Professional Documents
Culture Documents
SUBMITTED BY:
ANURAG SINGH
ROLL NO. 06
XPGDM 2007-2008
INTERNATIONAL MANGEMENT INSTITUTE
AKNOWLEDGEMENTS
I would like to thank Prof. Abhijeet Roy, Faculty “B&I,” INTERNATIONAL MANAGEMENT
INSTITUTE, New Delhi, for giving me his invaluable guidance and blessings to complete
this project.
My sincere thanks to Mr. Ashvini Srivastava (CEO, Apollo HealthHiway), Ms. Megha
Malagatti, (Consultant Health Care Solutions - HealthHiway), Mr. A.V. Rajan (General
Manager- Insurance and Claims Solutions) for spending their valuable time and giving
me invaluable insights on Health Insurance IT and automation.
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TABLE OF CONTENTS
1. Introduction – Page 4.
5. Need for a national health data repository under the auspices of IRDA
– Page 19.
7. Proposed business model for data repository and costing – Page 23.
11. Present use of smart cards in India in health insurance – Page 31.
14. Gap analysis of manual resources for the TPA industry – Page 42.
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Introduction
According to Professor Abhijeet Roy for the Industry to really take of several enablers
have to be in place – a well accepted treatment protocol for different types of diseases,
a network of Hospitals/nursing homes who offer treatment at reasonable prices,
doctors who accept that both policyholders and insurance companies have their points
of view, reasonable premiums for the elderly, etc. However for all and some more a
data repository has to be built for which Third party administrators play a very
important role. The data is definitely out there with 10 million health insurance claims
set to hit the system (including RSBY) every year with a estimated CAGR of 30%.After a
brief explanation of Indian healthcare and health insurance the first part of this project
is an attempt to explain about such a data repository under the auspices of IRDA which
would benefit the whole country and the industry in particular. It is also a business
opportunity for private players who have the competence to manage such a repository.
The second part explains about the smart cards and their accompanying technology and
how they are being used in the Health insurance space especially by the Central govt. it
further enumerates a brief concept paper as to how smart cards could be used for
outpatient claims.
With the growth in claims the infrastructure of the industry participants will have to
bear a huge strain. The last section explores the domain of health claims automation
with a brief mention of two companies who are working in this space in India and the
benefits the present gains which are being made because of this automation. A gap
analysis for the TPA industry in terms of its human resources is also presented.
The subject of use of IT and automation in health insurance in India is vast and several
other subjects like use of IT and automation in the distribution and marketing of health
insurance, in predictive modeling for actuarial practice, micro insurance, policy
administration etc. could have been taken up but It was the decision of the author to
restrict himself to the above three topics due to the constraints of time and primary
sources. Perhaps they can be subject for a subsequent project.
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Health Care in India
Before we start any discussion on Health insurance in the Indian context it is essential
that a brief overview about healthcare in India be mentioned.
India has made notable achievements since independence in 1947 .The country’s
population has increased from 361 million in 1951 to 1.13 billion in 2007 (313.0 percent
increase), life expectancy has more than doubled (32 years to 68.6), infant mortality rate
has decreased 76.3 percent (146 per 1000 babies to 34.6) and crude death rate has
fallen 73.7 percent (25.2 per 1000 population to 6.6).
According to IRDA total healthcare expenditure in the private sector went from just over
2% of GDP in 1961 to close to 4% of GDP in the mid-1980s.It then dropped to below 2.55
% of GDP in the mid-1990s, only to rise sharply again to around 5.5% of GDP in
2003.Total healthcare spending (both public and private) in the country is well over 7%
of the total GDP, higher than many other developing countries..This is puzzling for two
reasons. Firstly such a high level of expenditure is not common among developing
countries in the region .According to World Development report in Malaysia; private
expenditure on health care is 1% of GDP, in Sri Lanka 1.8% of GDP and in China 1.9% of
GDP. All of these countries mentioned above have a far superior health outcome than
India (lower infant mortality, life expectancy, incidence of communicable disease).This
suggests that, despite high healthcare expenditure India is unable to improve the health
outcome of its citizens.
India faces considerable challenges .The country accounts for a larger share of the
world’s disease burden .That is, although India makes up 16.5 percent of the world’s
population ,it accounts for ‘a third of diarrheal diseases ,tuberculosis ,respiratory and
other infections ; a third of parasitic infestations ,and perinatal conditions ; a quarter of
maternal conditions ; a fifth of nutritional deficiencies ,diabetes and cardiovascular
diseases ; and the second largest number of HIV/AIDS cases in the world ‘- National
Commission on Macroeconomics and Health .
The level of Health care in India also varies substantially between rural and urban areas.
The supply of hospital beds, doctors and other facilities is often ten times as high in
urban areas as it is in rural areas.
