Table Of Content
Introduct Introductiio n to Insurance .............................................. ....................................................................... .............................................. .................................... ............... 3 Contract Contract of Insurance Insurance ............................................ ..................................................................... .............................................. ............................................ ....................... 4 Health Insurance ............................................... ........................................................................ .............................................. .............................................. .............................6 History History of heal ea lth insurance ...................................................... .............................................................................. ................................................. ........................... 6 Health Care C are Scenario in India .................................................. ........................................................................... .................................................. .........................9 Health Insurance in India ......................................................... ................................................................................. ................................................ ........................12 Class Classifi ificat catiion of Health Insuran I nsurance ce Scheme .............................................. ...................................................................... ............................... ....... 13 Market-Based Market-Based S ystems ste ms ............................................ ..................................................................... .............................................. .............................. ......... 14 Employer Em ployer Based Based Schemes ......................................................... .................................................................................. ..................................... ............ 21 Central Government Government Health Sch Sc heme (CGH (C GHS) S) .............................................................. .................................................................. 24 NGOS N GOS / Community-Base Community-Basedd Health Healt h Insu Ins urance ............................................ ................................................................ .................... 26 Health In I nsuran sura nce Initiatives by State Governments Governments ..................................................... ................................................................. ............ 31 Health Insurance Policy ............................................ ..................................................................... .............................................. ...................................... ................. 32 Procedure Procedure Fo llowed llowed in Settlement Set tlement of C laims ........................................... ................................................................... ............................... ....... 37 ad ministrators istrators (TPA’s (TP A’s) ............................................. Third party admin ...................................................................... ............................................ ...................43
Future Future of Health Insurance.............................. Insurance....................................................... ................................................. ................................................ ........................44 Conclusion Conclusion ........................................... .................................................................... ............................................... ............................................... ..................................... ............ 46
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List of Tables:
Table no.
Topic
Page num ber
1 2
Socio Economic Economic Indicators Indicators Achievement Achievemen t of India in Health Heal th Sector
3
Percentage o f total tota l health expen expe nd iture funded through p ub lic/soci lic/soc ial insurance and direct government revenue
4
Health Heal th Insurance Coverage Coverag e in India
5 6
Percentage growth growt h in gro gro ss premium premiu m in insurance com co mpanies pan ies in 2003-05 2003 -05 Premium Coll Co llect ectiio n from hea hea lth insura insuranc ncee segment segme nt
14 16 20
7 8 9
Existing infrastructure infrast ructure under ESIS in Indi Ind ia Public insurance schem sc hemes es Non-profi Non-pro fitt social insura insurance nce sche mes in India Ind ia
22 24 27
2
10 11 12
List of Tables:
Table no.
Topic
Page num ber
1 2
Socio Economic Economic Indicators Indicators Achievement Achievemen t of India in Health Heal th Sector
3
Percentage o f total tota l health expen expe nd iture funded through p ub lic/soci lic/soc ial insurance and direct government revenue
4
Health Heal th Insurance Coverage Coverag e in India
5 6
Percentage growth growt h in gro gro ss premium premiu m in insurance com co mpanies pan ies in 2003-05 2003 -05 Premium Coll Co llect ectiio n from hea hea lth insura insuranc ncee segment segme nt
14 16 20
7 8 9
Existing infrastructure infrast ructure under ESIS in Indi Ind ia Public insurance schem sc hemes es Non-profi Non-pro fitt social insura insurance nce sche mes in India Ind ia
22 24 27
2
10 11 12
Introduction to Insu I nsurance rance “Insurance is a protection from risk as the man is perennially exposed to risk”.
Life may stop suddenly with a heart attack. The house may unexpectedly catch fire and be gutted the crop may be lost by vagaries of nature, draught, disease or flood. The motor car may be badly damaged in a road accident, thus, risk of different kinds resulting in loss are inevitable in life. Insurance provides an answer by providing protection to persons from such contingencies. Insurance Insurance is a coverage cov erage by contract contract where w here by one party party (insurer) agree to indemnify indemnify or guarantee another (insured) (insured) against loss by a spec ified contingent event or peril and or an an unfortunate event. The aim of all types or classes of insurance is to afford protection to the
insured from the risk, which he apprehends or anticipates. The protection from insurance is available to the insurer not in preventing the event happening but in indemnifying the insured from the loss he has sustained. Insurance is a major component of the financial sector. It is a risk transfer mechanism, whereby an insured transfers a risk exposure to an insurer in considerat consideratiion for the payment of premium. Health care insurance or health insurance is a contract between a policyholder and a third party payer or government prog pro gram to reimburse the policyh po licyholder older for all or a portion of the cost of medically necessary treatment or preventive care provided by health care professionals professionals.. The The su s ubject matter matter of o f insurance insurance is PROPERTY, PROPERTY, PREMIUM, and LIABILITY. LIABILITY. Function of Insurance
The function of insurance is two folds. In the first instance it transfers or shifts a risk from one individual to a group and secondly, the losses are shared, on some equitable basis by all members members of the group. group. Insu Ins urance is a device wherewhere- by the risk of financial loss loss accruing from from death or disability, or damag dama ge to, or destruc des tructio tionn of property o wing to perils per ils to which they are exposed is passed on to another. The insurer, of course, collects an agreed rate of contribution from a large number of people and relieves the insured partly, if not wholly, from the effects of loss by paying the insurance money.
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Contract of Insurance I nsurance A contract of insurance is an agreement whereby one party called the Insurer undertakes, in return for an agreed consideration, called the Premium, to pay the other party namely, the Insured a sum of money or its equivalent in kind, upon the occurrence of specified event resulting in loss to him. The Policy is a document, which is an evidence of the contract of insurance. The contract of insurance is governed by the law of contract as embodied in the Indian Contract Act,1872. All insurance contracts must have the following five essential elements in order that they may be legally legally enforceable. enforceable. a. Of fer and The person who wants to take up cover against particular The an d acce acceptan ptan ce: ce: perils offers offers his risk through a proposal proposal form to the insurance company. b. Consideration: The premium paid is the consideration and on its receipt by the The insurance company the contract of insurance comes into force. c. Con sensus Ad I dem: The parties to the contract must be of the same mind and there The dem: should be a complete and unbiased agreement between the insurer and the insured regarding the terms of the contract. The intention of the insured should have been clearly understood by the insurance company. d. Capacit Both the parties must be legally competent to enter into an Both Capacit y to Contr act: act: agreement. The parties to the contract should not be of unsound mind. They must have attained atta ined the age o f majorit majorityy and sh s ho uld uld not have been declared as insolve nt. nt. e. L egali ty of th e Object The purpose for which the agreement is The Object of the Contr act: act: entered into should be legal and not opposed to public policy. Basic Principles of Contract of Insurance
i.
Insurable Insurable Inte Interrest es t
A contract of insurance does not undertake to prevent the occurrences of the peril insured against. What it provides is a promise to make good the financial loss caused by the operation of the insured peril. 4
ii.
Utmost good faith
Law requires both the parties to the contract to observe good faith, which means absence of fraud. Insurance contracts are subjected by law to a higher duty namely of utmost good faith. The proposer has a duty to disclose to the insurer all material facts which he knows and which he ought to known. A material fact is a fact which affect the judgment of a prudent underwriter deciding whether to accept the risk and if so, at what rate of premium and subject to what terms and conditions. iii.
Indemnity
Indemnity means compensation for loss or injury. It also means security or protection against loss or damage. Insurance contracts promise to make good the loss or damage limiting it to the amount of loss or damage subject to the sum insured. iv.
Subrogation and Contribution
Subrogation is defined as the transfer of right and remedies of the insured to the insurer who has indemnified the insured in respect of the loss. v.
Proximate Cause
The object of insurance is to provide indemnity not for any loss but only for such losses as are caused by insured perils. The perils insured are clearly stated in the policy and the liability of the insurer arises only if the loss is caused by these perils. Classification of Insurance
Insurance business is broadly classified into Life Insurance and General Insurance (or non- life insurance) business
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General insurance business is broadly under the following heads: 1. Property Ins urance – Fire, theft, Engineering and miscellaneous accident Motor
Insurance. 2. Liability Insurance – Employees liability, public liability, products liability and
professional indemnity, pecuniary Insurance’s, fidelity guarantee credit insurance. 3. Personal accident and health Insurance. 4. Crop & cattle insurance . 5. Marine insurance .
