Will Modicare be a game changer or turn into another Rashtriya Swasthya Bima Yojana?

Viswanath Pilla & M Saraswathy
Moneycontrol News 

The Pradhan Mantri Jan Arogya Yojana (PM-JAY) also called Ayushman Bharat launched on September 23. Moneycontrol has put together some of the opportunities and challenges ahead for the scheme in the years ahead.

Rashtriya Swasthya Bima Yojana (RSBY), the much smaller precursor to Ayushman Bharat launched a decade ago failed to deliver due to small coverage, lack of awareness among beneficiaries, poor implementation and frauds.

Ambitious scheme

PM-JAY will be the largest government sponsored health insurance scheme. It aims to provide Rs 5 lakh coverage to 100 million poor vulnerable families translating into 500 million individual beneficiaries, which is more than the population of North America. The scheme is important because more than two-thirds of expenditure on healthcare is out of pocket, often pushing people into poverty.

The cash-less scheme will cover medical and hospitalisation expenses for almost all secondary care and most tertiary care procedures. PM-JAY has defined 1,350 medical packages covering surgery, medical and daycare treatments including medicines, diagnostics and transport.

The cost of the scheme will be shared between the Centre and states in a 60:40 ratio.

Game changer if implemented well

If implemented effectively, the scheme will have far-reaching consequences on the entire Indian healthcare and insurance landscape. It will improve  facilities in hospitals, create jobs in the sector and people will have to shell out less money on premiums.

It will help India move closer to the UN Sustainable Development Goal of "universal health coverage".

There are several interesting things that are happening simultaneously. The country will get standard treatment guidelines and defined package rates for surgeries. The scheme will help in generating large volumes of data. With the power of data analytics and artificial intelligence, the government will be able to design and offer more targeted healthcare initiatives, detect and monitor fraud, regulate hospitals, optimise costs and improve efficiencies. The scheme will also enrich the database of hospitals registered with the Registry of Hospitals in Network of Insurance (ROHINI) System and the human capital captured under the National Health Resource Repository (NHRR) project.

Moreover, the scheme will have a multiplier effect on hospitals and allied sectors like pharmaceuticals, medical devices and diagnostics. Companies will be encouraged to invest more, and this will create jobs.

Execution
Though the Centre funds the scheme, it’s the state that executes it. Most states have opted for a trust-based model over an insurance-led model for maintaining control over costs and a say in administering claims.

In a trust-based model, each individual state will form its own trust to manage the scheme and claims will be disbursed from a corpus created from central and state government contributions.

But most states don’t have deep experience in handling claims, so they are relying on third-party administrators to manage the scheme. The scheme’s success will depend on how quickly third-party administrators settle claims. Once a claim is filed, TPAs will have to bear the full responsibility of settling the medical costs incurred by the patients. Since it is a cashless process, this will have to be done at the time of hospitalisation itself.

In the insurance sector as well, TPAs have been repeatedly advised by the regulator to be involved in the claims settlement process and look into selection or rejection of claims.

Frauds
Fraud is a big concern. A report by industry body CII and consulting firm PWC have found that existing schemes have seen a significant rise in financial costs due to systemic inefficiencies and fraudulent behaviour across stockholders.

Duplicate beneficiaries, fraudulent claims, conversion of out-patients to in-patients, needless procedures, showing medical management cases as day-care procedures and overcharging by doctors and hospitals are some of the common frauds and corrupt practices, the report pointed out.

Moneycontrol has learned that the National Health Agency (NHA) has spent significant amount of time on developing robust IT systems and protocols to identify theft.

This is where the trusts adopted by state with little experience may face a challenge.

While the scheme proposes zero tolerance to frauds, it is not clear what are the steps being taken to mitigate these risks. For instance, how will the states deal with fraudulent claims?

Those with insurance partners will at least have an experienced hand. But those solely following the trust route will have to follow a trial-and-error method.

Insurers said there should be constant monitoring of the hospitals to ensure that the insured get what they are promised.

A senior insurance official said that while on paper the scheme offers pre- and post-hospitalisation benefits, strict checks by the authorities will be needed to make sure that the claimants get proper medical care.

Lack of infrastructureMuch of the healthcare infrastructure is concentrated in and around large metros and Tier I cities. The semi-urban and rural areas are underserved. The scheme will initially put pressure on large tertiary hospitals with the inflow of patients.

The CII-PWC report estimates that India would require 1.6 lakh new hospital beds, in addition to existing 13.5 lakh beds to meet the demand created by the scheme. Much of that new demand has to be created by the private sector. The government is yet to offer any incentives for private hospitals willing to set up hospitals in rural and semi-urban areas.

Also, India has chronic shortage of doctors, with only one doctor for every 11,000 patients against WHO recommendation of one doctor for every 1,000 patients.