Our 20 years old son needed to fix his knee which got injured while playing a football match for his university team. MRI revealed his ACL had a grade III tear and as per the medical experts’ opinion, if he wanted to continue to play football, he needed to get it reconstructed. We, as a family have had a medical insurance cover forever, earlier during our active working days, a corporate one, after stepping off the corporate treadmill, a family floater. We have chosen to be with a government medical insurance provider, as that to our mind was more reliable and dependable based upon our research and also on anecdotal evidence available around us, which to my disappointment turned out to be a myth.
We were always intrigued when people around us would say that they were denied cashless facility or have been chasing their reimbursement with their medical provider as we thus far had a smooth ride. We discovered in a hard way now since we didn’t have a corporate medical insurance cover that we belong to the lowest rung of the customers i.e. retail medical insurance buyer who are given the rawest deal when it comes to facilities by these public sector insurance companies. In any case it is a well-known fact that any medical insurance whether issued by public sector company or by a private player is beset with numerous fine prints and one has to be very careful while buying one and should always consult a trustworthy, knowledgeable person.
Our story below will give the readers a fair idea into how medical insurance works and how retail customers of public sector insurers are at the receiving end of this complicated, opaque system. I would also like to flag at the outset that ours’ was an elective surgery, we have a little bit more awareness as customers because of our professions and we had all the time in the world to take on the system and ended up in a hospital which turned out to be more ethical than most of its peers. I wonder how people, unsuspecting common people, in time of medical emergency manage to navigate this system successfully.
So, after an in-depth research, survey and meeting a few doctors in different hospitals about available options to get our son’s knee fixed, we had finally zeroed in on a doctor and a hospital to carry out the ACL reconstruction surgery. We had taken a decision after weighing in all options and were happy that a date was fixed for the procedure. We applied for a pre-approval from our TPA as is the norm for availing the cashless facility for medical insurance. The expense estimated by the hospital was quite well within our insurance limits and we thought it was just a matter of procedure and would get the approval easily. I was totally taken a back when I was told that since the surgery fell under GIPSA, the insurance company would not cover the expense to the extent as was being demanded by the hospital but would only cover the agreed package amount as the hospital we had chosen was a GIPSA empaneled hospital. This information was given to us as a matter of fact during the processing of our pre approval for cashless facility by our TPA / hospital and we were basically being asked what next did we propose to do?
This was the very first time that we ever heard of GIPSA, no one had ever bothered to inform us actively including our insurance company or agent. I wanted to dive deeper and figure out where we stood and what options we had as we were very clear that we wanted our insurance company to pick up the tab in our chosen hospital and we wanted the doctor that we had after painstakingly chosen for his super specialization and expertise. We naturally wanted the best we could afford for our son like any parent would. Afterall that’s why we pay our insurance premiums diligently year after year and renew the policy in time.
GIPSA – General Insurers Public Sector Association
It is a group of four public sector general insurance companies who as a group have negotiated special package rates with hospitals they could manage to negotiate with for many regular, common, most prevalent procedures/ surgeries and treatment on the premise that the hospital are overcharging whenever a patient goes in for cashless facility for availing these medical services. The so called overcharging causes underutilization of the sums insured as the same gets exhausted for simple procedures leaving less protection for the insurer for the rest of that particular financial year. This is a perfectly sound argument and surely needs addressing but in a manner that does not boomerang on the patients as does in the current system. The other more pressing motive behind the GIPSA regime appears to be the fact that all these companies were running in huge losses due to various reasons (as per CAG report) and they needed to stem the revenue outflow. In a bid to curb the increasing losses apparently due to fraudulent and inflated claims, GIPSA had decided to restrict the cashless medical facility only to hospitals that agree to join the Preferred Provider Network (PPN) and gave GIPSA rates. The rule, was implemented on 1 July 2010. That ended hassle free cashless facility for crores of customers of these insurers and the worst hit was the retail customer.