Health Insurance Health insurance has become a necessity in today’s world considering the rise in the cost of medical care and treatment and the huge population of the country. The escalating cost of medical treatment today is beyond the reach of the common man. Even if an individual is healthy and has never had any major problem, it is not possible to predict what may happen in the future. There is a growing public awareness for better health care and desire to have better health care from private medical providers. In case of a medical emergency, cost of hosp ita l room, doctor’s fees, medicines and related health services all add
up to a huge sum. In such times, health insurance provides the much needed financial relief.
History of health insurance Introduction
Some people think of health insurance as a recent development in human history. But concern for financial loss resulting from accident and illness can be traced to ancient civilizations. Health insurance, limited primarily to disability income in case of accident existed in the early history of Rome. This tradition continued in Europe in the Middle Ages, and by the 17th century there were laws providing sickness insurance for seamen and dismemberment insurance for soldiers.
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Health insurance today is a broad array of coverage providing for the payment of benefits as a result of sickness and injury. It includes insurance for losses from medical expense, accident, disability, and accidental death and dismemberment (AD&D). Expansion and Growth of Individual Health Insurance Pre-Worl d War I
The trend toward broadened coverage continued in the early part of the century. For example, insurers extended disability provisions from 26 weeks to 52 weeks and then to 104 weeks; in 1913 they introduced lifetime disability benefits. Insurers also begin writing policies that they had to renew, with premium rates that the insurers could not raise. At the same time, adverse conditions existed. The policies had heavy restrictions and there was no cooperation among the insurers to improve the condition of the insurance business. Tr ends and Devel opment s: 1918-1940
The health insurance business experienced little growth in the years immediately following World War I. The collapse of the stock market in October 1929, followed by the Great Depression, affected the health insurance industry greatly. Loss ratios climbed in the field of s ickness d isability coverage’s. Accidental death and monthly indemnity risks were a staggering source of loss. The industry’s problems were compounded by improper
underwriting and inadequate premiums resulting from insufficient claim experience. During and after the Depression, a new era of health insurance began. Some of the innovations and changes that were introduced in the 1930s included: 1. Emphasis in private insurance on reimbursement for hospital, surgical and medical expenses. 2. Introduction of blanket accident expense policies. 3. Introduction of coverage for the entire family.
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Gr owth Years: 1940-1960
After World War II, health insurance as a whole entered a period of dynamic growth exceeding that of any other form of insurance. People were looking for broad coverage and guaranteed benefits and to meet this need the individual health industry expanded hospital and medical expense policies and made greater use of renewal guarantees. The beginning of a new decade in 1950 witnessed the continued growth and expansion of the individual health insurance industry. Contributing to the expansion was an increasing public awareness of the staggering loss of national income from accident and sickness. In 1956 the US Congress established the Social Security Disability Insurance (SSDI) program. It also enacted two health insurance program, Medicare for the elderly and Medicaid for the poor. I ndi vidual H ealt h I nsur ance Today
Changes in individual health insurance evolved in response to customer needs, cost containment activities and legislative mandates. Starting in the 1950s individual health insurance for various expenses incurred for medical care became more readily available for persons under age 65. Private insurers now offer individual comprehensive coverage, integrating basic and major medical coverage in a single policy with a deductible and with an unlimited maximum benefit.
Emerging Trends Insurers have developed health insurance products to reflect changes in the socioeconomic environment. Both the range of benefits and the scope of coverage have increased to meet changing needs. Managed care, which is fast becoming the leading form of health insurance delivery, integrates the financing and delivery of appropriate health care services. Providers in managed care plans offer standardized health services to enrollees at set costs that generally are lower than traditional fee- for-service arrangements.
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Health Care Scenario in India Introduction
The health care system in India is characterized by multiple systems of medicine, mixed ownership patterns and different kinds of delivery structures. Public sector ownership is divided between central and state governments, municipal and Panchayat local governments. Public health facilities include teaching hospitals, secondary level hospitals, first-level referral hospitals (rural hospitals), dispensaries; primary health centers (PHCs), sub-centers, and health posts. Also included are public facilities for selected occupational groups like organized work force (ESI), defense, government employees (CGHS), railways, post and telegraph and mines among others. The private sector (for profit and not for profit) is the dominant sector with 50 per cent of people seeking indoor care and around 60 to 70 per cent of those seeking ambulatory care (or outpatient care) from private health facilities. While India has made significant gains in terms of health indicators - demographic, infrastructural and epidemiological (See Tables 1 and 2), it continues to grapple with newer challenges. Not only have communicable diseases persisted over time but some of them like malaria have also developed insecticide-resistant vectors while others like tuberculosis are becoming increasingly drug resistant. HIV / AIDS have of late assumed extremely virulent proportions. The 1990s have also seen an increase in mortality on account of non-communicable diseases arising as a result of lifestyle changes. The country is now in the midst of a dual disease burden of communicable and non communicable diseases. This is coupled with rising health costs, high financial burden on the poor and erosion in their incomes. Around 24% of all people hospitalized in India in a single year fall below the poverty line due to hospitalization (World Bank, 2002). An analysis of financing of hospitalization shows that large proportion of people; especially those in the bottom four income quintiles borrow money or sell assets to pay for hospitalization (World Bank, 2002). This situation exists in a scenario where health care is financed through general tax revenue, community financing, out of pocket payment and social and private health insurance schemes. India spends about 4.9% of GDP on health. The per capita total expenditure on health in India is US$ 23, of which the per capita Government expenditure on health is US$ 4. Hence, it is seen that the total health expenditure is around 5% of GDP, with breakdown of public expenditure (0.9%); private expenditure (4.0%). The private expenditure can be further
9
classified as out-of-pocket (OOP) expenditure (3.6%) and employees/community financing (0.4%). It is thus evident that public health investment has been comparatively low. In fact as a percentage of GDP it has declined from 1.3% in 1990 to 0.9% as at present. Furthermore, the central budgetary allocation for health (as a percentage of the total Central budget) has been stagnant at 1.3% while in the states it has declined from 7.0% to 5.5%.
Table 1. Socioeconomic indicators Land area
2% of world area
Burden of disease (%)
21% of global disease burden
Population
16% of world population
Urban : Rural
28:72
Lite racy rate (%)
65.38
Sanitation (%)
Rural – 9.0; Urban – 49.3
Safe drinking water supply (%)
Rural – 98; Urban – 90.2
Poverty (%)
Below poverty line – 26
Rural – 27.09; Urban – 23.62 Poverty line (Rs.)