Since the 1980s, the government has taken a more comprehensive approach to health
care. The 2002 National Health Policy focused on’ a decentralized public health system
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while seeking greater contributions by the central government .It championed equitable
access to healthcare ,much wider roles for the private sector and non governmental
organizations ,public participation in health care ,disease surveillance and the
strengthening of primary healthcare delivery’ -.Ministry of Health and Family welfare
“National Health Policy – 2002”.As a result of this policy the Government in recent years
is increasingly pursuing a strategy of Public Private Partnerships (PPP) to improve access
to complex ,life saving medical procedures for its poorer and more needy citizens and to
address challenges in creating and managing tertiary care hospitals .
In addition to the public system, a robust private sector led by some dynamic
entrepreneurs has emerged to address unmet healthcare needs of the country. In
recent years, corporate hospital groups such as Apollo Hospitals Group .Fortis
Healthcare, Manipal Hospitals, Max healthcare and Wockhardt Hospitals have become
centres of excellence, for example they primarily cater to an emerging middle class and
to medical tourists seeking affordable, high quality care without long waiting lines.
According to IBM Global services estimate India’s healthcare spending on care delivery
and drugs will increase from RS.111,233 crores (US $27 billion) in 2007 to Rs.502,281
crores (US$126 billion ) in 2015 .The growth will be driven by increased spending at both
private and public hospitals and by rising medical inflation . This is explained by the
following graphic.
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The following graphic explains the Average expenditure per hospitalization by
population category.
India also lacks widespread quality standards measurement and reporting .In response
private hospitals have begun to report their quality performance as a way of
differentiating themselves .Accreditation organizations such as the National
Accreditation Board for Hospitals and Healthcare providers (NABH) and the Joint
Commission International (JCI) – the international arm of the US based Joint
Commission on Accreditation of Healthcare Organizations - are also helping promote
widespread adoption of quality standards .Corporate Hospitals are largely pursuing
accreditation ,while government hospitals have slow to do this. These developments
have deep implications for the purview of our study.
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Drivers of Change in Indian Health Care.
1. Globalization – Due to the economic benefits that India has reaped because of
Globalization and thus higher incomes the affordability for better nutrition and
access to Healthcare will go up. Globalization also raises the societal
expectations and fuels demand for greater spending on societal services,
including healthcare.
2. Consumerism – With increased information flows and rising affluence
consumerism in health care in India is on the rise .The balance of power is subtly
shifting to the medical services buyer who are willing and able to promote and
defend their interests. A growing awareness of risks and adverse events is also
driving consumerism in healthcare. The mass media is playing an increasingly
prominent role in public education about these things as chronic conditions.
Consumers will certainly become less willing to accept negative outcomes as
inevitable or as the luck of the draw.
3. Demographic shifts – With increased urbanization Corporate hospitals,
diagnostic centres and other private providers are emerging to address the
increasing demand .Apollo hospitals has an ambitious plan of providing 150 –
200 bed hospitals in tier 2 and 3 cities of India under the brand name of Apollo
Reach.
An ageing population will further drive healthcare demand and costs .In 2015,
75.3 million (5.8 percent of total) Indians will be 65 years or older. - IBM Global
Institute report.
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Inhibitors of change in Healthcare in India.
1. Financial Constraints – This is one of the chief inhibitors of change, even with
increased government spending in the current plan ‘inclusive growth’ cannot be
achieved without the increased role of the private sector both the medical
services providers and insurers .The costs have to be brought down so that
medical services are within reach of the masses or how to create the means for
the masses to pay for these.
2. Lack of Aligned incentives – How can collaboration be encouraged among
providers, payers, suppliers and patients when each has divergent forms of
healthcare incentives.
3. Access to Information - Non digital and digital healthcare data is being
generated at unprecedented rates .The present 29 TPA s (Third party
administrators) in India are generating humungous amounts of data on a
monthly basis. Infrastructure , common standards , processes are keys issues to
get the right information in the right form to the right person at the right time
The challenge revolves standards based systems interoperability and the
reengineering of processes that are inefficient and/or counterproductive.
The newer entrepreneurs investing in the healthcare sector and also with
corporatization of the sector, providers are keen on investing in the IT sector for
increased efficiencies and better bottom lines. The budgets for IT infrastructure in the
healthcare sector by an individual player are estimated in the range of Rupees 10 Lakhs
to 50 Thousand, with majority of them looking at investing in the Rs 5 Lakh bracket. A
significant amount of the spend is targeted towards the hospital operations, especially
in the Accounts department. The other departments which are mostly likely to be
connected to network in many of the hospitals are admin, laboratory and pharmacy are
departments, all leading to a more efficient structure. Most of the hospitals use in-
house developed software packages for Revenue Mgmt Cost mgmt, Performance mgmt
and Patient Care software for major hospital mgmt functions, however, the overall cost
and effort involved in adoption of IT are key deterrents for actual and early
implementation of the IT projects in this sector. As a result many of them opt for small
modules from various vendors that are difficult to integrate with each other. Hospitals
rely on support by the vendor who provides the application, followed by Inhouse IT
Team and third party AMC in some of the hospitals.
Major opportunities exist in the market for IT players related to the use of Hospital
Information Systems (HIS), Smart card technology for Patient Relationship
Management (PRM) and Claims automation.
