draft for discussion - rsbyrsby.gov.in/docs/rsby committee final draft report for comments.pdf ·...

Final Draft Report

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RSBY COMMITTEE

FINAL DRAFT

REPORT

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Contents 1. EXECUTIVE SUMMARY .................................................................................................................................. 4

a. SUMMARY OF RECOMMENDATIONS MADE IN THE REPORT ......................................................... 12

2. INTRODUCTION .............................................................................................................................................. 13

a. BACKROUND AND PAST EXPERIENCE ................................................................................................. 15

b. STRENGTHS OF RSBY................................................................................................................................ 15

c. OBSERVED WEAKNESSES OF RSBY ...................................................................................................... 15

4. IMPLEMENTATION ISSUES........................................................................................................................... 18

5. ISSUE NO 1: MAKING RSBY MORE PATIENT FRIENDLY ....................................................................... 18

a. TREATMENT OUTCOMES REPORTED ................................................................................................... 18

b. VARYING QUALITY OF HEALTH SERVICES IN PRIVATE/ PUBLIC SECTORS ............................... 18

c. ENROLMENT PROBLEMS ......................................................................................................................... 19

d. RECOMMENDATIONS ON IMPROVING PATIENT SERVICES ............................................................ 21

e. SUGGESTED SCOPE OF OUT PATIENT SERVICES ............................................................................... 24

6. ISSUE NO 2: DEALING WITH HOSPITAL GRIEVANCES .......................................................................... 28

a. COMMONLY REPORTED ABUSE BY HOSPITALS ................................................................................ 28

b. RECOMMENDATIONS ON HOSPITAL GRIEVANCES........................................................................... 29

7. ISSUE NO 3: RUNNING INFORMATION TECHNOLOGY APPLICATION ............................................... 32

a. NO UNIFORMITY ARCHITECTURE IN RSBY CURRENTLY: ............................................................... 32

b. USES OF IT ARCHITECTURE .................................................................................................................... 33

CLINICAL DATA ON EPIDEMIOLOGY AND TREATMENT PROTOCOLS ............................................. 33

MONITORING ON DEVIATIONS ................................................................................................................... 34

c. RECOMMENDATIONS ON IT APPLICATION ......................................................................................... 34

8. POLICY LEVEL ISSUES .................................................................................................................................. 36

9. ISSUE NO 4: INTERFACE WITH INSURERS ................................................................................................ 36

a. INSURANCE COMPANIES ARE NOT DESGINED FOR THE JOB OF OUTREACH ............................ 36

b. CONFLICT OF INTEREST OVER PUBLICITY AND ENROLMENT ...................................................... 37

c. LIMITED AVENUES FOR FEEDBACK TO GOVT EXIST ....................................................................... 37

d. INSURANCE COMPANY HAS NO INTEREST IN EQUITABLE DISTRIBUTION OF SERVICES ...... 37

e. DIFFERENCE IN PERSPECTIVE OVER IT APPLICATION .................................................................... 37

f. LOW LEGITIMACY FOR MEDICAL AUDIT ............................................................................................ 38

g. INSURERS CANNOT BE EXPECTED TO REGULATE THEMSELVES ................................................. 38

h. CORE COMPETENCE OF INSURANCE COMPANIES ............................................................................ 38

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i. WHY STATE NODAL AGENCIES FIND IT DIFFICULT TO PERFORM THE FUNCTIONS OF

INSURER ................................................................................................................................................................ 39

j. CORE COMPETENCE OF STATE NODAL AGENCY .............................................................................. 40

k. THE ADVANTAGES AND DISADVANTAGES OF INSURED AND SELF INSURED MODELS ........ 42

l. RECOMMENDATIONS ON ROLES OF SERVICE PROVIDERS ............................................................. 42

10. ISSUE NO 5: INCENTIVE STRUCTURES FOR STAKEHOLDERS ......................................................... 48

a. INCENTIVE STRUCTURE FOR HOSPITALS ........................................................................................... 48

b. GRADING SYSTEM RECOMMENDED ..................................................................................................... 49

c. NORMS FOR SINGLE SPECIALTY HOSPITALS ..................................................................................... 50

d. ISSUES WITH NABH NORMS .................................................................................................................... 50

e. RECOMMENDATIONS ON HOSPITAL INCENTIVES ............................................................................ 51

f. INCENTIVE STRUCUTRES FOR INSURERS ........................................................................................... 54

ADJUSTMENT / REFUND ............................................................................................................................... 54

ANNUAL FINANCIAL REVIEW ..................................................................................................................... 54

g. RECOMMENDATIONS ON INCENTIVES FOR INSURERS ............................................................... 56

h. INCENTIVE STRUCTURES FOR TPAs ...................................................................................................... 57

i. RECOMMENDATIONS ON INCENTIVE STRUCTURES FOR TPA ................................................... 57

11. CONCLUSION .............................................................................................................................................. 59

a. INSURANCE MODEL SEEMS BEST AT THE MOMENT ........................................................................ 59

b. TO PUT PATIENTS FIRST, ALL MEDICAL CONTENT SHOULD BE PART OF TENDER

DOCUMENT AND AGREEMENT WITH INSURER .......................................................................................... 59

c. CONTRACT WITH INSURER IS A LEGAL CONTRACT ........................................................................ 60

d. CREATE AVENUES FOR FEEDBACK ...................................................................................................... 60

e. AUTHORISE THE SNA TO ENFORCE THE NORMS ............................................................................... 60

f. SANCTIONS AND INCENTIVES ................................................................................................................ 61

g. COSTS OF NORMLESSNESS ARE FARILY HIGH .................................................................................. 61

h. PENALTIES CANNOT BE PRIMARILY MONETARY ............................................................................. 62

i. THE CHOICES BEFORE US ........................................................................................................................ 62

LIST OF ANNEXURES ............................................................................................................................................. 63

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1. EXECUTIVE SUMMARY

The Rashtriya Swasthya Bima Yojana (RSBY) is being implemented in 24 states in India today,

with a total of 3.75 crore card holders, providing coverage to a total of 11.25 crore beneficiaries

at an average premium of approximately Rs. 400. A total of 25 lakh beneficiaries have availed

hospitalization services at an average claim payout of approximately Rs. 5000. The above data is

for 2013-14 as generated on 1st September 2014.

RSBY tries to use the structure of private health insurance to provide cashless medical services

to the below poverty line population of the country. The basic issue that creates challenges for

RSBY is the low involvement of the State Nodal Agency (SNA) and that there are hardly any

built in checks to create accountability for either Insurers or hospitals participating in the

scheme. Private health insurance schemes function on the basis that enlightened self-interest of

the patient is sufficient to guard his interests. The consumers of private health insurance are well

aware of the benefits available to them since they have paid for these but the below poverty line

population is not so aware. Even in case of private health insurance schemes, enlightened self-

interest is not sufficient protection since patients are scared and vulnerable and have little access

to systematic information. In the case of below poverty line patients, enlightened self-interest

barely works. The absence of checks and accountability in RSBY leaves the patient at the mercy

of Insurers and hospitals.

The states of Maharashtra and Tamil Nadu left the scheme after initially agreeing to implement

it. Andhra Pradesh had agreed to implement RSBY in the state as a top-up scheme but later

withdrew from the scheme. Other states have been implementing the scheme but they have many

reservations about the scheme. This committee was set up to take feedback from the states and

incorporate their learning experiences in the scheme so that it could be implemented fully

throughout the country.

RSBY has been faced with multiple weaknesses from the operational front, which has led to low

accessibility of the scheme by the beneficiaries. Some of the key weaknesses observed are:

1. There is a conflict of interest with the Insurance Company conducting enrolments,

empanelment/de-empanelment of hospitals as well as the insurance claims settlements, in

some cases through the Third Party Administrators (TPA).

2. The different software at the field level e.g. Transaction Management Software (TMS),

was flawed, leading to no data or inaccurate data being reported.

3. There were no Key Performance Indicators defined for monitoring the scheme

4. Lack of checks and balances at the operational level have led to multiple frauds in the

scheme,

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5. The TPA’s have been operating the scheme at various States, whereas the contract was

signed with the Insurance Company. This has led to instances where the States had to

coordinate with the TPA, who has no stake in RSBY.

6. Inadequate staffing of the SNA is one of the key issues observed in RSBY. This has led

to no or low level of involvement of the SNA at the States.

In the hope of helping poor patients and as a result of unintended consequences, RSBY has

ended up being a hospital centric scheme and an Insurer-centric scheme.

Ministry of Labour and Employment (MoLE) has taken various initiatives to plug these

weaknesses in RSBY. A brief of the initiatives undertaken by MoLE are as below:

a. Standardized data preparation and pre-enrolment guidelines and template shared with the

states to ensure exhaustiveness of pre-enrolment data being collected at the field level.

The enrolment software at field level is also being modified to bring into effect the

requisite changes in the data.

b. Separation of enrolment activities from the insurance companies, through a centralized

enrolment agency, to avoid conflict of interest.

c. Introduction of wellness checks for one member of the beneficiary family

d. Strengthening of role and involvement of SNA along with adequate staffing at various

levels.

e. Role of SNA has been enhanced in the empanelment and de-empanelment of hospitals.

f. Strengthening of MoLE with adequate capacity at various levels.

g. Introduction of key performance indicators (KPI’s) and periodic MIS to monitor the

performance of the insurance companies.

h. Setup of technical help desk at MoLE to address field level technical issues in software

i. Introduction of penalties (including refund of premium on pure claim ratio) on insurance

companies, SNA on non-performance and non-adherence to protocols.

j. Standardization of the Transaction Management Software (TMS) across the country with

one version.

k. The Contact Center is being introduced to have a structured mechanism to address the

grievances and obtain feedback from the beneficiary.

l. Integration of SMS gateway has been completed and SMS services shall be initiated

soon.

m. Setting up of district level kiosks through a separate agency to provide effective post

enrolment services.

n. Increased focus on training of SNA and other beneficiary on each aspect of the processes

within RSBY.

o. Introduction of field and medical audits for which the empanelment process is being

conducted by MoLE.

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p. A Committee has been setup at MoLE to look into clinical pathways for all tertiary care

procedures.

q. Norms on hospital spread and number at district and block have been included in the

KPI’s for insurers.

r. Detailed functional requirement specifications for revamped RSBY

The Committee constituted by Ministry of Labour and Employment (MoLE) was entrusted to

bring out the best practices across states and make recommendations for the revamping of

RSBY, with a view to improve service delivery, ensure greater efficiency and transparency and

to provide RSBY as a platform to other states for other schemes too. In its recommendations, the

Committee has observed and recommended areas for enhancement of RSBY and a way forward.

Brief of the Committee’s recommendations

a. RSBY has over the years relied on the insurance companies to conduct enrolments,

empanel hospitals as well as provide insurance to its beneficiaries. It is true that the

Insurance companies do have considerable expertise in purchasing services from

hospitals. With a few exceptions, most state governments do not have such expertise.

Hence for the moment, RSBY should continue to use the insurance model to provide

cashless medical services to the poor, but with strong controls to avoid any field level

discrepancies [Chapter 11 (a)]. In States like Andhra Pradesh which do have the expertise

needed, the State Nodal Agency/Trust or Society could be allowed to play the role of

Insurance Company.

b. Systematic checks should be built into the RSBY both for hospitals and for Insurers.

For Hospitals, following kinds of checks are proposed:

Build in pre-authorization, clinical pathways and mandatory investigations for all

procedures to the extent possible, wherever these exist.[Chapter 5 (d), 6(b)]

Evaluate all empanelled hospitals on a uniform grade sheet and link the grade to the

package rate paid, to encourage improvement in quality of care.

Collect quarterly information on Key Performance Indices from empanelled hospitals.

[Chapter 6(b)]

Conduct medical audit and impose sanctions against hospitals which do not follow

norms. [Chapter 6(b)]

For Insurers, following kinds of checks are proposed:

All medical content like clinical pathways, investigations and grade sheets should be

written into the tender and the agreement with the Insurer. [Chapter 11(b), (f)]

90% of the amount left over from the 85% amount meant for claims, should be

refunded to the state government at end of policy period. At the same time, there

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should be annual financial review linked to claim ratios, for protection against

excessive claim ratios. [Chapter 10(f)]

Monitor Key Performance Indicators of Insurers. [Chapter 9(l)]

Sanctions should be imposed against TPAs and Insurers who do not follow norms.

[Chapter 10(i)]

c. It was noted by the Committee that Third Party Administrators (TPA) contracted by the

insurance companies are permitted by IRDA to handle claims admissions and

recommend to the insurer for the payment of the claim settlement, provided a detailed

guideline is prescribed by the insurer to the TPA for claims assessments & admissions in

terms of capacity requirements, internal control requirements, claim assessment &

admissions procedure requirements etc. under the agreement. As per the IRDA

guidelines, the TPA cannot offer its services for claim settlements and rejections to health

insurance policies.

However, it has been the experience in some states that TPA’s are working in multiple

areas on terms and conditions which are beyond the IRDA guidelines. The Committee

however recommends that the insurance company should fulfil its responsibilities

through its own capacity and use the TPA only as per the guidelines of IRDA. The

Committee also recommends that MoLE should take up the issue of TPA participation in

RSBY with IRDA and keep a close watch on their activities, since most of the grievances

involve TPA’s. The Committee further recommends that there shall be no sub-contracting

by the TPA. It is also recommended that IRDA should provide a complete report on the

TPA, since this is seen as a major constraint in delivering optimal outcomes to the

beneficiary.

d. The Committee also noted the growing involvement of Re-insurers in RSBY with some

states. While, Re-insurance is permitted by IRDA and that it is desirable to have re-

insurance in the health insurance sector, the current mode of operations of the re-insurers

are counter to the overall policy objectives of RSBY. The Committee hence recommends

that the involvement of re-insurers be taken up by MoLE with DFS along with the cost

benefit analysis to the ultimate beneficiary. IRDA should provide a complete report to

MoLE on the functionality of re-insurance since this impacts the beneficiary under

RSBY.

e. The Committee also recommends strict parameters for periodic assessment of

performance of insurance companies [Chapter 9(l)]. The penalty framework based on the

KPI’s would need to be further worked upon by MoLE along with subsequent weightages

to each KPI and penalty clauses.

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f. The Committee also noted that Wellness Check may be conducted for all members of the

beneficiary family (if feasible), else conduct the wellness check for atleast one member of

the beneficiary family through OPD insurance.[Chapter 5(d), Point 7].

For all these recommendations and checks to work, it is essential that the role of the State Nodal

Agency (SNA) be strengthened. The present allocation of tasks in the RSBY outsources

everything to the Insurer and leaves little scope for the SNA to carry out its role of monitoring,

collecting feedback and improving implementation on basis of feedback received. The scheme

can be monitored regularly only by creating systematic avenues for feedback which in turn is

best possible if the SNA were to run the call center. The present structure of the scheme dis-

allows much feedback from reaching either SNA or the National level Grievance Committee at

the Ministry of Labour.

Insurance companies and hospitals cannot be expected to regulate themselves or to reach out to

beneficiaries. Nor can these tasks be left to the Third Party Administrator who has no stake in the

system. This is a task for the State Nodal Agencies which have signed the contract with the

Insurer and which do have a stake. To enable the SNAs to perform this role, basic tasks like

distribution of beneficiary cards, publicity, running the IT platform and getting medical audit

carried out, should be done by the SNA. The task of hospital empanelment should be jointly

carried out by Insurer and SNA since the SNA is best placed to know about infrastructure

available and gaps if any. The payment to SNA for all these tasks should be separate and should

not be loaded onto the premium.

