Health

Myth of coverage: Private insurance loopholes kept out-of-pocket expenses high for COVID-19 patients

Getting cashless treatment or reimbursement became difficult as COVID-19 cases rose

 

The Pradhan Mantri Jan Arogya Yojana (PM-JAY) could do little to alleviate the enormous financial burden that the novel coronavirus disease (COVID-19) brought on the poor.

But the experience of those who paid for private health insurance was not satisfactory either. As the number of COVID-19 cases increased, so did the trouble of getting cashless treatment or getting claims reimbursed. 

Almost 10 months have passed since KG Philip and his wife Elizabeth of Veli village in Kerala’s Thiruvananthapuram district have recovered from COVID-19 infection. They received treatment at two different COVID-19 care centres identified by the state government on the outskirts of the district. 

The treatment put the family in immense financial strain. Their only hope was the Corona Rakshak policy by a private insurance company, to which they subscribed right from the beginning when the pandemic scare gripped the nation. 

Corona Rakshak and Corona Kavach are two short-term COVID-19-specific policies designed by the Insurance Regulatory and Development Authority of India (IRDAI) in 2020.

While Corona Kavach is an indemnity-based product, which provides cashless COVID-19 treatment or reimbursement of the amount spent on treatment, Corona Rakshak is a benefit-based policy which promises a fixed amount of compensation to every COVID-19 patient. 

Philip had paid a total premium of Rs 19,500 and the insurance provider promised a reimbursement of Rs 2.5 lakh to each affected family member on recovery and submission of bills.

Yet, the company is denying reimbursement to those who have received treatment at government allotted COVID-19 care centres. Despite the intervention from the district collector and the insurance ombudsman in his favour, Philip awaits reimbursement. 

As per the General Insurance Council set up by IRDAI, 2.6 million private insurance claims were recorded between March 2020 and September 2021 from across the country. Of these, 2.2 million claims were settled and 0.2 million claims rejected. 

But several beneficiaries Down To Earth spoke with said that the amounts paid were lower than the claims. Suraj Dash’s mother and sister were at a private hospital in Bhubaneswar, Odisha, after being infected with the virus during the peak of the first wave in September last year.

“My insurance policy had coverage of Rs 5 lakh. The insurance company reimbursed Rs 1.20 lakh despite the hospital bill being more than Rs 5.30 lakh,” said Dash, who had lost his father to COVID-19 days earlier. 

The company deducted the expenses on “consumables” which ranged between Rs 10,000 and Rs 25,000 a day. 

Ghalib Kaleem, a social activist based in Patna, remembered his bitter experience with a private health insurance company during India’s second COVID-19 wave.

After his condition deteriorated, he was admitted to a private hospital in Patna in the third week of April 2021 and stayed in an intensive care unit ward for seven days. The hospital charged him over Rs 2 lakh. He said: 

As I had a health insurance policy, I was not worried about the hospital expenses. But I was shocked when the insurance company officials informed me that COVID-19 treatment was not covered because it is a pandemic. The hospital I was admitted to also did not help me with the insurance claim, stating the same reasons. 

Finally, after several complaints, the insurance company reimbursed Kaleem just Rs 22,000. Insurance companies also rejected a sizeable amount of hospitalisation claims on the ground that the patients should have been home isolated, but were unnecessarily admitted to hospitals. 

Health insurance is a product designed in the pre-COVID-19 times, which does not factor in the unforeseen costs during a pandemic, according to Mahavir Chopra, founder of Beshak, a community platform for insurance awareness. “COVID-19 hospitalisation, for instance, requires isolation and sterilisation, which are costly. Room charges are also very high post-COVID-19.”

Explaining the reason for lower claim settlement, Nadhamuni, an official of private health insurer Star Health Insurance based in Andhra Pradesh, said: 

The insurance companies shelled out huge claim sums during the first wave. But during the second wave, in tune with the norms set by the All India Institute of Medical Sciences and the World Health Organization, cases were classified as mild, moderate and severe. Claims were settled on that basis.

Analysts, however, believe that the lack of standard treatments or established protocols for COVID-19 is responsible for the poor settlement of insurance claims.

While the insurance business is regulated by IRDAI, the private healthcare market is unregulated and unethical practices are rampant, according to an article co-authored by Ravi Duggal, an independent researcher and activist based in Mumbai, and Shailender Kumar Hooda, associate professor, Institute for Studies in Industrial Development and published in Economic and Political Weekly, on July 31, 2021. 

To bring in clarity and transparency, the General Insurance Corporation of India (GIC) issued a schedule of rates June 2020 for COVID-19 claims being filed with its member insurance companies, and included PPE kits and bio-medical waste in the charges. It advised insurers to pay claims as per government rates or, in cases where this was not applicable, follow its rate chart. 

Officials with private insurance companies said following any such norm was difficult during the pandemic situation. Bhaskar Nerurkar, head of health at Bajaj Allianz General Insurance, said the GIC rates covered three PPE kits for each normal patient per day and four kits for ICU admission at the rate of Rs 650 per kit per day, even though the actual rate of consumables were higher due to the shortage. 

Similarly, several people were forced to travel long distances for beds but transportation was not covered under the scheme. 

A case in point is Odisha, where at least 30 young people succumbed to the infection because the state lacked enough extracorporeal membrane oxygenation (ECMO) treatment machines.

There was just one ECMO machine at a private hospital in the state. Doctors said the patients had to be airlifted to other states for treatment, which was expensive. 

The first ECMO connection to a patient costs Rs 10 lakh and the subsequent per-day charge is Rs 3 lakh. The cost for airlifting the patients cost several lakhs more. 

Reluctance sets in

As the cases rose, insurance companies began to refuse cashless COVID-19 treatment. “From the hospitals’ point of view, they needed ready money to run the establishments and to avoid the burden of uploading bills online and seeking reimbursements,” said a GIC official on condition of anonymity. 

In the two years since the start of the pandemic, courts had to often step in to resolve health insurance-related issues. 

On April 28, 2021, the Delhi High Court directed all insurance companies to process the insurance claims in 30 to 60 minutes so that the discharge of patients is not delayed and hospital beds are not blocked due to delays in processing claims.

Following this, IRDAI asked insurance companies to communicate their decision on the authorisation of cashless treatment for COVID-19-related claims to network providers within an hour of receiving the request. 


Read more: Myth of coverage: How state delay, private sector disinterest caused PM-JAY to fail


Coverage of home-based care was another issue taken up by the Delhi High Court, when shortage of beds across the country, especially in the national capital, had become grave. The court, in May 2021, asked IRDAI to consider cases of patients who underwent home-treatment due to dearth of infrastructure and consider such insurance claims. 

This despite the fact that IRDAI, in a circular issued in June 2020, had asked the insurers to cover the costs of availing COVID-19 treatment at home maximum up to 14 days in certain conditions. Following the court’s direction, the monitoring agency issued a reminder in July 2021 about the same. 

A major problem was the limit of Rs 15,000-20,000 fixed by many insurers for home care. But this limit was inadequate for most patients who needed oxygen cylinders and related expenses like regulators, nursing charges, other important injections and medicines at home.

This is the third in a reported series on the effectiveness of government and private health insurance schemes in India. Also read the first and second parts. It first appeared in the December 16-31 print edition of Down To Earth. 

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