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Overview of Health Insurance in India
India’s health insurance market has experienced significant regulatory and institutional
changes since the insurance industry was opened up to private sector participation in
1999.Two pertinent passages of the act are
Prior to the passage of the 1999 IRDA Act, all insurance was sold in India through
government-owned insurance companies. While private insurance has grown,
government companies still write the great majority of business, particularly for the
individual market. The health insurance market share of government owned insurers
declined from 98 per cent in 2001-02 to 76 percent in 2005-06. Conversely, the health
insurance market share of private non-life insurers increased twelve fold from two per
cent to 24 per cent during the same period.
This gives an opportunity to more domestic and foreign players to enter the market and
innovate increase competition and bring out new products .There is a huge untapped
potential in the Indian market .A range of products have been launched to cater to new
segments . Customers in India broadly fit into 3 distinct segments: Up-market or
modern, traditional, and rural and un-/semi-educated. These segments present an
opportunity for insurers that can tailor their approach. Insurers are investing heavily in
additional networks—from banking to telemarketing, the Internet, and direct sales—in
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order to reach underserved segments, and potentially reduce costs. Still a lot needs to
be done as according to IRDA out of pocket expenses for Health Care are over 75% of
total health care spending. Virtually all health insurance products in the Indian insurance
market are designed to meet the hospitalization expenses of the policyholder. This has
not changed significantly since the introduction of health insurance in 1986. Health
insurance policies do not cover dental services, vision services, preventive care, home
health services or long-term care and, rarely, out-patient services. In many cases policies
exclude certain kinds of care, even if a hospitalization occurs.
According to IRDA the Health insurance market size currently stands at about INR 5,152
crores in FY 2008, up from INR 761 crores in FY 2002, showing a compounded annual
growth rate of 37 percent. In addition to basic hospitalization, the health insurance
market has witnessed the introduction of hospital cash (cash payments to the individual
if they are hospitalized) and critical illness products, which cover a list of designated
diseases.
Despite the impressive growth of health insurance, it remains a small percentage of the
overall insurance business of non-life insurers and an insignificant proportion of the life
insurers. The following figure depicts the relative growth of health insurance among
non-life insurance companies.
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The following figure depicts penetration of private health insurance in the country.
Although the number of persons covered has grown from 0.69 million in 1991-92 to 3.5
million in 1998-99 and around 17 million in 2005-06, it is still a very small percentage of
the population, only 1.56 per cent in 2005-06.
Looking at these growth rates and penetration the industry has barely scrapped the
surface in terms of its potential.
Let us now look over certain products in the present Health Insurance Market.
Mediclaim
Mediclaim was introduced by Central govt. owned non life insurance companies in
1986.It basically reimburse for Hospitalization claims. Privately owned companies have
also adopted it. Since its inception it has undergone changes in both premium charges
and benefit design and has remained focused (with the exceptions mentioned above) on
coverage for hospitalization. In its present form, Mediclaim covers expenses incurred by
a policyholder during hospitalization and/or domiciliary hospitalization due to illness,
diseases or injury. It is available to persons between the ages of 5 and 80 years
(maximum age of coverage can be increased to 85 years if the policy has been renewed
without any break in coverage). Children between the age of 3 months and 5 years of
age can be covered if one of the parents is also covered. The benefit limit varies from Rs
15,000 to Rs 500,000 per annum, while the premium reflects a calculation based upon
the benefit amount and the age of the person. These policies can be written for groups
or individuals and can cover individuals or families under a single benefit amount (often
called “a family floater”). Mediclaim requires new enrollees above 45 years of age to
undergo a pre-acceptance medical checkup and has stringent pre-existing
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condition/disease exclusions. It excludes expenses on hospitalization for certain
diseases during the first year.
It excludes expenses on hospitalization for certain diseases during the first year. To
encourage health insurance, the government has allowed a deduction from taxable
income for premiums up to Rs 15,000and for senior citizens up to Rs 20,000. After the
introduction of Third Party Administrators (TPAs) in 2002, the policy was changed to a
“cashless hospitalization benefit” with payments made directly to providers. (TPAs are
discussed at length later). Prior to the coming of TPA’s it was the responsibility of
patients claiming reimbursement to submit bills directly to their insurer for payment.
Cashless hospitalization allowed the TPA to prospectively guarantee payment to the
hospital and thus remove the burden of filing claims from the patient.
Critical illness (CI) policies were the second type of product offered in India. Originally,
these policies were sold exclusively by life insurance companies as riders to their basic
products. Recently, non-life companies have started marketing them as a separate
product. As indicated above, today they are not as popular as the Mediclaim products
and cover only specified illnesses of a potentially catastrophic nature, such as heart
attacks, cancer, brain tumors, etc. Recently, recognizing the need for and hence market
opportunity in health insurance, life insurers like Tata AIG and ICICI Prudential have
introduced stand-alone health and critical illness products.
Some insurers have recently introduced what are called Hospital Cash Policies. These
policies, which are in fact supplemental income insurance, provide for a daily allowance
during the days of hospitalization. Their purpose is to help policyholders to meet-out-of
pocket expenses that are not covered under a hospitalization policy. To date they have
not been popular with the general public since the per day amounts that they pay are
very small.