The basic issue is that such a complex scheme requires a sound system of rules and regulations,

in order to work well. RSBY has many potential benefits to offer to society. But in order that

those benefits reach the people, just rules and regulations which encourage patient centric

healthcare need to be defined and factored into the running of the scheme. Whether it is norms

governing hospital empanelment, linking hospital payments with good practices, defining

clinical pathways or the numerous other rules which are the essence of any healthcare scheme,

all these rules are crucial to good governance. Given that RSBY is a very significant intervention

in the field of healthcare and if that intervention is to achieve positive results, it should be

governed by norms which promote good health practices. The writing on the wall is clear

enough. But do we have the will to act upon it that remains to be seen.

To address the implementation and policy level interventions, the Committee suggests the way

forward for the revamp of RSBY once the revised IT architecture is in place.

S.

No. Recommendation Changes required in

1

Clinical pathways and mandatory

investigations

(a) RFP & MCA for Insurers including agreement

between Insurer & Hospitals.

(b) RSBY Operations Manual

(c) Software for Hospital Transactions

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S.


2

Pre-authorization for all elective

procedures





3

Joint committee of doctors to

review rejected pre-authorizations




4

Entrusting SNA with the task of

card distribution

(a) RFP & MCA for Insurers


(c) Incorporate in new MCA for Smart Card Service

Provider (if different from Insurer)

5

Permanent kiosk at every block

headquarters



(c) Incorporate in new MCA for agency running kiosks (if

different from Insurer)

6

Provide Wellness check /OPD

services to all RSBY beneficiaries.

(OPD services have been approved

for the Convergence Pilot in 20

districts). Preference is to be

provided to hospitals for OPD in

the order of :

a. Govt. Hospital

b. Not for Profit

c. Private Hospital


between Insurer & hospital.



7

Key performance indicators for

hospitals


between Insurer & hospital.


(c) Software for Hospital Transactions and Performance

Evaluation of Hospitals.

8

Revise package costs for hospitals

which are too low as compared to

costs



9

Medical audit of pre-

authorizations




10

Redefine packages which are

abused like independent ward stay

and ICU stay


between Insurer & Hospitals


11

Clinical data on epidemiology and

treatment protocols

(a) RSBY Operations Manual

(b) Software for Hospital Transactions, Analysis of

Hospital claims data

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S.


12

Data mining software for analysis

of medical data RSBY Operations Manual

13

Key performance indicators for

Insurers




(c) Software for Performance Evaluation of Insurers

14 Empanelment criteria for hospitals




(c) Software for Hospital Empanelment

15

Grading sheet for hospitals and

linking it to package rates along

with long term plan for

independent grading agency


between Insurer & Hospital.


(c) Software for Hospital Empanelment

16

Norms for single speciality

hospitals


between Insurer & Hospital.


(c) Software for hospital empanelment

17

Infrastructure audit for speciality

empanelment




(c) Software for hospital empanelment

18

Abolishing collection of Rs. 30

from the beneficiary and provision

of Rs. 50 by MoLE to SNA

RFP & MCA for Insurers

RSBY Operations Manual

Software for premium calculation

19

Penalties towards insurance firms

including refund of premium and

annual financial review of insurer




(c) Software for MIS reports and penalty calculation

20

Payment to TPA on per case basis

instead of per authorization basis


between Insurer & TPA


(c) Software for claim settlement

21

Adjudication guidelines for claim

settlement




22

Sanctions on TPA& Insurers

including blacklisting


between Insurer & TPA, SNA & Insurer


23

Provide copies of agreement

between Insurer and TPA to

SNA/MoLE




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S.


24

Hiring of independent agency to

develop and maintain uniform IT

architecture


between Insurer & TPA, Insurer & hospital


25

Segregation of financial functions

with insurer , whereas card

distribution, medical audit and

other residuary functions with

SNA




26

Removal of limit of five members

per family for enrolment




27

Claims appeal committee to be

formed for hospitals




28

Feedback mechanisms by keeping

call center with SNA




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a. SUMMARY OF RECOMMENDATIONS MADE IN THE REPORT

1. CLINICAL PATHWAYS AND MANDATORY INVESTIGATIONS BE ADOPTED

WHERE EXISTING/DEVELOPED AND MADE PART OF TENDER DOCUMENT

TO EXTENT POSSIBLE

2. INTRODUCE PRE AUTHORISATION FOR ELECTIVE PROCEDURES WITH

SOME EXCEPTIONS FOR LOW COST PROCEDURES

3. REMOVE LIMIT OF FIVE MEMBERS PER FAMILY FOR ENROLMENT

4. ABOLISH PAYMENT OF RS 30 BY BENEFICIARY FAMILIES FOR CARD

5. PROVIDE OPD SERVICES IN RSBY

6. LAY DOWN ADJUDICATION GUIDELINES FOR CLAIM SETTLEMENT

7. CLAIMS APPEAL COMMITTEE SHOULD BE FORMED FOR HOSPITALS

8. DRAFT AGREEMENT BETWEEN HOSPITALS AND INSURER SHOULD HAVE

PROVISION FOR REPORTING ON KEY PERFROMANCE INDICES.

9. REVISE HOSPITAL RATES FOR PACKAGES WHICH ARE TOO LOW AS

COMPARED TO COSTS

10. INITIATE MEDICAL AUDIT OF PRE-AUTHORISATIONS AND HOSPITALS AND

LAY DOWN SANCTIONS FOR DEVIATION

11. RE-DEFINE PACKAGES WHICH ARE MUCH ABUSED LIKE INDEPENDENT

WARD STAY AND ICU STAY

12. MINISTRY OF LABOUR SHOULD HIRE AGENCY INDEPENDENT OF INSURER

TO DEVELOP AND MAINTAIN UNIFORM IT ARCHICTECTURE

13. DATA MINING SOFTWARE NEEDED

14. USE OF COMPREHENSIVE GRADE SHEET APPLICABLE TO ALL HOSPITALS

15. INFRASTRUCTURE AUDIT FORM NEEDED FOR SPECIALTY EMPANELMENT

16. LINKING GRADE WITH PACKAGE RATE FOR HOSPITALS

17. RUN CAPABILITY BUILDING PROGRAMS FOR ALL HOSPITALS

18. LONG TERM PLAN FOR INDPENDENT GRADING AGENCY

19. INCORPORATE REFUND AND ANNUAL FINANCIAL REVIEW CLAUSES IN

AGREEMENT WITH INSURER

20. KEY PERFORMANCE INDICATORS NEEDED FOR INSURERS, HOSPITALS AND

OTHER STAKEHOLDERS

21. CHANGE THE RENUMERATION PATTERN OF TPAs TO PER PRE

AUTHORISATION AND PER CLAIM BASIS

22. IMPOSE NON MONETARY SANCTIONS LIKE BLACKLISTING ON

DEFAULTERS

23. FINANCIAL FUNCTIONS REMAIN WITH INSURER BUT CARD DISTRIBUTION,

MEDICAL AUDIT AND RESIDUARY TASKS WITH STATE GOVERNMENT.

EMPANELMENT TO BE JOINT ACTIVITY.

24. CREATE AVENUES FOR FEEDBACK BY KEEPING CALL CENTER WITH SNA

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2. INTRODUCTION

The Rashtriya Swasthya BimaYojana (RSBY) is currently functioning in 24 states out of 29

states and UTs in India. Three states of Andhra Pradesh, Maharashtra and Tamil Nadu left the

scheme after initially agreeing to implement it. Other states have been implementing the scheme

but they have many reservations about the scheme. RSBY is expected to provide cashless

medical services against catastrophic health expenditure to the most vulnerable sections of the

population. This objective can be achieved fully only if feedback from states is incorporated in

the scheme so that they can wholeheartedly agree to implement the scheme. This is the main

reason why this committee has been set up.

In order to revamp RSBY to ensure better patient care

services, it is important to re-examine the conceptual

framework of the scheme in the light of the

experiences of the states and other feedback about the

scheme from different sources. Discussions were held

with all states who were part of the committee and

written feedback was invited from them.

In addition to what the states have said, feedback

about the scheme as reflected in journal and

newspaper articles has also been taken.

FEEDBACK ABOUT THE RSBY:

1. State governments feel that while the objective of the scheme is excellent, the

implementation machinery is not up to the mark.

2. State governments felt that there was little accountability of the Insurance companies to

the beneficiaries and state governments.

3. State governments felt that Insurance companies make too much profit out of the scheme

and there should be a mechanism to ask them to refund extra profits over and above a

certain limit.

4. State governments felt that RSBY is too hospital centric in implementation. There is little

focus on treatment outcomes. Nor does the scheme generate data about epidemiology and

treatment outcomes which could be shared with states for improving health policy.

5. The Labour Department is implementing the scheme in many states and the involvement

of Health Department is limited while the skills for monitoring scheme implementation

are with the Health Department. The Health Department being the single nodal agency

for all health interventions, and the primary regulatory body for hospitals, the stewardship

of the Health Department would result in better coordination of scheme and

implementation.

TERMS OF REFERENCE OF THIS

COMMITTEE: This Committee was

constituted by Ministry of Labour and

Employment, Government of India vide

Intimations dated 26th and 27th August and was

entrusted with making recommendations “ to

revamp RSBY” with a view to (1) improve

service delivery, (2) ensure greater efficiency

and transparency and (3) to provide RSBY as a

platform to states for other schemes. Detailed

Terms of Reference are at ANNEXURE 1.

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6. Several evaluations have said that there is a need to increase awareness about the scheme

among potential beneficiaries so that those who are genuinely in need could avail of the

scheme.

7. Evaluations have also observed that many patients, who availed treatment under the

scheme, still had to incur out of pocket expenditure for services. One such study from

Gujarat said, “nearly 60% of insured patients had to spend about 10% of their annual

income on hospital expenses, despite being enrolled"1.

On the basis of above feedback, the following aspects of the scheme have been identified

for discussion in order to make suggestions about the revamping needed:

Implementation Issues:

1. The interface with patients and the experience of patient care services.

2. The interface with hospitals and issues faced by hospitals.

3. The role of Information Technology in generating data about treatment outcomes and

also in monitoring quality of services provided.

4. The protocols for operating RSBY at the field level and effective controls for each

participating stakeholder within the scheme.

Policy Issues:

5. The Interface with the Insurer or tasks allocated to each agency in the light of the core

competence of each agency.

6. The incentive structures in place for various stakeholders: Hospital, Insurer and TPA.

After elucidating each issue, we would then try to sum these up to examine and suggest how the

RSBY could be revamped to improve patient care services, to improve efficiency and

transparency in service delivery.

1 Devadasan Narayanan, Tanya Seshadri, Mayur Trivedi and Bart Criel; "Promoting universal financial

protection: evidence from the Rashtriya Swasthya Bima Yojana (RSBY) in Gujarat, India", Health

Research Policy and Systems 11(29) doi:10.1186/1478-4505-11-29, 2013.

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a. BACKROUND AND PAST EXPERIENCE

The RSBY has notched up some significant successes. It has been able to provide protection

against high health expenditure to about 3.85 crore families which constitute the most vulnerable

sections of the population, at very reasonable prices. Around 22 lakh people are treated in the

scheme every year. The RSBY is very economical. At a time when healthcare costs are

skyrocketing, there is a great need to look for cost effective means of managing the healthcare

needs of the population. But there are many weaknesses in the scheme mainly on account of lack

of built in checks for hospitals or Insurers.

b. STRENGTHS OF RSBY

1. SIGNIFICANT FINANCIAL PROTECTION AND REDUCTION IN OUT OF

POCKET EXPENDITURE: Through this scheme, the government has been able to

provide cashless medical services to needy people, who would not otherwise have been

able to afford the service. An evaluation of the scheme by National Labour Institute

(NLI) NOIDA said that 97% of those surveyed possessed RSBY cards.2

2. AN ECONOMICAL MODEL: By fixing package prices, RSBY has made a major

conceptual advance on existing healthcare delivery models. The concept of package

prices for an indicative length of stay makes healthcare costs transparent and this imposes

a natural check on prices. The average cost per treatment is around Rs. 4000. Premium

remains on an average Rs. 500 per family per annum.

3. ENCOURAGING BETTER MAINTENANCE OF PATIENT RECORDS: The NLI

report said that as many as 86% patients were provided a discharge summary. Records of

treatment are very important to maintain continuity of care and this is one of the most

important areas that need attention in healthcare in India today.

c. OBSERVED WEAKNESSES OF RSBY

1. LITTLE OR NO INVOLVEMENT OF THE SNA: The SNA being the backbone of

the scheme at the States lacks adequate capacity to monitor the activities within the

scheme. Another cascading issue is that of the performance data, which is not provided

by the Insurance Company to the SNA, which leaves the SNA with no scope for any

further action.

2. INVOLVEMENT OF TPA IN OPERATING THE SCHEME AT STATES: The

TPA’s are employed by the Insurance Companies to process the claims raised by the

hospitals and other administrative tasks. It has also been observed that in some States, the

TPA’s are also conducting enrolments on behalf of the Insurance Company. The

Committee has also observed that TPA’s in some states have sub-contracted their

responsibilities to other agencies unknown to the SNA. This has diluted the focus of the

Insurance Company towards providing the benefits of the scheme to the end beneficiary.

2 Ghosh, Ruma, "Evaluation Study of Rashtriya Swasthya Bima Yojana, A study of Jharkhand,

Maharashtra and Punjab", V V Giri National Labour Institute, NOIDA.

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3. EVOLVING CONCEPT OF RE-INSURANCE IN RSBY: It has been observed that

Insurance Companies associated with RSBY are passing their risk to Re-insurers. The

Re-insurers are paid an amount to cover the risk for the RSBY insurer, which leads to

low claim ratio at the States.

4. LOW UTILIZATION: RSBY was designed to provide the beneficiary cashless health

insurance and to minimize their out of pocket expenses during a visit to the hospital. On

the contrary, it has been observed, that very few (3.6% for 2013-14) beneficiaries out of

the 3.75 crore card holders have availed hospitalization under the scheme. It has also

been observed that the hospitals demanded out of pocket expenses to initiate treatment

for these beneficiaries, which has ultimately led to low utilization of the scheme.

5. LOW LEVEL OF AWARENESS ABOUT RSBY: Despite the scheme being managed

from the State, the awareness of the benefits of the scheme are not known to many

beneficiaries. This has also contributed to the low utilization of the scheme. Though the

responsibility of creating awareness of the scheme lies with the Insurance Company, the

utilization data does not depict awareness of the scheme. Additionally, the SNA who

could have played a key role in increasing awareness of the scheme lacked the

institutional support and the capacity.

6. LACK OF CAPACITY AT MOLE: The Ministry of Labour & Employment (MoLE),

which is the scheme ministry, too lacked the institutional structure and adequate capacity

to manage the scheme. This resulted in the scheme being outsourced to a third party and

MoLE having reliance on the data supplied by this third party.