The empaneled hospitals called PPN (Preferred Providers Network), as per the agreement entered in to by them with these insures, cannot demand more than the agreed package tariff for these identified GIPSA procedures/surgeries and treatments. Whenever a patient having a medical insurance of any of these PSUs approach a PPN healthcare provider they can’t be denied the services. The healthcare provider/hospital is under legal obligation to give the agreed package rates and facilities that an insured person is entitled under the terms of his/her insurance policy but more often than not it has come to light that the PPN hospitals try to cut corners or try to manipulate the situation by inserting things in the bill which are not a part of GIPSA. To work around the situation they make a patient fill up a PPN network declaration form at the time of admission in the hospital. Many a times unbeknown to the patient they sign an undertaking in this form saying that they will pay the difference between GIPSA package and the actual bill raised by the hospital. I think it is incumbent upon the hospital at the time of admission to clearly define the patient’s rights and entitlements and the items that could fall outside the scope of GIPSA as per the insurance policy they hold so that the patient does whatever he/she chooses knowing the financial repercussions fully. Just to illustrate my point this is what PPN declaration form says;
On my own option, I wish to avail above better facility and I hereby agree to pay on my free will, after being explained in detail by the Hospital authority in my own and understandable language about the above mentioned Additional Facility/Procedure/Treatment and associated cost of it, which is over and above the agreed PPN tariff. Further, if I opt to go for final bill reimbursement with insurance company, respective insurance company will reimburse only as per agreed PPN tariff rates and balance amount will be borne by myself or patient only. I have also been explained that when room service of a category better than eligible room rent is availed by the patient, not only the difference in room rent but also an equal proportion of all other charges associated with the treatment shall be borne by me.
In our case it was a GIPSA surgery, the hospital we had chosen turned out to be a GIPSA empaneled hospital and we were not explained anything that is written above in the form. We were by that time aware so didn’t sign the form and were not asked twice about the same. The hospital had raised a demand of 2.58L whereas under GIPSA agreement they had capped this at 92K plus the cost of any implant. The problem becomes intractable sometimes for PPN hospitals when some very senior and sought after doctors who work for the hospital as consultants and command very high fees due to their expertise and vast experience are not interested in doing such surgeries as it eats in to their well-deserved fees (this is open to discussion) despite their hospitals being legally bound to honor the GIPSA packages. Many hospitals have panels of doctors specifically who do GIPSA procedures, meaning thereby the services of the most senior and experienced doctors is not available to people who come under these insurance policies. Many of these people if their insurers didn’t have a PPN network and GIPSA package could have afforded the best doctors as per the terms and conditions of their respective policies. We were very fortunate that our chosen hospital turned out to be more ethical than many others and didn’t have a PSU panel of doctors.
PPN network hospitals are not very happy to honor the GIPSA package rates and going to a non PPN hospital means saying good bye to cash less facility and making upfront payment and then waiting endlessly for reimbursement depending upon many fine prints. In our case it was both our good and bad fortune that our chosen hospital turned out to be a PPN hospital, good fortune because if it was not a PPN hospital then we would not have been able to avail of a cashless facility at all at our chosen hospital and bad fortune because of GIPSA we were in the first instance told that we would have to pay the difference.
PSU insurers took the initiative to have their own network of hospitals called PPN but even after 13 years, enrolment of hospitals under PPN coverage is far from being adequate. To my horror I discovered that in my state of Himachal Pradesh there is only one PPN hospital meaning thereby that by this decision and due to the inability of PSU insures to get on board as many hospitals as possible, people living in certain parts of the country like my state have been virtually denied the cashless facility which is the most important facility in time of a medical crisis and also the most important attribute of a medical insurance. This is against the letter and spirit of the basic medical insurance agreement that these companies have with the customers like us. Retail customer of these companies are the worst hit as corporate and group insurance policy holders do get cashless facility even outside of PPN network hospitals (this needs to be double checked). If we had chosen to undergo this procedure in some hospital in Himachal Pradesh we would have had only the facility of reimbursement. It is a matter of investigation to find out how many people get reimbursed for the entire amount that they spend on availing of a health care service even after the known deductibles are taken in to account.
Now question that begs answer is why shouldn’t all government registered hospitals and healthcare service providers be made a part of the PPN? Why should the patient have to look for a PPN hospital when a medical emergency has befallen a family? Why shouldn’t all the tertiary care hospitals/healthcare establishments automatically be considered a part of the PPN network? It is well understood that empanelment is a result of an agreement between the four insurance companies and the healthcare provider/hospital but in a scenario where there are no PPN hospitals why shouldn’t customer be entitled to go to any hospital and be allowed to avail of the cashless facility. It is not the patient’s fault that they live in a place where the Public sector insurance companies have not for whatever reasons been able to get anyone on board with PPN.
