New Delhi: Historically, one of the design apprehensions of the insurance model of health delivery has been the issue of the ‘moral hazard’. With the protection of insurance and the benefit of not having to pay for healthcare directly, tools like insurance can increase healthcare consumption.
This is not necessarily a bad thing, if there is active interest in health. But it becomes a ‘hazard’ when the element of abuse creeps in. This can come from healthcare providers, such as hospitals, putting patients through unnecessary or even harmful procedures because they want to get to the insurance money.
India is embarking on covering 500 million people with state-sponsored health insurance. At this massive scale, the potential for huge distortions is real. The question is whether patients will still be the biggest beneficiaries, at the end of the process.
According to model tender documents for the new Ayushman Bharat-National Health Protection Mission (AB-NHPM), the government has proposed that insurance companies will vet all applications for medical procedures under the scheme. They will then pre-approve ones that seem fit. If they reject a procedure, it will then be forwarded to state authorities who will have to assess those cases. Approvals or rejections must happen within six hours.
“This is envisioned as a gatekeeping mechanism for abuse and misuse of the insurance scheme,” said Indu Bhushan, CEO of the AB-NHPM.
“Pre-authorisation is important because there is a lot of incentive for healthcare providers to indulge in the moral hazard. But it is only one step and cannot be relied on entirely,” says Sakthivel Selvaraj, director of health economics, financing and policy at the Public Health Foundation of India.
Out of the 1,350 procedures across 23 areas for which the government has fixed packages and rates, 47% of them will have to undergo a pre-authorisation procedure.
In some fields, all procedures will need pre-authorisation. This includes all procedures in the fields of cardiology (38), cardio-thoracic surgery (71), ophthalmology (42), interventional neuroradiology (12), plastic and reconstructive surgery (9), oral and maxillofacial surgery (9), paediatric medical management (100), neo-natal (10), paediatric cancer (12), ‘medical packages’ (70), oncology (112) and ‘mental disorders’ packages (17)
Some procedures will need no advance approvals at all: polytrauma (13), general surgery (253), emergency room requiring less than 12 hours stay (4).
Take cardiology for example. All the 38 listed packages also have to be pre-approved. These are some of the areas which will be looked into during pre-authorisation:
“Specific Pre and Post-op Investigations such as ECHO, ECG, pre/ post-op X-ray, label/ carton of stents used, pre and post-op blood tests (USG, clotting time, prothrombin time, international normalized ratio, Hb, Serum Creatinine), angioplasty stills showing stents & post stent flow, CAG report showing blocks (pre) and balloon and stills showing flow (post) etc. will need to be submitted/ uploaded for pre-authorization/ claims settlement purposes. The costs for such investigations will form part of the approved package cost.”
Can pre-authorisation help prevent some fraud?
A valid fear of health-watchers borne out by evidence from insurance architecture globally is that health insurance at this large scale (100 million families or 500 million people) can cause distortions from the supply and the demand side. When suppliers such as hospitals begin to induce demand, to cash in on insurance money, this can lead to them prescribing unnecessary procedures. Some of these can be actively harmful.
One flaw of the erstwhile national health insurance scheme, the Rashtriya Swasthya Bima Yojna (RSBY), is that it did not have a pre-authorisation component (or rather it mandated this screening only for those procedures which were not on a green-lighted list).
Some states like Maharashtra run their health insurance schemes with pre-authorisation required for all procedures. A 2011 report sponsored by the Planning Commission said that other state schemes such as the Rajiv Aarogyashri, Vajpayee Aarogyashri, Kalignar scheme and Yeshasvini scheme all have pre-authorisation.
The 2011 report noted how pre-authorisation can help to control coasts from soaring:
“The closed ended benefit packages and pre authorization seem to be useful tools introduced by health insurance schemes in terms of containing costs of healthcare provision by the government.”
According to the new tender document, the information collected by pre-authorisation can be a tool which can be indicative of ‘fraud triggers’. So apart from pre-authorisation, the tender also prescribed audits of the procedures which have been approved.
Disciplinary action can also be taken against hospitals based on the audits of these approvals:
“De-empanelment process can be initiated by Insurance Company/SHA after conducting proper disciplinary proceedings against empanelled hospitals on misrepresentation of claims, fraudulent billing, wrongful beneficiary identification, overcharging, unnecessary procedures, false/misdiagnosis, referral misuse and other frauds that impact delivery of care to eligible beneficiaries.”
There are six steps to disciplinary action and three grades of offences, resulting in penalties. The maximum penalty is de-empanellment.
The pre-authorisation will be carried out by clinicians hired by the insurance company. In the case of a trust model, these approvers can also be pulled from the public sector and it has led to efficient and integrated systems in states like Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra.
What other gatekeepers are needed?
While agreeing that pre-authorisation is required at some level, Rob Yates, senior fellow at the Royal Institute of International Affairs, Chatham House, says, “In this process, some people who need treatments will be denied them and some people who don’t need the services requested will be given them.”
Many say that whether or not India is proceeding with insurance for private healthcare, the roots of public healthcare will still need to be strengthened.
“By far the best way to strengthen the gatekeeper function in India would be to strengthen the primary care system and ensure that people are registered with family doctors who can refer their patients for hospital care without there being any financial incentive for them to over or under supply services,” says Yates.
Indranil Mukhopadhyay at Jindal University says that while pre-authorisation is essential, it cannot be the exclusive mechanism on which the scheme puts its weight on. “There ought to be a compulsory referral from the public sector to the private sector. That way the public sector is also strengthened and there is a filtering to prevent unnecessary and unscrupulous procedures. Many things have to work in tandem.”
He also points out that this entire project is being implemented without any conversation on regulating the private sector, where 500 million people may now attempt to access care: “The Clinical Establishments Act needs to be taken up seriously as it can fix issues in the private sector.”