7. DISSATISFACTION IN THE STATES: There has been dissatisfaction expressed by a

few state governments regarding the structure of the scheme, from time to time. Three

major state governments of Tamil Nadu, Maharashtra and Andhra Pradesh have refused

to participate in the scheme and have preferred to run their own state government funded

health insurance schemes. Other governments have flagged issues about the

implementation methodology adopted in the scheme. Excessive authority given to

Insurance companies and poor monitoring methodology are among the chief complaints.

8. LITTLE DATA ON TREATMENT OUTCOMES: 33.81% patients in study by the

National Labour Institute reported an average rate of satisfaction while 55% reported that

they healed completely. The Information Technology and data collection methodology of

the scheme remains very weak. There is little data available on treatment protocols or

medication provided; variation in these protocols and how these have affected treatment

outcomes. No system seems to be in place to follow up on patients requiring follow up

treatment. As a result it is difficult to evaluate the reasons for 33.81% patients reporting

that the treatment provided was average in quality.

9. NO CLINICAL PATHWAYS IN THE SCHEME: A scheme which intends to provide

good healthcare to people, should have some clinical pathways for the various procedures

especially in view of the fact that services are being purchased from private sector

Final Draft Report

17

hospitals. However this has not been the case so far. This could be one reason why the

quality of services provided remains quite variable.

10. REPORTS OF FRAUD AND MEDICAL MALPRACTICE: A report by Amicus

Advisory and several media reports have flagged the issue of large number of ghost

cards3. There are also cases of suspect procedures being performed needlessly although

without treatment protocols, there is no way of judge if there is any truth in the charges.

11. PERVERSE FINANCIAL INCENTIVES: One of the major problems reported has

been that while the scheme incentivizes hospital treatment to patients, it has no incentives

for medical management since OPD costs are not covered. Many evaluations have

reported high use of surgical packages.

Due to a great deal of dissatisfaction among state governments, the Government felt a

need to study the experiences of various state governments providing health coverage to

people and on the basis of these inputs, to look at revamping the RSBY, adopt best

practices and to address the weaknesses reported.

3 Reports in The Hindu and other newspapers in Sept 2013, available at URL:

http://www.thehindu.com/news/national/government-paid-private-insurer-crores-in-premium-for-ghost-

beneficiaries/article5083382.ece

Final Draft Report

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4. IMPLEMENTATION ISSUES

The first part of this report would discuss the problems faced in implementation of RSBY and

possible solutions to these problems in the light of the experience of the different states. In the

light of these experiences, policy issues would be discussed in the second part of the report.

5. ISSUE NO 1: MAKING RSBY MORE PATIENT FRIENDLY

a. TREATMENT OUTCOMES REPORTED For any health scheme, the most

important question to be asked would be regarding treatment outcomes of healthcare

services provided. An evaluation study of RSBY in the states of Jharkhand, Maharashtra

and Punjab conducted by the VV Giri National Labour Institute (NLI) NOIDA revealed

that while 55% patients treated said that their condition improved completely after

treatment, 33.81% patients said that the satisfaction rate was average.

The satisfaction rates were: Excellent (10.29%), Very good (25.87%), Good (28.21%), and

average (33.81%). Given little data on treatment outcomes, we cannot know reasons for average

rates of satisfaction where these existed.

Feedback from different state governments shows that some common complaints from patients

were:

a. Dissatisfaction with treatment provided

b. Hospitals not following standard protocols

c. Charging of money even though it is cashless scheme

d. Denying Follow up treatment

e. Difficulty in getting enrolled with Insurer/ TPA

These complaints against hospitals can be grouped into three different categories.

The first two categories have to do with hospitals not following Standard Operating

Procedures.

The second category of complaints has to do with over charging and denying follow up

treatment.

The third category of complaints has to do with difficulties in enrolment process.

b. VARYING QUALITY OF HEALTH SERVICES IN PRIVATE/ PUBLIC

SECTORS Surveys of the healthcare industry in India have shown that the quality of

service provided in different facilities varies a great deal and that many hospitals do not

follow SOPs. Standard Operating Protocols or SOPs as these are called are important

Final Draft Report

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since these put patients first. RSBY makes no attempt currently to define clinical

protocols for different procedures.

Many of these complaints can be addressed by defining the mandatory investigations and clinical

pathways for each of the procedures offered in RSBY. Maharashtra and Andhra Pradesh have

both defined the mandatory investigations for all procedures offered. Maharashtra has also

defined clinical pathways for some 150 high uptake procedures while others are being

developed.

These pathways are sets of questions and answers to enable the physician to determine whether

or not the treatment proposed is appropriate keeping clinical parameters of the patient in mind.

All the clinical pathways developed in Maharashtra are available on the site

http:jeevandayee.gov.in under the tab Clinical protocol guidelines. A sample angioplasty

protocol is attached at ANNEXURE 2 and pediatric management guidelines in use in Tamil

Nadu are placed at ANNEXURE 2A.

The list of mandatory investigations in Andhra Pradesh, investigations for 308 RSBY procedures

as prescribed in Maharashtra (being common with state Health Insurance scheme) and Tamil

Nadu are placed at ANNEXURE 3A, 3B and 3 C respectively.

Regarding over-charging to patients, there are many complaints on this ground. One basic reason

is that payment for Outpatient services is not included in RSBY and there are many gaps in these

facilities in the present public healthcare system.

c. ENROLMENT PROBLEMS

The low enrolment ratios of around 62.3% in RSBY are directly related to the flaws in the

mechanism for data collection and procedures for distribution of smart cards to beneficiaries. So

far as data collection is concerned, this activity is entirely dependent on the efforts of state

government agencies and State Nodal Agencies can only facilitate those efforts. However

efficiency in distribution of smart cards can definitely be improved by entrusting this task to the

State Nodal Agency and by empanelling a public sector undertaking to assist the SNA with this

task. The issues arising from faulty smart card distribution and the learnings from that process

are summarized in the table given below:

What went wrong What were the learnings

Inefficient data collection & de-duplication

process leading to discrepancies in the post

enrolment data

Enrolment of bogus beneficiaries

Low coverage of enrolment of beneficiaries

Disjointed IT architecture at field and central

level

Disparity in performance data obtained from

various sources

Reliance on insurance companies to conduct

major activities of RSBY leading to conflict of

interest

Program of such large scale and diversity of

operations requires effective monitoring tools

with various stakeholders

Data (beneficiary as well as performance data) is

of prime importance and this was a grey area in

RSBY

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Low level of accountability among the

external stakeholders towards the program

Low focus on program monitoring leading to

discrepancies at field level and wrong

reporting of performance of program

Non-adherence to protocols in the RSBY

process by stakeholders

Sub-standard / non –functioning smart cards

issued to beneficiaries

Non-delivery of cards to intended

beneficiaries

No check if the card was actually delivered to

the beneficiary

Conflict of interest with insurance company

also conducting enrolments

No field level check on activities

Lack of biometric authentication for DKM

leading to unscrupulous data

Low threshold of premium amount utilized by

insurance companies towards payment of

claims / claim settlement

Beneficiaries not aware of empaneled

hospitals leading to dissatisfaction

Absolutely no information of grievances and

complaints at district and state to NGRC

Kiosk as a service provider was totally left out

from the ambit of monitoring

Requirement of a robust application for data

exchange on real-time basis or at least near real-

time basis

Checks required on the field functionaries of

RSBY (i.e. FKO, DKM) and protocols for

uploading data to be strictly emphasized

IEC is an important component of the program

and needs to be well defined with roles and

responsibilities for each stakeholder

Need for centralized procurement of smart cards

through a dedicated agency

IEC activity to ensure the beneficiary is made

aware of the empaneled hospitals and services

available at these hospitals

Being connected with the beneficiary is a much

needed step and this should be done through

various mediums. Voice call, SMS etc.

Performance based SLA’s to be introduced for

each process and stakeholders of RSBY

Beneficiary acknowledgement of resolution of

complaint / grievance is important

Separate the agency that manages kiosks for

RSBY to bring accountability

Challenges in RSBY related to enrolment and

uptake

Actions Needed

Poor Quality of pre-enrolment data leading to

low percentage of enrolment

Inconsistency of data from various sources

leading to requirement of continuous

reconciliation

No category prioritization guidelines defined

and lack of an automated process for de-

duplication

Real-time update of data starting from

enrolment process till claim disbursement

Absence of accurate data has implications on

performance evaluation and levying penalties

on external agencies involved

Beneficiary card blocked with treatment

package, even if the beneficiary has not

availed the treatment. This leads to low

coverage amount remaining with the

beneficiary

No SMS communication to beneficiary due to

lack of mobile number data

Lack of awareness of existing complaint and

grievance redressal channels

Lack of training to grievance committee

members to resolve grievances/ no process

defined for complaint/ grievance follow-up

Document process guidelines and operating

manuals for reference of all stakeholders to

bring a common understanding of RSBY

Provide states with guidelines on data

preparation and strict adherence to the same.

Capture of at least one identifier to facilitate de-

duplication is a must

Capturing mobile number of all beneficiaries at

time of enrolment

Capturing of mobile number of beneficiary

mandatory at the time of registration in hospital

Insurance and enrolment to be separate activities

and performed by separate agencies

Identification of a public sector undertaking for

centralized procurement of smart cards to ensure

quality

Fixing the glitches in the RSBY software (TMS,

DKM upload module and fund flow module) to

enable accurate flow of data from various

stakeholders involved (i.e. post enrolment data,

hospitalization data, claims data etc.)

Printing of contact center toll-free number on

beneficiary card and the card cover for

awareness and complaint logging

Provision for incentives for FKO at the

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and closure

Lack of information dissemination to

beneficiaries (i.e. enrolment dates, hospitals

under RSBY etc.)

No KPI’s fixed for various processes of RSBY

and their stakeholders

Reach of kiosk only at district level.

Beneficiaries at block level have to travel

large distance to avail any post enrolment

service at kiosk. This leads to loss of wages

for the beneficiary

Low level of awareness amongst the

beneficiaries about existence of kiosks at

districts

Kiosk does not have access to post enrolment

data at times, hence it is unable to provide the

requisite services to the beneficiaries

Lack of standard operating procedures and

training to kiosk operators pertaining to RSBY

discretion of the States

IEC activity at hospitals mandated with help

desk and information board highlighting

facilities at hospitals for RSBY beneficiaries

Chart Service level agreements for processes and

stakeholders in RSBY and mandate adherence

Build strong MIS capability at central level

through software and capacity building for

effective KPI monitoring of the program

SMS communication to beneficiary at stages

based on available mobile numbers

Feedback letter needs to be sent to all

beneficiaries

Bring clarity in the role of kiosk operator and

provide operating procedures and assign

responsibility of kiosk with separate agency

Guidelines for information board at kiosk with

services of RSBY to be displayed

Increase accountability of Insurer and

responsibility of SNA towards the program

The learning experiences in the second column indicate the way forward for the RSBY so far as

Smart Card distribution and data updation is concerned.

d. RECOMMENDATIONS ON IMPROVING PATIENT SERVICES

1. CLINICAL PATHWAYS AND MANDATORY INVESTIGATIONS BE

ADOPTED WHERE EXISTING/DEVELOPED AND MADE PART OF TENDER

DOCUMENT: It is recommended that these mandatory investigations and clinical

pathways, where available, be made part of the tender document and agreement with

Insurer/Trust so that all parties know these in advance and rational parameters are

available for decision taking. Each of the clinical pathways could provide for the

practitioner to differ for reasons to be recorded in writing. Any consistent deviations

could be flagged in medical audit. Maharashtra state health insurance scheme has

developed pathways for some 150 procedures which have been in place for some time

and could be adopted. These are available on the website of the RG Jeevandayee Arogya

Yojana Society. Remaining pathways would need to be developed. Mandatory

investigations could be adopted from Tamil Nadu/Maharashtra/Andhra Pradesh. Andhra

Pradesh has incorporated the mandatory investigations in MOU with hospitals.

2. INTRODUCE PRE AUTHORISATION

a. FOR ELECTIVE PROCEDURES: Andhra Pradesh, Tamil Nadu and

Maharashtra, all follow a pre authorization procedure for treatment under their

respective health insurance schemes. This means that a treatment request is sent in

to the Insurer/ Trust and a response is provided within a defined time limit or

Turnaround Time (TAT) as this is called. This varies from 12 hours in Andhra

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Pradesh to 24 hours in Maharashtra. A 12 hour turnaround time would be suitable.

Regarding which are the procedures for which pre authorization should be done, a

committed constituted in Maharashtra to examine the issue has given its

recommendations which are attached at ANNEXURE 4. Wherever clinical

pathways exist, the pre authorization should normally follow the pathway. Where

the physician concerned differs, he should record his reasons in writing.

b. JOINT COMMITTEE OF DOCTORS TO REVIEW REJECTED PRE

AUTHORISATIONS: To prevent demand side moral hazard, one needs to

ensure that patients are treated at the appropriate level. This is an important

activity and needs to be performed scrupulously. The main issue to monitor here

is whether or not the clinical pathway has been followed and the turnaround time

between the receipt of application from the provider and the response. In

Insurance systems, there could be an incentive for arbitrary rejection of pre

authorization. In Maharashtra currently 4% of pre authorizations are rejected

while in Tamil Nadu, 2.66% are rejected. To make this process more objective, a

committee consisting of two doctors from Insurer side and two doctors from SNA

side could vet rejected cases. In addition, a doctor from a public hospital mutually

agreed upon by both parties, could be a fifth member.

c. FOR EMERGENCY PROCEDURES: No pre authorization should be

mandated for emergency procedures since this might increase the time in which

the patient is attended and it could be harmful. Whenever a beneficiary card is

swiped, information goes to Insurer in any case. It would be mandatory to swipe

this card and also to select the procedure applicable within 24 hours of the

emergency procedure being performed.

3. REMOVE ENROLMENT LIMIT OF FIVE MEMBERS: Removing the enrolment

limit of five members may address some of the problems of low enrolment ratio

substantially. This is a policy issue which would be discussed in the second part of the

report.

4. ABOLISH CONDITION OF PAYMENT OF RS 30 FOR CARD BY

BENEFICIARY FAMILIES: The present condition of charging Rs 30 per beneficiary

does not achieve much purpose. Moreover it adds considerably to logistics. This is one

main reason for resistance among many state governments which have no wish to spend

so much effort on logistics for what they consider a nominal fee with little meaning.

5. STREAMLINE METHODOLOGY FOR ISSUING SMART CARDS:

a. Entrusting the SNA with the task of card distribution is important to address the

conflict of interest over enrolment with the Insurer. The Insurer and TPA would

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23

get higher premium for more enrolment but they have no incentive to verify the

accuracy of the process and too much enrolment publicity leads to higher payouts

which in itself is a disincentive.

b. Centralized procurement of Smart cards be done through a dedicated agency,

preferably a public sector undertaking. The states can also employ PSU firms

within the state for enrolment activities. The funding for this may be obtained

from MoLE.

c. A permanent kiosk should be opened at every block headquarters, preferably at

the Rural Hospital since enrolment is a continuous activity.

d. At least one unique identifier of beneficiary in addition to thumbprints must be

captured at the time of enrolment for de-duplication.

e. Any of following documentary evidence could be asked for any subsequent

confusion in case the fingerprint mechanisms fail which they often do:

i. Voter ID

ii. Copy of Aadhaar card

iii. Birth certificate for those below 18

iv. Statement of School headmaster regarding date of birth if birth certificate

unavailable

v. Enrolment slip for registration of Aadhaar card

f. A letter for feedback purposes should be sent by SNA to every patient treated

under the scheme. This is routinely done in states like Maharashtra and the patient

gets an opportunity to reply to the SNA.

g. Telephone calls can be made to random sample of patients regarding quality of

care received.

