Hospitals cold to 'preferred network' tag

The job is getting tougher for insurers and third party administrators (TPAs) to convince hospitals to be on their Preferred Provider Network (PPN) list. In a bid to lure more customers, both private and public health insurers are trying every trick in the book to get more such hospitals on board. According to insurers, the deliberations are going nowhere as hospitals seek higher rates than what is on offer.

“Hospitals are not agreeing to the rates offered by insurers. Public sector insurers are having a tough time convincing these hospitals,” said an official from a public sector insurance company. Currently, four public sector insurers – Oriental Insurance, United India Insurance, New India Assurance and National Insurance Company – are in talks with more than 50 big- and medium-sized hospitals for the PPN network.

Tertiary care hospitals like Breach Candy, Lilavati and Jaslok and secondary health care centres too are driving a hard bargain with insurance players. PSU insurers have the highest market share of around 80% in health insurance business.

The eagerness to go the whole hog to court hospitals is explained by the fact that cashless mediclaim can be availed only in PPN hospitals that insurers are tied up with. This is a significant criterion for customers while choosing their mediclaim providers as they get a better deal in terms of discounts, advanced treatment and diagnosis options. Under the reimbursement policy, customers need to furnish bills and other details of treatment to avail of the benefit.

Usually, insurers get into arrangements with many hospitals after negotiating terms and conditions with them. Of all these tie-ups, there’s a set of preferred network wherein insurance companies hold out better and attractive deals to customers. Service providers also negotiate with insurers and TPAs on the differential treatment rates and other hospitalisation networks.
This is how it mostly works. Insurers usually get into contracts on fixed outgo for specified ailments and ask hospitals for some volume discounts. But service providers are betting on differential rates taking into account various factors like location, number of years of experiences and so on.

Insurers feel their stand is justified because of “poor treatment facilities for insurance policy holders”. “From our past experiences, some hospitals are not treating insurance policy holders on par with other patients who do not have health insurance. We do not have proper mechanisms to check these kinds of wrong-doings by hospitals yet,” added the official.

Private insurers are slightly better-off in PPN tie-ups. According to them, the package rates offered by private players are somewhat acceptable to the hospitals. “At Bajaj Allianz, we so far don’t have any problems with preferred networks as we try to negotiate well with service providers in terms of rates,” said Suresh Sugathan, head, health administration team, Bajaj Allianz General.

Nayan Shah, MD, Paramount Health Services-TPA, sees constructive discussions as the way out. “Hospitals do not agree on rates and insurers blame them for those inflated bills. More discussions, rational rates and better understanding on services provided by hospitals can resolve the issue,” he said.