Emergence and growth of health insurance has given rise to a need for maintaining and optimising claims processing and management to enhance services offered by the health insurance companies and healthcare providers with the ultimate aim of providing maximum benefit to the insured. Divya Chawla brings out the importance of claims management in the health insurance space and highlights key issues that impede the growth and evolution of health insurance in India.
Health, in all aspects, is a key parameter that defines growth and prosperity in a country. Considering the growing costs of healthcare, worldwide, because of infusion of newer technologies and better care delivery methodologies, coupled with increasing awareness of people towards better and efficient healthcare services, India is experiencing a significant transformation in its health patterns. The Government is also making due efforts by introducing several health programmes and policies to improve citizens’ health and standard of living. Over the past decade or so, there has been a consistent improvement in the life expectancy of the Indian population and decrease in infant mortality rates, both of which are key indicators of good health in a country. The Ministry of Health and Family Welfare with its three departments the Department of Health, Department of Family Welfare and Department of Ayurveda, Yoga, Naturopathy, Unani, Siddha and Homeopathyis dedicated to implement key reforms that can bring about a complete change in which healthcare is provided in the country.
Better health services, however, are accompanied with higher medical costs, which can be a crucial impediment on road to achieving the vision of a healthy country. The only solution to this issue is to avail health insurance or mediclaim policy in the interest of making life hassle free for all. Although, the penetration of health insurance in India is still very low, yet the industry is now gaining momentum as more and more people are getting their health insured. Figures suggest that less than 15 percent of India have some form of health insurancethe rest of the population is yet to benefit from these services. The health insurance industry, therefore, has a huge scope for growth with almost 85 percent of the population that is still not insured.
Health insurance has, over the past few years been, has emerged as one of the fastest growing non-life insurance segments in the insurance industry. In fact, health insurance is emerging as one of the key line of businesses for the life insurance companies as most of the large insurance companies are now jumping into this segment by offering products in the health insurance space. Going back, health insurance in India, was first marketed by non-life insurers as mediclaim in 1986. The products, then had an annual limit of indemnity chosen by the insured beforehand and the premiums were largely based on the chosen limit and the age of the prospect. Still, even after more than two decades, the health insurance industry is faced with many complexities, which are difficult to understand.
The private healthcare insurance industry has opened up because of establishment of the Insurance Regulatory and Development Authority (IRDA). This has posed a lot of challenges that include increase in claim amounts, need for rationalising the cost structure of treatment in private hospitals, lack of data, standardised billing and under reporting of information by the private hospitals, and slow claims processing.
To address these issues, the health insurance sector assumed a new dimension, with the advent of third party administrators (TPAs).
The primary function of the TPAs was to infuse efficient management systems to offer benefits to the insurance companies as well as people insured. Further, their presence is aimed at insuring standardisation and improving penetration of health insurance in the country. TPAs manage standardisation of charges and cashless services in health insurance. TPAs are expected to develop an appropriate system and management structures for controlling costs, developing protocols and improving quality of services that can ultimately lead to lower insurance premiums. The IRDA has also laid down certain regulatory standards for TPAs to perform optimally.
The emergence of TPAs, hence, has allowed for settling claims in a much faster and efficient way and eliminate most of the challenges that were being faced by the health insurance industry earlier. However, general awareness about the existence of TPAs and the services they provide is still low. In future, hospital administrators will recognise the immense business potential that their association with TPAs will have. This also gives rise to the need of IRDA to have a greater control over TPA activities to enhance the benefits of TPA-healthcare provider and TPA-insurer associations.