6. PROVIDE OPD SERVICES: An important reason for over-charging here, assuming

that hospitals are sincere, is that RSBY does not provide OPD services and there is a

considerable cost for consultation, medicines and diagnostics. Providing outpatient

services would help provide continuity of care to patients and to reduce out of pocket

expenditure. It is certainly true that OPD services are both costly and difficult to audit.

However it is also true that outpatient services account for a significant portion of out-of-

pocket expenditure in various surveys carried out by National Sample Survey and other

studies. What we recommend is that outpatient services be provided in steps, with

consultation being provided in the first step, medicines in the second step and diagnostics

in the third step. Public Health facilities should be the preferred choice of service

provider and only where public health facilities or doctors are unavailable, should

charitable trusts and private practitioners be enrolled.

7. INTRODUCTION OF WELLNESS CHECKS: The concept of wellness check was

introduced to let the beneficiary visit the PHC/ CHC/ Hospital in their vicinity and

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experience the healthcare facilities provided to them under RSBY. Ideally, wellness

check should be conducted to for all members of the beneficiary family or any one

member of the beneficiary family, through OPD insurance. This will not only improve

access but also help the beneficiary avail health services, but will also provide data on the

health seeking behavior of the beneficiary or their family member.

8. AUGMENT CAPACITY OF SNA: The capacity of the State Nodal Agency (SNA) is

of prime importance, as this will be the focal point for monitoring of the scheme. It is the

SNA that can detect discrepancies and take adequate measures, if sufficiently staffed. The

SNA staffing can be augmented on the model followed by the Planning Commission,

Government of India for hiring of consultants.

e. SUGGESTED SCOPE OF OUT PATIENT SERVICES

OPD services could be designed to meet the following costs:

1. Cost of Consultation: to be met by RSBY. An annual ceiling of Rs 7,500 per family

insured could be provided under RSBY under this head. Since the incidence rate at all

India level is estimated to be approx. 7.5% as per NSSO data of 2003 survey, this

provision should be sufficient. However the committee members felt that this amount

would be inadequate for a complete wellness check for all family members. A limited

check on risk factors and conditions included under the Non Communicable Disease

program such as diabetes, hypertension, cancer could be conducted at Primary Health

Centers but this should not be mandatory or linked to enrolment since time period taken

to cover all 3.85 crore families could be very long.

2. Cost of Medicines: to be met by Free drug program of National Health Mission

The cost of diagnostics is much larger and far more vulnerable to moral hazard. It would be best

to include these at a later stage and only as a third step.

Suggested scope of OPD services is placed at ANNEXURE 5. In case it is necessary to empanel

private practitioners for OPD services due to a shortfall in required numbers of doctors, private

practitioners should be empanelled only for consultation purposes and for medication, they

would need to refer the patient to the government pharmacy.

SUGGESTED NORMS FOR DOCTOR POPULATION RATIO

To begin with, a norm of 10,000 population or approximately 2000 households per practitioner

could be used to identify the numbers of practitioners required.

With 3.85 crore households covered in RSBY this would seem to mean that 19250 doctors would

be needed. However we need to remember here that government doctors serve the entire

Final Draft Report

25

population and not just these 3.85 crore households so it would be fair to assume that the

vulnerable sections of the population only constitute one half of the patients serviced by the

doctors in the government sector. It would be fair then to have a ratio of not more than 1000

households per doctor or a total of 38500 doctors. Of these 69% approximately may be needed

in rural areas and 31% in urban areas. This means 26565 doctors in rural areas and 11935 doctors

in urban areas would be needed.

As per National Health Profile 2012, 106813 allopathic doctors were available in India in the

government sector but out of these doctors, 29562 doctors were at Primary Health Centers in

Rural areas and 5805 specialists were available at CHCs4. No data was available regarding urban

areas. This indicates that there could be a mismatch between availability and requirement of

government doctors.

If we count all the doctors at PHCs against the required figure of 26565 doctors in rural areas,

that should be sufficient for OPD services.

For urban areas, 11935 doctors would be needed at level of the Primary Health Unit. This need

could be addressed through the National Urban Health Mission and any gaps would need to be

addressed by empanelment of private practitioners. Approx. 5000 doctors could be made

available through govt sources here and remaining 6935 could be hired from charitable trusts and

private sector. This means a total of 31565 doctors from government and 6935 from the private

sector could be asked to provide OPD services under RSBY.

For providing OPD services as per population norms, practitioners could be empanelled in

following order of priority:

1. Government Doctors

2. Doctors Employed by Non-Governmental Organizations/ Charitable Trusts

3. Private practitioners

In all cases however, it should be mandatory for hospitals to keep a record of patients

examined in terms of some basic parameters:

1. Name of Patient

2. Age of Patient

3. Sex of Patient

4. Name of Father

5. Name of Mother

6. Residential Address

7. Patient UID in RSBY

4 National Health Profile 2012, released by Central Bureau of Health Intelligence, Ministry of Health and

Family Welfare, Govt of India.

Final Draft Report

26

8. ICD Code of disease identified (This should be available as drop down menu)

9. Medication prescribed as per the Essential Drug List

10. Investigations/Tests prescribed

11. Aadhaar number where available

Web enabled software which can also work in offline mode would be needed. One version of

this is already available with CDAC, a government IT company, under a contract with

Government of Maharashtra, RG Jeevandayee Arogya Yojana Society.

Using this software would enable the practitioner to upload these details via the internet every

few days to claim his bills.

It would be mandatory for them to use the ESSENTIAL DRUG LIST prescribed by concerned

state government. On these conditions, private practitioners could be allowed to refer patients to

government pharmacies for obtaining prescribed medication.

REIMBURSEMENT OF OPD SERVICES FOR GOVT INSTITUTIONS: For primary

services, it may not be appropriate to reimburse government institutions on a per case basis since

that may well lead to distortions and inequity in patient care services. However funds could be

offered for institutional support. Such support could be both a one-time grant for computers ,

modem and printers and also a recurring grant for hiring data entry operators for record-keeping.

This would mean a cost of Rs 60,000 for computer, printer and internet connection as a one-time

cost and recurring costs of Rs 1.2 lakhs per annum per data entry operator @ Rs 10,000 per

month thereafter.

REIMBURSEMENT OF OPD SERVICES FOR PRIVATE DOCTORS: A consultation fee

of Rs 100 per incidence could be given to private practitioners and doctors employed by NGOs

only. OPD services under RSBY can be introduced as a separate package with a fixed package

cost in the range of Rs 7500 per family per annum to be utilized @ Rs 100 per incidence, within

the existing sum insured. An incidence may be defined as an illness for which the beneficiary has

approached the doctor for consultation and may include more than one consultation visits. The

incidence shall be counted as complete and eligible for payment when the illness for which

beneficiary has approached has been treated or referred to higher centre. A sum of Rs 250/-

could be paid for a specialist consultation. For availing the claim the treating doctor would have

to submit the consultation documents in the form of illness diagnosed, medical examinations

done with recorded parameters as mentioned above. These consultation documents should be

machine generated i.e. there should be a software application (may be called e-prescription

application under RSBY) loaded on the system of the empanelled doctors who will enter and

upload the necessary patient related parameters & reports for sending them online for claim

settlements. An offline version of the module could be made available so that doctors could

upload the claims as and when internet connectivity is available. An added 3% cost for

administrative and record keeping measures could be given to private practitioners.

Final Draft Report

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ESTIMATED EXPENDITURE ON OPD SERVICES

The NSSO data for the 2003 survey indicates an incidence of 7.5% of disease in the general

population requiring OPD services. Let us assume a figure of 10% for the country as a whole,

given that free providing of services would in itself encourage an increased uptake.

For 3.85 crore households, this suggests a possible 38.5 lakh claims. We assume that 60% claims

would be taken care of by government doctors.

For remaining 40% claims or say 15.4 lakh claims generated by private practitioners, a cost of

Rs 2000 lakhs or Rs 15.4 crores would be incurred in a given year. Adding 3% would mean 46.2

lakhs= Rs 15.86 crores.

INSTITUTIONAL SUPPORT FOR GOVT INSTITUTIONS

Rs 60,000 per centre for 31565 centers= Rs 189.39 crores one time grant

Recurring cost of data entry operators @ Rs 1.2 lakh per operator= Rs 378.78 crores

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28

6. ISSUE NO 2: DEALING WITH HOSPITAL GRIEVANCES

Hospitals being the main care providers in RSBY, it is very important to have fair and

transparent conditions for them from the very beginning. However the RSBY model so far has

left all dealing with hospitals to the Insurer. Insurers in turn have sub-contracted this out to Third

Party Administrators (TPAs). The result is that the terms and conditions of service are left

ambiguous. Since the Insurers and TPAs have a strong incentive to contain costs, this often leads

to arbitrary and unnecessary deductions in hospital bills and also delayed payments. Arbitrary

treatment in turn leads to fraudulent practices on the part of hospitals.

The main complaints of hospitals against TPAs/Insurers are:

a. Very high technology assessments used like CT, biopsy even where not strictly

required. This in turn limits services provided to the larger cities.

b. Irrational and non-transparent deductions from bills.

c. Demand of money for processing of bills.

d. Delayed payment of bills. Failure of TPA/Insurer to update details of pending

bills in IT application.

e. Low rates of packages.

In turn this often leads to deviations on the part of hospitals.

a. COMMONLY REPORTED ABUSE BY HOSPITALS

COLLECTING MONEY FROM PATIENTS This is a frequently reported problem in RSBY.

The NLI report says that 36% patients in RSBY have had to incur out of pocket expenses over

and above the package price. The study from Patan Gujarat gives an even higher incidence of

60%.

ABUSE OF PACKAGES BY UNNECESSARY BLOCKING OF MULTIPLE PACKAGES

This is a phenomenon which is reported in a study done by Amicus Advisory on RSBY5.

Procedures which are most commonly abused are the unspecified ward stay and ICU stay. Ward

stays and ICU stays are often claimed independently of any other procedure and since no

evidence is demanded, this is a common mechanism hospitals use. A study of RSBY in Amravati

in Maharashtra pointed out that there was no audit of the TPA transactions and as a result

inaccurate claims tended to be filed, "listing patients with ophthalmic symptoms and abdominal

5 Amicus Advisory Pvt. Ltd. "The need for Surveillance, Concurrent & Retrospective Audit of Claims

and Process Compliance under Rashtriya Swasthya Bima Yojana (RSBY). Accessed on 7th Sept 2014.

Available on URL, https://www.insuranceinstituteofindia.com/downloads/Forms/III/Important%20Notice/Fraud%20Control%20Works

hop/Need%20for%20RSBY%20claims%20survellience,%20concurrent%20and%20retroactive%20audit%20-

%20Amicus%20Advisory%20Report.pdf

https://www.insuranceinstituteofindia.com/downloads/Forms/III/Important%20Notice/Fraud%20Control%20Workshop/Need%20for%20RSBY%20claims%20survellience,%20concurrent%20and%20retroactive%20audit%20-%20Amicus%20Advisory%20Report.pdf



Final Draft Report

29

pain as undergoing surgical procedures, or those with fever and minor discomfort as having ICU

stays"6.

In view of all the above, a possible strategy could be to have more transparent and clearer terms

of service for hospitals which are spelt out in the agreement itself. Secondly the scope for abuse

should be reduced by eliminating or re-defining packages which are abused. Finally regular

monitoring of transactions should be done by State Nodal Agency by regular data collection and

also through medical audit.

b. RECOMMENDATIONS ON HOSPITAL GRIEVANCES

1. DEFINE MANDATORY INVESTIGATIONS: These investigations should be linked

to every procedure in the IT application so that hospital and insurer know what these are.

These should form part of the tender and the agreement with Insurer. While laying down

these investigations, it is important to keep in mind that unnecessarily technology

intensive investigations should be avoided so that residents of backward areas are not

discriminated against. For example a CT scan or an ABG test is not available everywhere

and should be sparingly used. Annexures give lists of mandatory investigations in place

in health insurance schemes of three different states.

2. LAY DOWN ADJUDICATION GUIDELINES FOR CLAIM SETTLEMENT: All

insurance companies have such guidelines for claim settlement. Many such guidelines

have a great deal of medical content. To ensure that good quality health protocols are

built into these guidelines, these should form part of the tender and the agreement with

Insurer. For instance for orthopedic cases, these guidelines prescribe rates to be settled

where more than one long bone fracture is set at the same time. These guidelines also

indicate the settlement to be made where the length of stay was shorter than indicated.

There are multiple such examples where each Insurer and TPA has a separate policy for

settling claims for identical procedures. This in turn causes much complaint by hospitals.

ANNEXURE 6 places on record the claim settlement/ adjudication guidelines in place in

Maharashtra Insurance scheme.

3. CLAIMS APPEAL COMMITTEE SHOULD BE FORMED: The Insurer should be

asked to set up a Claims Appeal Committee with two representatives of State Nodal

Agency to entertain any appeals made by hospitals in respect of deductions and/or

rejections. A Turnaround Time should also be prescribed for deciding on appeals. The

Insurer should have final say in this matter. All hospitals need to be informed about the

committee so that if needed, they can prefer appeals.

6 Rathi, Prateek, Arnab Mukherji, Gita Sen, "Rashtriya Swasthya Bima Yojana, Evaluating Utilisation,

Roll-out and Perceptions in Amaravati District, Maharashtra", Economic and Political Weekly Vol XLVII

no 39, Sept 29, 2012, Mumbai.

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4. DRAFT AGREEMENT BETWEEN HOSPITALS AND INSURER WHICH IS

PART OF RFP SHOULD INCORPORATE KEY PERFORMANCE INDICES

FOR HOSPITALS FOR REPORTING: The agreement between Hospital and Insurer

which is part of the tender should contain a provision for regular reporting on Key

Performance Indicators to State Nodal agency and Insurer by empanelled hospital.

ANNEXURE 7 records the agreement between Hospital and Insurer recommended by

Maharashtra state.

5. KEY PERFORMANCE INDICATORS FOR HOSPITALS ARE ESSENTIAL:

ANNEXURE 8 records the data set collected on quarterly basis from all empanelled

hospitals by the RG Jeevandayee Society in Maharashtra. Such regular data collection is

essential for being able to establish benchmarks of hospital performance on quality

parameters. Such benchmarks enable assessment across time for the same facility and

also across space for comparing different facilities. The data set from Maharashtra for

instance collects reports on the number of admissions per month, the number of ventilator

days, number of patients who left against medical advice, number of deaths, number of

patients needing re-treatment for urinary stones, number of cancelled or postponed

surgeries, number of surgical site infections for clean operations, other adverse events to

give some example. This information would be very useful for medical audit. It is

important to note that the information must be submitted on all patients treated by the

hospital and not just RSBY patients. Any hospital would use substantial portions of its

infrastructure to service RSBY and accordingly it should be graded on the entire

infrastructure and reporting should be mandatory on outcomes for all patients.

6. REVISE HOSPITAL RATES FOR PACKAGES WHICH ARE TOO LOW AS

COMPARED TO COSTS: Low package rates is a common complaint by hospitals.