Rural – 327.56; Urban – 454.11
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Table 2. Achievements: 1951- 2000
1951
1981
2000
Life expectancy
36.7
54
64.6 (RGI)
Crude birth rate
40.8
33.9 (SRS)
26.1 (99 SRS)
Crude death rate
25
12.5 (SRS)
8.7 (99 SRS)
Infant mortality rate
146
110
70 (99 SRS)
75
2.7
2.2
38.1
57.3
3.74
Demographic changes
Epidemiology
Malaria (cases in million) Leprosy cases pe 10,000 population Small pox (no of cases)
>44,887 Eradicated
Guinea worm (no. of cases) Polio
>39,792
Eradicated
29709
265
Infrastructure
SC/PHC/CHC
725
57,363
1,63,181 (99-RHS)
Dispensaries & hospitals (all)
9209
23,555
43,322 (95 – 96CBHI)
Beds (Pvt & Public)
117,198
569,495
8,70,161 (95-96CBHI)
Doctors (Allopathy)
61,800
2,68,700
5,03,900 (98-99MCI)
Nursing personnel
18,054
1,43,887
7,37,000 (99-INC)
In light of the fiscal crisis facing the government at both central and state levels, in the form of shrinking public health budgets, escalating health care costs coupled with demand for health-care services, and lack of easy access of people from the low-income group to quality health care, health insurance is emerging as an alternative mechanism for financing of health care. 11
Health Insurance in India Health insurance can be defined in very narrow sense where individual or group purchases in advance health coverage by paying a fee called "premium". But it can be also defined broadly by including all financing arrangements where consumers can avoid or reduce their expenditures at time of use of services. The health insurance existing in India covers a very wide spectrum of arrangements and hence the latter- broader interpretation of health Insurance is more appropriate. Health insurance is very well established in many countries. But in India it is a new concept except for the organized sector employees. In India only about 2 per cent of total health expenditure is funded by public/social health insurance while 18 per cent is funded by government budget. In many other low and middle income countries contribution of social health insurance is much higher (see Table 3). Table 3. Percentage of total health expenditure funded through public/social insurance and direct government revenue Country
Social Health
Government B udget
Insurance
Algeria
37
36
Bolivia
20
33
China
31
13
Korea
23
10
Vietnam
2
20
India
2
18
As cited in Naylor et al.2002 Source: It is estimated that the Indian health care industry is now worth of Rs. 96,000 crore and expected to surge by 10,000 crore annually. The share of insurance market in above figure is insignificant. Out of one billion population of India 315 million people are estimated to be insurable and have capacity to spend Rs. 1000 as premium per annum. Many global insurance companies have plans to get into insurance business in India. Market research, detailed planning and effective insurance marketing is likely to assume significant 12
importance. Given the health financing and demand scenario, health insurance has a wider scope in present day situations in India. However, it requires careful and significant effort to tap Indian health insurance market with proper understanding and training.
The above graph shows sharp rise in the penetration of the Health Insurance in India after 1999. This was due to the policy change by IRDA (Insurance regulatory and development board of India) and private players were allowed to enter the health insurance segment.
Classification of Health Insurance Scheme There are various types of health coverage in India. Based on ownership the existing health insurance schemes can be broadly divided into categories such as: Mar k et-based systems (pri vate and volu nt ary) E mpl oyer based i nsur ance schemes Member organi zati on (N GO or cooperati ve)-based systems Govern ment or state-based systems
13
The health care demand is rising in India now days. It is estimated that only 10 per cent of health insurance market has been tapped till today. Still there is a scope of rise up to 35 percent in near future. Market-Based Systems 1. Mediclaim scheme
The government insurance companies started first health insurance in 1986, under the name mediclaim; thereafter Mediclaim has been revised to make it attractive product. Mediclaim is a reimbursement base insurance for hospitalization. It does not cover outpatient treatments. First there is used to be category-wise ceilings on items such as medicine, room charges, operation charges etc. and later when the policies were revised these ceilings were removed and total reimbursements were allowed with in the limit of the policy amount. The total limit for policy coverage was also increased. Now a person between 3 months to 80 years of age can be granted mediclaim policy up to maximum coverage of Rs. 5 lakh against accidental and sickness hospitalizations during the policy period as per latest guidelines of General Insurance Corporation of India. This scheme is offered by all the four subsidiary companies of GIC. Mediclaim scheme is also available for groups with substantial discount in premium. The table 4 below indicates the share of various forms of health coverage in India. Table 4: Health insurance coverage in India Schemes
Beneficiaries (In million)
The Employees State Insurance Scheme (ESIS)
25.3
Central Government Health Scheme (CGHS)
4.31
Railways Health Scheme
8
Defense employees
6.6
Ex-servicemen
7.5
Mining and plantations (public sector)
4
Health insurance (Public sector non-life companies)
10
Health insurance (Private sector non-life companies)
0.8
Health segment of Life insurance companies (Public
0.232
14
and private sector) State sponsored schemes
<0.5
Employer run facilities/reimbursement schemes of
6
private sector Employer run facilities/reimbursement schemes of
<8
public sector Community health schemes
3
Total
Gupta Source:
~85
and Trivedi
The current statistics on health insurance indicate that out of 1 billion population only about 2 million of population is covered by Mediclaim scheme. The reason for lack of popularity of this scheme could be several. The health insurance products are generally complicated and it is suggested that GIC and its subsidiary companies who deal in non-life insurance market which is dominated by mandated insurance such as accident, fire and marine, do not have expertise in marketing health insurance and therefore this scheme is not popular. Health insurance also represents very small percentage of overall business of GIC and its subsidiaries hence they have also not focused their attention in this area. The GIC companies have little interest and mean to monitor the scheme. It should also be recognized that because of technicalities of health service business there are number of cumbersome rules which have hampered the acceptance of the scheme. It is also reported that in number of cases the applicants of older ages have been refused to become member of mediclaim scheme due to unnecessary conservatism of the companies. Another area of less popularity of the Mediclaim is the lack of appropriate marketing efforts in selling these products. To popularize the schemes it is important that proper marketing is done. To make the scheme more acceptable government has exempted the premium paid by individuals from their taxable income. This provides 20-40% subsidy on the premium to taxpayers. Mediclaim has provided a model for health insurance for the middle class and the rich. It covers hospitalization costs, which could be catastrophic. But given the premium is on higher side it as remained limited to middle class, urban tax payers segment of the population. There are also problems and negative unintended consequences of this scheme. There are reported 15
fraud and manipulation by clients and providers, which have implications for the growth and development of this sector. The monitoring systems are weak and there are chances that if the doctor and patient collude with each other, they can do more harm to the system. There is also element of adverse selection problem as the scheme is voluntary. As the scheme reimburses charges without limit it also will pushed up the prices of services in the private sector. How successful has Mediclaim been in India from a business perspective? While the details on the performance of the Mediclaim in its early years are not available, during 1999-2000, the last year before the entry of private companies, some 2.3 million Mediclaim policies were sold, adding up to a total health premium of Rs. 200 crores. (Gina Singh, 2001)4. With the entry of the private players, the health business has also increased sharply. The health premium has shown an impressive eight- fold growth in the last five years reaching Rs. 1732 crores in 2004-05. This statistics clearly reflects the contribution of the health segment to the overall growth of insurance sector; while insurance sector is growing as a whole, the health segment is contributing to this growth to a great extent. The table 5 below indicates, in the year 2003-04, the gross premium of health segment increased by 35 percent compared to 19 percent in Motor insurance and 7 percent in Fire insurance; for the public sector companies at least, the health insurance segment has shown the most growth. During 2004-05, health insurance segment continued to top the list, however at a slower rate of 28 percent. Table 5: Percentage growth in gross pre mium in insurance companies in 2003-05 2003-04
2004-05
Insurer Fire Marine Engg. Motor Health Total Fire Marine Engg. Motor Health Total Public
-3.33 -13.32 -4.44 13.46 28.89 6.56 -1.46 2.85
4.31 9.30
17.79 5.43
New
-
-3.71 8.23
27.33 4.38
India
10.97
sector
-21.90 18.79 8.06
National -1.63 -13.14 -
54.92 3.17 2.54 -2.31
29.73 42.36 18.27 3.05 34.93
19.62 16
4.68 19.02 26.28 11.94
United 4.67 -11.32 -6.46 3.87
10.85 3.33 -6.69 -18.57 10.42 -7.79 5.24
-3.77
India Oriental -1.62 -4.01
-7.03 12.28 7.87
1.02 -5.61 10.00
Private 63.58 120.85 43.51 86.67 130.32 67.40 28.70 48.56
5.87 14.80 6.85
7.31
60.48 70.39 114.21 57.35
sector Total
6.57 -3.92
3.94 18.66 35.13 12.30 5.39 10.22
17.85 16.13 27.91 12.73
There are many other new products developed by the GIC viz; a. Bhavishya Arogya Policy, with a single sum insured. It is a deferred treatment plan for long term health care of old age. The sum insured can be enhanced in multiples of Rs. 10,000 starting from Rs. 50,000 on wards at a cost of 20% an additional premium, four years before the commencement of the retirement age. b. Senior citizens unit plan (SCUP)- launched as a joint venture plan of the unit trust of India and the New India Assurance company, which is linked to an annuity retirement plan, providing hospitalization benefit up to Rs. 5 lakhs. It is a combined limit of life time for investors and their spouse. c. Cancer insurance, limited to members of the Indian cancer society. Another cancer policy is cancer Insurance policy for the member of cancer patients Aid association. 2. Private Insurance schemes
