International Journal of Management (IJM), ISSN (Print), ISSN (Online) Volume 1, Number 2, Aug - Sept (2010), IAEME

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1 International Journal of Management (IJM) ISSN (Print), ISSN (Online) Volume 1, Number 2, Aug - Sept (2010), pp IAEME, IJM International Journal of Management (IJM), ISSN (Print), ISSN (Online) I A E M E RASHTRIYA SWASTHYA BIMA YOJNA- HEALTH INSURANCE FOR THE POOR - A BRIEF ANALYSIS WITH A FOCUS ON THE STATE OF KERALA ABSTRACT D. DHANURAJ Research Scholar Anna University of Technology Coimbatore Jothipuram, Coimbatore , India dhanurajd@gmail.com Millions of the people in India do not have access to the medical facilities and quality medical care. Most medical treatments are prohibitively expensive. Each year almost 3.5 million people are pushed below poverty line due to expensive medical care. Majority of medical bills are still private out of pocket payments. Government spending on health care is very low in India. Total per capita expenditure on health care is around$ 23 of which government provides only around $4. In addition to that, medical insurance sector in India is still in the nascent stages of development. In this scenario, The Federal Government, with the help of State governments implemented a health insurance scheme called Rashtriya Swasthya Bima Yojna (RSBY) intended for absolute poor in the country in It has been implemented in different states in India in such a short period of time. Some initial studies from different parts of the country reported challenges in enrollment, claim ratios and fraud claims from different hospitals. In order to validate such findings, a study has been conducted in the state of Kerala. The goal was assess issues of acceptability and management issues of the scheme among stake holders in an effort to make RSBY more efficient and effective for all the stakeholders involved. Interviews with administrators of different empanelled hospitals and insurance company representatives in Ernakulam district were included in the study. The study conformed some of the challenges reported earlier about the scheme and further research in this area is indicated. INTRODUCTION Access to quality health care is still a distant dream for majority of population in India in spite its status as a rising economic power. Escalating prices on basic necessities is continuing to make the life of a common man miserable. As per WHO statistics in 2011, 25.7 % of total population in India is living below poverty line which is about 300 million of total population. Burden of communicable and non communicable diseases are increasing in India and this is disproportionately affecting the vulnerable sections of the population. About 40% of poor people had to borrow money from lenders with high interest rates or have to sell their assets in order to ensure quality medical care. (Rajeev Ahuja, 2006) About 24% of total hospitalized population is pushed below poverty line 208

2 because of health care costs per year in India. (World Health Organization, 2005)Incompliance due to high health care costs also a major problem faced by a huge section of population. Deterioration of health and loss of work days is a mounting social problem that is especially affecting the lower quintiles of population. This phenomenon significantly reduces economic productivity of the country as a whole. Government expenditure on health is historically very low in a country where poor people consists a major chunk of population. Total health expenditure in the country is 4.9% of GDP. Out of this the government spends only 1.1% of the GDP per year. Per capita total expenditure on health in India was $23 in 2004 which was increased to 44.8 in 2009 where Governmental spending per capita is only around $4 in (World Health Organization, 2005). This is lower than most similar Asian countries like China, Malaysia, Sri Lanka, Thailand and Bangladesh. Again, out of total health care expenditure, public expenditure accounts for only 26.7% and the rest 71.6% was private expenditure. Among the private expenditure, 74.4% is out of pocket expenditure in India (World Bank, 2009). Medicines (40%, highest), hospitalization, surgery, consultation and transport are the major expense areas in health care. This situation perplexed the policy makers and governments alike. Factors like poor health care delivery systems, inadequate access to health care facilities and absence of any financing mechanisms made government to concentrate more on health issues of the poor. In order to overcome the inequalities in the society and to provide financial protection to the marginalized, the Central Government decided to increase the health care expenditure from 1.1 to 3 % of GDP per year. (Joint Learning Workshop, 2009) In addition, Governments, both States and Central, came up with different health insurance schemes in response to increasing demand for alternative financing mechanisms for health care other than out of pocket expenditures. Most of these schemes failed due to inadequate policy designs, accountability and sustainability issues, dysfunctional monitoring and evaluation mechanisms and lack of awareness among target populations. LITERATURE REVIEW Health care delivery system in India consists of private, public and mixed ownership institutions. The government sector or the public sector includes medical colleges, district hospitals, primary health centers, community health centers and tertiary care hospitals. While the