These rates were fixed way back five years ago and cost has risen considerably since

then. A committee should be appointed to work out costing of packages at current prices

to fix ceiling prices afresh. A good indicator for uneconomic packages would be

packages which are seldom used.

7. INITIATE MEDICAL AUDIT OF PRE-AUTHORISATIONS AND HOSPITALS

AND LAY DOWN STRICT SANCTIONS FOR DEVIATION: It is very important to

conduct random checks by way of medical audit by the State Nodal Agency. Andhra

Pradesh has done excellent work in this regard by initiating Medical audit of hospitals.

The Medical Audit form used in AP is placed at ANNEXURE 9. For medical audit, it

would be best to develop assessors from reputed medical colleges who are hired by the

State Health department for this activity. This is on the lines of the assessors on the rolls

of the NABH. A third party medical audit done by a private party may not achieve much.

Here we need to remember that only those doctors with sufficient standing in the medical

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community are capable of doing medical audit and it would be difficult for private parties

to hire such people. Routinely insurers and TPAs are not able to get reputed doctors to

carry out such tasks. This Medical Audit should be followed up with sanctions against

hospitals which deviate from the norms. Initially the hospital concerned could be barred

from performing the procedure abused but for those with many repeated offences, a

recommendation regarding suspension of license under the State Nursing Homes Act

could be made.

8. RE-DEFINE PACKAGES WHICH ARE MUCH ABUSED LIKE INDPENDENT

WARD STAY AND ICU STAY: It is suggested that General ward and ICU packages

should be linked with some existing packages and should not be allowed as Standalone

packages. In case a patient develops a complication in an existing package prolonging

length of stay indicated, only then should General Ward or ICU packages be allowed

through a fresh pre-authorization with evidence of the complication which occurred.

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7. ISSUE NO 3: RUNNING INFORMATION TECHNOLOGY

APPLICATION

a. NO UNIFORMITY ARCHITECTURE IN RSBY CURRENTLY: Currently

there is no unified web based IT architecture in place in RSBY. There are two types of IT

applications in RSBY: the various softwares dealing with issue of smart cards to

beneficiaries and a Transaction Management Software provided by GIZ. Regarding the

hospital transaction management software, there is no uniform IT application followed in

RSBY across the states. SNAs have no access to the Transaction Management Software

so it becomes difficult to track claim movements and settlements. This non transparency

results in piling up of complaints and grievances of network hospitals regarding claim

settlements.

It is therefore essential that a uniform IT application containing all the related modules for e.g.

preauthorization, claims, grievances etc. should be developed and managed by the Ministry of

Labour and Employment. Login rights should be given to SNAs, TPAs, Insurance Companies,

network hospitals etc. per the defined requirements.

Such an IT application does exist in Andhra Pradesh and Maharashtra. This web portal is a

workflow-oriented integrated system which addresses the needs of all the target groups

(Beneficiaries). Each phase of the patient’s journey through the system, from enrolment of the

beneficiary, in/out patient registration, surgery updates, preauthorization requests, discharge

updates, claim settlements etc. are routed through the IT platform. IT platform is designed for

monitoring real time information about the scheme such as patients (cases) registered, pre-

authorizations given, surgeries performed, amount claimed by the hospitals, claim amount paid

by Insurer, etc. Source code of this application could be made available to Government of India

if so desired.

This IT platform can be deployed at each state and it can be customizable as per the state specific

requirements with minimal code changes. A provision is made in the system to add or remove

procedures in the scheme. ICD coding is mandatory for all the procedures that are going to be

added in to the scheme.

Data Mining:

Data synchronization/replication is very important for the MoLE to monitor the RSBY scheme

progress at all the states. In order to monitor/administer the RSBY scheme centrally, IT platform

should have provision for data synchronization/replication so that all the states data (required

data formats can be identified later) will be kept at one place to do any kind of analysis. This can

be achieved by using interoperable techniques/Database replication techniques.

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Data Replication using Patient Data Replication Service:

MoLE (Central RSBY ) Application will enable integration of data /information from various

state RSBY applications so that one-stop source for all information and data pertaining to

various states can be provided to MoLE. For this purpose, patient data (RSBY cases) from

various state portals need to be consolidated on a regular basis. This consolidated data will

enable MoLE to monitor the scheme centrally.

Approach for integrating Patient Data Replication (PDR) service with RSBY

PDR service (Client) would be an integral part of State RSBY application. It is a must for

consolidation of patient data from all the state RSBY portals with Central RSBY application.

This can be implemented using well defined Web Service Description Language(WSDL)

compliant standard interface. It provides the data of all registered patients and the data pertaining

at each stage in the workflow in the given time period.

This service can provide the following functionalities.

1. New patient registration

2. Patient Lifecycle updates – such as Preauthorization, Surgery update, Claim Processing,

electronic health records.

3. Patient Discharge, etc.

PDR Service (server) would be an integral part of center RSBY application and it is a scheduled

job type of entity. It would communicate with PDR service (client) using well defined standard

interface. Using this, data can be retrieved from the state RSBY applications and kept in central

database of central RSBY application.

b. USES OF IT ARCHITECTURE

In this way the IT application in RSBY could be a powerful source of information for:

CLINICAL DATA ON EPIDEMIOLOGY AND TREATMENT PROTOCOLS

One of the reasons for the fact that there is little discussion on treatment outcomes in

RSBY is that clinical data is captured in a very limited way. The applications can give

demographic details of the patients treated and the procedure performed. But other

clinical details whether medication prescribed, ICD disease code, basic symptoms are not

being captured. Even information about medication and disease codes in themselves

would provide a great deal of data about epidemiology. If clinical pathways are

introduced, a great deal of data about treatment protocols would be generated. RG

Jeevandayee Society has appointed a software vendor for automating the protocols for

ease of use.

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MONITORING ON DEVIATIONS

Fraud is a common problem in RSBY. A report by Amicus Advisory on fraud in RSBY

listed following common frauds:

INVENTORY OF THE ACTS OF INDISCRETIONS

_________________________________________________

Analysis reveals that some of the most common acts of indiscretion are as under.

1. Fraudulent admissions

2. Conversion of Outpatient cases to Inpatient cases

3. High incidence of day-care procedures

4. Deliberate blocking of higher-priced packages to claim higher amounts

5. Blocking of multiple packages even though not required

6. Connivance with beneficiaries to swipe the cards even without any need for treatment

7. Non-payment of transportation charges

8. Not dispensing post-hospitalization medication

9. Showing medical management cases as non-invasive surgeries

10. Impersonation in connivance with cardholder and hospitals

11. Replacing fingerprints fraudulently at district kiosk

12. Addition of outsiders as family members and inclusion of biometrics

13. Irregular or inordinately delayed synching of transactions to avoid investigations

14. Treatment of diseases which a hospital is not equipped for

15. Showing admission in ICU though treatment is given in general/private wards

A uniform IT application could be of great use in identifying deviations and taking remedial

action.

c. RECOMMENDATIONS ON IT APPLICATION

1. MINISTRY OF LABOUR CAN USE SOURCE CODE OF MAHARASHTRA/AP

APPLICATIONS: It is understood that the Ministry is already planning to have a

separate agency to develop the IT application for greater functionality. Here the source

code of software as available in Maharashtra and Andhra Pradesh could be used as a

basis since this software already have provisions for pre-authorizations and also for

hospital claim settlement. This code could then be customized to suit RSBY.

2. AGENCY FOR MAINTAINING SOFTWARE SHOULD BE DIFFERENT FROM

INSURER: Once developed, this software should not be handed over for maintenance to

the Insurer; rather the agency which develops the software should be hired to maintain

and customize it further for a period of three years at least. Separate service level

agreements could be signed between Insurers and the IT agency to facilitate data flow to

the Insurer. The reasons are:

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a) DIFFERENCE IN PERSPECTIVE OF INSURER AND SNA: All complex software

require a great deal of change management and customization. Here there is a basic

conflict of interest. The Insurer is certainly interested in monitoring financial information

to flag cases of fraud. But an Insurer can have no interest in the first objective of the

Ministry: namely to get epidemiological data. Capturing clinical data for this purpose

requires exhaustive interaction with the users which has a cost. Insurers are rarely willing

to bear these costs, nor is it in their interest to do so. Even simple activities like linking a

procedure with the mandatory investigations and checklists of documents prescribed, has

a cost to it.

b) GIVING PRIVATE INSURERS CONTROL OVER HEALTH DATA IS

PROBLEMATIC Giving control over the IT application to the Insurer would provide

private players access to the health profile of the population. That in itself is dangerous.

In other countries for instance South Africa where the IT application is run by the

Insurers, merely getting medical data for the government is not an easy task.

3. DATA MINING SOFTWARE NEEDED: Given the vast volume of data anticipated, the

Ministry should invest in appropriate data mining software for retrieving data for health policy as

per requirement. This data should be shared with State Nodal Agencies for appropriate action.

For example, huge medical data is available with the Arogyasri Trust in Andhra Pradesh so the

Trust has incorporated a Business Intelligence tool for improved reporting, trend analysis, future

projections etc. Further the invaluable data is used to study the disease trends, prevalence and

distribution among various demographic groups to plan the scheme and suggest preventive

health measures in AP.

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8. POLICY LEVEL ISSUES

9. ISSUE NO 4: INTERFACE WITH INSURERS

The issues discussed so far have mostly to do with implementation but we have seen that many

problems also arise due to poor accountability of hospitals and insurers. The main grievance of

state governments has been that the Insurers are not sufficiently accountable in the various tasks

they are supposed to perform in RSBY. In this section we shall discuss the issues which arise due

to errors inherent in the policy paradigm in the scheme.

The basic issues in the interface with the Insurer have been:

1. Poor enrolment ratios for beneficiary families and low beneficiary awareness in many

areas.

2. Skewed uptake in many regions: low uptake in some areas enables substantial profits for

Insurers while fraud in other areas leads to excessive claim ratios.

3. Empanelled hospitals not equitably distributed across the region often due to

concentration of hospitals in and around district headquarters and metropolises.

4. Hospitals which perform well are often de-empanelled at short notice and with little

reason.

5. Medical audits are hardly conducted.

6. Information not regularly collected on Key Performance Indicators for Insurers

These issues arise mainly on account of following issues:

a. INSURANCE COMPANIES ARE NOT DESGINED FOR THE JOB OF

OUTREACH

Insurance companies which sell policies in the private health insurance market are not designed

to conduct outreach programs for poor and deprived beneficiaries. Private buyers are well aware

of the benefits they have paid for. For group insurance policies, it is the responsibility of the

company/corporation/Society to provide verified database of those eligible. In most such

policies, there are routinely co-payments involved so each person covered, automatically knows

the health benefits due to him. It is certainly not expected that any insurance company would

make any effort to inform those covered of the benefits available. It is only with the RSBY that

insurance companies were asked to make this effort. The RSBY provides coverage to the poorest

and most vulnerable sections of society many of whom may not be literate. Insurance companies

have little or no experience of dealing with such groups. Asking them to deliver such services

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has been counter-productive. A specific effort needs to be made to reach the deprived which

Insurance companies do not make.

b. CONFLICT OF INTEREST OVER PUBLICITY AND ENROLMENT

Secondly there is a major conflict of interest here. While it is true that higher enrolment would

mean higher premium, too much publicity would lead to higher incidence ratios which is against

the interest of the Insurer. This is why post enrolment publicity is vested with State Nodal

Agency but they have little funds for this task.

Similarly empanelment of hospitals which take their tasks seriously and perform well also lead to

higher payouts. De-empanelment of a hospital then cannot be so easy or at least it should not be

entirely at the option of the Insurer.

c. LIMITED AVENUES FOR FEEDBACK TO GOVT EXIST

In the present RSBY structure, since the call center is run by the Insurer, very limited avenues

for feedback are available to the State Nodal Agency or to the Ministry of Labour. In many states

which run call centers, the average daily volume of calls is around 5000 and much information is

exchanged by this means. For smooth running of the scheme, this function should be taken over

by SNA.

d. INSURANCE COMPANY HAS NO INTEREST IN EQUITABLE

DISTRIBUTION OF SERVICES

Equitable distribution of facilities is a factor which is far more the concern of the State Nodal

Agency than the Insurer. For insurers it hardly matters whether their payout comes from a few

hospitals or from many hospitals or whether it comes from the metropolises or backward areas.

This is something which does concern the State Nodal Agency which has little control over the

decision. Nor are desirable ratios of beds to population spelt out in the RSBY. Since the State

Nodal Agency is not sufficiently involved in these decisions, long term plans to address basic

infrastructure gaps are rarely drawn up.

e. DIFFERENCE IN PERSPECTIVE OVER IT APPLICATION

From the perspective of the Insurer, the purpose of the IT application is merely to monitor the

financial details of the pre-authorizations and claims and at best, to detect fraud. To add coding

to capture details of medical data involves a considerable cost which is not economic from the

point of view of Insurer. Given the complexity of the software, it would be very difficult to

anticipate all the future requirements and build these into the Functional Requirement

Specification. Moreover, while many clinical pathways exist, many are yet to be developed.

Unless the IT contract is separately drawn up and monitored by the State Nodal Agency, it would

be difficult to adjust the scheme to cover such requirements. In Maharashtra, the contracts which

the Insurer entered into with the IT service provider ran counter to the contracts which the

Insurer had signed with the State Nodal Agency.

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f. LOW LEGITIMACY FOR MEDICAL AUDIT

Finally the ability to do medical audit depends entirely on the legitimacy of the person

conducting the audit. This is something which doctors employed by Insurers rarely have. The

same problem would be faced by any Third party which attempted the task. Medical audit can

best be conducted by doctors employed in reputed medical colleges or hospitals of the highest

grade. Such doctors are available mostly to the government and some selected private institutes.

Similarly the task of drawing up clinical pathways and lists of mandatory investigations must be

coordinated by the State Nodal Agency using the services of doctors from such reputed

institutions. Yet it is the Insurers who in RSBY have prescribed the lists of mandatory

investigations and even on occasion, empanelment criteria.

g. INSURERS CANNOT BE EXPECTED TO REGULATE THEMSELVES

All these issues arise because of a basic anomaly in the structure of RSBY: given that the Insurer

has been contracted in to perform a certain set of tasks, it must be the job of the State Nodal

Agency to monitor task performance. But the RSBY creates a structure in which monitoring

tasks like medical audit or grading of hospitals or collecting key performance indices from

hospitals and Insurers has been entrusted to the Insurer itself. This is a contradiction in terms. No

agency is equipped to regulate itself, nor should we ask it to do so. This must be the job of the

State Nodal Agency. The expected outcomes and agenda must be set by the government and the

State Nodal Agencies equipped with the authority and tools to monitor how that agenda could be

achieved. A PPP model cannot mean outsourcing the scheme lock, stock and barrel: that would

defeat the purpose of the PPP. Something like this is what has happened to the RSBY.