Another very important question that needs to be answered is as to why would a PPN empanelled hospital raise a bill which is not as per GIPSA rates? They are legally bound to honour these rates and the patients can raise a grievance with their insurer that could even result to their de-empanelment if taken to a logical end. Well I don’t have a straight answer for that but what I have been able to dig up is that these GIPSA rates are not reflective of ground realities as per the hospital sources and have been almost unilaterally imposed by the public sector insurers on the PPN empanelled healthcare providers and hospitals.The government companies have followed the process as always in a box ticking approach manner, their inputs for pricing had been taken but unfortunately their views about pricing were not given its due and the prices have almost been unilaterally imposed upon the healthcare service providers and hospitals.
The next most natural question that will spring up in any prudent person’s mind would be as to why these healthcare providers/hospitals in that case agree to be a part of the PPN where GIPSA would be applicable? The reason is simple as one cannot lose sight of the fact that collectively these public sector companies have had a large share of market in the medical health insurance historically (which although has been on a rapid decline) so not wanting to agree to be a part of PPN would mean saying no to the business of these PSUs. Another very important factor that was discovered was that GIPSA only covers some regular, common, most prevalent procedures and surgeries and there is a lot of business which lies outside of GIPSA where these PSU companies don’t insist on GIPSA pricing but are willing to give a better price. So the healthcare providers/ Hospitals have done their business mathematics and have unwillingly done this agreement to be able to transact the business of PSUs both that falls under GIPSA and is outside the purview of GIPSA. Apparently the pricing of business that falls outside of GIPSA purview to some extent cross-subsidizes the GIPSA component and helps these facilities keep afloat according to hospital sources.
This to my mind is a not a very healthy scenario at all. This is arm twisting and exploitation of a situation where government companies are trying to bully healthcare providers/ hospitals to provide medical healthcare at a price that they believe is just and correct and tantamount to administering healthcare services pricing. Overcharging by healthcare service providers/ hospitals to my mind cannot be dealt with by bullying them to agree to a price package which is not entirely acceptable to them. I would also like to know as to what stops other private players in the market to lobby together and ask for a price from these hospitals and healthcare service providers, a GIPSA like package, which they deem just and reasonable? Where does that leave the healthcare industry? Would it not rob them of their autonomy in the first place for pricing the services that they provide? Would it also not rob them of any incentive to innovate and endeavor to provide the best and the cutting edge facilities to their patients especially who are seeking healthcare services with medical insurance and are not paying upfront cash.?
Are we not dooming the health insurance customers to mediocrity? Are we not instead of guarding the interests of the patients, which is the rationale behind GIPSA, doing them a disservice by creating an environment where the healthcare service providers/ hospitals do not see any reason why they should continually upgrade and build upon their infrastructure facilities and expertise when they have to adhere to unreasonable price packages because of market compulsions? Are we not creating a situation where hospitals are trying to work around this by not making the services of their top doctors available to GIPSA cases? While it can not be denied that a lot of healthcare service providers and private hospitals have been over-charging the patients and that needs to be addressed. To deal with that situation the public sector insurers in their wisdom had created GIPSA and PPN which has turned out to be a double whammy for the patients. The patients now cannot get cashless facility outside of the PPN network which is abysmally low pan India and the PPN empaneled hospitals cannot charge more than GIPSA administered rates for procedures and surgeries in the ambit of GIPSA so trying to work around it in many ways all of which are not good for patients. By doing so the access of such patients, who use public sector insurance, to hassle free healthcare services is reduced in big cities where this PPN network and GIPSA is applicable in some hospitals and not in others, and no cashless facility for customers where there are no PPN hospitals. Having to organize money when one is dealing with a medical emergency defeats the purpose of having a medical insurance to a very large extent.