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Role of Govt. of India in Health Insurance
Total public expenditure is increasing and the emphasis on public health and disease
prevention in the central budget is improving. Although hospitalization coverage is the
basis for almost all health insurance, according to the most recent census only 1.7
percent of admissions were reimbursed and the average reimbursement was only 258
rupees (or 3.6 percent of the average hospitalization cost of 6,225 rupees).
In recent years though the Central government has taken multiple initiatives in health
insurance, as in 2004 it launched the Universal Health Insurance (UHI) scheme, which
was aimed at the people below the poverty line. In the State Government front the
Employee State Insurance Scheme (ESIS) is a health insurance program for non-
seasonal power-using factories employing 10 or more persons and non-power using
factories employing 20 or more persons. Employees must make under Rs 10,000 per
month to participate in the scheme. In 2006, there were nearly 355 lakh beneficiaries.
Recently the Central Government has launched the Rashtriya Swasthya Bima Yojana
(RSBY) .It was formally launched on October 1 2007. The objective of RSBY is to provide
the insurance cover to below poverty line (BPL) households from major health shocks
that involve hospitalization.
Under the Scheme, total sum insured would be Rs. 30,000/- per family, per annum, on a
family floater basis. It would operate through cashless transactions and would cover
hospitalization expenses, taking care of most of the illnesses with as least exclusions as
possible. An initial allocation of Rs.250 crore has been made in the budget 2008-09. The
Centre would contribute 75% of the annual premium whereas the States would be
contributing the remaining 25%.(The innovative use of smart cards in this scheme is
discussed in the section related to use of smart cards in health insurance).
The Central Government Health Scheme (CGHS) is a mandatory social health insurance
scheme for employees and retirees of the central government. Coverage includes: OPD,
emergency, drugs, lab tests, family welfare services, specialist visits, and a 90% advance
for specialized procedures. In 2004, CGHS covered approximately 44 lakh people, or
0.5% of the population and according to the Ministry of Health and Family Welfare
annual report, 11.44% of the total health budget (MOHFW) was spent on CGHS in 2004-
2005. The total cost of CGHS has fluctuated in the past six years, as has the percentage
of health expenditure on CGHS. At its peak in 2003-2004, CGHS was 18% of the total
health budget. This is in part due to CGHS allowing beneficiaries to purchase drugs at
pharmacy shops and introducing contracting with private hospitals for providing
healthcare to CGHS beneficiaries. However, in recent years, the expenditure on CGHS
has come down dramatically.
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Key participants in the Health Insurance industry
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As of February 2009 there were 29 TPA s in operation though the top 3 have over 50%
of the market. Interestingly as Insurers have started analyzing their claims experience
some of them have realized that they have realized that by using a TPA for admission
and settlement of claims they have infact outsourced their most important activity. As a
result some insurance companies have either established their own (Bajaj Allianz
General Insurance) or are intending to establish their own in house claims operation.
Further, reinsurers like Munich Re and Swiss Re have taken stakes in Paramount
Healthcare and TTK Healthcare respectively, whilst Reliance General Insurance Has
acquired a majority stake in MediAssist.
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The following figure shows the Market Share of the TPA s for the financial year 2007.
TPA s generally have inhouse expertise of medical doctors, hospital managers and
medical consultants. The backbone of TPAs is information management system.
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Analysis of data regarding hospital admissions across the network (this also helps in
identifying health need and effective treatment protocols), analysis of treatment,
tracking documents pertained to each case, and tracking shortfalls in claims are
essentials of claim management.
The future influence of TPA s would be largely determined by their activities, the way
they organize their services and revenue generation model .In present form they earn
their major revenue from fees charged as a commission on insurance premium. TPA s
generally operate at a fixed rate varying regionally from 5.2% or 5.4% by public insurers
and from 7 % to 10% by private insurers.
There are various challenges that the industry faces .These include gaps in data to
determine prices of products and ability to negotiate payment rates with providers, a
regulatory framework that does not recognize the unique features of health insurance
products, lack of quality assurance measures for health providers and lack of consumer
awareness about the benefits of health insurance.
A TPA has to be passive in its approach to business – it depends upon the insurance
company for the business; not the policyholders. A TPA can act on behalf of more than
one insurance company; similarly one insurance company can appoint more than one
TPA .This appears to be good for competition –however it does introduce problems
associated with the basic business model of the TPA.
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A. Need for a National Health Data Repository under the Auspices of IRDA.
Health insurance rates were never and in fact were heavily discounted to counter the
high fixed prices of other types of insurance. For this reason health insurance rates are
expected to rise significantly with de-tariffing. This in turn will force insurers to
increase their health insurance and actuarial skill levels as they will no longer be able to
afford large subsidies for health policies.
With de-tariffing, the importance of data collection and data analysis for Health
insurance has increased significantly. There is now a clear need for more effective
utilization of data analysis in the new competitive regime of pricing where cross subsidy
across business lines is less feasible. Proper data analysis is also necessitated by new
regulations of IRDA such as IBNR (Incurred but not Reported) estimation and Product
Filing Requirements. It is also important to create industry-wide benchmarks to enable
an insurer to compare its own performance and rates with industry standards.