The current allocation of tasks in RSBY does not reflect the core competence of the two main

agencies involved, namely the Insurer and the State Nodal Agency. The present structure also

prevents the SNA from carrying out its role of supervisor adequately. For greater efficiency and

transparency in service delivery, the core competence of the agencies should be taken into

account.

h. CORE COMPETENCE OF INSURANCE COMPANIES The core competence

of an Insurance company in the field of Health Insurance lies in three main tasks:

1. Empanelment of Hospitals including fixing rates for procedures offered.

2. Processing Pre authorizations for Elective procedures

3. Processing Claims of Service Providers and claim settlement.

Insurers would be competent for these three tasks. However regarding empanelment of hospitals,

it is best that this should be a joint task with the State Nodal Agency. Currently empanelment is

the primary responsibility of the Insurer although the State Nodal Agency can intervene where it

deems fit. As has been pointed out above, it is the State Nodal Agency and not the Insurer who is

interested that the hospitals be equitably distributed. Clear criteria need to be provided to the

Insurer for empanelment. Also the number of hospitals in terms of ratio of bed to population

should be fixed to provide some basis for decision-making. Criteria for pre authorization and

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claim settlement should also be included in the tender and also Agreement with Insurer to ensure

good service and transparency.

For these three tasks, Insurer does have a great deal of expertise which it may be difficult for

government agencies to replicate.

i. WHY STATE NODAL AGENCIES FIND IT DIFFICULT TO PERFORM

THE FUNCTIONS OF INSURER

1. ABILITY OF GOVT TO CONTAIN COSTS VERY POOR: The ability of the

government to keep tabs on market rates and to negotiate discounts is severely limited.

Current government procedures make any discounting of prices very difficult. The

Arogyasri scheme in Andhra Pradesh started out with differential pricing for hospitals

and soon after it changed to a Self-Insured Model, discounting was given up. In

government hands, the likelihood is that prices of procedures would soon balloon and

costs would simply remain in an upward spiral. In the Maharashtra case, the old

Jeevandayee scheme processed 96000 cases at an average rate of Rs 66000 per case for

fourteen years. In the new Jeevandayee Yojana in the Insurance based model, the cost per

transaction came down to Rs 25000 per case and the number of beneficiaries

automatically tripled.

2. ABILITY OF GOVT TO MANAGE A VARYING WORKLOAD VERY POOR:

Processing Pre Authorization and Claims is a manpower intensive task with the numbers

of staff constantly varying. Given the legal hassles which all government organizations

routinely face in the Labour Courts, it would be very difficult for the government to

manage these aspects of the scheme. In Tamil Nadu and Maharashtra, the Insurer

employs Liaison officers at every hospital, including government hospitals. Tamil Nadu

insists on regular rotation of these employees. They not only facilitate patient treatment,

liaison with head office but also act as informers. In Andhra Pradesh, these Arogya

Mitras are employed by the Aarogyasri Trust itself and their number runs into thousands.

For government however, direct employment of Arogya Mitras could have serious long

term consequences. Eventually the Arogya Mitras and the staff of the scheme would put

in claims demanding permanent employment. Within six months of the scheme being

launched in Maharashtra, the Arogya Mitras went on strike and only after it was made

clear to them that the principal employer was the Insurer/TPA, was the strike called off.

3. ABILITY OF GOVERNMENT AGENCIES TO RESIST POLITICAL

PRESSURES IS LIMITED: In India, the present political system functions on the basis

of building patron client relationships. This system in turn means that there is a great deal

of pressure on politicians from their constituents to ask for undue favours from

government agencies. And hospitals are rather powerful entities. The ability of

government agencies to implement empanelment norms impartially, to have an objective

vetting of pre authorizations, remains suspect therefore. Insurers on the other hand, are

far less vulnerable to such pressures.

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These features make insurance companies well equipped to take care of the three tasks of

empanelment, pre authorization and claim processing.

Now let us look at the core competence of the State Nodal Agencies.

j. CORE COMPETENCE OF STATE NODAL AGENCY

STATE NODAL AGENCIES HAVE LONG EXPERIENCE IN OUTREACH AND

PUBLICITY: It has been the basic task of State governments to reach out to the public and most

especially to the deprived sections of the population for the last fifty years at least. While there

may have been some slip ups in the task, in the end it is government agencies which conduct the

decennial census and which have built up a database of voters for the electoral machinery with

some success. No doubt the databases of the government still need a great deal of correction. But

that is the job of government and it cannot be outsourced. Hence the State Nodal Agency should

be entrusted with the task of issuing the beneficiary cards. Given the importance of this activity,

permanent kiosks could be opened for this task in the Rural Hospital in each block. The specific

agencies to deliver the cards and configure each card could be empanelled by Central

Government and state governments could choose any agency in the panel. It would be open to

the government to pick up and empanel any competent state level public sector undertakings also

for the job. Here however a note of caution is needed: the State Nodal Agencies/ concerned

departments should create some paper trail involving verification by the beneficiary to validate

the databases. Too often these databases are not confirmed with the beneficiary himself. Merely

reading out names in a panchayat or displaying these in a ward is not sufficient to validate the

databases and all caution should be taken on this account.

STATE NODAL AGENCY WELL EQUIPPED TO RUN CALL CENTER AND

PUBLICITY: Most state governments already perform the task of running a call center in the

102 service under Janani Suraksha Yojana or 108 ambulance services. So government is well up

to this task. The call center is a very important source of feedback to the State Nodal Agency

regarding grievances by hospitals and/or patients. Without this feedback, the ability of the State

Nodal Agency to monitor the scheme becomes very limited. There are many grievances that calls

are not adequately answered. All three states of Andhra Pradesh, Maharashtra and Tamil Nadu

run 24*7 call centers; in AP it is done by the Aarogyasri Trust and it is run by Insurers in the

other two states. Tamil Nadu supervises call center employees while the employees are paid by

the Insurer. Tamil Nadu seems satisfied with the Call center but the Maharashtra government

found that the information provided by the Call center staff was of varying quality ranging from

good to outright bad. The Maharashtra Rajiv Gandhi Jeevandayee Arogya Yojana Society then

had to set up its own call center for hospitals.

GOVERNMENT HAS PERSPECTIVE NEEDED FOR RUNNING IT APPLICATION

The IT application is of great importance both for (1) running the scheme on a daily basis and

(2) Mining the application for health related data.

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While the data gathered in RSBY has significant value, only the Health Department officials can

know what the appropriate questions to ask the database are. What combination of demographic

details with a particular disease pattern raises alarms is a question requiring much domain

expertise. Insurance companies do not have this expertise. We should associate with reputed

research institutes for data mining from the beginning; otherwise it may lose its focus in view of

routine administrative works. The government should actively reach out to agencies like Indian

Council of Medical Research and Medical colleges so that the data could be used for research

purposes.

For all these tasks, it is important to build in fields for medical data in the various forms to be

filled in by the hospitals and practitioners. Simple items like medication prescribed and ICD

codes for disease and procedure, when added to demographic data, can bring in a great deal of

information. This information could be used to identify any anomalies in procedures in the field

and used for corrective action. Hence data mining is best possible when the state government is

running the IT application. The Call center could be clubbed with the IT Application while

floating a tender. Service level agreements could be drawn up between the IT vendor and

Insurer. But it would be important for the SNA to directly monitor the execution of contract for

the IT application.

STATE NODAL AGENCY HAS ACCESS TO REPUTED DOCTORS FOR CONDUCT

OF MEDICAL AUDIT: Conducting medical audit is an important tool to monitor the health

outcomes of the scheme. The quality of treatment offered and follow up can be reviewed through

audit. This task can be done by Insurers only if they have well qualified manpower. Trained

doctors are not easily available to Insurers for this purpose. More importantly, in order to

maintain checks and balances, it is best to have Insurers vet the pre-authorizations and claims

and to have the State Nodal Agency conduct random checks both of pre-authorizations and of

empanelled hospitals. The State Nodal Agency is much better equipped to conduct medical audit.

The Public Health Department alone has the legitimacy required to hire doctors from reputed

public and private hospitals and colleges. Finally it is the Health department alone which has an

interest in and ability to monitor health outcomes.

PUBLIC HEALTH DEPTT HAS LONG EXPERIENCE IN WORKING WITH

HOSPITALS AND DOCTORS: The Public Health Department has considerable experience in

working with hospitals and individual doctors. It is the State Nodal agency which should identify

infrastructure gaps which exist and which should draw up a long term plan to address those gaps.

Otherwise the RSBY would simply replicate the existing medical infrastructure which in turn

would mean that funds would flow far more to the developed areas rather than to existing areas.

Both Andhra Pradesh and Maharashtra made systematic efforts to upgrade infrastructure across

the board. Maharashtra set up dialysis units in public hospitals across the state since these

facilities were hardly available in the private sector. These are tasks which are of no interest to

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the Insurer. Only the active involvement in the empanelment process can help achieve equitable

distribution in the long term.

k. THE ADVANTAGES AND DISADVANTAGES OF INSURED AND SELF

INSURED MODELS

THE INSURER MODEL

ADVANTAGES DISADVANTAGES

1. Good ability to contain Costs Administrative Costs of Insurer and TPA

added on.

2. Good ability to discount package rates Tendency of TPAs to collude with

hospitals to perpetuate fraud

3. Good ability to manage manpower

without legal hassles

4. Capable of handling political pressures

THE SELF INSURED MODEL

ADVANTAGES DISADVANTAGES

1. Lower Administrative Costs 1. Poor Ability to control costs

2. No TPA collusion with hospitals but

we cannot discount possibility of Trust

employees colluding with hospitals

3. Poor ability to discount package rates

4. Poor ability to manage manpower

5. Vulnerable to political pressures

l. RECOMMENDATIONS ON ROLES OF SERVICE PROVIDERS

ALLOCATE FINANCIAL FUNCTIONS TO INSURER AND RESIDUARY FUNCTIONS

TO STATE NODAL AGENCIES: In the light of above discussion, we can say that

outsourcing the entire scheme to a single vendor would defeat the purposes of the scheme. The

RSBY has some financial functions. The financial functions should rest with the Insurer but

tasks like issuing of identity cards, and overall monitoring must rest with the Labour and Public

Health Departments so that the health outcomes of the scheme could be monitored. For IT

Application and call center, a separate vendor should be appointed to avoid conflict of interest.

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FINANCIAL FUNCTIONS WITH INSURER:

1. Processing Pre authorizations for Elective procedures

2. Processing Claims of Service Providers and claim settlement.

For performing all these functions too, the government should provide detailed medical

parameters for rationalizing decision taking in each of the above cases including clinical

pathways and mandatory investigations for pre-authorizations and checklist of documents for

claim processing.

For processing rejected pre-authorizations more objectively, a committee consisting of two

doctors from Insurer side and two doctors from SNA side could be constituted. In addition, a

doctor from a public hospital mutually agreed upon by both parties, could be a fifth member. The

committee would need to meet daily. Similarly a committee to process appeals on claims

reduced or rejected could be constituted. Both committees should be headed by Insurer.

SUPERVISION AND RESIDUARY FUNCTIONS WITH SNA:

1. Issuing Smart Cards for Identification

2. Conducting Publicity

3. Conducting Medical Audits both of pre authorization and of hospitals and practitioners.

JOINT FUNCTIONS OF INSURER AND SNA:

1. Empanelment of Hospitals.

2. Empanelment of private practitioners for OPD services where the doctors in government

or NGO sector are insufficient.

For empanelment function, a committee should be set up with two representatives of Insurer

and two representatives of SNA and one representative of Public Health Deptt in case the

SNA is the Labour Deptt and vice versa. The chairperson of the Empanelment Committee

should be the head of the SNA.

SEPARATE VENDOR BE HIRED FOR IT AND CALL CENTER

1. Running the Call Center

2. Running the IT Application

This tender should be separately floated by SNA and appropriate service level agreements be

contracted with Insurer to facilitate scheme operations. A detailed Functional requirement

specification would be needed for the tender.

STRENGTHEN THE STATE NODAL AGENCIES: If the State Nodal Agencies are to

perform all these tasks, it would be important to strengthen these agencies. Ideally each SNA

should be registered as an independent society or Trust but this is a decision which should be left

Final Draft Report

44

to the state governments. The Centre also needs to increase some resources for SNAs.

Alternatively, the staff augmentation of the SNA can be done through the model followed by The

Planning Commission of India, for hiring of consultants. The current allocation of Rs 30 per

family is too low and this should be raised to Rs 50 per family insured. In any case these costs

should not be loaded onto the premium. The SNA should also be provided adequate and regular

training on the key processes of RSBY and the IT platform by National Labour Institute (NLI) to

enable it to function effectively.

STRENGHTHEN OPERATIONS TEAM AT MOLE: In the earlier schema of operations,

MoLE lacked the manpower to address key field issues reported to them. This was primarily

done by an outsourced agency at MoLE, leaving the scheme vulnerable to multiple unresolved

issues. It is hence recommended that an institutional structure be created at MoLE to support the

program at a national level. Adequate manpower at various levels technical and operational

should be available at MoLE to address technical and policy level issues.

KEY PERFORMANCE INDICATORS FOR INSURERS: This is an important set of

indicators which could be used to assess performance of Insurers every month. The following

indicators are used in Maharashtra to get performance of every district in the state every week:

Indicators Definition

Whether for

that month or

cumulative

since

beginning of

financial year

1 Incurred Claim Ratio On Earned Premium Cumulative

On Total Premium Cumulative

2 Booked preauth ratio Amount of Preauth booked /Premium

paid for district Cumulative

3 Incidence Rate

No of preauths raised from Network

Hospitals/ No of beneficiary families

in that district covered in policy

Cumulative

4 Average payout per claim Total value of claims paid in Rs/ No of

claims Cumulative

5 Average payout per

beneficiary

Total value of claims paid in Rs/ No of

patients treated

6 Total no of hospitals

empanelled WITHIN the

Total hospitals empanelled

cumulatively Cumulative

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Whether for

that month or

cumulative

since

beginning of

financial year

district

7 Total no of public hospitals

empanelled WITHIN the

district

Total hospitals empanelled

cumulatively Cumulative

8 No of Preauthorisations

Raised No of pre auth raised Cumulative

9 No of pre authorisations

approved No of pre auth approved Cumulative

10 % Preauth Approval No of preauths approved X 100/ No of

preauths raised by concern district Cumulative


rejected No of pre auth rejected Cumulative

12 % Preauth Rejected No of preauths rejected X 100/ No of

preauths raised by concern district Cumulative

13 No. of procedures done Cumulative

14 Surgeries/Therapies / 1

Lac Beneficiaries

Surgeries/Therapies / 1 Lac

Beneficiaries Families Cumulative

15 No of claims paid No of claims paid Cumulative

16 No of claims pending

beyond 15 days

No of claims pending beyond 15 days

of receipt Cumulative

17 No of claims rejected No of claims rejected Cumulative

18 Claim rejection rate No of claims rejected X 100 / No of

claims raised by concern district Cumulative

19 No of camps held

Cumulative

20 No. Of patients screened in

health camps. Cumulative

21 Average No patients

screened / health camp

No of patients screened / No of health

camps Cumulative

22 No. Of patients referred in

health camp Cumulative

23

No. Of patients of health

camps reported to Network

hospital

Cumulative

24

No. Of preauths raised at

Network hoospital for camp

patients

Cumulative

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46


Whether for

that month or

cumulative

since

beginning of

financial year

25

District wise Uptake of

follow up procedures as %

of discharged cases eligible

for follow up

No availing first follow up for follow

up Procedures X 100/ No eligible for

follow up (No preauths approved

eligible for follow up packages- No of

deaths- Numbers where sum

exhausted)

Cumulative

26

District-wise % of approved

Preauths in total preauths

and in public hospitals

No of approved preauths in public

hospitals X 100 / total no of approved

preauths in that district

Cumulative

27 Payout to public hospital

v/s Total Payout in district.