a) Bajaj Allianz: Bajaj Alliance offers three health insurance schemes namely, Health Guard, Critical Illness Policy and Hospital Cash Daily Allowance Policy. The Health Guard scheme is available to those aged 5 to 75 years (not allowing entry
for those over 55 years of age), with the sum assured ranging from Rs 100 0000 to 500 000. It offers cashless benefit and medical reimbursement for hospitalization expenses (preand post-hospitalization) at various hospitals across India (subject to exclusions and conditions). In case the member opts for hospitals besides the empanelled ones, the expenses incurred by him are reimbursed within 14 working days from submission of all the documents. While pre-existing diseases are excluded at the time of taking the policy, they are covered from the 5th year onwards if the 17
policy is continuously renewed for four years and the same has been declared while taking the policy for the first time. Other discounts and benefits like tax exemption, health check-up at end of four claims free year, etc. can be availed of by the insured. The Critical Illness policy pays benefits in case the insured is diagnosed as suffering
from any of the listed critical events and survives for minimum of 30 days from the date of diagnosis. The illnesses covered include: first heart attack; Coronary artery disease requiring surgery: stroke; cancer; kidney failure; major organ transplantation; multiple sclerosis; surgery on aorta; primary pulmonary arterial hypertension, and paralysis. While exclusion clauses apply, premium rates are competitive and high-sum insurance can be opted for by the insured. The Hospital Cash Daily Allowance Policy provides cash benefit for each and every
completed day of hospitalization, due to sickness or accident. The amount payable per day is dependant on the selected scheme. Dependant spouse and children (aged 3 months – 21years) can also be covered under the Policy. The benefits payable to the dependants are linked to that of insured. The Policy pays for a maximum single hospitalization period of 30 days and an overall hospitalization period of 30/60 completed days per policy period per person regardless of the number of confinements to hospital/nursing home per policy period. The other scheme provided includes Silver health policy, Health insurance policy, Star Package policy, etc. b) ICICI Lombard: ICICI Lombard offers Group Health Insurance Policy. This policy is available to those aged 5 – 80 years, (with children being covered with their parents) and is given to corporate bodies, institutions, and associations. The sum insured is minimum Rs 15 000/- and a maximum of Rs 500 000/-. The premium chargeable depends upon the age of the person and the sum insured selected. A slab wise group discount is admissible if the group size exceeds 100. The policy covers reimbursement of hospitalization expenses incurred for diseases contracted or injuries sustained in India. Medical expenses up to 30 days for Pre-hospitalization and up to 60 days for posthospitalization are also admissible. Exclusion clauses apply. Moreover, favorable claims experience is recognized by discount and conversely, unfavorable claims 18
experience attracts loading on renewal premium. On payment o f additional premium, the policy can be extended to cover maternity benefits, pre- existing diseases, and reimbursement of cost of health check-up after four consecutive claims-free years. The Various plans provided are: Health Advantage Plus Insurance, Family Floater Plan, etc. c) Royal Sundaram Group: The Shakthi Health Shield policy offered by the Royal Sundaram group can be availed by members of the women’s grou p, their spouses and
dependent children. No age limits apply. The premium for adults aged up to 45 years is Rs 125 per year, for those aged more than 45 years is Rs 175 per year. Children are covered at Rs 65 per year. Under this policy, hospital benefits up to Rs 7 000 per annum can be availed, with a limit per claim of Rs 5 000. Other benefits include maternity benefit of Rs 3 000 subject to waiting period of nine months after first enrolment and for first two children only. d) Cholamandalam General Insurance: The benefits offered (in association with the Paramount Health Care, a re-insurer) in case of an illness or accident resulting in hospitalization, are cash-free hospitalization in more than 1 400 hospitals across India, reimbursement of the expenses during pre- hospitalization (60 days prior to hospitalization) and post- hospitalization (90 days after discharge) stages of treatment. Over 130 minor surgeries that require less than 24 hours hospitalization under day care procedure are also covered. Extra health covers like general health and eye examination, local ambulance service, hospital daily allowance, and 24 hours assistance. There are many other private insurers also. The data of the premium collection of the various health insurance companies is given in the table 6 below:
19
Table 6 Premium Collection from health insurance segment
20
From the above table it can be seen that there is a great boost in the premium collection from the health insurance segment.
Employer Based Schemes 1. Employee State Insurance (ESI) Scheme
Under the ESI Act, 1948 ESI Scheme provides protection to employees against loss of wages due to inability to work due to sickness, maternity, disability and death due to employment injury. It also provides medical care to employees and their family members without fee for service. When implemented for the first time in India at two centers namely Delhi and Kanpur simultaneously in February 1952, it covered about 1.2 lakh employees. Presently the scheme is spread over 22 states and Union territories across India covering 91lakh employees and more than 350 lakh beneficiaries. The Act compulsorily covers: (a) all power using nonseasonal factories employing 10 or more persons; (b) all non-power using factories employing 20 or more employees and (c) service establishments like shops, hotels restaurants, cinema, road transport and news papers are covered. ESIC is a corporate semigovernment body headed by Union Minister of Labor as Chairman and the Director General as chief executive. Its members are representatives of central and state governments, employers, employees, medical profession and parliament.
21
The financing of the scheme is done by Employees State Insurance Corporation (ESIC) which is made up of contributions from: (a) employees who contribute at the rate 1.75 per cent of their wages (if daily wage is Rs.25 or less, his contribution is waived); (b) employers who contribute at the rate of 4. 75 per cent of total wage bills of their employees to contribution on behalf and for employees having daily wage ofRs. 25 or less; and (c) State Governments contributes 12.5 per cent of total shareable expenditure worked out by prescribed ceiling on expenditure which is Rs. 600 per insured person per annum and expenditure incurred outside/over and above the prescribed limit. The State Government runs the medical services of this scheme of social insurance meant for employees covered under the ESI Act 1948. This scheme - compulsory and contributory in nature - provide uniform package of medical and cash benefits to insured persons is implemented through special ESI hospitals and diagnostic centers, dispensaries and panel doctors. The existing facilities under the ESIS are provided in Table 7. The delivery of medical care is through service (direct) system and/or panel (indirect) system. It provides allopathic medical care, but medical care by other systems like ayurvedic and homeopathy in the states is also provided as per the state government decision. The medical care consists of preventive, promotive, curative and rehabilitative types of services are provided by the scheme through its own network or through arrangements with reputed government or private institutions by concept of proper referral system and regionalisation. Table 7. Existing infrastructure under ESIS in India Particulars
No. of Centers
632
No. of Insured Persons/Family
84,45,000
Units ESI Hospitals
125
Number of ESI Hospital Beds
23,334
ESI Dispensaries
1,443
Insurance Medical Officers
6,220
Insurance Medical Practitioners
2,900
22
Preventive services include immunization, maternal and child health, family welfare services. Promotive services include health education and health check-up camps. Curative services include: dispensary care, hospital care, maternity care, supportive services including diagnostic centre, drugs, dressings, surgical procedures, dental care, prosthesis and other appliances. Rehabilitative services include: physical rehabilitation, economical rehabilitation, and provision of artificial aids (social, psychological rehabilitation). Even though the scheme is formulated well there are many problem areas in managing this scheme. Some of the problems are: Large number of employers try to avoid being covered under the scheme, A large number of posts of medical staff remains vacant because of high turnover and lengthy recruitment procedures, There is duality of control, Rising costs and technological advancement in super specialty treatment, Management information system is not satisfactory. There is low utilization of the hospitals The workers are not satisfied with the services they get. In rural area the access to services is also a problem. Some of the state governments have to subsidize the scheme heavily even though the ESI Corporation, which is the financial arm of the system, has much surplus funds. All these problems indicate an urgent need for reforms in the ESI scheme (Vora, 2000). Some of the options for reforms in ESI scheme could be: making the scheme autonomousmanaged by workers and employers while government only retails controls through a guiding framework as is the case with German Sickness Funds. Secondly the scheme should be made open for non-organized sector through fixed income based contribution. This will extend the benefits of the scheme to many more people. The government should set the patient care standards and monitor outcomes as well as patient satisfaction. The management of the health
23
facilities also needs to be improved substantially. The financial management of the scheme also needs improvement.
