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Business News/ News / India/  Health insurers in a fix as pvt hospitals seek higher rates for covid treatment
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Health insurers in a fix as pvt hospitals seek higher rates for covid treatment

Private hospitals charge as up to ₹7 lakhs for covid treatment, claim risk for higher cost

 Due to the covid-19 crisis, private hospitals have bee approaching health insurance firms to discuss package rates for treatment. (Photo: HT)Premium
Due to the covid-19 crisis, private hospitals have bee approaching health insurance firms to discuss package rates for treatment. (Photo: HT)

NEW DELHI/MUMBAI: Health insurers have been grappling with claims as high as 7 lakhs as private hospitals seek higher package rates for treating a covid-19 patient.

Abhay Soi, chairman of Max Healthcare and Radiant Life Sciences, in a video conference on Wednesday had said the cost of care has moved up because of the disruption, requirement for personal protective equipment (PPE), and the greater risks faced by doctors.

“We are in discussions with insurance providers for increasing package rates," Soi said.

Max Healthcare’s hospital in Delhi’s Saket area has 32 patients of covid-19, of which 15 are in the intensive care unit, including three on ventilator support, according to a Delhi government’s bulletin on Wednesday. There are around 600-700 patients in its hospitals across the national capital, Soi said.

Due to the crisis, other large private hospitals have also been approaching health insurance firms to discuss package rates for treatment of the disease.

“Because pandemics are a once-in-a-hundred-years phenomenon, the pricing was not taken into consideration by insurers anywhere in the world," Mahavir Chopra, a health insurance expert, said. “My understanding is that there will be a review of the possibilities of how costs can go up because this is something insurers and reinsurers are grappling with currently."

But the problem is not only with high claims, but also the variance in claim amounts. And so health insurers are also seeking standardised rates.

“The issue that we are facing out of the little claims experience that we have is that the size of the claims varies significantly. Some claims are just 1.5 lakh and some go up to 7 lakh. It is very important to bring about some sort of standardisation for Covid-related claims similar to how there is blanket standardisation on the cost of testing," Ritesh Kumar, managing director and chief executive officer of HDFC Ergo General Insurance Company, told Mint. He added that hospitals also feel the need for standardisation.

Apart from covid-19 treatment, there is also an issue of treatment of other diseases, which were already included in the insurance schemes, but hospitals say that currently, with lower footfalls that may not be the most important factor for them.

“Our costs have gone up, but we haven’t started doing that (approaching health insurance firms) as yet because at this point of time there is anyway not enough occupancy to be worrying about that," Apollo Hospitals Enterprise Ltd group chief financial officer Krishnan Akhileswaran told Mint, adding that the country’s largest hospital chain will reconsider its options after monitoring the situation for 15 days.

Fortis Healthcare said it will continue to provide services at existing prices despite a rise in cost, and its focus is to maintain continuity of services for the benefit of patients.

“Yes, costs have increased, such as for PPE for the surgeons, doctors and nurses; use of disposable sheets etc. but right now, we have not calculated the cost per procedure and we continue to provide our services at existing prices," a spokesperson for Fortis Healthcare told Mint in a statement.

Fortis Healthcare-operated Hiranandini Hospital at Vashi on the outskirts of Mumbai has been designated as dedicated COVID 19 facility, while it is also treating patients at Fortis Memorial Research Institute in Gurugram, as well as two hospitals in Mumbai, and one each in Kolkata, Bengaluru and Amritsar.

Most private hospitals said their costs have increased even as revenue streams have been hit by lower occupancy rates and decline in footfalls in outpatient departments (OPDs), fewer elective surgeries and a fall in international patients.

“The covid-19 pandemic has caused an adverse impact on the private healthcare sector resulting in 70 – 80% drop in footfall, test volumes and 50-70% drop in revenue in last ten days of March that is expected to sustain in month of April with continued lock down," a joint report by consultancy firm Ernst & Young and Federation of Indian Chambers of Commerce & Industry (FICCI) said on Thursday.

The report estimated operating losses of 14,000-24,000 crore per quarter if the situation continues.

For now, processing claims for treatment of covid-19 is being done on a priority, say insurance firm executives, who believe that such wide difference in value would create issues and suggest standardisation in terms of whether the patient needs just normal treatment for milder symptoms or has to be shifted to intensive care unit and put on ventilator for severe symptoms.

“The entire architecture of the treatment for covid is defined by ICMR. But if treatment protocols get defined based on the severity of the cases then obviously cost also will get defined. We are still in the initial stage. I think it will take some time till things become clearer," Sanjay Dutta, Chief - underwriting, claims and reinsurance at ICICI Lombard General Insurance Co, told Mint.

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Published: 17 Apr 2020, 10:57 AM IST
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