Furthermore it is suggested by the author that there should be a National Health Data
Repository run by IRDA for the benefit of all stakeholders in the Health insurance sector
be it the TPA s, Insurance Companies, Medical Services providers ,Central and State
Govt. and the General public.
For this the TPA have an extremely important role to play .According to Professor
Abhijeet Roy ‘The real issue is the relationship between premiums, profile of policy
holders, and various elements of cost; e.g. differentiating between high cost metros and
smaller towns in terms of premiums’
The benefits of such an exercise are immense and are listed as follows.
3. Work with the finance function to evaluate the company’s liabilities for financial
reporting.
4. Work with marketing / sales and underwriting to establish proper pricing for all
products.
5. Assist the provider contracting function in establishing fair yet competitive fees to
pay providers and begin to understand practice pattern differences among
providers.
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6. Support the marketing and sales functions by assisting in the development of rates
for new products.
14. Exploring the option products and features like MSA (Medical Saving Account),
deductibles, co-payment, coinsurance etc. which may not be credible when
developed at the individual insurer level.
15. Pooled data can also be utilized to develop richer rating manuals. These help
insurers to establish and maintain rating.
16. Approaches for initial (new business) and renewal (continuing business) rating.
When reliable and credible experience data applicable to the group or block of
business is available, an actuary is likely to conclude that such experience data is an
appropriate basis from which to develop premium rates.
A foundation of high quality and complete data is the basis of all lines of insurance
business. No individual company can have data as rich as the industry’s collective data
sets, so mechanisms of data pooling and sharing can benefit all participants. The ideal
way to facilitate pooling is to build a data repository to which all participants can have
access. It will be a benchmarking platform that provides access to blinded data from all
other insurers. The data warehouse can be run as a service to the individual insurers
thus reducing the cost of data warehousing for each insurer. With minor safeguards it is
very easy to ensure that the data warehouse does not provide access to any confidential
information.
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Prerequisites for Proper Implementation
A data repository is very different from data which is merely stored in a database. A
data repository solution has in-built intelligence. The business logic integrated into a
data repository reflects decades of industry experience. Generally a data repository has
multiple features and clearly defined operational stages. A data repository receives data
files in prespecified format that are then processed for integration into the data
warehouse. The processing includes attribute analysis, completeness, uniqueness and
business rule compliance test on the data. Then the data is profiled and the extraction
transformation and loading (ETL) routines are executed on the data. The data
warehouse engines process the data and insert it into the base repository.
Subsequently data marts are created that are subject area specific. The data
warehouse/repository decision support system and executive information system uses
the data marts and online analytic process (OLAP) cubes to generate structured reports.
In addition, it has features that enable the user to drill into the data. Data repository’s
are designed for the end user, most of the CXO level reports are available through a
dashboard and detailed intelligence can be accessed by a few simple clicks of the
computer mouse.
In the first industry wide initiative of its type, IRDA requested submission of health and
motor insurance data in a common format in early 2006. For the Health data, each TPA
extracted data from their system and submitted it on behalf of the insurers they
support.
According to the data variables provided by IRDA the data is segmented into 3 data
tables for each TPA which is as follows Table A - Policy Data, Table B - Members Details
and Table C - Claims Data.
The main data elements in Table A, from an analytical perspective are: TPA Code,
Insurer Code, Underwriting Office Code, Policy Number, and Start date, End date,
Product Type, Type of Cover, Group Size, Policy premium, Ref Type, City and Product
Name.
The main data elements in Table C, from an analytical perspective are: TPA code, Insurer
Code, Member ref key, Claim number, Diagnosis description, Diagnosis code, Procedure
description, Name of Hospital, Date of Admission, Date of Discharge, Total Amount
Claimed, Room & Nursing Charges, Surgery Charges, Consultation Charges, Investigation
Charges, Medicine Charges, Miscellaneous Charges, Total Claim Paid, Policy Number,
Date of Intimation to TPA, Hospital under network or not and Check date.
If the data from all insurers / TPAs is to be of value then consistency across TPAs is of
utmost importance. This would help to ensure a uniform analytic model is applicable
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and results are more useful. This would involve, having key fields mapped and linked
similarly across all TPA data.
The robustness, efficacy and validity of the data and take maximum benefit for our
proposed data repository can be gauged through a three stage process.
Stage One – Creating a uniform and clean data source: An aggregated insurer / TPA
data analysis can only be initiated after undertaking a rigorous review of the data. After,
the review the data is consolidated into a single data source which combines multiple
TPAs data. This stage is concluded by performing a comprehensive reasonability check
of the aggregate data. After consolidation of data, the next step is to conduct
reasonability checks to understand the quality of data.
For further data enhancement it would typically include, but would not be limited to,
data cleaning, re-categorization, sorting, grouping, and calculating new variables by
utilizing existing variables and reformatting. The following reasonability checks can be
taken.
Negative Policy Period; i.e. End Date before the Start Date.