Claim amount paid to public hospitals

X 100/total claim amount paid to

districts

Cumulative

28

District-wise no. of 131

Government procedure

performed.

No of procedures reserved for govt

performed by Public Network

Hospitals

Cumulative

29

District-wise uptake of

Government procedures

against No of beneficiary

families

No of preauths raised from Public

Network Hospitals for govt reserved

procedures X 100 / No of beneficiary

families in that district covered in

policy

Cumulative

30 No. Of grievances pending

more than 7 days. Cumulative

Monthly indicators

1 No of hospitals empanelled

in the week

2 No. Of hospital raise less

than 7pre auth in a week

(should be de-empanelled)

No of hospitals raising less than 7 pre

auth

3 No of pre authorisation

raised in the month No of Preauth Raised


approved in the month No of Preauth Approved

5 % Preauth Approval No of preauths approved X 100/ No of

preauths raised

6

District-wise No. Of pre-

auths approved beyond 12

hours of TAT.

Final Draft Report

47


Whether for

that month or

cumulative

since

beginning of

financial year

7

% Preauths approved

beyond 12 hours to total #

preauths raised

No Preauths approved beyond 12

hours X 100/ total No preauths raised

8 No. of procedures done

9 District-wise No. Of

claims pending beyond 15

days.


of receipt for that month

10

% Claims pending beyond

15 days to total claims

submitted


X 100/ total No claims submitted

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48

10. ISSUE NO 5: INCENTIVE STRUCTURES FOR STAKEHOLDERS

An effective means of improving service delivery of various RSBY agencies would be to align

the financial incentives of these agencies with the deliverables expected of these agencies.

Currently these incentives are not necessarily aligned with the deliverables. In this section, the

incentive structure of each agency: hospital, Insurer and TPA would be independently discussed.

a. INCENTIVE STRUCTURE FOR HOSPITALS

The process of Empanelment of Hospitals would normally have following objectives:

1. To identify hospitals with the requisite facilities to provide patient care

2. To empanel sufficient number of facilities to see that there is no denial of care to patients

and to see that these are regionally distributed

3. To provide concrete incentives to improve quality of care.

For achieving the first objective, RSBY and most state governments look at the availability of

human resources and infrastructure in the hospitals. If RSBY could proceed further and add

process parameters to HR and infrastructure, it would represent a significant advance in the

quality of assessment of hospitals. All medical facilities must perform some basic patient care

processes like issuing patient identifiers, record keeping, infection control protocols and other

Standard Operating Protocols. These should be part and parcel of a comprehensive assessment.

Any gaps in process parameters have serious consequences at ground level and can lead to a

doubtful quality of service. The report of Amicus Advisory on RSBY identifies following

commonly observed deviations in hospital practice:

TABLE 1: SOURCE (AMICUS ADVISORY REPORT)

Discrepancy Type Count % Occurrence

Qualified nurse not

present

774 37

Investigation Report/

Corroborating Diagnosis

not available

286 14

OT notes not available 285 14

Qualified Doctor not

present

272 13

Didn't co-operate with the

Investigation Team

144 7

Indoor case papers

incomplete

99 5

Proof of payment of 91 4

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49

Discrepancy Type Count % Occurrence

Transportation Charges

absent

RSBY Help Desk not

available

79 4

Patient's complaint

doesn't corroborate with

package blocked

63 3

Treating doctor's details

not shared

44 2

Daily monitoring chart

not available

28 1

Discharge Card not

prepared

19 1

Package blocked without

patient being admitted

18 1

Complaints & treatment

doesn't justify

hospitalization

14 1

Vital equipment missing

from OT

12 1

Discrepancy between

patient's & Smart Card's

details

10 -

Food not provided to

patient

6 -

b. GRADING SYSTEM RECOMMENDED

One good way to deal with such problems may be to have comprehensive quality of care

parameters for hospital assessment

Tamil Nadu has gone a little further on these lines and has added some norms like use of ICD

coding etc. But Maharashtra has the only scheme which to our knowledge, has built in

comprehensive norms for monitoring quality of care or process parameters.

Maharashtra has developed a grading sheet for hospitals which has the following sections (the

grading is done for all hospitals, whether private or public):

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50

TABLE 2: SUMMARY OF EVALUATION PARAMETERS USED IN MAHRASHTRA

Sr No Name of parameter Number of

Indicators

Marks

1 HR Quality 10 18

2 Facilities Management 15 15

3 Infection Control Measures 11 12

4 Quality of Patient Care 17 20

5 Monitoring Medication 6 8

6 Maintenance of Patient Medical Records 5 7

7 Patient Satisfaction Indices 8 8

8 Standard Operating Protocols 8 5

9 Transparency In pricing 4 7

Total Weightages 84 100

Detailed Grading sheet used in Maharashtra is placed at ANNEXURE 10A. The grading sheets

used in Tamil Nadu for multi-specialty and single specialty hospitals is placed at ANNEXURE

10B.

c. NORMS FOR SINGLE SPECIALTY HOSPITALS

In addition to the above norms which are useful for empanelling multi-specialty hospitals which

provide intensive care, a different set of norms is needed for empanelling single specialty

hospitals so as to provide services closer at hand to people living in remote areas. Both

Maharashtra and Tamil Nadu use a different grade sheet for single specialty hospitals in a few

specialties: Pediatrics Medical Management, Orthopedics, Nephrology for standalone dialysis

centers, Ophthalmology, ENT, Oncology and Prostheses. The grade sheet used in Maharashtra

is placed at ANNEXURE 11A.

d. ISSUES WITH NABH NORMS

The National Board of Accreditation for Hospitals and Healthcare Providers (NABH) has norms

for different levels of healthcare providers which are in line with International norms. Many

states do incentivize hospitals that comply with NABH norms by providing an added percentage

reimbursement in the package available. The major issue remains that the numbers of these

facilities are very limited and do not constitute more than 10% of the hospitals empanelled.

Using such a strategy means that there is no uniform evaluation of the remaining 90% hospitals.

There would be no performance incentive for facilities which may comply only partially with the

NABH norms.

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51

It has been generally observed that the NABH norms emphasize space requirements a lot and

have very strict labour policies which drive up costs. These norms focus on processes and not on

treatment outcomes which are very important to RSBY. Moreover these norms are very general

and difficult to apply for a large scale exercise. The NABH norms have not been used to empanel

hospitals on a large scale so the utility of their tools remains untested. The Maharashtra

government has already been using the above norms successfully for a year now and has

successfully empanelled 500 hospitals in the state alone.

e. RECOMMENDATIONS ON HOSPITAL INCENTIVES

1. USE OF COMPREHENSIVE GRADE SHEET APPLICABLE TO ALL

HOSPITALS EMPANELLED: The grade sheets used in Maharashtra for multi-

specialty and single specialty hospitals could be adopted in RSBY.

2. INFRASTRUCTURE AUDIT FOR SPECIALTY EMPANELMENT: While the

above grading sheet can be used to grade a hospital, a separate assessment is needed to

determine which specialties can be empanelled in any hospital. The Infrastructure

Audit Form being used in Maharashtra for this purpose is placed at ANNEXURE 12A.

The forms used in Andhra Pradesh and Tamil Nadu are placed at ANNEXURE 12B

AND 12C respectively. This form should take into account the human resources

available in areas outside the metropolises. We should not mandate super specialty

qualifications for areas like Nephrology, Pulmonology, Gastroenterology etc. since these

are not available in sufficient numbers. Persons qualified as MD Medicine and MS

General Surgery with some experience are also well qualified to perform many

procedures. But this needs to be clearly specified in the Infrastructure Audit form

otherwise Insurers routinely use personnel norms which are more suitable for large

metropolises only. Having broad based personnel requirements would allow the scheme

to empanel hospitals in remote areas also.

3. LINKING GRADE WITH PACKAGE RATE: Costs of providing services vary

greatly depending on the location of the facility and type of service provided. To have the

same payment rate for all would create a situation where quality would have little

meaning and costs would soon spiral. We cannot say that an Apollo hospital and a 10 or

20 bed operation have similar costs. The above grade sheet as used in Maharashtra can be

used to grade hospitals in 4 different grades and each grade could be paid a different

package rate. For single specialty hospitals, there are 2 different grades in operation. This

would provide hospitals with financial incentives to improve quality. The grading system

recommended by Maharashtra is as follows:

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GRADING SUMMARY FOR MULTI SPECIALTY HOSPITALS

Criteria Grade Package

Rate

Minimum mandatory fulfilled in all sheets and

marks more than 50% in each sheet

A 100%

Marks more than 50% in 6 sheets i.e.

HR,FAC,MED,EMR,ICM,TIP

B 85%

Marks more than 50% in 4 sheets i.e.

HR,FAC,MED,TIP

C 75%

Marks more than 50% in 2 sheets i.e. HR,FAC D 60%

In practice however Maharashtra found that there were very few hospitals in the D grade and it

only served to identify hospitals at the bottom of the list. Perhaps the states with poorer

infrastructure availability might still need the D grade in case they are not able to empanel

sufficient hospitals in the top three grades. Tamil Nadu uses a grade sheet with six different

grades.

4. NEED FOR CAPABILITY BUILDING: This system of empanelment would need to be

coupled with a training program for staff of empanelled hospitals on the said norms. A

commonly reported problem in hospital services is lack of awareness of safety protocols and also

lack of documentation. One such study from Patan Gujarat said that, "The hospitals are not used

to and often do not maintain detailed documentation of all processes. When insurance companies

raise questions about these claims, doctors feel hassled and do not realize that thorough

documentation and knowledge about what is included in the package and what is not, can

actually minimize these rejections"7. In Maharashtra, the RG Jeevandayee Arogya Yojana

Society tied up with the National Board of Hospitals and Healthcare providers to train hospital

staff including staff of private hospitals. A three day course was devised for this purpose. Till

date over 500 persons from the state have been trained in the course. Free slots are offered in this

course to all empanelled hospitals, whether public or private ones. The costs are borne by the

Society.

5. SETTING UP AN INDEPENDENT GRADING MECHANISM: Ideally there should be an

independent mechanism for grading and evaluation of hospitals. This is because such kinds of

7 Seshadri T, Trivedi M , Saxena D, Nair R, Soors W, Criel B, Devadasan N, "Study of Rashtriya

Swasthya Bima Yojana (RSBY) Health Insurance in India", Institute of Public Health, Bangalore, India,

Indian Institute of Public Health, Gandhinagar, India, Institute of Tropical Medicine, Antwerp, Belgium,

2011. URL accessed on 7th Sept 2013. http://www.iphindia.org/v2/wp-content/uploads/2013/01/RSBY-

report_2013_Jan_02.pdf

http://www.iphindia.org/v2/wp-content/uploads/2013/01/RSBY-report_2013_Jan_02.pdf

http://www.iphindia.org/v2/wp-content/uploads/2013/01/RSBY-report_2013_Jan_02.pdf

Final Draft Report

53

evaluations require expertise which can be built up over time and it needs continuous capability

building. Moreover, even the Public Health Department runs government hospitals and there

would be a conflict of interest in the Department evaluating its own hospitals. But this choice

could be left to the states. In any case even if the Health Department were to take up the task,

they would need to have an independent program to develop assessors and to provide the

assessors recognition of some kind to build up a culture of medical audit.

6. SANCTIONS FOR DEVIATION: Punishments for hospitals can be at different grades like

stopping only pre authorization, withholding all the pending claims, suspension, removal,

imposing penalty, down grading etc. For those who consistently violate the rules, cancellation of

license under State Nursing Homes Act be considered.

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f. INCENTIVE STRUCUTRES FOR INSURERS

There is a common misnomer that RSBY is a health insurance program. However, since all

preexisting diseases are covered, RSBY is actually a variety of universal health assurance and

not an insurance scheme in the sense of risk coverage.

So the incentive structure for Insurers should be such that there is reimbursement of minimum

administrative expenses while at the same time, no excess profits should be allowed.

While 15% could be allowed for administrative expenses of Insurer, this should not mean that

claims be disallowed if these exceed 85% of gross premium.

For other expenses to be incurred on publicity, the IT architecture, the distribution of smart

cards, medical audit etc. which would be incurred at the level of State Nodal Agency, these

would be flat amounts not linked to the premium for the scheme. If desired these could be

calculated in terms of a certain amount per capita. In any case these expenditures to be incurred

by SNA should not be loaded onto the premium.

Maharashtra scheme has provided a mechanism of Refund and also Annual Financial Review to

review the finances of scheme every year. A 5% buffer is provided to maintain some

accountability on the part of Insurer to ensure that due diligence is followed. Tamil Nadu also

has a refund clause which provides for cutoff of 80% for claims settlement. This is how the

clauses work:

ADJUSTMENT / REFUND

If there is a surplus after the pure claims experience on the premium (excluding Services Tax) at

end of the policy period, after providing 15% of the premium paid towards the Company’s

administrative cost, of the balance 85% after providing for claims payment and outstanding

claims, 90% of the left over surplus will be refunded to the Government within 30 days after the

expiry of the Run-off period.

ANNUAL FINANCIAL REVIEW

“Annual Financial Review” shall mean that if the Incurred Claims Ratio (Claims Paid Plus

Claims Outstanding) plus the Audited Administrative Expenses (as defined hereunder) exceed

110% of the Gross Premium (excluding Service Tax) then the loading in the Gross Premium

(excluding service Tax) will be in excess over 105% of the Gross Premium (excluding Service

Tax). For example:

a. If Incurred Claims Ratio (Claims Paid Plus Claims Outstanding) Plus Audited

Administrative Expenses (as defined hereunder) is 109.99 % of the Gross

Premium (excluding Service Tax) then there shall be no loading;

b. If the Incurred Claims Ratio (Claims Paid Plus Claims Outstanding) Plus Audited

Administrative Expenses (as defined hereunder) is 110 % of the Gross Premium

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(excluding Service Tax) then the loading will be 5%.(110-105)

c. If the Incurred Claims Ratio (Claims Paid Plus Claims Outstanding) Plus Audited

Administrative Expenses (as defined hereunder) is 115 % of the Gross Premium

(excluding Service Tax) then the loading will be 10%. (115-105)

d. “Audited Administrative Expenses shall mean the Administrative Expenses of

Insurance Company Ltd as per Audited Annual Accounts of the Company as on

31st March of the year immediately preceding the date of inception of the renewal

policy. In no case shall this be allowed to exceed 15% of Gross Premium

(excluding Service Tax) in the RGJAY Scheme.”

WORKED OUT EXAMPLES

ILLUSTRATION OF REFUND CLAUSE

Premium = Rs 100

Amount for Claims= Rs 85

Amount for Administrative Expenses of Insurer = Rs 15

CASE 1

Claims paid= Rs 70 (70% of premium)

Balance amount left out of Rs 85= Rs 85-70= Rs 15

Amount to be refunded to Government= 90% of Rs 15= Rs 13.5

CASE 2

Claims paid= Rs 90

Balance amount left out of Rs 85= Rs 85-90= 0 (minus amounts cannot be counted)

Amount to be refunded to Government= 0

CASE 3

Claims Paid= Rs 82 (82%)

Balance amount left out of Rs 85= Rs 85-82= Rs 3

Amount to be refunded to Government= 90% of Rs 3= Rs 2.7

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ILLUSTRATION OF ANNUAL FINANCIAL REVIEW CLAUSE

Premium is Rs 100 with 15% for administrative expenses of Insurer only.

