Earlier this month, my 16-year old son tested positive for covid and was briefly hospitalized. It took us about six hours to get a bed and the all-in cost was over ₹35,000 a day. I have three different health insurance policies with a cumulative cover of over ₹75 lakh. The first insurer had recently dis-empanelled the hospital, the second had had some differences with the hospital on room eligibility, and the third was of the view that hospitalization was not necessary. Covid claims such as this are testing the health insurance ecosystem deeply and at the core are the seemingly unbridgeable differences between hospitals and insurers.
All participants in the ecosystem are facing challenges, including patients. Many cashless claim requests are being converted to reimbursements because insurers believe that hospitalization is unnecessary, particularly just for observation. But patients will not push back when advised hospitalization. More reimbursement claims will lead to potential grievances because these take longer to settle, often one to three months from claim intimation, and can be rejected. Separately, claim paid as a proportion of the hospital bill has reduced, from about 80% to 50% in many cases. One reason is that hospitals are charging more than the recommended tariffs. The penalty, for this difference of opinion between hospitals and insurers, is borne by policyholders. In some cases, policyholders are unclear about what is covered. In one example, a patient did not realize that the policy had a ₹5 lakh deductible, which means that only expenses over ₹5 lakh are covered.
Insurers find it difficult to price covid insurance so dynamically when they have limited insight into disease incidence rates and little control on costs. They also end up being blamed for hospital administration issues. The discharge process is one such. This can take over eight hours, as it did for my son, and is largely due to inefficient hospital administrative processes or simply the overwhelming load of bed occupancy. Insurers also face fraudulent claims. During the early lockdown months, many insurers allowed patients to submit scanned bills, instead of originals, for claims settlement. This made the process easier. However, now instances are coming to light where patients used scans to claim from multiple insurers for the same medical treatment.
The kindness of doctors and nurses in dealing with patients is heart-warming, but hospitals are woefully short on capacity. In the Delhi hospital where my son was admitted no rooms were vacant, emergency beds all occupied, staff were trying their best to manage capacity and doctors were working long hours. If the eight hours that it takes to discharge patients could be reduced, it would only allow more patients to be taken in and ease capacity.
There are some new challenges also. A friend in the UK needed to take an RT-PCR test before returning to India. This cost over ₹30,000. Travel insurance rejected the claim, citing the clause “routine physicals or other examinations where there are no objective indications or impairment in normal health" are excluded. I can appreciate the insurer’s as well as the claimant’s perspectives. There were no objective indications, but RT-PCR during a pandemic is not a routine examination. How such cases get redressed will clarify the boundaries of health insurance.
Although I have thrown up more issues than solutions, one idea is to create smaller ecosystems, for example a preferred network with just a handful of hospitals, where the patient, insurer and hospital can work more harmoniously on issues of higher cashless claims, package-based payments, and quicker discharge. Patients should be encouraged to visit this small network. Success here will provide the basis for larger scale implementation.
We were driving home after my son recovered and was discharged from the hospital. After some cajoling, insurance did pay the bill. As I narrated some of these incidents, my son wanly asked me if these would find their way into my column. I laughed because though he has been a loyal editor of my column for a decade, this was the first time that he actually provided the content