Length of Stay is less than Zero; i.e. Date of Admission after the Date of
Discharge.
Date of Admission before the Policy Start Date.
Date of Admission after the Policy End Date.
Claims Paid Amount less than or equal to Claims Incurred Amount.
Missing Policy Data against Incurred Claims
Inconsistency in Age of Insured
Policy Premium less than Zero.
Stage Two – Creating a single data source with Member information and Claims data:
After cleaning and standardizing the data, Table A (Policy Data) should be combined
with Table B (Members’ Details) to produce Master Exposure table. Data reasonability
checks should be conducted thereafter on the Master Exposure table. Table C (Claims
Data) should be updated with Master Exposure table to update Member Policy details
to produce Master Claim’s table. Subsequently, reasonability checks should be
performed on the Master Claims table.
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Stage Three – Using the data source for Performance Analysis, Financial Reporting,
Premium Rating and Provider Analysis: In stage three, the data is used to conduct the
analyses to assess the performance of the particular product / company. Some of the
same results, but not all, can be achieved using industry standard databases and
querying tools.
Data Completeness: To ensure that the data is complete and accurate validation
features need to be introduced into the TPAs front end business application. The
validations should cover most of the mandatory fields and as many of the non-
mandatory fields as possible. An example of the fields that would benefit from
validations are all the date fields including date of birth, policy start date, policy end
date, admission date and discharge date. These validations would include such checks as
(1) policy start date has to be after date of birth, (2) the end date has to be after start
date, (3) the admission date has to be between start and end date and (4) the discharge
date has to be after admission date. Although this all sounds logical and simple, many
errors are made while entering dates. Records with discharge date before policy start
date and admission date after discharge date are frequently noticed, mostly due to data
entry errors. It is important to ensure that validations do not overwhelm the data entry
task. Validations which are too comprehensive and which prevent the data entry incase
all the fields are not filled can undermine the purpose of validations since the data entry
professional filling in invalid / inaccurate data just to progress.
Data Standardization: To ensure that the data is consistent across a spectrum of data
sources, a data field standardization document should be developed and adopted by all
insurers and their TPAs. In addition to validations, the data must be submitted in a
standardized format, especially for all mandatory fields. This is best accomplished by
standard drop downs which can be selected by the data entry professionals.
Once the rationale is in place the need for a business model to self fund the Data
repository implementation, operations and long term evolution is clear. There are
currently several common business models for a National level data centre, all of which
will continue to evolve .For our purposes we broadly outline three models.
Since we are analyzing opportunities for IT in Health insurance for our purposes we will
rule out option 1; as it is IRDA may not find running a Data Repository its core activity.
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The lack of industry wide initiative so far rules out the second for the present .We will
under purview of this study concentrate on the third option.
It has often been indicated by existing industry leaders that they oppose pooling as it
will benefit newer players more than it may benefit them. This competitive concern is
legitimate and needs to be addressed. Data pooling has to be driven by a visible and
tangible principle of “Benefit for contributors” (BFC). Contributors who pool data have
to be rewarded by access to a significant amount of analytical output that must have
tangible business use.
The ideal business model (option 3) would involve IRDA as the lead agency
sponsoring/Licensing the incubation, a vendor who is willing to build / operate /
transfer and an industry that has the foresight to support the initiative and comply with
data delivery guidelines in return for actionable intelligence. The vendor must present a
model to IRDA based on capacity building for long term management and sustainability.
IRDA should be able to recover costs incurred in providing this service thus making it a
viable and sustainable service. The cost recovery would be in the form of fees for
providing a managed data warehousing services to individual insurers. Availing of a
service would enable the insurers to save money as they would not need to invest in
hardware, software or manpower. They would just pay a quarterly or annual service
charge. Since the data warehouse would be a consolidation point of each insurer’s data
they would desire to have access to their own consolidated data, analytical reports, and
benchmark comparisons as well as access to features that enable them to drill into the
data. This will assist health insurers in developing provider contracts, rating manuals,
underwriting guidelines and service level benchmarks. Access can be rights based and
provided by a web interface.
Since the data warehouse would also enable IRDA to perform its regulatory duties more
efficiently, it should also be an internal client to the data warehousing initiative. The
vendor can be given an incentive to develop a sustainable business model. This
incentive could include a share of the revenue that IRDA is able to generate from the
rendered services, for a limited period. The vendor must enhance capacity and
capability of the data warehouse as the industry grows. The vendor may demand an
initial amount as a set up fee or a guaranteed revenue sharing model. Since large
amounts of data will require more hardware, system capabilities and staff (analytical &
Maintenance), since IRDA might not want to invest in a system which caters to
unpredictable future demands. Therefore it might be desirable to develop a fee model
with a vendor which links subsequent payments to the number of covered lives for
which data is warehoused.
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The following would be a likely logical view of a data centre
The following table shows the costing for a 60 server (initially 2 servers per TPA @29
TPAs along with buffer) data warehouse which has been outsourced to a third party.
Annual Recurring
S.no. Item Description Charges in INR
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B. Role of Smart Cards in Health Insurance and Opportunities.