Central Government is limited to certain programs like family welfare and disease control, the state governments are responsible for primary and secondary medical care. They are also in some extend responsible for specialty care in the state. All these institutions work on a no or minimal fee basis and are intended for people who cannot afford to pay for their health care needs. But in reality even the most poor in India prefer private care rather than government facilities in spite of huge out of pocket expenses in private hospitals. According to a UK based study on health care spending in India, it was found that there is not much difference in spending in private health care sector between poor and non poor people in the country. Around 69% of poor people s health care expenditure is on private health care facilities compared to 75% of non poor. (Berg, R, & Ramachandra, 2010) Reasons for not relying on public hospitals include huge disparities in the standard of care, lack of proper infra structure, outdated equipments and unclean environments. Most government institutions are way below quality expectations of a normal hospital in India and this, when combined with corruption make government hospitals and health centers score very low in customer satisfaction. But one cannot deny the fact that they are a great help for the absolute poor in the country though not very high tech in nature. 209

3 The private sector hospitals have more perceived quality than public hospitals by the general population, which to a greater extend is true. Most hospitals are equipped with skilled staff, modern technology and imported machineries. Reduction of import duties and loosening of regulations helped in proliferation of quality private hospitals in the country in the last two decades. Now, India has such private hospitals that have all the facilities and quality of care comparable to any state of the art hospitals in the developed countries. Even though everything is available here in the country, majority of its citizens cannot access such high quality services due to unthinkably high healthcare costs. This is especially true for the marginalized and unprivileged in the society. Again, private health sector also has varying degree of quality of care as it operates in an unregulated market. Most people in India go to government hospitals not out of choice, but out of compulsion due to poverty and huge health care costs in the private sector. Non compliance to medical advice due to unbearable costs is another reason for increased morbidity and mortality since health insurance is not common at all. People have to pay the bills from their own pockets. Affordable and accessible healthcare programs are to be developed immediately to tackle this burgeoning problem in India. Health care access is found to be significantly reduced for poor quintile of population in India. Unequal geographic distribution of health care facilities, socioeconomic conditions and existing gender norms all play an important role in significantly reduced access to health care especially by poor rural population. A person from the poorest quintile of the population is six times less likely to access health care facilities than a person from the richest quintile in India. Also skilled birth attendance at the time of delivery is six time more for women in rich quintile that the poor quintile of population. Geographic location of health care facilities and reduced transportation services affect access to care. This scenario is exacerbated by reduction in governmental health spending and high cost for health care services in private sector. The inequality in health care services between public and private sector and economic constrains are found to affect health of the poor sector of population which constitutes majority of India. Corruption in governmental health facilities, out of pocket expenditures and lack of insurance also affects utilization and access of care by needy people. (Milind Deogaonkar, MD, 2004) In India, health care is financed through general tax revenue, community financing, out of pocket payments and social and private health insurance schemes. Twenty four percent of all hospitalized persons are pushed below poverty line in India due to huge health care bills in a single year (World Bank, 2002). In 2004, around 6.2% of household fell below poverty line as a result of huge health care costs. Among this, 1.3% as a result of inpatient care and the rest 4.9% due to outpatient care. Out of pocket payments, still the major health care financing system in India is responsible for such financial strain and bankruptcy that is especially affecting the lower and middle class population. Health insurance in India Insurance industry in India has a history dating back to 18 th century when Oriental Life Insurance Company was first started in 1818 in Kolkata. After that many insurance companies were founded. In 1912, the Life Insurance Companies Act and the Provident Fund Act were passed as a measure to regulate the insurance industry in India. Health insurance was introduced in India in this year. In 1972, the Parliament passed the General Insurance Business (Nationalization) Act which brought 107 insurers under one umbrella of General Insurance Cooperation with four subsidiary companies namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General 210

