August 02, 2007

False claims bleeding health insurers

The healthcare insurance industry is suffering losses of upto Rs 600 crore annually, on false claims every year, according to a survey by MediAssist.

MediAssist, a leading third party administrator, estimates the the number of false claims at 10-15 per cent of total claims.

''We found nearly 25 per cent of claim cases that could be categorized under false claims, but as the sample size increases we believe that this percentage would settle at 10-15 per cent of total claims which amounts to Rs 400 cr-Rs 600 cr,'' said B Madhavan, CEO of MediAssist. The survey had a sample size of 600 cases.

The main reasons for these false claim payouts, MediAssist found, were policyholders making claims for pre-existing diseases, or manipulating documents, or availing and providing treatment that is not reasonably warranted.

Hospitals were also over-diagnosing or overpricing the treatment to increase costs, after getting to know that the person was insured.

Moreover, third party administrators (TPAs) are not fully automated across the country and hospitals are not able to verify patient details immediately. Persons, who are not insured, were also found to be getting treatment under an insured person's policy details.

The total premium collection for medical insurance firms in the country is about Rs 4,000 crore, while total claims amount to about Rs 4,300 crore in a year. Less than one per cent of the country's population is covered under medical insurance.

MediAssist said hospitals need to work in tandem with TPAs to eliminate false claims, while TPAs should invest in infrastructure to improve verification and entitlement. It proposed that TPAs also blacklist hospitals that overcharge or over-diagnose.

MediAssist CEO said that health insurance was a bleeding sector and that the survey aimed to find the causes for the high claim ratio and bring about a consensus among stakeholders to work together to minimize malpractices.

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