We surely need a system to ensure the pricing of healthcare services are just, fair and reasonable but instead of stifling the pricing of the healthcare services using medical insurance companies’ bargaining power is it not better that we use a collaborative method where all stakeholders including the healthcare service providers/ hospitals, insurance companies and TPA collectively arrive at the pricing of the services which is reasonable and also acceptable to all so that the healthcare service providers/hospitals don’t try to dodge their responsibility and impart services to these patients under GIPSA without any grudge.
In the alternative we could also look at a scenario, keeping in mind the fundamental and critical nature of services healthcare industry provides, where their profit is capped at a certain percentage of their investments so that they can continue to provide the best possible services and have ample surplus to be able to expand and grow. This suggestion to most market supporters would sound preposterous but given the nature of this profession I think it is quire desirable and in any case the collective bargaining power of the public sector insurance companies at present is trying to achieve the same by means which are not totally above board and also not transparent or just and in times to come private sector insurance companies will try to achieve the same using the same tactic.
MCI could be of help in this matter. We should have a system where healthcare providers can be classified into different categories based upon the quality of their services, infrastructure etc. on the basis of some objective criteria laid down by IRDAI. We have QCI’s (Quality Council of India) NABH (National Accreditation Board for Testing and Calibrating Laboratories) and NABL ( National Accreditation Board for Hospitals and Healthcare Providers) who already are benchmarking the hospitals and healthcare providers and the laboratory facilities that they provide. The pricing of the services for different categories of healthcare providers and hospitals then can be done in a consultative process which is fair to all stakeholders in the system including patients, hospitals and insurance companies. In the existing system this classification of healthcare providers and hospitals is kept in mind again perfunctorily but the fixation of prices is not done in a consultative manner. GIPSA seems more like a unilateral arrangement where prices have been almost imposed upon the hospitals which they do not seem very happy with. Public sector health insurance companies are in a way exploiting their unique position where historically they have been the biggest market players and have control over a large business even today and health care providers and hospitals find it hard to completely let go of this business.
We are a welfare country and it is incumbent upon our government to provide affordable, accessible and competent health care services to its citizens. Governments over the years have failed in discharging this responsibility and without a doubt the private sector have been doing a commendable job of bridging this gap between demand and supply. Instead of having a collaborative and a constructive approach with these healthcare service providers and hospitals to evolve a system which is most suitable for patients, it is unfortunate that in their wisdom to make the system fair and reasonable they have adopted an approach which is nothing less than bullying and hitting the customers hard.
The very rationale for which GIPSA rates were introduced to safeguard the interests of the patients are being compromised. Many healthcare providers and hospitals agree to GIPSA and then find ways to get out of it or bypass it or frustrate the purpose entirely by raising a bill in such a manner that only a part of the bill gets covered by GIPSA and the rest the patient has to deal with. I want to know how many patients when they are dealing with a medical emergency can question these things or even understand the repercussions. In any case hospital patient relationship is of fiduciary in nature and nobody thinks or should think that it is important to ask questions before patients are required to sign bulk of documents. Patients’ gullibility and vulnerability can’t be allowed to be predated upon. Patients buy medical policies at a rate that is offered to them and have to accept healthcare services at a rate that is offered to them. In both scenarios they don’t have any say in the matter and by creating tension in the system, by having forced pricing, the patients are at the receiving end both in terms of their access to cashless facility and their inability to do anything even if they find a PPN hospital but hospital is trying to evade its responsibility in terms of GIPSA.
In our case with good sense prevailing, the hospital honored GIPSA upon our raising the issue, we were given a full bill out of which GIPSA rates were reimbursed to the hospital in a cashless transaction and the rest was waived off by the hospital in our favor. We just had to pay a couple of thousands. I think the hospital wanted to flag their rack rate and the gap between the rack rate and the GIPSA rate and make its grievance public yet another time.
I am sure not too many stories of this kind have happy ending, whereas everyone who has bought a medical insurance deserves to be able to avail of cashless facility in any hospital and be indemnified as per the terms and conditions of the policy. I urge the IRDAI to take immediate note and fix the system please.
Archana Vaidya is a Natural Resource Management and Environment Law Consultant. An advocate practicing at the High Court of Himachal Pradesh, she is an Oxford Gurukul Chevening Fellow and a founding partner of IELO, a law firm. She has co-authored books and writes on issues related to natural resource management and environment law. She divides her time between Delhi and Bajaura, Kullu.