4 Insurance commenced its business on January 1sst Again, the enactment of the Insurance Regulatory Development Act in 1999 facilitated the entry of private and foreign health insurance players into the Indian market. HEALTH INSURANCE MARKET IN INDIA Health care financing plays a major role in improving access to quality health care and improving health care delivery systems both in developed and developing countries. But even today, the penetration of health insurance market in India is very limited covering about 10% of the total population. But data indicates than the health insurance industry is growing much faster than the average industry growth. According to IRDA Annual Report, , the premium collected from health insurance has been increased from INR 4894 crore to INR 6088 crore in (Chawla, 2010) The industry is recognizing the growth potential and is concentrating on more of getting volume than depth to increase profitability. The schemes currently available in India can be categorized into the following: (1) Voluntary health insurance schemes or private-for-profit schemes Major Players in Public sector: General Insurance cooperation; 4 subsidiaries- National Insurance cooperation, New India assurance company, United Insurance, LIC Private sector: Bajaj Allianz, ICICI Lombard, Royal Sundaram, Cholamandalam General Insurance (2) Employer-based schemes These schemes are offered through employer managed facilities. Both private and public employers offer employer based schemes. Railways, defense and security forces, plantations, mining sector are covered by this type of policies. But coverage is minimal, only about 30 to 40 million people. (3) Insurance offered by NGOs / community based health insurance Community based health insurance schemes are mainly targeting the poor population in bypassing unexpected health care costs. Such schemes aim to protect poor from indebtedness by prepayment of a small premium rather than borrowing money. These schemes mainly operate through Non Governmental Organizations. (4) Mandatory health insurance schemes or government run schemes (ESIS, CGHS) Most of the above mentioned schemes and health insurance policies cater to middle and above middle class population in India and there are not many takers for absolute poor in the country. Either their employers do not give health insurance or simply cannot afford monthly insurance premiums. Even if some community or faith based institutions offer health insurance for poor people in the country, they are not enough to cover the entire BPL population in the country. Though government has implementing different insurance schemes catering to different sectors of population such as agricultural workers and marginalized women, it is not considered very successful so far. In order to provide quality medical access to the most vulnerable absolute poor population in the society, various schemes have been launched by both State and Federal governments. One such scheme is the Universal health Insurance scheme from Central Government in Universal health Insurance Scheme: Central Government launched the Universal health Insurance Scheme in 2003 with the intention of covering low income population in the country. The term universal is misleading as it only meant low income people in India. Though it was intended for all low income individuals initially, the scheme ultimately was made available only to people who were identified as people below poverty line (BPL) as per the Planning Commission 211

5 recommendations. The insurance is provided by four public companies and the benefits package offered include Rs 30,000 per year per family or 15,000 per individual per year. It also includes accident benefits and loss of wages benefit on daily basis. High subsidies in insurance premium were offered by Government of India. The scheme was operated through third party administrators or TPAs, which are independent agencies to coordinate between the various hospitals, customers and insurance agencies. (Nandraj, N. Devadasan and Sunil, 2006). The premium for joining the universal health insurance scheme is listed below. Premium rates for Universal Health Insurance Scheme Target population: BPL families in India Total premium for joining the scheme Payable by insured From Government subsidy For an individual Rs 365 Rs 165 Rs 200 For a family of 5 Rs 548 Rs 248 Rs 300 For a family of 7 Rs 730 Rs 330 Rs 400 Source: (Nandraj, N. Devadasan and Sunil, 2006) In spite of low premium rates and coverage benefits, the scheme was faced with low enrollment rates and had a very low claim ratio in the end of the year 2006, which was only 12%. Only 9252 families enrolled in the first year. In order to raise the enrollment in the scheme, the government increased the subsidy share and reduced premium rates to Rs.165 for an individual, 248 for a family of five and 330 for a family of 7. This move from the government s part increased enrollment to a great extend but still there are limitations noted in coverage and execution. The government failed to exploit the insurance market by allowing only the public ones to supply insurance schemes. Also there was no flexibility in schemes offered and the insurance companies were not allowed to fit schemes to beneficiary s needs. This seriously affected the enrollment rates for the scheme. Another problem faced by the scheme was the lack of proper infrastructure and weak health system delivery. Insured people were unable to access quality care due to the lack of proper health infrastructure nearby. (Rajeev Ahuja, 2006) This scheme also lacked a nodal agency which the Central or Sate Government can