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AHNA, Star Health slug it out over inflated bills, claim rejections

Insurers and hospitals are at loggerheads over treatment costs and pending dues once again. This time, the confrontation is playing out in the city of Ahmedabad.

While the intensity of the tug-of-war seemed to have subsided post the Covid-19 pandemic, it has once again come to the fore after Ahmedabad Hospitals and Nursing Homes Association (AHNA) issued a letter to standalone health insurer, Star Health and Allied Insurance, threatening to discontinue cashless facility unless a host of issues are resolved.

It has set a deadline of October 15 to address concerns such as claim rejections after initial approvals, delays in clearing payment dues, charges fixed by the companies that hospitals deem ‘unsustainable’ and even delisting of hospitals from the company’s networks.

When the two groups lock horns – over billing, treatment costs – often it’s the policyholders, who are left in the lurch. Around 52.04 crore Indian residents possessed health insurance in 2022, as against 51.4 crore in 2021, as per the Ministry of Health and Family Welfare.

In 2010, the Preferred Provider Network (PPN), launched by the four government-owned general insurers, aimed to curb treatment costs at hospitals that joined this network. But, corporate hospitals in Mumbai refused to join citing unreasonably low prices set by insurers.

Efforts on to resolve the deadlock
Star Health says it has received the communication from AHNA but rules out any disruption of insurance claim payouts for policyholders.

“As of now, there is no imminent discontinuation of cashless facility at any of the member hospitals of AHNA. We are already in talks with member hospitals and are confident of addressing their genuine concerns within the next few days while also clarifying our stand,” says Anand Roy, MD and CEO of Star Health and Allied Insurance. The company offers cashless facilities at 14,500 hospitals across India.

IRDAI-backed industry’s move towards cashless claims
Currently there aren’t any signs of the cashless facility being discontinued as insurers and third-party administrators (TPA) say they are striving to meet the goal of 100 percent cashless settlement within the next couple of months as suggested by Insurance Regulatory and Development Authority of India (IRDAI).

“We are currently settling 65-68 percent claims on a cashless basis and are striving to meet the IRDAI target,” says Dr Krishna Jaiswal, Managing Director at Ericson Insurance TPA, who has been settling claims across a network of 13,000 hospitals.

Insurance experts say that such issues get resolved once hospitals and insurance companies come to an understanding. “Both hospitals and insurance companies are interdependent. Policyholders need insurance coverage for costly procedures. Once a hospital is blacklisted, it doesn’t remain blacklisted forever,” says Hari Radhakrishnan, Regional Director of First Policy Insurance Brokers.

But Star Health isn’t the only entity in the line of fire. AHNA had, on August 7, 2023, asked the Gujarat Government to clear pending dues worth Rs 650 crore arising from the Mukhyamantri Amrutam Yojana (MAY) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Failing to clear the dues would force hospitals “to stop services to patients under these schemes,” AHNA had said.

Moneycontrol.com checked with at least seven major insurance companies and no other insurer has received such communication from any hospital association lately. AHNA could not be reached for comments.

The discrepancies
In January 2023, the State Anti-Fraud Unit of the government-led health insurance scheme Pradhan Mantri Jan Arogya Yojana (PM-JAY) unearthed irregularities in the functioning of three Surat hospitals and dis-empanelled them from the network. IRDAI too has seen an 81 percent rise in claims from Gujarat State between 2020 and 2022.

Once empanelled, hospitals agree to offer medical procedures at a set rate to policyholders. When the medicals bills are higher than market rates, insurers and third-party administration companies, who act as intermediaries in settling insurance claims, raise an alarm.

Jaiswal says, “If a hospital in a small town charges Rs 20,000-25,000 for a typhoid treatment and a similar bed hospital in the same city charges Rs 70,000 for the same treatment, then it is a cause for concern. The cost of medicine is the same, the variation occurs due to increase in charges such as hospital beds, doctors sitting fees etc.”

Inflated bills lead to faster absorption of sum assured and a higher premium. This vicious cycle is affecting the affordability of insurance for policyholders. Most insurance companies and TPAs are in constant engagement with network hospitals and medical associations to improve procedures and ensure zero disruption in services such as withdrawal of cashless facilities, among other things.

Using data intelligence and records for more than 15 years, TPAs and insurance companies are able to battle high charges quoted by hospitals, which currently aren’t regulated by any institution.

“It is better to have treatment costs under control as insurance premium can’t be increased at the same scale as medical inflation. There is always a gap,” says Radhakrishnan.

Star Health’s defence
When asked about claim rejections after pre-authorisation of claims, Star Health said that it settles all legitimate claims. “Rejection of claims mainly happens when policy conditions are not met, like excluded ailments, claims within waiting period, sub-limits in sum insured, pre-existing diseases, non-disclosure of major ailments and other similar well defined non-payable reasons,” says Roy.

Insurance companies claim they have been using experience in the medical field and robust artificial intelligence to identify irregularities and monitor claims from flagged hospitals.

“In a few instances we delay claims due to an alert on suspected fraud, either by hospitals, claimants, intermediaries or third-party aggregators. Our tech-enabled fraud detection process flags suspected fraudulent claims,” Roy adds.

According to insurers, deficiencies from hospitals include unnecessary in-patient admissions, high usage of antibiotics, unindicated investigations, differential room tariffs, unauthenticated lab reports, incomplete treatment documents, violation of agreed pricing, prolonged stay at hospitals, inconsistent billing, intervention and distortion by third party aggregators.

“Hospitals indulge in wrong practices of admitting patients when hospitalisation is not required or conducting diagnostic tests where not required. Policyholders increasingly opt for cashless facilities to avoid out-of-pocket expenses and less documentation. Hence, discontinuation of the cashless facility has now become a tool in the armoury of hospitals,” says the Health Insurance Head of a Mumbai-based general insurance company.

Insurance companies are also combating medical malpractices, by hiring doctors who can understand the line of treatment. Moneycontrol

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