· Intelligence for exploiting this increased data. The smart card participates directly in
controlling transactions; i.e. it is active not passive like the magnetic card
· It cannot be reproduced, nor can its code be broken. After three wrong codes have
been tried, the chip blocks any further usage of the card, which is therefore more
secure than a magnetic card
· It stores formula within its permanent (read-only) memory which enables it to
verify the authenticity of the secret code typed in by the customer
· It registers and memorizes the number and frequency of all transactions effected.
Over a billion smart cards are already in use. Currently, Europe is the region where they
are most used. Compaq and Hewlett-Packard are reportedly working on keyboards that
include smart card slots that can be read like bank credit cards.
A smart card contains more information than a magnetic stripe card and it can be
programmed for different applications. Some cards can contain programming and data
to support multiple applications and some can be updated to add new applications after
they are issued. Smart cards can be designed to be inserted into a slot and read by a
special reader or to be read at a distance, such as at a toll booth. Cards can be
disposable (as at a trade-show) or reloadable (for most applications). An industry
standard interface between programming and PC hardware in a smart card has been
defined by the PC/SC Working Group, representing Microsoft, IBM, Bull, Schlumberger,
and other interested companies. Another standard is called OpenCard. There are two
leading smart card operating systems: Java Card and MULTOS. To access the information
stored in the smart card we require a Smart Card Reader. Smart card readers are the
necessary interface between smart cards and information systems. They can be
connected to PCs via serial or USB ports, integrated into computer keyboards, and now
they can be integrated into laptops. Portable readers can be used when a patient's
smart card needs to be accessed outside of the health care facility (ambulances, home
nurses etc.).
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Types of Smart Cards.
Before implementing the Smart Card, it is necessary to understand the significance and
potentiality of Smart Cards and also necessary to put the technology into contest. There
are different technologies available for the purpose. There are various types of smart
cards in the market .Some notable examples are.
Memory Card
The memory Card is more advanced which has a microchip or integrated circuit with
fixed memory functions, but no processing power. Memory Cards are less expensive and
much less functional than Micro Processor Card. They contain EEPROM and ROM, as
well as some address and security logic. Typical Memory Card Applications are pre-paid
telephone cards and health insurance cards.
Microprocessor Card
Microprocessor Card is the most secure type card. It has a built-in Operating System in
its microprocessor. The Central Processing Unit (CPU) uses RAM as its working memory
and the data is stored in EEPROM, which size in modern cards varies from 1 KB to 1 MB
and constitutes a dominating factor specifying the card capabilities. It has the capability
to perform independent calculations and therefore it can store several applications. The
card can be used in various areas, e.g. banking payment systems, Motor Insurance,
Health Insurance, transportation systems, etc.
Technically, these cards are in the category of microprocessor card. They are different
from other type card because of the functionality. A cryptographic coprocessor is a
hardware module, which includes a processor and the same is used for encryption and
related processing. These cards are programmed with various security features to
prevent unauthorized retrieval of data.
Contact smart card is embedded with a single integrated circuit chip that contains just
memory or memory plus a microprocessor. The microprocessor is less expensive and
they offer less security. The microprocessor contains an "intelligent" controller used to
securely add, delete, change, and update information contained in memory. This type of
card is used in a wide variety of applications including network security, vending, meal
plans, loyalty, electronic cash, government IDs, campus IDs, e-commerce, health cards,
and many more.
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Contactless Smart Card
Unlike Contact Smart Card, contactless smart cards contain an embedded antenna
attached to the chip for reading and writing information contained in the chip's
memory. They need only be passed within range of a radio frequency acceptor to read
and store information in the chip. The range of operation varies from 2.5" to 3.9"
(63.5mm to 99.06mm) depending on the acceptor. This type of card is in a wide variety
of application like Student identification, electronic passport, vending, parking, tolls, etc.
Proximity Cards
Like Contactless Card, Proximity cards communicate through an antenna. They have a
greater range of operation. The range of operation for proximity cards varies from 2.5"
to 20" (63.5mm to 508mm) depending on the reader. A small amount of information
can be read with proximity cards such as an identification code that is usually verified by
a remote computer; but the disadvantage is that the information cannot be written
back. These cards are used where fast, hands-free operation is preferred.
Hybrid Cards
Hybrid card is the combination of two or more embedded chip technologies such as a
contactless smart chip with its antenna, a contact smart chip with its contact pads,
and/or a proximity chip with its antenna -- all in a single card. The contactless chip is
used for fast transaction times and/or mass transit application. The contact chip can be
used for higher levels of security applications. The individual electronic components are
not connected to each other even though they share space in a single card.
Combi Cards
The combi card has one smart chip embedded in the card that can be accessed through
either contact pads or an embedded antenna. This card provides ease-of-use and high
security in a single card product. These types of cards can be applied in the areas of
mass transit application.
These cards can store many megabytes of data, but the disadvantage with these type
cards is that it can only be written once and never erased with today’s technology. The
devices used for reading and writing are very expensive but these can be used very well
in the applications areas like health care where large amounts of data must be stored.