use to tap large number of beneficiaries. The Government of India, after realizing that the UHIS is not as successful as desired, launched Rashtriya Swasthya Bima Yojna in After incorporating various lessons from similar schemes from the past and recommendations from various stake holders, professional think tanks and International organizations, policy makers came up with an exciting new scheme loaded with technology which targeted the absolute poor in the country. RASHTRIYA SWASHTYA BIMA YOJNA (RSBY) RSBY is a health insurance scheme for absolute poor, launched by the Central Government through the Ministry of Labor and Employment in April This public private partnership program is intended to provide financial protection for those identified as people below poverty line (BPL) in India by increasing access to quality health care 212

6 and covers most health care costs of beneficiaries that involve hospitalization. (Ministry of Labour, 2011). RSBY process Flow chart State Govt. Govt. Central Set up agency when plan to implement RSBY upload data (3) BPL data (2) Nodal Agency (1) (13) Data& bill (14) Payment RSBY website Bidding (4) BPL data TPA Insurance Company NGO (6) (11) Claims payment (12) Empanelment (5) Kiosk (9) BPL list issue smart cards (7) (10) Hospitals Smart cards Beneficiaries (8) RESEARCH METHODOLOGY The World Bank prescribes four major tools for analyzing the existing policy by in which reforms can be suggested. They are 1) stake holder analysis 2) political mapping 3) network analysis and 4) transaction cost analysis. In the context of this study stake holder analysis, network analysis and transaction cost analysis are used. Political mapping is not considered as it is beyond the scope of this study. 213

7 An in depth study was organized to understand Rashtriya Swasti Bhima Yojna (RSBY). Questionnaires was prepared and administered in the slums of Kochi. Stake holders interviews with the accredited hospitals of RSBY in Kochi were also conducted. Results were analyzed. An overall understanding helped to suggest the recommendations and a new policy framework as suggested by World Bank policy study toolkit. Various methods are used for the analysis as given below Secondary Research Qualitative Research Comparative Study Systematic Review Meta-Analysis Using secondary data analysis, the challenges for RSBY are found out as; 1) Accessibility issues 2) Low enrollment rates 3) Issues with transparency and false claims from hospitals 4) Low claim ratio In order to validate the findings in literature review, a pilot study is being conducted in Ernakulum district, Kerala to find out the challenges in management of the scheme by different stakeholders. RSBY is a comparatively new policy which is in the process of implementation in many states. So it is hard to analyze a central government policy based on what happened in just one or two states considering the huge socio economic and demographic differences in different States in India. But it is never too early to critically look at a policy to find the current challenges of the scheme in order to improve it for the future. Again the challenges will be different in different parts of the country too. In order to find more about the challenges faced by different stake holders in management of the scheme in Kerala, a pilot study has been conducted in Ernakulam district in the State of Kerala and included interviews with the insurance company and administrators in 6 empanelled hospitals in the Ernakulam district in an effort to improve management and efficiency of the scheme and to increased access to quality health care. In Kerala, the State government decided to extend the scheme to the poor families not covered under RSBY BPL guidelines by paying Rs.30 as premium/year and to those above poverty line provided they contribute the full premium amount including smart card costs. The extended version of RSBY is called Comprehensive Health Insurance Scheme or CHIS, The State government decided to launch the scheme in all 14 States in itself. The nodal agency responsible for implementation of the scheme in the State is known as Comprehensive Health Insurance Agency of Kerala or CHIAK. United India Insurance Company Limited is the insurer for RSBY CHIS scheme in the state. They are utilizing the services of community based organization called Kudumbasree in order to raise awareness and enrollment of beneficiaries. (Comprehensive Health Insurance Agency of Kerala, 2011) DATA ANALYSIS AD FINDINGS 1. Challenges with the claim process: A claim will be completed only if the empanelled hospital completes three processes. 1. Registration: 2. Swipe and block the money during admission. 3. Hit again during discharge Only if the hospital completes these three hits, it is called a transaction and can be processed as a claim thereafter. For an insurance company, if any of these steps are missing then it is not a claim and the company is not responsible to pay back the claim to the hospitals. 214