Central Government Health Scheme (CGHS) Since 1954, all employees of the Central Government (present and retired); some autonomous and semi-government organizations, MPs, judges, freedom fighters and journalists are covered under the Central Government Health Scheme (CGHS). This scheme was designed to replace the cumbersome and expensive system of reimbursements (GOI, 1994). It aims at providing comprehensive medical care to the Central Government employees and the benefits offered include all outpatient facilities, and preventive and promotive care in dispensaries. Inpatient facilities in government hospitals and approved private hospitals are also covered. This scheme is mainly funded through Central Government funds, with premiums ranging from Rs 15 to Rs 150 per month based on salary scales. The coverage of this scheme has grown substantially with provision for the nonallopathic systems of medicine as well as for allopathy. Beneficiaries at this moment are around 432 000, spread across 22 cities. The CGHS has been criticized from the point of view of quality and accessibility. Subscribers have complained of high out-of-pocket expenses due to slow reimbursement and incomplete coverage for private health care (as only 80% of cost is reimbursed if referral is made to private facility when such facilities are not available with the CGHS). Table 8. Public insurance schemes
Contribution
ESIS (Employees State
CGHS (Central Government
Insurance Scheme)
Health Scheme)
Employees: 4.75% of wages.
Pay/pension Contribution
Employers: 1.75% of wages.
(Rs/month) (Rs/month)
All contributions are deposited <3,000 15 by the employer.
3001 – 6000 40
State governments contribute a 60001 – 10000 70 minimum of 12.5 %on ESIS
10001 – 15000 100
expenditures in their
>15000 150
respective States (Garg 1999b, The bulk of resources (85%) 24
p. 30). See also section 59A
come from general revenues
(Govt. of India, 1999g, pp. 51- of the Central Government 52)
(Garg 1999b, p. 34)
Reimbursement Does not allow reimbursement 1. Reimbursement of of medical treatment outside
consultation fee, for up to
of allotted facilities. For
four consultations in a total
example, the Employees State spell of ten days (on referral) Insurance Act 1948 states that entitlement to medical benefits 2. Cost of medicines. does not entitle the insured to ‘claim reim bursement for
medical treatment except under re gulations’ (Govt. of
India, 1999g, p. 50) and ESI
3. Charges for a maximum of ten injections. Reimbursement for specified diseases or ailments.
(General) Regulations, (Govt. of India, 1999g, p. 156) Entitlement
Depending on ‘allotment’ as
1. First-level consultation
per the ESI Act
and preventive health care
1..Outtpattiientt mediicall
service through dispensaries
carre att diispensarriies orr
and hospitals under the
panell clliiniics,,
scheme
2. Consultation with specialist 2. Consultation at a CGHS
and supply of special medicines and tests in addition
dispensary / polyclinic or CGHS wing at a recognized
to outpatient care; 3. Hospitalization, specialists, drugs and special diet. 4. Cash benefits: Periodical payments to any insured person in case of sickness, pregnancy, disablement or
25
hospital. 3. Treatment from a specialist through referral, emergency treatment in private hospitals and outside India.
death resulting from an employment injury. Eligibility
Employees (and dependants)
Employees of the Central
working in establishments
Government (excepting
employing ten or more persons railways, Armed Forces (with power) or twenty or
pensioners and Delhi
more persons (without power) Administration), pensioners, and earning less than Rs. 6
widows of Central
500 per month. (Garg 1999a,
Government employees,
p.85)
Delhi Police employees, Defence employees and dependants residing in 24 specified locations (See Govt. of India, various publications)
NGOS / Community-Based Health Insurance Community-based funds refer to schemes where members prepay a set amount each year for specified services. The premia are usually flat rate (not income-related) and therefore not progressive. Making profit is not the purpose of these funds, but rather improving access to services. Often there is a problem with adverse selection because of a large number of highrisk members, since premiums are not based on assessment of individual risk status. Exemptions may be adopted as a means of assisting the poor, but this will also have adverse effect on the ability of the insurance fund to meet the cost of benefits. Community-based schemes are typically targeted at poorer populations living in communities, in which they are involved in defining contribution level and collecting mechanisms, defining the content of the benefit package, and / or allocating the schemes, financial resources (Such schemes are generally run by trust hospitals or nongovernmental organizations (NGOs). The benefits offered are mainly in terms of preventive care, though ambulatory and in-patient care is also covered. Such schemes tend to be financed through patient collection, government grants and donations. Increasingly in India, CBHI schemes are negotiating with the for profit insurers for the purchase of custom designed group insurance 26
policies. However, the coverage of such schemes is low, covering about 30-50 million indicates that many community-based insurance schemes suffer from poor design and management, fail to include the poorest-of-the poor, have low membership and require extensive financial support. Other issues relate to sustainability and replication of such schemes. A comparison of various health insurance schemes by NGOs is given below in table 9. Table 9. Non-profit social insurance schemes in India Name
Location
Membe rs
Type of Insurance
1. ACCORD/
Tamil Nadu (Gudalur) 7 356
ASHWINI Health
Health Insurance
(1997)
(with NIA)
40 000
Health insurance
Insurance Scheme 2. Aga Khan Health
Gujarat (Sidhpur)
Services3 3. Apollo Hospital
(1997) Tamil Nadu (Madras)
Association (AHA) 4. ASSEFA
10 000
Health Insurance
(1995)
(with GIC)
Tamil Nadu (Madurai) N.N.
(Association of Sarva
Cattle Insurance Health Insurance
Sewa Farms) 5. Cooperative
Andhra Pradesh
Development
(Hyderabad)
26 000
Death Relief Fund (Life Insurance)
Federation (CDF) 6. Goalpara
West Bengal
1 247
Health Insurance
Cooperative Health
(Shantiniketan)
(1997)
7. Kottar Social
Tamil Nadu
34 000
Health Insurance
Service Society
(Kanyakumari) Karnataka
7 000
Health Insurance
Maharashtra
150 000
Health Insurance
Society
(KSSS) 8. Mallur Health Cooperative 9. Mathadi Hospital
27
Trust
(Bombay/Mumbai)
10. Medinova Health West Bengal (Calcutta) 35 000
Health Insurance
Card Scheme 11. Navsarajan Trust Gujarat
10 000
Health Insurance (with NIA) Accidental Insurance (with LIC) Nutrition Legal Aid Drugs Fight Against Corruption
12. New Life
Tamil Nadu
N.N.
Health Insurance
13. Organization for
Tamil Nadu (Mysore)
1 137
Health Insurance
Development of
Accidental
People (ODP)
Insurance (with NIC)
14. Pragati Thrift and –
410
Death Relief Fund
75 000
Health Insurance
6 800
Health Insurance
17. Seba Cooperative West Bengal (Calcutta) 3 000
Health Insurance
Health Society
families
(with GIC)
40,000
Integrated
Credit Society 15. Raigarh
Madhya Pradesh
Ambikapur Health
(Raigarh District)
Association (RAHA) Medical Insurance Scheme 16. Saheed
West Bengal
Shibsankar Saba
(Burdwan)
Samity (SSSS)
18. Self Employed
Gujarat (Ahmedabad)
Insurance Scheme
Women’s Association
28
(SEWA)
Health Insurance Life Insurance (with LIC) Accident (with NIA) Asset Insurance Maternity Benefit
19. Kasturba Hospital Maharashtra (Wardha
19 457
Scheme, Sewagram
(1997)
District)
20. Social Work and Rajasthan (Ajmer)
Health Insurance
20 000
Health Insurance
Research Centre (SWRC) (defunct?) 21. Society for
Maharashtra
1 200
Health Insurance
Promotion of Area
(Bombay/Mumbai)
couples
Accident
Resources Centre
Housing(with
(SPARC)
OIC)
22. Students Health
West Bengal (Calcutta) 550 000
Health Insurance
Gujarat (Anand)
Health Insurance
Home 23. Tribhuvandas
800 000
Foundation 24. Trivandrum
Kerala
Craft & Gear
District Fishermen’s
(Thiruvananthapuram)
Fund (loan basis)
Federation (TDFF)
Contingency Fund (death, accidents, loss of work)
25. Urmal Rural
Rajasthan (Bikaner & N.N.
