunch. Only 1% can afford to spend Rs.5,00,000

instantly and easily. 99% of Indians will face financial crunch in

case of critical illness. Hence the need for Health Insurance.

Who does not need H.I???

One who is covered by his employer.

One who can make immediate payment of hospital bills of the order of Rs.1,00,000 or Rs.2,00,000 or even Rs.5,00,000 need not to go for health insurance.

What H.I Policy covers in India?

It covers hospitalization when a patient is in hospital for more than 24 hours due to:

-Illness -Accident -Surgical requirement

COSTS COVERED ARE:

Room, boarding expense in hospital/nursing home.

Nursing and ICU expenditures Fees of healthcare professionals

involved in the treatment Anaesthesia Pre and post hospitalization

expenses.

What H.I Policy in India does not cover? Treatment of illness at home by

consulting doctor in your locality or even in hospital.

Health check-ups,home health services. Long term care/rehabilitative care Preventive healthcare Dental and vision services Outpatient services

Health Insurance Plans Health

Insurance Plans

Private SocialCommunity

Based / Micro Insurance

Existing Schemes Can Be Categorized As:

(1) Voluntary health insurance schemes or private-for-profit schemes;

(2) Employer-based schemes;

(3) Insurance offered by NGOs / community based health insurance (CBHI), and

(4) Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS).

THIRD PARTY ADMINISTRATION

TPAs are BPO of insurance companies and are responsible for coordinating all aspects of claims arising due to health insurance policies.

TPA

Insurance

company

Policy Holder

Hospital

premium

reimbursement

Health services

Services provided by TPA

I.D Card 24 hours helpline for customer

services Providing list of hospitals in network Claim processing during admission

of policy holder Enquiry Scrutinizing bills

Functions Of TPA Coordinates with insurance co. & hospital Maintains all records Enrollment processing Issues authorization forms to the hospital Makes the payment to the hospital Facilitates claim settlement Fund administration Benefits management

Procedures Facilitated by TPA

Cashless hospitalization

Reimbursement

Enhancement Claim settlement

You require hospitalization

Planned Emergency

TPA scruitinizes & on case to case basis authorizes

mediclaim

Approval granted & you get cashless hospitalization

You get treated & prior to discharge complete claim form and sign all billsPay all non-medical bills by yourself

TPA pays bills of approved amount to the hospital

Approval not granted ,no cashless hospitalization but claim papers can be submitted for reimbursement

Planned & emergency bills are paid by you. claim to be sumbitted to TPA with original documents

Network hospital

Non-Network hospital

CASHLESS HOSP.

REIMBURSEMENT

Patient pays total bill to the hospital

After discharge submits all the original bills+original discharge summary+original investigative

reports to TPA

Patient is reimbursed within 30-60 days

Claim studied by TPA

ENHANCEMENT:

In case the bill exceeds the approved amount, the ward coordinator sends the final bills and documents to the respective TPA for enhancement.

CLAIM SETTLEMENTAll documents of

patient are sent to TPA

No discrepancy

TPA studies the claim

Discrepancy found

Claim settled within 30-60 days

Queries on them are asked

Resolved with hospital

Claim disapproval or denial

Not resolved

PROBLEMS :FACED BY TPAs : Lack of proper communication Increased bill and treatment cost Hospitals show negligence in filing the claim procedure Lack of trained staff and professionalsFACED BY HOSPITALS : Lack of awareness of the procedure Issue of pre-authorization letter not within specified time

limit Claim reimbursement is also unnecessarily delayed in

some cases.

Health Insurance – Focus Areas

Health Insurance - potential to become a Rs.25000 crores industry by 2012.

No. of Elderly People in the Developing World will TRIPLE in 25yrs. (WHO)

In India, the no. of people above 60 yrs is about 8% today, with that no. expected to hit 21% by 2025. (Asia Insurance Review)

Source: NIA Library

Health Insurance – The Way Ahead

Creating awareness on Rights & Responsibilities

Standardization of Cost TPAs Health Providers

Increased Tax benefit Removal of Service Tax

Health Insurance – The Way Ahead contd…

Gradation of Health service providers Pool for Senior Citizen Renewability / Portability Compulsory Health Benefits for organized

sector Government role on mass healthcare

initiatives

Constraints In Extending Coverage 75% of the population works in the

informal sector 25% of the population below

poverty line 70% of the population in rural

areas Under insured country Health insurance an ill understood

subject

Policy Holders

Insurance Company

Third Party Administrator

HEALTHCAREPROVIDER

Insurance Prem

iums

Insurance

Coverage

Health Services

TPA F

ees

Paym

entsCl

aim

s

Cashless Treatment

FRUSTRATIONS IN THE SECTOR

COST DRIVERS IN HEALTH INSURANCE

Technology / Specialization Prescription Drugs Medical Inflation Moral Hazard / Adverse Selection New treatments Unnecessary treatments

PROBLEMS FROM INSURERS

Policy condition problems Customer Ignorance Pre-Existing Condition Issues Disputes with hospitals / insured Delays

PROBLEMS FROM TPAs

Lack of Infrastructure “There are no holidays in Health care”

yetoffices not open on holidays, telephone access unavailable, etc

No qualified doctor / staff Delay in claim-settlement Deduction in bills without basis Increased paperwork

SOLUTION : Insurer

Designing a less complex products Clarity in policy terms, conditions & exclusions Efficient system for claims processing Need for quicker services. E.g.: Toll free no's,

cashless, quick response Expense analysis on a regular basis Product innovation Efficient training of sales force

SOLUTION :

Policyholder Pay attention to policy conditions Read the exclusions and

limitations very carefully Compare premium costs,

deductibles, co-payments Take an informed decision

SOLUTION :

Third party administration

Proper infrastructure Speedy claim settlement

process Less paper work Efficient staff.

SOLUTION : Regulator/Government

Come out with health insurance regulations

Centralized data base for health insurance experience statistics

Provider rating Ensure that a decent portfolio of health

coverage represent the rural sector Guard against ill effects of privatization Further tax incentives Compulsory savings towards health care

Recent Initiatives Of IRDA

Committee to formulate regulations Pure health insurance products Allowing the formation of an stand

alone health insurance company Renewability/policy renovation Senior citizens Data management/data pool Third party administrators.

Recent Concepts in H.I

Day care surgeries/ treatment covered insurance.

Co-payment concept Health insurance

through credit card. Micro insurance.

Challenges in Health Insurance

Medical advance, both a challenge & also impediment

Increase in health care cost Ageing population Acute shortage of trained personnel

ranging from doctors to health care administrators

New emergence and resurgence of old diseases

CONCLUSION Creating awareness & meeting the

demand for health care & financing Creating modules for aligning the

services of all concerned Focusing on enhancing affordability

& reducing costs Rapid coverage and health benefit

to all

WANT TO KNOW MORE???

www.healthinsuranceindia.org

www.expresshealthcare.inwww.google.comBussiness world

Thank You

“While buying health insurance one is also buying peace of mind, when one may need hospitalization”