The CMD of The New India Assurance Co Ltd, M Ramadoss, spoke with Moneylife’s Raj Pradhan and Aaron Rodrigues on various issues facing the insurance industry

Raj Pradhan & Aaron Rodrigues (ML): Can you tell us what the current situation is in the cashless facility imbroglio between public sector insurers and hospitals?

M Ramadoss (MR): Insurance companies have been witnessing inflated, fraudulent, and unwarranted claims from some hospitals when the patient wishes to go for cashless treatment. Due to this, insurer-funded healthcare cost is more than individual funded cost. The reverse is true in developed countries.

We have 380 hospitals who have agreed to be part of our Preferred Provider Network (PPN). Ideally, we want as many hospitals on board as possible. The standard rates could vary based on location, facilities, equipment, etc. It is not one-size-fits-all. If there are industry-standard rates, we will welcome it. Due to the absence of it, I have to step in but not to rob hospitals of their profits. We have benchmarked average costs of prior years and used recommendations of doctors on the panel.

ML: Removal of cashless facilities from major hospitals is causing inconvenience to policyholders. What are your comments?

MR: Out of 100 policies, 8% make claims of which 35% are cashless. It is not a great disservice. If the patient is unable to go to a PPN hospital, the reimbursement will still happen after the claim is submitted. We are technically and legally not violating the agreement with policyholders because we specify in the policy that hospitals have to agree to our terms. I don’t see any harm to our reputation. On the contrary, I have received congratulatory emails for the PPN initiative.

ML: There are reports of public sector insurers coming up with new policies for cashless facilities at high-end hospitals.

MR: We are open to talks with all hospitals and share how we arrived at costing of procedures for different grades of hospitals. Contrary to belief that hospitals are trying to get out of PPN, more hospitals are coming on board. Some of them are prevented from talking with us by different associations, but have indicated willingness to talk in the near future. Unlike in the US, the supply constraint is present in India for quality healthcare which does make it difficult to negotiate with corporate hospitals. We do need discounts on volume of business. If we are unable to convince high-end corporate hospitals to join the PPN, we will be forced to come up with a separate plan for cashless facilities at high-end hospitals. The premium for this ‘Platinum’ policy will be higher, but we have not finalised it. It is at the drawing board stage. We have solidarity from private insurers too. They are also suffering due to erratic charges from some hospitals.

ML: What are some of the checks and balances in the system?

MR: We have ongoing work to check and audit the system. At one time, we did a three-month investigation in different cities. We found cases of bogus nursing homes, bogus bills from hospitals and pharmacists as well as fraudulent claims by policyholders. We would like policyholders to assist us by reporting any aberration to us and to verify hospital bills.

We are moving towards a centralised payment system that will streamline the payment process. We have an external agency to audit all Third Party Administrators’ (TPAs) files. Public sector insurers will be starting our own TPA entity in a year’s time. We have not finalised an outside partner. It may be in-house, but a separate company. It will help to have better control over claims.

ML: It has been reported that public sector insurers want to deal directly with equipment suppliers and pharmaceutical companies to cut claims cost by 20-30%. Are these reports true?

MR: No. The news is not correct as we don’t have any immediate plans of doing so.