Health and Research
Jodhpur)
Health Insurance
Development Trust (defunct?) 26. Voluntary Health Tamil Nadu
160 000
Services Medical Aid Plan
29
Health Insurance
Source: Patrick Krause (2000), ‘Non-profit
Insurance Schemes for the
Unorganized Sector in India’, Socia l Policy Division 42, Working Papers
No. 22 e, GTZ Some examples of community-based health insurance schemes are discussed herein. Self- Employed Women’s Association (SEWA), Gujarat:
This scheme established in
1992, provides health, life and assets insurance to women working in the informal sector and their families. The enrolment in the year 2002 was 93 000. This scheme operates in collaboration with the National Insurance Company (NIC). Under SEWA’s most popular policy, a premium of Rs 85 per individual is paid by the
woman for life, health and assets insurance. At an additio nal payment o f Rs 55, her husband too can be covered. Rs 20 per member is then paid to the National Insurance Company (NIC) which provides coverage to a maximum of Rs 2 000 per person per year for hospitalization. After being hospitalized at a hospital of one’s choice (public
or private), the insurance claim is submitted to SEWA. The responsibility for enrolment of members, for processing and approving of claims rests with SEWA. NIC in turn receives premiums from SEWA annually and pays them a lumpsum on a monthly basis for all claims reimbursed. (Ranson K & Acharya A, 2003). Another CBHI scheme located in Gujarat is that run by the Tribhuvandas F oundation (TF), Anand.
This was established in 2001, with the membership being
restricted to members of the AMUL Dairy Cooperatives. Since then, over 1 00 000 households have been enrolled under this scheme, with the TF functioning as a third party insurer. in Karnataka established a CBHI scheme in 1973. It The Mall ur Mi l k Cooperati ve covers 7 000 people in three villages and outpatient and inpatient health care are directly provided. A similar scheme was established in 1972 at Sewagram, Wardha in Maharashtra. This scheme covers about 14 390 people in 12 villages and members are provided with outpatient and inpatient care directly by Sewagram.
30
Th e Acti on for Commun i ty Or gani zati on, Rehabil itation and Devel opment (ACCORD), Nilgiris,
Tamil Nadu was established in 1991. Around 13 000 Adivasis
(tribals) are covered under a group policy purchased from New India Assurance. Another scheme located in Tamil Nadu is Kadamalai Kal anji a Vatt ara Sangam (KKVS), Madurai. This was established in 2000 and covers members of women’s
self-help groups and their families. Its enrolment in 2002 was around 5 710, with the KKVS functioning as a third party insurer. Th e Volu ntary H ealt h Servi ces (VH S), Chennai,
Tamil Nadu was established in
1963. It offers sliding premium with free care to the poorest. The benefits include discounted rates on both outpatient and inpatient care, with the VHS functioning as both insurer and health care provider. In 1995, its membership was 124 715. However, this scheme suffers from low levels of cost recovery due to problems of adverse selection. Rai garh A mbi kapur Health A ssoci ati on (RAH A), Chhatisgarh was established in
1972, and functions as a third party administrator. Its membership in the year 1993 was 72 000.
Health Insurance Initiatives by State Governments In the recent past, various state governments have begun health insurance initiatives. For instance, the Andhra Pradesh government is implementing the Aarogya Raksha Scheme since 2000, with a view to increase the utilization of permanent methods of family planning by covering the health risks of the acceptors. All people living below the poverty line and those who accept permanent methods of family planning are eligible to be covered under this scheme. The Government of Andhra Pradesh pays a premium of Rs 75 per acceptor. The benefits to be availed of, include hospitalization costs up to Rs. 4000 per year for the acceptor and for his / her two children for a total period of five years from date of the family planning operation. The coverage is for common illnesses and accident insurance benefits are also offered. The hospital bill is directly reimbursed by the Insurance Company, namely the New India Assurance Company.
31
The Government of Goa along with the New India Assurance Company in 1988 developed a medical reimbursement mechanism. This scheme can be availed by all permanent residents of Goa with an income below Rs 50 000 per annum for hospitalization care, which is not available within the government system. The non-availability of services requires certification from the hospital Dean or Director Health Services. The overall limit is Rs 30 000 for the insured person for a period of one year. A pilot project on health insurance was launched by the Government of Karnataka and the UNDP in two blocks since October 2002. The aim of the project was to develop and test a model of community health financing suited for rural community, thereby increasing the access to medical care of the poor. The beneficiaries include the entire population of these blocks. The premium is Rs 30 per person per year, with the Government of Karnataka subsidizing the premium of those below poverty line and those belonging to Scheduled Castes/ Scheduled Tribes. This premium entitles them to hospitalization coverage in the government hospitals up to a maximum of Rs 2 500 per year, including hospitalization for common illnesses, ambulance charges, loss of wages at Rs. 50 per day as well as drug expenses at Rs 50 per day. Reimbursements are made to an insurance fund which has been set up by the NGO / PRI with the support of UNDP. The Government of Kerala is planning to launch a pilot project of health insurance for the 30% families living below the poverty line. The scheme would be associated with a government insurance company. Currently, negotiations are under way with the IRA to seek service tax exemption. The proposed premium is Rs 250 plus 5% tax. The maximum benefit per family would be Rs 20 000. The amount for the premium would be recovered from the drug budget (Rs 100), the PRI (Rs 100) and from the beneficiary (Rs 62.50) while the benefits available would include cover for hospitalization, deliveries involving surgical procedures (either to the mother or the newborn). Instead of payment by the beneficiary, Smart Card facility would be offered. This scheme would be applicable in 216 government hospitals.
Health Insurance Policy A health insurance policy is a contract between an insurer and an individual or a group, in which the insurer agrees to provide specified health insurance at an agreed-upon 32
price the premium. Depending on the policy, the premium may be payable either in a lump sum or in installments. Health insurance usually provides either direct payment or reimbursements for expenses associated with illnesses and injuries.
Cost
The cost and range of protection provided by the health insurance will depend on the insurance provider and the particular policy purchased. These days, most companies give the benefit of health insurance to the employees. However, in case your employer does not offer a health insurance plan, it is advisable to opt for a health insurance scheme.
Who can avail the Policy?
Health insurance can be availed by people aged between five and seventy five (The upper and lower age limits may vary slightly depending on the policy). The health insurance scheme could either be a personal scheme or a group scheme sponsored by your employer.
What it covers?
In anticipation of unexpected events that create the need for medical goods and services, the health insurance does not cover certain ailments. It does not cover ailments in the first year after the policy is taken. It covers hospitalization charges for:
o
Heart attacks
o
Strokes
o
Prolonged illnesses
o
Loss of limb, eye, or other parts of the body due to accident
o
Injuries
o
Maternity expenses
o
Medicines
Points to be known
You should understand the policy, and become familiar with common health insurance provisions, including limitations, exclusions, and riders. It is very important to know what your policy covers and what you have to pay yourself. Health Insurance policies generally cover boarding, nursing and diagnostic expenses, which include room rent charged at the 33
hospital or nursing home, fees of the surgeon, anesthetist, doctor, etc. Some policies even offer fixed cash amount for each day you stay at any hospital for treatment. If you have a persistent health problem and then decide to take insurance, it might not be covered. Expenses on hospitalization, incurred in the first 30 days after taking a policy are also not entitled, except in case of an injury from accident. Treatment of certain diseases is not covered during the first year of your policy. The list of diseases may vary form one health policy to another.
Claims Settle ment Procedures
Claim settlement is one of the most important tasks of any insurance company. Proper settlement of claims requires a sound knowledge of the law, principles and practices governing insurance contracts and in particular, a thorough knowledge of the terms and conditions of the standard policies and various extensions and modifications there under. The procedure in respect of claims under various classes of insurance follows a common pattern and may be considered under three broad headings: 1.
