In a move which will cause huge losses to the exchequer, the State government, despite having a full-fledged State Health Agency (SHA), has decided to rope in a third party administrator (TPA) to process the claims of public hospitals empanelled under the Ayushman Bharat-Karunya Arogya Suraksha Padhati (AB-KASP).
Orders have been issued awarding the contract for processing claims of public hospitals to M/s Vidal Health Insurance TPA Private Ltd., for a period of one year. The order says that there are KASP claims of public sector hospitals, pending since July 2020, which the new TPA will have to handle.
The AB-KASP was launched in 2019 in the insurance mode, wherein the insurance company (Reliance General Insurance Ltd.) was handling claims processing and settlement.
Last year, the government took the decision to shift the AB-KASP from the insurance mode to the assurance mode. The reason cited for moving from the insurance mode was the delays in claims settlement and high claims rejection rate. The assurance mode was claimed to be advantageous as the government would have direct control over claims scrutiny, processing and settlement.
The fact that the delays in claims settlement was due to the government failure to pay premium to the insurance company on time.
The KASP, when it was launched in 2019, was being run by the Comprehensive Health Insurance Agency-Kerala (CHIAK). Then came the proposal to set up a separate SHA. The government also sanctioned 33 new posts for the same.
The CHIAK was told to handle only the legacy issues of the old RSBY schemes.
“It was touted as a big advantage that in the assurance mode, the insurance company can be avoided and that claims processing as well as pre-authorisation of treatments of public hospitals would be directly handled by the SHA. It had been decided ahead that claims management of private hospitals would be handed over to a TPA, till the SHA built up its capacity.
Now it emerges that the SHA, which was set up for the “professional management” of KASP, cannot handle the claims processing of public hospitals either,” sources at the Finance Department said.
Now, questions are being asked why it was felt necessary to dislodge CHIAK, which had been running the health insurance schemes without a hitch for many years.
“If the claims of both private and public sector hospitals are to be processed by a TPA now, how different is the new scheme from the old insurance mode? If the insurance company’s high-handedness was the issue earlier, then CHIAK could very well have directly run the scheme, at no extra cost to the government. What was the need to set up a new agency, with additional infrastructure, human resources?” a senior finance official pointed out.
As 2020 was the COVID-19 year, claims from public hospitals under the KASP would have drastically come down. Yet claims worth lakhs, have been pending since July 2020 because the SHA seems to have scant expertise in claim processing. Public hospitals will not make an issue about pending claims because the money has to come from the government and not the insurance company.
Health financing experts had warned earlier that given the high claims rate in the State, in the assurance mode, the government would never be able to keep up its monetary commitments to hospitals.