8 Insurance companies responded that there was high frequency of claims from different empanelled hospitals, especially public hospitals without completing these three steps. Last year, the claim from a public hospital in Kochi was approximately 82 lakhs (U.S $8.2 million)but the amount with TPA was only 33 lakhs (U.S $3.3 million), The rest, 49 lakhs (U.S $4.9 million) of claim was withheld or rejected by TPAs because of incomplete transactions by hospitals, even though the hospital did provide treatment. This happened mainly because beneficiaries left hospital after discharge and do not usually come back to the RSBY counter for swiping. This phenomenon was rare in private hospitals but after two years experience, government hospitals are also trying to make it better as such incomplete transactions resulted in huge debts for hospitals. 2. Challenges with the reimbursement process The number of days specified in the policy regarding reimbursement of claims to hospitals is 21 days. But serious delays are reported in that process by hospitals which made this scheme less lucrative to such institutions. Main complaints from hospitals was late reimbursement from insurance companies which most often put them it huge debts. The reimbursement process can be summed up as follows: The TPAs are instructed to give the invoice of claims from hospitals to the insurance company on a weekly basis. After getting the invoice, the insurance company releases the cheque to TPA and from there it will be send to the concerned hospitals. The whole process can take around 21 to 25 days. But normally there will be serious delays due to a variety of reasons. The insurance company complained that weekly invoice is not happening from TPAs. Usually this will be twice monthly or even monthly in spite of repeated instructions from insurance companies. As of now in Kerala, there are 5 TPAs for the state and none of them have local bank accounts. So cheques released from insurance companies will be sending to banks in somewhere out of state like Pune or Chennai which will again delay the process at least by one week. There are some delays noted in dispatch time of cheques by TPAs to hospitals also. Initially insurance companies did not expect all these intricacies and confusion in reimbursement delays which is one of the major complaints against insurance companies from hospitals. But now they are trying to respond to such complaints. Recommendations from insurance company in sorting out the complications and to reduce delays include starting local accounts by TPAs and opening of a separate account by hospitals only for RSBY reimbursements. They are insisting on exclusive accounts because then it will be easy to sort out accounts if any in case of complaints or anomalies from claims. But this is not a very attractive alternative for hospitals since such exclusive accounts will result in accountability for that amount of money for which hospitals have to pay tax for. 3. Challenges with Out of pocket payments In certain cases beneficiaries had to pay out of pocket payments which is strictly prohibited by government scheme. This mostly happens by a process called clubbing which can be explained with an example. Suppose the beneficiary is hospitalized in the ward for two days for hernia and the package rate for hernia is Rs and the package includes all the services including stay in general ward. But the hospital will charge two days of stay in the ward in addition to package charges, that is Rs 1000 extra for that case. But as per the package, the total amount reimbursed to the hospital will be only Rs The balance Rs will be OOP by clubbing surgical and nonsurgical package rates. Another scenario is that there occurred some requests from beneficiaries and other stakeholders that the scheme should allow beneficiaries to cover the difference out of pocket in order to avail more quality services like rooms instead of general wards or more quality services than that of prescribed in the package. Those who argued for this benefit were ready to pay the difference in amount. But Government strictly rejected such a request on the ground that if somebody can afford to pay such difference then 215

9 he/she is not BPL anymore. Besides, accepting such requests are like questioning the very basis of this scheme since this is for very poor people or marginally above absolute poverty line. Again, if beneficiaries can do that, that will increase the chance for a fraudulent BPL list. Already there are so much allegations about the list on which the whole scheme is based on. There are complaints that the list includes large number of non BPL population and left out many genuine poor. APL wanted to join the list since they can avail all the benefits allotted to the BPL population. Once they realize that they can get only as per standards prescribed and not as per they wanted, there is a reduced chance for such people for renewal of the scheme. 4. Challenges with premium level Reimbursement rates for staying in general ward is Rs. 500/day and in ICU it is Rs /day. Most high tech hospitals do not want to take up the scheme and those who are empanelled wanted to get out because of very low package rates as per their standard rates. Either they have to compromise on quality standards or had to opt out from accepting the scheme. It will be difficult for most hospitals to give quality treatments and manage costs of administration because of insufficient amount of money quoted for procedures, as per hospitals. Many hospitals responded that current payment rate of Rs. 500/day is manageable and welcoming. But such responses were heard only from small private hospitals and public hospitals. High tech private hospitals expressed concerns over this as their standard prices are much above this fixed rate. This may sometimes affect the quality of services provided by such hospitals. They unanimously voted for an increment in per day reimbursement rate at least to Rs. 700 /day. 5. Challenges with communication among