Preliminary
2.
Investigation
3.
Settlement.
The following is the general procedure followed in settlement of any kind of insurance claims: I. Notice of Loss
It is most essential that early notification of the loss be received by the insurer as per the time limits provided for in the policy document. Delay would adversely affect the insurer’s position. Therefore, non- fulfillment of this provision in insurance agreement will relieve the liability of insurer if the non- compliance materially affects the insurer’s position. However, whether there is delay in notification or not, this is ultimately decided by the Court of Law is case of any dispute depending on the individual case and facts. 34
In case of health insurance it is essential that the policy holder if falls sick should notify the insurer and the Agent/Broker immediately (within 24 hours time) after the admission into the Hospital giving as many details as possible of the disease/symptoms, the treating Doctor, the address of the Hospital for elective admissions. In case of emergencies, the intimation or notice of ill health and other particulars may be sent within reasonable time not exceeding one week. The above intimations/ notices are mandatory requirements for claiming reimbursement under the GIC norms. These procedures may vary from insurer to insurer depending on the nature of the contract. II. Procedure
The insurer will check the following on receipt of intimation of loss or damage from the insured. i.
Enforcement of the policy on the date of occurrence of the loss or da mage;
ii.
Receipt of the notice of loss within the stipulated time period as mentioned in the policy document.
iii.
Loss or damage by a peril, which is covered under the insurance policy.
Once the above verification is made, the loss is allotted a number and entered in the Claims Register. A separate file is opened for the claim with a copy of the policy, or relevant extracts thereof filed with the claim papers. Thereafter, a claim form is issued to the insured. III. Claim Forms
Each class of insurance will have different contents in its claim form. In general, the claim form is designed to elicit full information regarding the circumstances of the loss, such as date of loss, time, cause of loss, extent of loss. This information is necessary to enforce contribution and subrogation. In health insurance, the insured should submit the duly filled in prescribed claim form to the insurer along with all the pertinent documents in original viz., original discharge summary/ death summary, original bills of hospitalization payments etc., all the investigation 35
reports in original including films of X- ray, ECG, CT Scan, MRI etc. These are again the mandatory requirements for claiming reimbursement which should be done within seven (7) days from the date of discharge from the Hospital. IV. Assessment of Loss
On receipt of the duly filled in claim form from the insured, the insurer decide about investigation and assessment of the loss. If the loss is small, the investigation to determine the cause and extend of loss is done by an Officer of the insurer. Investigation of large, complicated claims is entrusted to independent professional surveyors. Sometimes it may be waived and the loss settled on the basis of the claim form and evidences provided. In case of an appointment of a surveyor, the surveyor is provided with all the relevant information pertaining to the claim. The intimation of appointment of Surveyor will be sent to the insured. V. Surveyors and Loss Assessors
Under Insurance Act, every insurer, in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding Rs.20, 000 on any policy of insurance shall be admitted and settled only after a report on the loss from a person who holds a license to act as a surveyor. In case of Personal Accident claims, the insured is required to submit a report from the attending doctor specifying the cause of accident or the nature of illness as the case may be and the duration of disablement. Depending on the conditions laid out in the policy, the insurer reserves the right to arrange for an independent medical examination. Third Party claims involving personal injuries are assessed on the basis of medical opinion of a medical practitioner. VI. Claims Documents
For the purpose of providing further evidence and to substantiate the claim, the insured needs to submit documents other than claim form and surveyor report. These documents include police report and post mortem report in case of a personal accident policy claim etc.
36
VII. Final Settlement
Once the above formalities are fulfilled, the claim is processed on the following basis: Claim form Independent surveyors report, medical opinion etc Various supportive documents furnished by the insured and Any other evidence secured by the insurer. If the claim is in order, settlement is made by payment in the form of a crossed cheque in favor of the insured. The payment is entered in the claims register and in the relevant policy record. If there is any company-insurance, appropriate recoveries are made from the company-insurer. VIII. Discharge Voucher
Depending on the policy, a discharge voucher is executed by the insured certifying the amount received from the insured and other particulars of his full and final claim settlement which discharges the insurer form any further obligations on the policy.
Procedure Followed in Settlement of Claims Mediclaim
Mediclaim insurance is a cover which takes care of medical expenses following hospitalization / domiciliary hospitalization of the insured in the following situations: Sudden illness Accident or surgery required in respect of any disease which has arisen during the policy period. Claim:
The claim is payable when treatment is given to the insured from a registered hospital or nursing home. However, in the case of non-registered hospital or nursing home the treatment can be covered under the policy subject to hospital/nursing home on conformation of the following: 37
The hospital/nursing home should have 15 inpatient beds It should have qualified nursing staff round the clock Qualified doctors round the clock Fully equipped operation theatre The very purpose of Mediclaim policy is to provide reimbursement in respect of treatment taken in the hospital / nursing home, the policy also provides reimbursement in respect of domiciliary hospitalization (treatment taken at home). However, for a claim submitted for domiciliary hospitalization the following conditions should be satisfied: Medical treatment should be for more than 3 days. The treatment should be such for an illness/disease/injury which in the normal course would require treatment and care in the hospital/nursing home but actually taken whilst confined at home due to any of the following circumstances: 1. Condition of the patient is such that he/she cannot be moved to the hospital/nursing home or 2. The patient cannot be moved to hospital/nursing home for lack of accommodation there in. In the instance of death of the patient, the insurance company will insist upon a succession certificate from a court of law for disbursing the claim amount in the name of the nominee. In case of any dispute, the insurer can deposit the claim amount in the court for disbursement to next legal heirs of the policy holder.
Claim Forms Claim form is a fundamental document which is the basis for the settlement of a claim on any insurance policy. The objective of a claim form is to provide the relevant information required by the insurer to facilitate the process of decision-making in a policy claim settlement.
38
Each class of insurance will have different contents in its claim form. In general, the claim form is designed to elicit full information regarding the circumstances of the loss, such as date of loss, time, cause of loss, extent of loss. The other questions vary from one class of insurance to another. If the insurance is subject to ‘pro-rata average’, a question is asked on the values of the property at the time of loss.
In those classes of policies, which are contracts of indemnity, a question is asked to ascertain the other policies held by the insured covering the same subject matter and whether any third party was responsible for the loss. This information is necessary to enforce contribution and subrogation. Simple filling and submitting a claim form does not constitute an admission of liability by the insurer. All the correspondence sent by insu rer in this regard are also sent ‘without prejudice’ to their rights. To this effect in every claim form insurer will make it a point to print the above in bold words. Group Mediclaim Policy Form CLAIM FORM FOR GROUP MEDICLAIM POLICY
(The issue of this form is not to be taken as an Admission of Liability) Please give the following information correctly and completely. Claim No. _________________ 1.
Name of the Insured
(i)
Name of the Insured Employee
(ii)
Salary Roll No.
(iii)
E-mail id E-mail id
(iv)
Policy No.
2.
Details of the Insured Person in respect of whom claim is made:
(i)
If family member, name & relationship to the insured employee:
39
(ii)
Present completed age
(iii)
Occupation:
(iv)
Residential address
3.
Nature of disease / illness contracted or injury suffered:
4.
Date of injury sustained or disease / illness first detected
5.(i)
Name and address of the hospital / Nursing Home / Clinic
(ii)
Date of admission
(iii)
Date of discharge:
6.(i)
Amount of Pre and Post Hospitalisation Expenses incurred
(ii)
Total Amount Claimed
7.
If the claim is for domiciliary hospitalization, please indicate:
(i)
Date of commencement of treatment
(ii)
Date of completion of treatment
(iii)
Name & address of attending Medical
(iv)
practitioner
(v)
Qualification Telephone No.
In support of the above claim, I enclose following documents {Please indicate by ( Ö )} 1. Bills, Receipt and Discharge Certificate / card from the Hospital/Nursing Home. 2. Cash memos from the Hospital / Chemist(s), supported by the proper prescription.
