india health insurance scenario - september 2012

HEALTH INSURANCE MARKET IN INDIA

August 16, 2002 1


August 16, 2002 2

Topics that will be covered in this discussion:

Definition of “Health Insurance” Factors necessary for a good health insurance market Current Health Insurance scenario in India Possible Health Insurance products for the Indian market Possible market size of Health Insurance products in India The Missing Links and solutions Conclusion


August 16, 2002 3

Definition of Health Insurance:

Health insurance signifies the coverage that provides for the

payment of benefits as a result of sickness and injury and which

includes insurance for losses from accident, medical expense,

disability, or accidental death and dismemberment


August 16, 2002 4

Some key social and economic conditions are necessary for a country to

have a thriving health insurance industry: Social/Economic Factors Conditions Required

Healthcare Providers Good supply and equitable distribution of quality healthcare

providers

Morbidity Data Availability of good data about morbidity rates of various

ailments

Accreditation and licensure Proper accreditation and licensure of physicians, medical

care providers, and service providers

Well established and universally accepted medical protocols

Medical Protocols

Customers Knowledgeable and well-informed customers

Medical costs Detailed data on ALOS (Average Length of Stay) and

reasonable and customary cost for various ailments with

providers in different parts of the country

Billing Proper coding of various ailments and standardized billing

format for all providers

Risk Financing A strong well structured medical risk financing mechanism


August 16, 2002 5

However, after studying the Indian market we find the following:

Social/Economic Factors Current Indian Condition

Healthcare Providers Acute shortage of quality health care facilities and

specialists The public hospital system is in very poor condition and

is overburdened

Morbidity Data Very little morbidity data available, especially for the

target population

Accreditation and licensure There is no accreditation methodology for medical

facilities

There is no universally accepted practice of licensure

and continuing education for health professionals

Absence of any nationally accepted medical standards,

and lack of any regulatory body to monitor and enforce

those standards

Medical Protocols


August 16, 2002 6

Current condition of the Indian market (continued):

Social/Economic Factors Current Indian Condition

Medical Costs There is very little data about medical costs in various

parts of the country Practically no information is available regarding medical

cost “trend”

Billing No coding of ailments and treatments is done by the

medical practitioners and facilities Billing structure is practically different in each medical

facility

Risk Financing “Mediclaim” has failed to reach the vast majority of its

target market, though accident and disability coverages

are common in the corporate world Private life insurance companies has just launched some

fixed sum medical riders

Customers have little understanding of medical risks and

the appropriateness of the various products in the market

Customers


August 16, 2002 7

Health insurance can be offered under various coverages:

HEALTH

INSURANCE

Long Term

Care

Hospitalization

&

Surgical

Emergency

Medical

Critical Illness

&

Surgical

Specialty

Coverage

Supplemental

Medical

STD

&

LTD

AD&D

Comprehensive

Medical

PPD

&

PTD

Administrative

Services

Only

Medical Stop

Loss


August 16, 2002 8

The market for health insurance in India is huge and practically

totally untapped:

Lower Middle Class

150-160 million

Middle Class

90-100 million

9-10 million Upper Middle Class

6-7 million Upper Class Only a small portion (around 10%) of

this market of around 50 to 60 million

individuals has some health insurance

coverage

These segments have practically

no health insurance coverage

….the key is HOW to address the factors that are hindering insurers

from accessing this vast market


August 16, 2002 9

Clearly, the factors – “MISSING LINKS” – that are hindering this

development are:

Proper Supply

of Medical

Practitioners

Lack of

Medical Data

Lack of

Medical

Protocols

Lack of

proper

Accreditation

Lack of

Billing

Standards

This can be only

resolved over

time However, this “missing

links” can be addressed

NOW by setting up an

independent institution in

the mould of NCQA in USA


August 16, 2002 10

This independent institution will be responsible for the following tasks:

Independent

Institution

Accreditation and

licensure of

Medical Providers Establishing

Medical Protocols

Setting up medical

coding procedure

& billing standards

Accumulation &

analysis of medical

cost data Accumulation &

analysis of medical

morbidity data

Evaluation of

various health

Insurance plans

Evaluation of

various TPAs, PPOs,

and other health

service providers

Establishing the IT

architecture for

collection of data

from various parties


August 16, 2002 11

State &

Central

Governments

Medical

Practitioners

Medical

Service

Providers

Insurance

Companies

Reinsurance

Companies

TPAs &

PPOs

Pharmaceutical

Companies

Medical

Institutes

Independent

Institution

All the parties in the health industry need to contribute financially and

technically for the set-up and functioning of the institution:


August 16, 2002 12

To start the process of eventual setting up of the proposed independent

institution, IRDA can create some service guidelines for TPAs/PPOs,

insurance companies, and reinsurance companies:

Service Categories Specific Services

Provider Network Categorization by providers by primary, secondary,

tertiary, and super-specialty Proper geographical distribution of the providers Written service agreements with the providers

Provider Reimbursement Reimbursement to the providers will be based on a

mutually agreed fee schedule included with the service

agreement

Medical Management Promotion of globally established clinical guidelines for

treatment of various ailments among providers Disease management programs for members with

chronic ailments Medical management capability to assist members with

major medical situations


August 16, 2002 13

IRDA mandated service guidelines for TPAs/PPOs, insurance companies,

and reinsurance companies (continued):

Service Categories Specific Services

Claims Coding Medical coding of all claims based on one globally

accepted coding standard

Claims Payment & Monitoring Medical bill settlement directly with the providers as per

the pre-determined fee schedule A cash reserve of 25% of the annual targeted claim cost

need to be maintained Monitor and analyze claim utilization and cost pattern

Financial & Operational Reporting Capability to produce detail reporting of premium, claims

cost, morbidity rates, medical management, and trend

reports both for customers and IRDA

24-Hr Help Desk Help Desk in all major centers Cost of call to be borne by the company for medical

situations Operated by medically qualified persons (nurses,

paramedics, doctors)


August 16, 2002 14

Conclusions:

The fundamental factors that are required for development of health

insurance industry and either lacking or in a poor state in India

The market potential is huge as the vast majority of the target population

currently have no coverage

For the next decade the focus need to be totally on standardization of

health care facilities, setting up of uniform medical procedures and billing

procedures and collection and analysis of medical data

The insurers, health care providers, pharmaceutical companies, health care

institutes, other service providers, and various government and non-profit

organizations have to work together to develop the proper environment

The starting point in this process can be IRDA mandating proper service

guidelines for TPAs, insurers, and re-insurers regarding health insurance

coverages

india health insurance scenario - september 2012

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