Health Insurance Claim: Making it Easy for the Customer
Health insurance in India came in vogue in 1986 when Mediclaim by four public sector general insurance companies was introduced and since then the product continues to be a highly popular, yet controversial product. Popular, because of need to protect oneself financially in view of ever rising healthcare costs in private hospitals, changing life styles, income levels, etc., and controversial because of issues surrounding servicing of the product, especially the claims service part. When Mediclaim was launched in 1986, the claims service followed the prevailing pattern of other insurance products customer incurring the expense in the first place and then lodging claim with insurance company for reimbursement of the same as per terms and conditions of the policy. The delay in processing and payment of claim and deduction in claim amount were the primary reasons for customer dissatisfaction and continued to be so for a very long period. As per published data, the average time period for settlement of claim was 121 days in 2001. During 1999-2000, the insurance industry in India witnessed setting up of IRDA followed by entry of private players, keen to offer more customer friendly products and services. Thus the concept of ‘cashless’ hospitalisation was introduced in health insurance and a new entity-Third Party Administrators (TPAs) was born to facilitate the same. Under the scheme of things, TPAs empanelled various hospitals (meeting the criteria laid down in the policy), wherein a health insurance customer could avail of treatment and walk off without having to pay bill, only those minor expenses which are not covered under the policy need be paid from pocket.The advent of cashless hospitalisation brought a big relief and convenience to customers as they did not have to shelve out a huge sum in first place and wait for reimbursement of same from insurance companies. Customer also had the choice of various healthcare providers to avail treatment. Not only the cashless treatment choice, but average claim settlement period also came down drastically. As per published data, more than 75 percent claims were settled within one month in 2009 by the TPAs. The customer experience could further be enhanced and the frequently encountered issues and complaints could be addressed quite effectively through various measures by different stakeholders starting with proper orientation of sales force to educate the customer at the time of sale. It often happens that agents/sales force themselves are not clear about terms and conditions of policy or avoid detailing, what in their own view might be, a negative feature of the product. Further, sometimes the customer is not made aware of coverage and exclusions under the policy and on top of that, the process to avail cashless treatment is projected almost akin to swiping of credit card to purchase a product in the market. This gave birth to a host of customer issues arising out of ignorance of key coverage/exclusions and misplaced expectations in terms of process to claim, while simple knowledge of these could make a world of difference to customer experience.As regards claims management whether done in-house by the insurance company or through TPA, the areas which make the process hassle free and add to customer convenience include-24x7x365 accessibility, use of technology facilitating information flow to customer during various stages of claim/cashless approval (e.g. system based SMS alerts at defined triggers/events), online information regarding hospitals offering cashless facility-location, address, facilities, tariffs etc, member profile and claim status update, polite and helpful staff with adequate training and knowledge, strict adherence and monitoring of turn-around-time for various sub-processes from intimation of claim to dispatch of cheque or approval of cashless authorisation and lastly a defined process for redressal of customer issues/grievances which includes and presupposes senior management’s attention to this vital area.
Features of an Efficient Health Claims Management System
Over the next decade, the insurance industry will witness continuous evolution in health insurance products and processes. The trend to move the claims function in-house may also be adopted by more insurers. This will create a unique opportunity for claims system vendors who can offer systems and applications with a high level of flexibility and automation. The starting point is a well defined and intelligent work flow management module to ensure optimum work routing and distribution, in-built escalation and strong external communication features (like auto letter generation for various scenarios or SMS gateway). The ability to easily configure new products at a granular level is a vital requirementthis enables the automation of various validation checks on policy, claimant, benefits and provider. A product configurator interacts with a rules engine to define product benefits and exclusions to facilitate automated adjudication of claims. Appropriate pre-processing edits before the adjudication can substantially increase efficiency and process claims faster. In fact in the US, auto adjudication rates of 65-85 percent are not uncommon, albeit a very high percentage of these are simple primary care claims. Since new products will attempt to differentiate themselves with new service models, the claims systems will require business process builder to build operational workflow compatible with the product. In summary, the product configuration module, business process builder and rule engine are already becoming the core of the new generation claims systems. Such integrated solutions enable the claims teams to achieve significant automation of validation checks at the policy and the product level including verification of benefit and coverage limits to streamline prior authorisation for cashless claims. Access to data in the policy administration system and provider module is vital at this stage.
Once the claim data is in the system, pre-defined rules and product specific processes can be applied. After ensuring that all mandatory information is provided and is valid, the first step would be to match the claim against prior authorisation. The second step would be to conduct checks for medical appropriateness, compliance with provider contracts and variation from usual and customary practices. Much of this can be automated through the use of standard treatment guidelines embedded in the system to identify excessive or unwarranted billing item, therefore generating cost savings for the insurer. An ideal claims management system should also include a fraud management module that identifies possible fraudulent patterns based on policy holder profile, underwriting information and provider profile. Since fraud or abuse patterns frequently reoccur, such a tool can be very useful.Once a claim has been processed the claim payment process starts. Integration with payment gateways is a common feature now and significantly simplifies this process when paying network hospitals. In case of non-network hospitals or reimbursement claims, it helps to have a good cheque printing module. Finally, an effective claims management system can provide excellent insight to management.
Not only can past trends be identified and leveraged, the vast amount of claims data can be combined with enrollment data to be efficiently used in actuarial pricing and underwriting.In summary, underwriting and claims handling are two core functions of an insurer and technology offers a lot to streamline both these. The recent advances in claims system ensures that in a few years a significant portion of claims in India will be processed without any significant manual intervention. Technology, business practices such as contracted rates and standardised processing guidelines will do much to change claims management in the near future.