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With more and more covid-19-positive patients walking into private hospitals across the country, increasing costs of treatment is worrying insurers. According to data from the General Insurance Council (GIC), as on 11 May, 1,520 covid-19 claims were reported. Of this, 920 were settled by various general and stand-alone health insurers. The total cost of claims came to 12.47 crore. Compare this with data as on 28 March when the insurers settled just five claims amounting close to 11 lakh. This was an average claim size of a little over 2 lakh. Now with more claims coming to insurers the average size has shrunk to about 1.35 lakh.

But with no cap on costs and low footfall in hospitals, insurers are worried that hospitals may end up over-billing, the brunt of which will be borne by the insurance companies as well as the uninsured patients. Insurers, therefore, are looking at some sort of standardization of costs that will not only lend predictability but also help insurers settle claims faster. But this wish may not be granted anytime soon for two reasons: hospital costs are not regulated and covid-19 costs could vary hugely depending on the complications.

insurers’ problem

For the insurance industry and the uninsured patients, the cost of covid-19 treatment is a cause for worry. Insurers are still grappling to get a handle on costs. Some feel that since the costs are open-ended and on a fee-for-service model—a payment model in which services are paid for separately—it may lead hospitals to overcharge covid-19 patients. “We are continuously monitoring the industry-level data and have observed that the average claim size is about three times the usual claim average," said Prasun Sikdar, managing director and chief executive officer, ManipalCigna Health Insurance Co. Ltd.

Graphic: Santosh Sharma/Mint
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Graphic: Santosh Sharma/Mint


What’s added to the cost and has led to a lot of confusion as far as billing is concerned is the cost of protective gears such as the PPE kits. “Currently there is no uniform practice on how costs on account of defence protocols can be built into the bills. So in some cases, while a PPE kit is worn by a doctor who visits many patients in the same hospital, all of these patients are billed for these PPE kits individually," said Sushma Anupam, deputy general manager, New India Assurance Co. Ltd. Then there is the issue of over-billing on account of PPE kits. “When PPE kits were in short supply, the price of these kits were huge, but since then, they have become a lot cheaper. But we still see some hospitals charge as high as 4,500 for them," added Nayan C. Shah, managing director, Paramount Health Services (TPA) Pvt. Ltd.

Elevated costs are not a problem only in the case of covid-19 patients, said Shreeraj Deshpande, chief operating officer, Future Generali India Insurance Co. Ltd. Hospitals are exorbitantly billing certain non-medical expenses, which are general in nature, such as protective gears for their staff to individual insured patients. “Even non-covid patients may have to pay for increased safety protocols given that a large segment of patients are asymptomatic," said Bhabatosh Mishra, director, underwriting, products and claims, Max Bupa Health Insurance Co. Ltd.

While medical care will get more expensive given the protective protocols that hospitals will have to put in place, and not just for covid-19 patients, Deshpande said, standardization of treatment protocols and corresponding charges can bring some respite. “Only medical expenses incurred for treatment of the specific patient only should be billed. Specific government protocols for covid-19 treatment should be followed and corresponding charges should be standardized," said Deshpande.

HOSPITALS’ view

Hospitals do admit that costs have gone up after covid-19. “Costs have increased for all hospitals as disinfection, sterilizations, infection control, PPE, setting up isolation wards, staff rotations and quarantines, responsible waste disposal and comprehensive disinfection are all essential now. Physical distancing has also increased the cost of logistics," said a spokesperson for Fortis Healthcare Ltd.

However, coming up with fixed package rates may not be easy given the variations in the type of cases. According to Dr K. Hari Prasad, president, Apollo Group of Hospitals, covid-19 being a new infection, there is still no single recommended protocol for the management and treatment of covid-19. Add to this, underlying pre-existing conditions like diabetes, hypertension will add to the complexity of care. “One must also consider the quality of care that differs from a hospital that is JCI- or NABH-accredited and one that is not. In such a case, standardizing of costs for covid-19 treatment is not a feasible option," he said.

Is there a middle path?

Standardization of costs may not work out anytime soon, but insurers are actively tracking medical bills to understand costing and are in talks with hospitals to have some element of predictability. “We have been in discussion with relevant stakeholders on this matter. Both hospitals and insurance companies have been deliberating to come up with a structure to package the rates and we are confident of moving forward on that soon," said Sikdar.

According to Anupam, considering that the covid-19 treatment cost varies from 2 lakh to 18 lakh, depending on the severity, it’s important for insurers to get a handle on costs. “Some states like Delhi and Maharashtra are looking to standardize costs, but not all hospitals may go with it. So it’s important for us to negotiate with hospitals and arrive at package rates or to cap the costs of PPE kits per patient per day," she said.

Shah said that in order to inspire trust, hospitals need to go back to the drawing board to rework their costs. “Right now hospitals are just padding up costs. But covid-19 treatment needs isolation wards, which needs separate costing whether it’s room charges or doctor’s fee or nursing charges. Hospitals should reassess their costs and be transparent about these, instead of padding them up," added Shah.

While insurers work on arriving at a packaged rate, it may be some time before the benefit gets passed on to the uninsured population. Also, not all hospitals may agree to play ball. State intervention is, therefore, important, said Amir Ullah Khan, a development economist, who teaches economic policy at the Indian School of Business and the NALSAR University of Law. He said unlike the West where the private sector comprises about one-fifth of healthcare, in India, the private sector is about four-fifth of the sector. “As the cases shoot up, public capacity in India is bound to run out and given that the private sector was allowed to treat the virus only recently, there is a supply and demand gap that dictates pricing," he said.

However, Khan believes that in the long run, market forces will lead to price discovery, but in the interim the state needs to play a role. “State should pay for covid-19 treatment at least till such time the infection peaks. By which time, hopefully, there will be more capacities that will bring the costs down and some sort of a price discovery can happen. First keeping the private sector away and then allowing them to treat the virus with complete freedom has led to some sort of distortion in pricing," he added.

There may be no immediate pan-India respite in treatment cost, given that healthcare is a state subject, but Mahavir Chopra, a health insurance expert, said if the government does regulate the charges, it will surely end up helping everyone including the uninsured population. If, however, an insurance company negotiates direct rates with network hospitals, then the charges would be applicable between the hospital and the insurer and will have no bearing on the uninsured people, he said.

How this will lead to more transparency or benefit the non-insured population is still something one needs to wait and watch for.

disha.s@livemint.com

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