stakeholders There is another challenge in reimbursement process due to lack of communications between different stakeholders. The hospitals expressed a need for more communication flow with insurance companies regarding the pending amount and reason for not settling claims which can be explained below: Suppose a hospital bill the insurance company for 5 lakhs ($500,000). But the company reimbursed the hospital only for 4 lakhs ($400,000). The next time, suppose the bill is 5 lakhs, the hospital will bill for 6 lakhs($600,000) adding one lakhs($100,000) which they think as pending from last transaction, to the present bill. Again the insurance company reimburses a lesser amount and rejects the remaining claim. The hospitals keep on adding the non reimbursed amount thinking that it is pending from insurance company. In reality, this is the amount rejected or with held by companies due to different reasons. But the company through TPA failed to communicate why there is a difference and what are the reasons for not paying the claim amount. The balance amount is actually rejected claims or amount withheld rather than pending amount of reimbursement from insurance companies. This communication gap is mainly caused by the format of document given to hospitals regarding claim reimbursement. It just shows that the amount reimbursed and there is no explanation on why they had to receive reduced payment than claimed amount if that is the situation. As of now, the document includes claim amount from hospitals and reimbursing amount. It must include rejected/withheld amount and detailed explanations on why the amount is rejected as this serve as a feed back of performance in a way for hospitals and ultimately will help hospitals understand the pitfalls in order to improve their performances. Such a format will avoid a lot of communication gaps in claim reimbursement processes. 6. Challenges during yearly renewal of insurance providers Severe delays in reimbursement and claim processing is noted during renewal time of the scheme every year. The change of insurance companies, software and cards on April 1 st every year is causing different problems in reimbursements and enrollment processes. The new software cannot read the smart cards from previous year resulted in many 216

10 pending claim process and there is no way that hospitals can finish transactions or insurance companies can pay bay the pending amounts. Huge amounts are pending especially in government hospitals due to this problem. This can be solve to a greater extend by doing manual claims for that pending claims. But most insurance companies do not entertain such moves since it will increase administrative costs. 7. Challenges with false claims There are instances where hospitals claimed for unnecessary treatments from RSBY beneficiaries. Complaints about hospitals keeping the cards with them even after discharging the patient were heard during the study. They can swipe the card whenever needed and this will result in fraud claims. One hospital even reported two caesarian sections on the same patient within 10 days. After repeated claims for unnecessary long hospital stays, the rule has changed about blocking the money from the card. Earlier it was one time block for entire stay in the hospital. But now hospitals are allowed to block only for three days at first and after that for two days if needed. If hospitals need to keep the patient more than 5 days, then they will have to notify the insurance company before doing so. In order to control fraudulent claims from empanelled hospitals, insurance agencies have come up with different software applications to find duplication of claims. TPAs submit claims from hospitals to insurance companies in the form of floats. A float is the total number of claims in a fixed time period for all the empanelled hospitals in the districts allotted for that particular TPA by insurance companies. The float is numbered in ascending order as per the date of claims. A float will tell the insurance companies the total amount it has to pay in claim reimbursement in the concerned districts in a particular time period like for example 10 days. A float can be illustrated as below: TPA code Card number Patient name Date of Discharge Date of Admission Package code District code Hospital code Hospital name Total amount One float from single TPA will be about 500pages for 10 days. But it is important to check the whole document for claim verification and manual verification of such a huge document is laborious and often not feasible. In order to overcome this problem, the insurance companies introduced an efficient soft ware to check for duplication within each of the floats. But now they extended the process by making it intra as well as inter float checking for duplication of procedures. 8. Challenges in the market for insurance company Insurance companies are viewed as profit making mechanisms by government and beneficiaries alike. Though there certainly is a market aspect to it, trends in Kerala is not that great from an investor s point of view as of now. In Kerala, insurance company is at least looking for a break even in order to consider the business successful. Besides the element of social commitment, every company needs some incentive to take the business forward. The normal way of doing business is an profit margin where companies 217

