New Delhi: Peter Prem and his wife were admitted to St John’s Hospital in Bengaluru in August 2020 after they tested positive for COVID-19. They both had mild symptoms and were discharged in six days. But Prem’s discharge report showed an unexpected diagnosis--it said that he had chronic kidney disease, which he knew nothing about before this.

Prem’s insurance company, Star Health and Allied Insurance, refused to pay the cashless claim for treatment because they said his kidney ailment was “longstanding” even though they also admitted its history could not be ascertained, according to documentation sent to Prem, reviewed by IndiaSpend.

Prem told the company that no renal issues showed up in the formal medical check-up done before they issued his insurance policy. He raised a complaint with the hospital as well, asking to know why his discharge summary mentioned a kidney ailment. The hospital did not offer an explanation but sent Prem a revised summary that made no mention of the kidney disease.

“The insurance company’s call centre told us that they wouldn’t be able to honour my father’s medical claim because his policy was in the lockout period, and also that mild COVID would not be covered,” said Prem’s son, Andre Peter. The lockout period (period between when one buys a policy and one can actually use it) on Prem’s insurance policy was one month and this had ended in July, a month before he got COVID-19.

The elderly couple also wanted to isolate themselves at home but were instructed by the Karnataka government helpline to get themselves admitted to a hospital. Keen to leave the hospital at the earliest, Prem paid his bill and secured a discharge. The family is now engaged in a lengthy correspondence to get the insurance company to reimburse the bills.

IndiaSpend spoke to other families around India that struggled to get insurance claims paid for COVID-19 treatment and found that they had been turned away on multiple grounds--the price charged by private hospitals, pre-existing ailments, or the ‘mildness’ of their COVID.

“The pandemic has shown that private healthcare is unaffordable, public healthcare is weak and insurance is not helping people access healthcare either. There is really no substitute to developing a strong and free public health system,” said Indranil Mukhopadhyay, associate professor at Jindal Global University.

Our series ‘The Price of COVID’ has reported various aspects of the distortions in the price of healthcare during the pandemic. In this eighth part, we report on how even patients covered by insurance are paying for their own COVID care as a three-way conflict rages between insurance companies, private hospitals and government regulators over the cost of treatment and the amount insurers must reimburse.

Up to 80.9% of people in urban India and 85.9% in rural India do not have any health expenditure coverage, according to data from the National Sample Survey, 2018. Most of those who do, are covered by government insurance schemes, as per the survey. Over 80% Indians have been paying for private healthcare from their own pocket, IndiaSpend has reported.

The treatment pricing debate

The story that emerges is this: At the end of what is often a traumatising period of treatment and recovery, COVID patients are handed substantial bills by private hospitals. Their insurance companies may refuse to reimburse, and they may have no choice but pay out of their own pockets.

Anticipating roadblocks to insurance for COVID-19 treatment, the Insurance Regulatory and Development Authority of India (IRDAI) issued some vital circulars during this pandemic. First, it stated that if an existing policy covers hospitalisation, then it would also cover COVID-19 treatment. The agency also asked insurers to process COVID-19 claims “expeditiously” and to simplify procedures for this. Insurance companies were also asked to create insurance products specifically for COVID-19.

Anxious about the high hospitalisation costs involved in COVID-19 treatment, people have been trying to buy new health insurance or use their existing policies. Insurance companies have launched new products such as top-ups on existing premiums in anticipation of this.

There are also “COVID kavach (shield)” policies to exclusively cover COVID-19. For example, Max Bupa offers a COVID insurance cover of up to Rs 5 lakh, for a family of two adults and four children, at a premium starting from Rs 1,039. Or Star Health which offers a COVID coverage policy that promises to reimburse hospitalisation expenses and home treatment for up to 14 days.

“Private hospitals over-hospitalise patients and this is a problem for insurance companies who are then forced to insure these costs,” said S Prakash, managing director of Star Health and Allied Insurance. “Just like the insurance sector is regulated, private hospitals also need to come under a specific regulator for their prices,” he said.

In an attempt to regulate the haphazard pricing of COVID-19 treatment around India, state governments tried to cap the price of treatment, as IndiaSpend reported. Prior to these price-caps, corporate hospitals such as Max Hospital in Delhi for example, said they would need to charge Rs 72,000 per day for intensive care and ventilator treatment. The same treatment had been capped at a maximum of Rs 25,000 in Karnataka and a minimum of Rs 4,000 in Rajasthan.