But premium to increase only if Claims paid plus expenses crosses 110%. Loading to begin from

105%.

Refund of 90% balance if Claims are below 85%.

CASE 1

Claims paid= 94.9%

Total expenses= 94.9% + 15%= 109.9%.

There is no review and the premium remains Rs 100 for next year.

CASE 2

Claims paid= 98%

Total expenses= 98% + 15% = 113%

New premium would be loaded by 8% ie. 113% - 105%= 8%.

New premium= Rs 108

CASE 3

Claims paid= 80%.

Refund due= 90% of balance 5% premium (85% - 80%).

New premium= Rs 100

g. RECOMMENDATIONS ON INCENTIVES FOR INSURERS

1. ANNUAL FINANCIAL REVIEW AND REFUND: Clauses providing both for Refund

of premium and for Annual Financial Review as described above, could be followed in

RSBY. These clauses would guarantee a minimum 5% reimbursement to the Insurer

while also providing for some level of accountability in monitoring of expenses.

2. SOLVENCY RATIO FOR INSURERS: Only Insurers with solvency ratios of 1.5 as

mandated by IRDA should be allowed to participate in the RFP. The definition of

Solvency Ratio is: Available Solvency Margin/ Required Solvency Margin.

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h. INCENTIVE STRUCTURES FOR TPAs

Ideally the TPA is simply a manpower agency hired by the Insurer to process pre authorizations

and claims. An agency is needed since the manpower load varies from time to time.

But in the present system many Insurers reimburse TPAs on capitation fee basis, i.e. fee per

family insured. Such a payment mechanism immediately creates an incentive for artificial claims

control by the TPA to limit the number of claims. This mechanism creates separate financial

interests for the TPA distinct from the interests of the Government and also the Insurer. In many

situations, the TPA then does collude with hospitals to generate fraudulent claims or to

unnecessarily pad up claims for a consideration.

A question is often raised that what is the utility of the TPA and why cannot the Insurer do this

work itself. Insurers when asked, say that the processing of policies imposes a varying manpower

burden which they cannot directly handle. If they were to do so, then they would invite the

attention of the Industrial Courts and the various Labour laws to regularize those employees.

Hence excluding the TPA would most likely exclude the public sector insurers from the possible

bidders for the RSBY scheme. Given that public sector insurers today command 60% of the

health insurance market, excluding them in this manner may not be very desirable.

One way out of this situation could be to simply insist in the Agreement with Insurer that the

TPA should be paid only on per claim and per pre-authorization basis with no provision for

payment on capitation basis or +artificial claims control. This would reduce the TPA to the status

of a pure manpower agency and the conflict of interest would be substantially addressed.

Penalties for fraudulent behavior on the part of TPA and hospital would still need to be stipulated

in the agreement with the Insurer.

i. RECOMMENDATIONS ON INCENTIVE STRUCTURES FOR TPA

1. CHANGE THE RENUMERATION PATTERN OF TPAs TO ADDRESS

CORRUPTION: Currently most Insurers outsource health schemes like the RSBY to

third party administrators on capitation fee basis, i.e. a certain amount is fixed for TPA

per family insured. Such a financial arrangement creates a separate financial interest for

the TPA. When the claim ratios rise, many TPAs build a nexus with hospitals to commit

fraud. The TPA is purely a manpower agency and in order to ensure that it functions like

one, the tender for RSBY should clearly specify that the Insurer would only be allowed to

hire TPAs on per claim basis and per pre authorization basis. The capitation fee per

family method of reimbursement should be specifically dis-allowed. This would help

address the problem of corruption to a large extent.

2. IMPOSE STRICT SANCTIONS: Those TPAs found indulging in fraud and

malpractice could be penalized by monetary fines. But repeated violations should lead to

TPA being blacklisted by the Insurers and these names be circulated by the Ministry of

Labour to all Insurers working in the scheme with directions that no such blacklisted TPA

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is to be employed by any Insurer working with RSBY for five years from date of

blacklisting.

3. INFORM AGREEMENT WITH TPA TO SNA AND MOLE: It should be mandatory

for the Insurer to bring on record the agreement signed with TPAs under RSBY and

provide copy of contract to SNA and MOLE. It should also be mandated that sub-

contracting can only take place from the insurer to the TPA licensed by IRDA. Any

further sub-contracting by TPA will be considered a violation and strict sanctions shall be

imposed on the TPA.

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11. CONCLUSION

a. INSURANCE MODEL SEEMS BEST AT THE MOMENT In the light of the

above discussions, it seems that while there are pros and cons to the Self Insured and

Insurance model, the Self Insured Model does require a great deal of domain expertise.

The three states of Andhra Pradesh, Maharashtra and Tamil Nadu have built up a great

deal of expertise over the past few years much of which has been learned from insurance

companies. The sum of this expertise is attached as Annexures with this report which

runs into over 500 pages. Most states in India today do not possess this kind of expertise

in purchasing services from hospitals. Since such schemes as RSBY need to have

uniformity in structure for simplicity in operations, the Insurance model remains the only

option at this moment.

However in the states like Andhra Pradesh which are successfully running the Health

insurance schemes in Trust/Society/Department mode, such states shall be allowed to play

the role of insurance company for implementing the RSBY for better and effective

implementation by fully dovetailing RSBY with State Health insurance schemes.

Further states like Andhra Pradesh, Maharashtra and Tamil Nadu are willing to provide the

benefit of their learning experience to other states wherever required.

At the same time the State Nodal agencies should be strengthened. It would be desirable to

register the SNA as a separate Trust or Society but this is a decision which must be left to the

state government concerned.

We also need to remember here that the insurance companies were called onto the scene in the

first place because political interference made it very difficult for government agencies to

enforce any set of norms impartially. Political interference has been a very important reason for

most beneficiary oriented schemes to founder and lose track. In Maharashtra for example, a

health insurance scheme for poor people was run by state agencies for fifteen years. Within one

year of the insurance company coming onto the scene, costs came down to one third and many

hospitals openly acknowledged that earlier there had been no pressure to contain costs. Hospitals

are powerful interest groups. Politicians are under so much pressure from constituents to ask for

illegal favours that they seem to be looking for some external agency as a buffer against the

pressure. This is the main reason why many state governments started health insurance schemes

in collaboration with insurance companies in the first place. While reviling insurance companies

for being for profit entities is fine, we also need to take an objective look at the capacities of

government agencies to enforce any set of norms under political pressure.

b. TO PUT PATIENTS FIRST, ALL MEDICAL CONTENT SHOULD BE

PART OF TENDER DOCUMENT AND AGREEMENT WITH INSURER

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Having said that, it is important to build in all the expertise in operating health insurance

schemes as learned in these states into the RSBY for greater efficiency in service

delivery. All this paperwork whether on grading sheets for hospitals, infrastructure audit

forms, clinical protocols, hospital empanelment norms, mandatory investigations or claim

settlement guidelines, need to be part of the Expression of Interest for RSBY tender. It

should be compulsory for all state governments to incorporate all these guidelines into

their agreements with insurance companies irrespective of which Insurer it is. It is

through these guidelines alone that we can hope to encourage a patient centric model of

healthcare. Such clinical pathways and empanelment criteria put patients first and hence

need to be prioritized. Too often health insurance schemes are run for the profit of the

hospitals alone and the patient merely remains a means of achieving those profits.

c. CONTRACT WITH INSURER IS A LEGAL CONTRACT We need to

remember that the contract with an Insurance company is a legal document and

accordingly needs to be taken very seriously. Up to now, all the medical content in

Insurance schemes, government run or privately run, is part and parcel of the knowledge

of the TPA or the State Society. Unless it is made part and parcel of the Insurer's

Agreement right from the beginning, it would continue to cause disputes and avoidable

complaints by Hospitals and patients. These provisions cannot be left to oral negotiation

between State Nodal Agencies and different TPAs. In India we have a strong oral

tradition of learning as opposed to a written tradition. This also means that too often, such

learning does not form part of public private partnership contracts. This is one of the

main reasons for the patchy performance of PPP contracts in India. We should learn from

past experience given the importance of the task. There is no need to re-invent the wheel

and we also need to make the proposed MOU with hospital as part of the contract

between govt and Insurer.

d. CREATE AVENUES FOR FEEDBACK

Any scheme needs systematic feedback for mid-course corrections and constant

adjustments. By allowing the State Nodal Agency to run the Call center and to distribute

the beneficiary cards, the RSBY would create such mechanisms.

e. AUTHORISE THE SNA TO ENFORCE THE NORMS By allocating the tasks

of issuing beneficiary cards, medical audit, publicity and joint empanelment of hospitals

and practitioners, to the State Nodal Agency, we can authorize the State Nodal Agencies

to make these contracts a reality. A public private partnership does not decrease the work

of government; rather it increases our work since it entails a great deal of regulation. The

basic problem perceived in RSBY has been that by outsourcing the job lock, stock and

barrel to the Insurer, the government dis-empowered itself to regulate anything.

Regulation and monitoring are sovereign functions of government which cannot be

contracted out if the government still wishes to remain relevant to civil society.

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f. SANCTIONS AND INCENTIVES Finally this report has recommended a system of

incentives and sanctions put together to ensure that the patient centric norms

recommended are actually followed. The main problem in RSBY has been lack of

accountability of Insurers and Hospitals. Hospitals should be offered financial incentives

for improving quality of healthcare by linking Grading Sheet to package rates. So also

TPAs and Insurers are tied down by claim settlement guidelines. Insurers should be

offered the annual financial review of premium as incentive for good performance.

However all these incentives would work if the sanctions are also enforced. In the last

few years of RSBY operation, the numbers of hospitals and TPAs against whom penal

action was initiated are limited in number. This state of affairs must change.

Rule enforcement was an issue which came up repeatedly in the course of discussion. One

extreme view expressed was that if TPAs were to be paid on the basis of per claim and per pre-

authorization this would generate a huge number of fake claims by creating financial incentives

for pre-authorizations. It was also said that paying general practitioners on per incidence basis

rather than capitation fee basis would also lead to significant abuse. Here it is important to note

that rule formation and rule enforcement are intrinsic to any successful society. Unless we can

make and enforce rules, it would be difficult for any large scale system like the RSBY or indeed

anything to work at all.

Actually it is a very common complaint among civil servants that rules are routinely violated. So

far as Healthcare is concerned, the subject is even more important since it is difficult to obtain

optimum services from private providers unless the rules of the game are clear. We routinely see

a huge reluctance on the part of the Ministry of Health and Family Welfare to use private

hospital services or private practitioners for public health programs and the reasons cited are the

extremely varying quality of services provided. Common sense would suggest that there are

some public hospitals which are good and some which are bad and equally there are some private

hospitals which are good and some which are bad. What the Ministry really seems to be saying is

that in government hospitals there is a minimum standard of service which they do expect and

this is not the case in the private sector. However the job of creating norms for all service

providers, public or private, is that of the Ministry of Health itself.

The reason that watchdogs like the Medical Council of India have been relatively powerless is

because no such norms whether for hospital processes or by way of clinical pathways have really

been developed which could be up-scaled in a big way. The issue of medical abuse has no

meaning unless there is a norm or clinical pathway against which any specific act or behavior

could be assessed.

g. COSTS OF NORMLESSNESS ARE FARILY HIGH Lack of funds is one cost.

Absence of norms prevents the government from using the huge capital locked up in the

private healthcare sector while at the same time the government goes hunting for funds

under corporate social responsibility.

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62

But the most important costs are those which are levied on those service providers who prefer to

work with whatever norms do exist. The medical information gathered in the 500 pages of

Annexures with this document has been developed by such doctors and these constitute proof

that there are sufficient numbers of committed doctors and committed hospitals in India. It is

such doctors who have developed all this documentation. Failure to either prescribe or enforce a

norm penalizes these very people because it allows those who violate norms to go scot free. And

since practically everyone who breaks rules gets away scot free, there is immense pressure on the

better hospitals not to follow Standard Operating Protocols.

h. PENALTIES CANNOT BE PRIMARILY MONETARY

A monetary penalty has little long term value and it even encourages the idea that rule breakers

can pay a nominal cost and get away with it. Sanctions in order to be effective, should concern

themselves with the ability of the violator to practice his trade. So TPAs who practice fraud

should be blacklisted by the Insurer concerned for a period of five years and the government

should circulate such names to all Insurers so that there is a loss of livelihood for the TPA

concerned. Similarly in the case of hospitals which refuse to follow SOPs, while there could be a

de-empanelment for that procedure to begin with, any consistent violation should entail a

recommendation that the license of the hospital to operate under the State Nursing Homes Act

should be cancelled. Minimally such errant hospitals should not be empanelled by Public Health

Departments for providing health services to employees. Given that government insurance

schemes and schemes associated with government command a 35% market share, this is

sufficient economic clout for private hospitals to take notice. But this is useful only where one is

willing to use the clout. Here the issue of political will is also important since this is rarely

present.

i. THE CHOICES BEFORE US

The basic issue remains that such complex and challenging schemes require a sound system of

rules and regulations, in order to work well. RSBY has many potential benefits to offer to

society. But in order that those benefits reach the people, just rules and regulations which

encourage patient centric healthcare need to be defined and factored into the running of the

scheme. Whether it is norms governing hospital empanelment, linking hospital payments with

good practices, defining clinical pathways or the numerous other rules which are the essence of

any healthcare scheme, all these rules are crucial to good governance. Given that RSBY is a very

significant intervention in the field of healthcare and if that intervention is to achieve positive

results, it should be governed by norms which promote good health practices. The writing on the

wall is clear enough. But do we have the will to act upon it that remains to be seen.

*********************

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LIST OF ANNEXURES

No Description

1 Terms of Reference of this Committee

2 Sample Clinical Protocol for Angioplasty used in Maharashtra State

Health Insurance Scheme. Remaining 120 protocols available on URL:

jeevandayee.gov.in

2A Guidelines for Paediatric Medical Management used in Tamil Nadu

2A (1 to 12) Clinical Protocols developed in Maharashtra

3A List of Mandatory Investigations being used in Aarogyasri Insurance

Scheme of Andhra Pradesh

3B List of Mandatory Investigations for 308 common procedures between

RSBY and Maharashtra State Health Insurance Scheme

3C List of Mandatory Investigations for Tamil Nadu State Health Insurance

Scheme

4 RSBY procedures for which pre-authorization should be done

5 Scope of Out Patient Services

6 Claim settlement/ adjudication guidelines in place in Maharashtra

7 Agreement between Hospital and Insurer recommended by Maharashtra

state

8 Suggested Key Performance Indicators for Hospitals

9 Medical Audit form used in Andhra Pradesh

10A Hospital Grading Sheet used in Maharashtra

10 B Hospital Grading Sheet used in Tamil Nadu

11A Grade Sheet used in Maharashtra for Single Specialty Hospitals

11B Grade Sheet used in Tamil Nadu for Single Specialty Hospitals

12A Hospital Infrastructure Audit Form Used in Maharashtra

12B Hospital Empanelment form used in Andhra Pradesh

12C Hospital Empanelment form used in Tamil Nadu

13 Note on Arogyasri Scheme of Andhra Pradesh

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