40
3. Receipt and Pathological test reports from a Pathologist supported by the note from the attending Medical Practitioner / Surgeon demanding such Pathological tests. 4. Surgeons cert ificate stating nat ure of operat ion performed and surgeon’s bill a nd receipt. 5. Attending Doctor’s / Consultant’s / Specia list’s / Anesthetist’s bill and receipt a nd certificate regarding diagnosis, whichever is prescribed & thereby expenses incurred. Declaration
I here by agree, affirm and declare that: a. The statements/information given/stated by me/us in this claim form are true, correct and complete. b. No material information which is relevant to the processing of the claim or which in any manner has a bearing on the claim has been withheld or not disclosed. c. If I have given/made any false or fraudulent statement/information, or suppressed or concealed or in any manner failed to disclose material information, the policy shall be void and that I shall not be entitled to all/any rights to recover thereunder in respect of any or all claims, past, present or future. d. The receipt of this claim form/other supporting/related documents does not constitute or be deemed to constitute an agreement by the Company of the claim and the Company reserves the right to process or reject or require further/additional information in respect of the claim. In case of Maternity Benefits Extension
I hereby declare that at the time of delivery covered by this claim, I did not have more than two living children. I hereby warrant the truth of foregoing particulars in every respect and I agree that if I have made or shall make any false or untrue statements, suppression or concealment, my right to claim reimbursement of the said expenses shall be absolutely forfeited notwithstanding any other action that the Company may take against me under the
41
rules. I further declare that in respect of the above treatment, no benefits are admissible under any other Medical Scheme or insurance. In case of Reimbursement of Cost of Health Check-Up Extension
I confirm that no claim has been made by my family members or me for the past 4 policy periods nor any claim is proposed to be lodged for the said period. Place: Date:
Signature of Insured
Employee
Important: Since it is a pre-requisite for admission of claims under the policy that the Hospital / Nursing Home / Clinic where the Insured Person was admitted, is registered with Local Authorities, it is necessary for the claimant to ensure that the Hospital / Nursing Home / Clinic indicates the same on the Bill-cum-Receipt issued by them. (To be filled in by the Employer/Insured) Was the injured person in respect of whom claims being made
Yes/No
absent from work? If so, please furnish the details of such absence I / We hereby declare that the particulars made by the injured person in the claim from are true to the best of our knowledge and belief. Place :
Date :
Signature of the Insured
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Third party administrators (TPA’S) The health infrastructure in India is facing challenge of meeting the health goals and complexities emerging from the changing disease pattern. The proliferation of various healthcare technologies and increase in cost of care has necessitated the exploration of health financing options to manage problems arising out of increasing healthcare costs. Health insurance is emerging fast as an important mechanism to finance the healthcare needs of people. Further, the uncertainty of disease or illness is accentuating the need for insurance system that works on the basic principle of pooling of risks of unexpected costs of persons falling ill and needing hospitalization by charging premium from a wider population base of the same community. However, the complexity of health insurance industry has been much talked about but less understood, especially in Indian scenario. With the advent of Third Party Administrators (TPAs) this sector has assumed a new dimension. TPAs are presumed to infuse new management system and enrich knowledge base of managing healthcare services and costs. Their presence is aimed at ensuring higher efficiency, standardization and improving penetration of health insurance in the country. TPAs potentially have a wider role to play in standardization of charges and managing cash-less services in health insurance. There are questions that in what ways the TPA is going to influence the developments in the health sector. The influence of TPAs to a large extent would be determined by their activities, the way they organize their services and their revenue generation model. In present form, TPAs earn their major revenue from fees charged as commission on insurance premium. Insurance Regulatory and Development Authority (IRDA), the regulatory body for insurance sector in India has standardized this rate. Besides this, TPAs have a potential source of revenue from benefit management, medical management, provider network management, claim administration and information and data management. However, the insurance sector still faces challenge of institutionalizing the TPA services and there is substantial scope for improvements. Third Party Administrator (TPA) was introduced through the notification on TPAHealth Services Regulations, 2001 by the IRDA. Their basic role is to function as an intermediary between the insurer and the insured and facilitate the cash-less service of insurance. For this service they are paid a fixed per cent of insurance premium as commission. This commission is currently fixed at 5.6 per cent of premium amount. The core product or service of a TPA is ensuring cashless hospitalization to policyholders. Intermediation by TPAs ensures that policyholders get hassle-free services, insurance companies pay for efficient and cost-efficient services, and healthcare providers get their 43
reimbursement on time. By doing this it is expected that TPAs would develop appropriate systems and management structures aiming at controlling costs, developing protocols to minimize unnecessary treatments/investigations, improve quality of services and ultimately lead to lower insurance premiums. OPERATIONS OF THE TPA: The entire operation of the TPA can be classified in seven different stages which starts right from receiving the data of policyholder from the insurance company to claims settlement. The stages of the operational activities are: • Receipt of data • Preparation of ID cards. • Updating master member file • Hospitalization producer – Non - network hospital. • Hospitalization procedure – Network hospital. • Claims process ing procedure • Post hospitalization claims process. There are around 28 TPA’s in India, some of these are:
Safeway Mediclaim Services (License No.026) Alankit Health Care Limited (License No. 021) E Meditek Solutions Ltd (License No. 007), etc.
Future of Health Insurance Given the situation, there are few issues of concern or barriers towards implementing a social health insurance scheme in India. These are enumerated below along with the possible way ahead. India is a low-income country with 26% population living below the poverty line, and 35% illiterate population with skewed health risks. Insurance is limited to only a small proportion of people in the organized sector covering less than 10% of the total population. Currently, there no mechanism or infrastructure for collecting mandatory premium among the large informal sector. Even in terms of the existing schemes, there is insufficient and inadequate information about the various schemes. Data gaps also prevail. Much of the focus of the existing schemes is on hospital expenses. 44
There continues to be lack of awareness among people about health insurance. In spite of existing regulation in some States, the private sector continues to operate in an almost unhindered manner. The growth of health insurance increases the need for licensing and regulating private health providers and developing specific criteria to decide upon appropriate services and fees. Health insurance per se, suffers from problems like adverse selection, moral hazard, cream-skimming and high administrative costs. This is coupled with the fact that in the absence of any costing mechanisms, there is difficulty in calculating the premium. There is also a need to evolve criteria to be used for deciding upon target groups, who would avail of the SHI scheme/s and also to address issues relating to whether indirect costs would be included in health insurance. Health insurance can improve access to good quality health care only if it is able to provide for health care institutions with adequate facilities and skilled personnel at affordable cost.
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Conclusion In India has limited experience of health insurance. Given that government has liberalized the insurance industry, health insurance is going to develop rapidly in future. The challenge is to see that it benefits the poor and the weak in terms of better coverage and health services at lower costs without the negative aspects of cost increase and over use of procedures and technology in provision of health care. The experience from other places suggest that if health insurance is left to the private market it will only cover those which have substantial ability to pay leaving out the poor and making them more vulnerable. Hence India should proactively make efforts to develop Social Health Insurance patterned after the German model where there is universal coverage, equal access to all and cost controlling measures such as prospective per capita payment to providers. Given that India does not have large organized sector employment the only option for such social health insurance is to develop it through co-operatives, associations and unions. The existing health insurance programs such as ESIS and Mediclaim also need substantial reforms to make them more efficient and socially useful. Government should catalyze and guide development of such social hea lth insurance in India. Researchers and donors should support such development. Taking a look at the various steps and strategies that need to be followed by companies that hope to conquer the Indian health insurance market, we see that the four main challenges facing the industry are product innovation, distribution, customer service, and investments. Flexible products and new technology will play a crucial role in reducing the cost and, therefore, the price of insurance products. Finding the niche markets, having the right product mix through add-on benefits and riders, e ffective branding of products and services and product differentiation from competitors' offering will be a few challenges faced by new companies. Inarguably the potential market for insurance buyers is tremendous in India and offers great scope for growth. While estimating the potential of the Indian insurance market we are often tempted to look at it from the perspective of macro-economic variables like the ratio of premium to GDP (which is indeed comparatively low in India) but the fact is that the number of potential buyers of insurance in India is cert ainly attractive.
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