But the capping had other kinds of consequences--insurance companies now want to reimburse bills at the capped rates but the hospitals themselves want insured patients to pay higher and unregulated prices, we found. The set-up is varied around the country, with some states like Maharashtra and Karnataka saying that the capped rates are applicable for those without insurance.

Complaints, but no resolution

Sunny Guliyani experienced this himself when his 61-year-old mother was admitted to Delhi’s Moolchand Hospital after she tested positive for COVID-19 in July. She was hospitalised for 10 days and the family was billed Rs 3.73 lakh for her treatment and stay. Initially, Guliyani was not worried because his mother had an insurance cover of Rs 5 lakh.

At the billing counter, Guliyani realised HDFC ERGO that had insured his mother would only pay Rs 1.24 lakh. The company said this would be the price under the Delhi government’s capped rates. But the hospital argued that lower rates are only available to those who are uninsured, Guliyani told IndiaSpend.

Guliyani is not sure who should be reimbursing him now: “On the one hand, the hospital should have charged the capped rates. On the other hand, the insurance company is supposed to pay for the treatment. I have complained to several authorities, including the Delhi government, on this,” said Guliyani. HDFC ERGO declined to answer IndiaSpend’s queries.

Private hospital associations such as the Association of Healthcare Providers India (AHPI) have petitioned the IRDAI pointing out that capped rates are too low for their businesses, said Alexander Thomas, president of the association. The AHPI has presented its own costing analysis to the IRDA, asking that insurance companies pay the higher and uncapped price for patients who have insurance policies.

COVID insurance risk yet to be fully assessed

Trying to get cashless claims processed by insurance companies can be challenging: By the end of 2018-19, Rs 2,927.88 crore ($399 million) worth of cashless insurance claims were outstanding for 1.12 million claims, according to the most recent data from IRDA (in the health and accident insurance category). For every 7.6 claims paid, one claim was pending, according to these same data.

A June 2020 PricewaterhouseCoopers report estimated an increase in the demand for health insurance in India because of the spread of COVID-19. But since the risk of the disease has yet to be factored into existing policies, reimbursement claims can be a burden on insurance companies, it said. There is scant information available about the infection, the cost of its treatment and patient profiles and this affects the accurate underwriting of the risk and price of premiums. This may lead to “risk of under- or overpricing their products”, said the report.

Healthcare insurance (27.3%) is the second largest non-life insurance sector in India, after motor insurance (36.6%), in 2019-20. The total value of health insurance premiums paid by Indian consumers in 2019-20 was Rs 51,637 crore ($7.03 billion), up 17% over 2018-19. The PricewaterhouseCoopers report pointed out that the health insurance industry pays out about 80% of its total premiums as claims but with the pandemic, there would be an increase in claims, which could “hurt” the insurance industry.

Petitions seek speedy reimbursements

These uncertainties affect patients who have bought, or want to buy, health insurance to protect themselves from high-priced COVID-19 treatment. Besides regulation by government agencies like the IRDAI, customers have approached various courts to seek regulation of COVID-19 treatment prices at private hospitals and complaining about non-reimbursement of claims by insurance companies.

In August 2020, a Supreme Court bench looking into a petition on this matter chastised insurance companies: “When there's a pandemic, insurance companies can't keep their hands off.”

“It is submitted that if such inflated billing by the private hospitals can become a cause of concern for the insurance industry, what will be the plight of a common man who neither has a fat wallet nor an insurance cover to reimburse, in case, he requires hospitalization in a private hospital (sic),” says this ongoing petition at the Supreme Court.

The petition pointed out that due to the lockdown-led economic downturn, many patients do not have ready cash to pay hospitals and thus need insurance companies to come through on cashless claims. It asked the court to direct insurance companies to settle all claims at government capped prices. The case is still ongoing in the Supreme Court.

(Bhuyan is a special correspondent at IndiaSpend.)

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Anoo Bhuyan

    Anoo Bhuyan reports on healthcare at IndiaSpend. She has also reported on issues of law and justice, technology and society and gender. Before IndiaSpend, she worked at The Wire, Outlook Magazine, BBC News and National Public Radio. In 2018, she won Bournemouth University’s ‘Journalist of Change’ award for her reporting on extra judicial killings in Manipur. She also received a scholarship for her postgraduate degree at the School of Oriental and African Studies, University of London. She can be reached on Twitter at www.twitter.com/AnooBhu.