Statement in Response to Calling Attention Motion Notice on Unilateral Revision / Withdrawal of Medical (Cashless) Insurance Products by Public Sector Insurance Companies. The Minister of State for Finance Shri Namo Narain Meena made the following Statement in response to the Calling Attention Motion Notice regarding situation arising out of the unilateral revision / withdrawal of the Medical (cashless) Insurance Products by the Insurance Companies in the Public Sector, in Rajya Sabha, today:
“In Public Sector General Insurance Companies, the cashless facility is provided through Third Party Administrators (TPAs). The Insurance Companies are offering this facility in various cities and there are multiple TPAs in each city. Each TPA has its own network of hospitals.
The Public Sector Insurance Companies have a cost ratio of around 140% of the premium received under the health portfolio. The mounting losses in this portfolio are a matter of serious concern for them. It was also observed by these Companies that some of the hospitals were charging the patients having health insurance policies at rates which are quite higher than the reasonable cost of treatment. Due to these high charges, the policyholders were left with smaller amounts of sum assured to be used for any other eventuality during the remaining period of the health policy thereby causing undue hardships to them.
The Public Sector General Insurance Companies have not revised/withdrawn the product (health insurance policy) or the facility of cashless treatment. However, the Companies have started rationalization of empanelment of hospitals and standardization of rates and specified procedures followed by the hospitals. This has been implemented w.e.f. 1st July, 2010 in the cities of Delhi, Mumbai, Bangalore and Chennai. In these cities a Preferred Provider Network (PPN) has been started by inclusion of names of the hospitals that have agreed to work at given rates for specified procedures. The list of Hospitals in the PPN in these cities is available on the websites of TPAs/Insurance Companies. In the rest of India the earlier process of rendering cashless facility is still continuing.
It may also be noted that the Standard Health Insurance Policy does not provide for any assurance of cashless facility to the insured. However, in cases where a mention of cashless facility has been made it has been mentioned that the claims in respect of cashless facility will be through the agreed list of Network Hospitals / Nursing Homes / Day Care Centers and is subject to pre-admission authorization. The Network Hospitals are decided through the Memorandum of Understanding (MoU) of the TPAs with the hospitals and the list is amended from time to time. Presently, 449 hospitals are included in the network in the four cities (Delhi – 163, Mumbai -121, Chennai – 84 and Bangalore – 81). In selection of the hospitals care has been taken to ensure geographical spread of the hospitals for the convenience of the insured.
To minimize inconvenience to the insured, TPAs have been advised that for emergency and trauma cases, cashless facility should be provided not only at hospitals within PPN but at other hospitals also. Apart from the cashless facility under the PPN, the settlement of claims on reimbursement basis continues to be available for all hospitals (including non-network).
The adoption of the aforesaid PPN system with the package rates and stabilizing the hospitalization costs would benefit the insured by lowering the cost of every hospitalization leaving a larger balance in the sum insured in the policy for future hospitalization. Further, the lower cost will also reduce loading on policy premium at the time of renewal. Thus, this PPN system is in the interest of all health insurance policy holders.”