11 are ready to spend 80% for claims with 20% profit margin which can be utilized for administrative costs. As of now even a 10% profit can be considered as success as per the company. But last year the company suffered a loss ratio of 172% which is extraordinarily high. But Kerala has its own reasons for that like better infrastructure, awareness and high literacy rate compared to rest of India. High number of claims occurred from Kerala was unexpected to an extent because of the trend of low claim ratios almost throughout India. The insurance companies arrived at bidding rate by a trial and error method since it was just the starting in the State. In 2008, the insurance company quoted the premium based on rough estimates which was Rs. 440/family. Total enrollment was 12 lakh families and the total premium came up to Rs. 52, 80, 00,000 ($528 million) and the total claim amount was Rs. 60 crore ($600 million) from 130,000 claims. That year, there was a loss and the total loss for insurance company was 7.2cr ($72 million). In the second year, though the enrollment increased to 18 lakhs, the premium was Rs. 420/family. The second year also showed huge loss for the insurance company, which was around 75 crores ($750 million). The first two years bidding premium was a trial and error method since there were no statistics or yardsticks to compare. So for the third year of operation, the insurance company quoted a higher premium as Rs. 748/ family. The company is hoping that it will be a break even for the company and all the stakeholders involved. But if the loss is continuing like this, the sector will no longer be attractive to companies unless government decides to increase the premium level. As per the rule in India, health is the responsibility of the State government. As of now, the loss suffered to the insurance company is its own sole responsibility. But this is a model that works because of the close coordination of all the stakeholders in the scheme. So government can give a hand by giving subsidies if the insurance company suffered any loses so that they can have some security to enter into the business. A competitive company will give preference for profits rather than depending on government subsidies. Also, such a move can make the market a bit more lucrative for insurers too. 9. Challenges with monitoring and evaluation Another problem incurred to beneficiaries and insurance company is the deduction of amount from smartcards before it goes to monitoring and evaluation for fraud claims. Once the 3 step transaction is over, the amount is already deducted from the smart card even if it is a fraud claim. If in evaluation, it was found out that the amount deducted is for fraud claim, the insurance companies are unable to return that amount deducted from smart card during transactions. If the claim is for Rs and the original is Rs, 5000 and by the time the insurance companies monitor the fraud, Rs, 7000 will already be deducted from the card and nobody can refund the smart card with the excess amount claimed. Monitoring all the transactions real time before swiping the card means, insurance companies have to place an agent to monitor every transaction which will in turn prove to be will be very expensive for the companies. Qualification of insurance representatives who are responsible for monitoring and evaluation of admissions are questioned in some hospitals. Most of them do not have any medical background and hospitals had difficulties communicating with them about the need for certain medications and procedures. 10. Challenges with enrollment process As per the policy requirements one enrollment center should have 2 laptops, one card reader and one camera for enrolling 250 families. It will take approximately 8 hours to enroll families if electricity supply is not fall short. But most units will work with one laptop and this will result in delay in enrollment. The enrollment is usually done for two days at a stretch and delays means, the units fail to enroll the families arrived at that time which resulted in discontent among beneficiaries. In adequate infrastructure and 218

12 enrollment timings delayed the enrollment process in initial years. For example, some areas of Kerala economy is dependent on rubber plantations and most BPL population here work as tappers in such plantations. They leave early in the morning and return only afternoon. The morning enrollment in the first years considerably reduced their enrollment rates which the insurance companies rectified with work oriented timings. 11. Challenges with packages Some hospitals were concerned about the way packages were fixed too. For example, in RSBY chemotherapy has a fixed rate. But this procedure may require a mix of medicines from different packages, say for example three. But the hospital cannot block three packages. But in the Kerala version of RSBY scheme, CHIS (Comprehensive Health Insurance Scheme), it is revised and put it as medicine package. But still there are complaints that they don t include all the standard medicines in the medicine package. 