Date:14/07/2005 URL: http://www.thehindubusinessline.com/2005/07/14/stories/2005071403110100.htm

Back PSU insurers, hospitals agree on `package deal pricing' — Move to check overcharging of services

Radhika Menon

"There should be complete transparency between the insurance companies, the TPAs as well as healthcare providers."

Mumbai , July 13

PUBLIC-sector insurance companies and a group of hospitals have come to an understanding on pricing of healthcare services for which insurance covers are being provided.

As per this agreement, these hospitals will charge only the pre-agreed rates on medical services, including surgery. According to sources, there will be a ceiling on the rates on various services the hospitals can charge.

As per the understanding, hospitals and insurances companies will enter into an agreement on what is termed a `package deal pricing' for health services depending on the grade of the healthcare provider.

It is understood that in the western region, the four public-sector insurance companies and the Association of Medical Consultants are working out the price ceiling for some of the most common ailments and surgical procedures.

The move by insurance companies isexpected to check the malpractice of overcharging of services under health insurance.

Paramount Healthcare Management, the nodal third party administrator (TPA) for the western region, has made a database of the most common ailments such as heart surgery, cataract, tonsillitis, appendicitis, hysterectomy etc, as well as the average pricing across the primary, secondary and tertiary-level hospitals. The database has been submitted to the insurance companies, which, in consultation with the TPAs, will finalise the price structure.

Dr Nayan Shah, Managing Director, Paramount Healthcare Management, said that since there is no accreditation body in the country for hospitals, the National Centre for Quality Management was roped in through the General Insurers' Public Sector Association of India to work out a further classification of hospitals from the data collected by the TPAs.

While the move is meant to cover all hospitals under the TPA network, the exercise is being carried out in a phased way. In the north zone, about 200 hospitals have already signed the contracts. In the western region, the exercise is currently on and several secondary-level hospitals have already signed the contract.

Though the move is generally welcomed, there is a degree of scepticism about its implementation. Mr K. Badri, Vice-President, Finance, Family Health Plan, a TPA run by the Apollo group, said that it would take a great deal of concerted effort for hospitals to agree with the pricing and grading of health services fixed upon by the insurance industry.

"It has to be done in a holistic way and there should be complete transparency between the insurance companies, the TPAs as well as healthcare providers. Hospitals will simply walk out of the TPA network if they don't agree with the pricing," he said.