12. Challenges with awareness Even though most people are aware about the scheme, a majority is under wrong concepts about the package and the limit. They are not aware of the limit of Rs. 500/day and packages but think that there is 30,000 and can use it however they want it to be. Handbooks and brochures will be helpful to raise right awareness about the scheme among beneficiaries. Hospitals complained that there were frequent awareness programs and public service announcements during enrollment period but that it did not last long. CONCLUSIONS AND RECOMMENDATIONS Influx of beneficiaries for availing treatment is increasing steadily in all the hospitals studied regardless of the size and ownership of hospitals. But certain challenges in communication and claim processing between TPAs, insurance companies and empanelled hospitals were noted. Regular updates and clarity in communication with the empanelled hospitals are recommended in order to reduce friction between those stakeholders. Continuing workshops and training for hospital staff in the RSBY help desk is necessary to reduce erroneous and incomplete transactions. Out of Pocket expenditure are still reported in some hospitals. Government should take strong initiatives to control such steps in the future for successful implementation of the scheme. Again, some government hospitals complained of underestimation of their capacity by government and insurance companies alike. There are some government hospitals, though less in number, are exceptionally good in quality of services provided. If they claim more than as expected from a normal public hospital, then there will be doubts and questions on their capacity and number of claims. Many hospitals surveyed recommended CHIAK to conduct a study to assess the capacity of hospital, quality of each hospital, normal rates of procedures and their quantity of input before empanelment of hospitals in order to avoid such situations. In many small hospitals where majority of patients are RSBY beneficiaries, it will be difficult for them to manage hospitals costs if reimbursement is very late. Timely reimbursement will make the scheme more acceptable for most hospitals studied. This will again be possible only by more communication and coordination between hospitals, TPAs and insurance companies. The fixed package rates are definitely found good for small hospitals with reduced staff capacity but for most big hospitals the present rate is less and was found difficult to make ends meet. The price rates for all the procedures are fixed in 2007 and did not changed after that. It can increase since fixed rate is very low compared to regular prices of the same surgeries if done outside the scheme. Seeking help from local NGOs and community based organizations like kudumbasree proved to be very beneficial during the enrollment process. For example, many people in the same area have same common 219

13 names included in the list. It will be easy for local bodies like kudumbasree to identify who is on the list and who is not than people from outside. All respondents of the study responded that RSBY scheme is one of the massive scheme from Central Government and beyond doubt is helping millions of people to access health care services that they never even dare to dream. But like most government schemes, it had some concerns with the implementation and accountability part which should not be left unaddressed. This is a process which can be made efficient by capacity building and coordination of all the stakeholders in the loop. Government should also consider strengthening the health systems in addition to provision of health insurance schemes since it is lame to have an insurance policy without a place to go for treatment. RSBY- CHIS is an evolving scheme and if done right, will definitely increase access to quality health care facilities for millions of absolute poor people in the country. REFERENCES 1. Anil Swarup. (2010). Sharing Innovative experiences: Successful Social Protection Floor Experience. Retrieved 6 23, 2011, from UNDP: tection%20floor%20examples.pdf 2. Berg, E., R, D., & Ramachandra, M. (2010). India's poor rely mainly on private health care. 3. Chawla, D. (2010, September). Insuring a Healthy Future. ehealth, pp Comprehensive Health Insurance Agency of Kerala. (2011). The Scheme:Comprehensive Health Insurance Agency of Kerala. Retrieved July 12, 2011, from CHIAK website: &Itemid=78 5. India s health system: The financing and delivery of health care services. (2005). Retrieved June 13, 2011, from REPORT OF THE NATIONAL COMMISSION ON MACROECONOMICS AND HEALTH: ealth_section_2.pdf 6. Jain, D. N. (2010). Sector Initiative: Systems of Social Protection. Eschborn, Germany: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ). 7. Joint Learning Workshop. (2009). Moving Toward Universal Health Coverage-RSBY, India. Delhi: Ministry of Labour and Employment. 8. Ministry of Labor. (2000). Informal Sector in India. Retrieved June 23, 2011, from Government of India: 9. Ministry of Labour. (2011). Retrieved June 23, 2011, from Rashtriya Swasthya Bima Yojna: Rashtriya Swasthya Bima Yojna 10. Nandhi, S. (Director). (2010). A study to analyze implementation of RSBY in Chattisgarh [Motion Picture]. 11. Nandraj, N. Devadasan and Sunil. (2006). Health Insurance in India. Retrieved June 2011, from WHOIndia: hapter_01.pdf 220

14 13. Taylor, D. W. (2010). The Burden of NonCommunicable Diseases in India. The Cameron Institute. 14. WHO. (2005). Disease burden in India. WHO. 15. World Health Organization. (2005). HEALTH INSURANCE IN INDIA: CURRENT SCENARIO. 16. Patrick Krause (2000), 'Non-profit Insurance Schemes for the Unorganized Sector in India', Social Health Insurance, Retrieved from Milind Deogaonkar, MD. (2004). Socio-economic inequality and its effect on healthcare delivery in India: Inequality and healthcare. Electronic Journal of Sociology, Retrieved from Devolved power: key for health care in India. An interview with Michael Tharakan (2011) Bulletin of the World Health Organization., Retrieved from 221