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Java Card
JavaCard is a smart card that is capable of running Java byte codes so that cards become
more powerful and the same card will be able to run some of the applications as a user
run on his/her personal computer. Java Card was introduced by Schlumberger and
submitted as a standard by JavaSoft recently. Schlumberger has the only Java card on
the market currently and the company is the first JavaCard licensee. As a smart card
with the potential to set the overall smart card standard, JavaCard is comprised of
standard classes and APIs that let Java applets run directly on a standard ISO 7816
compliant card. JavaCards enable secure and chip independent execution of different
applications.
ISO 7816 Integrated Circuit Cards with Electrical Contacts. The International Standards
Organization (ISO) facilitates the creation of voluntary standards through a consensus-
building process that is open to interested participants. ISO 7816 is the international
standard for integrated-circuit cards (commonly known as smart cards) that use
electrical contacts. Anyone interested in obtaining a technical understanding of smart
cards needs to become familiar with what ISO 7816 does NOT cover as well as what it
does.
The smart card technology can be widely used in the area of Healthcare. It is a
convenience to the patient as well as to the doctor and also reduces lot of paper work.
This technology enables the patient to carry all medical history on a card and also a
doctor can store information with a smart card of his or her own. This technology adds
great efficiency without compromising on the individual confidentiality.
Smart card technology plays a very important role in achieving HIPAA (Health Insurance
Portability and Accountability Act of 1996) Compliance. This act encourages the
conversion of paper-based health care information systems to electronic systems and
also mandates to guarantee the privacy and security of patient information gathered as
part of providing health care. As discussed above, smart cards can store health
information on the card with all security features so that information in the smart card
can be accessed by the patient and medical practitioner.
To date, most payments that flow among industry participants – hospitals, insurers,
employers, and consumers are paper based. While consumers’ use of smart cards has
grown rapidly in many other areas, their use in making health-care payments has been
far more limited. Out-of-pocket consumer-directed health-care spending remains largely
paper-based.
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The consumer payment card industry has been built around a far simpler and more
straightforward business model: the purchase of goods from retail merchants. In the
retail merchant environment, price is readily established, and once a purchase is made
the transaction is generally completed. Payments for health-care services are far more
complex, with the price often not available at the point-of-sale and subject to different
deductibles or co-payment structures.
Transactions are often linked over time as part of an ongoing treatment, and payments
are subject to complicated adjudication rules. These and other complicating factors
create real challenges to innovators attempting to apply basic retail smart card
technology to this far more complex industry.
Despite these constraints smart card technology is being used in number of foreign
countries in the domain of health care as the following graphic shows.
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Present Use of Smart Cards in Indian Health Insurance
Smart Cards are central to RSBY, as it would enable cashless transaction as well as inter-
operatibility in network hospitals throughout the country. It would also enable foolproof
biometric identification of the beneficiary.
The smart cards will be issued by the smart card service provider on behalf of the
Insurance Company to the beneficiary. However, ownership of the card will remain with
the Central Government for its use in subsequent years and for other purposes. The
card is to be personalized on the spot and delivered there itself. The cost, if any, would
be borne by the insurance company as a part of the overall bill.
The smart card cannot be issued in the absence of head of the family as his photograph
has to appear on the face of the card. However, it can be issued in the absence of other
members, provided the head of the family is present. Their details can be added
subsequently at the district kiosk, to be maintained by the insurance companies.
In view of the possible migration of BPL workers, there is a facility of split card under the
scheme. These cards can be split at the time of first issue or subsequently at the district
kiosk. Split value can be decided by the head of the family, provided the total amount on
both the cards is equivalent to the total amount available on the primary card before
the split. The insurance company will authorize issue of these cards .A new card can be
issued in case of loss of smart card. However, the beneficiary will have to bear the cost
of duplicate card. As the details of the family would be available in the database, the
card could be issued at the district kiosk.
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based on the specifications, is to be prepared by the service provider for use in the
hospitals.
A back-end data base management is to be put in place for transmission from hospitals
to a designated server and for electronic settlement of claims to make the scheme not
only cashless but also paperless. An elaborate MIS is being developed for close
supervision and monitoring at various levels.
With a view to imparting security to the entire process of issuing and use of smart card,
an elaborate key management system (KMS) has been evolved by the National
informatics Centre (NIC). A Central Key Generation Authority (CKGA) has been set up for
creating root keys and to manage the entire key management system at the Central
level. The district keys will also be generated by CKGA. Thereafter, the keys for field key
officers (FKOs) will be generated at the district level. The district keys will be transferred
by the CKGA to the district key managers. An elaborate training schedule has been
worked out for the field key officers. On the occasion of district level workshop, the FKO
cards would be issued to them, using the DKMA software developed by NIC.
In all 60 million cards will be issued under RSBY during the next five years. This will be
the biggest ever exercise involving IT applications for BPL families in India or anywhere
else in the world. So far, IT applications had been used primarily in the urban areas. The
smart card is now traveling to rural areas on such a large scale.
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Ex Servicemen Central Health Scheme (ECHS)
Another first to the credit of this project is the use of national Smart Card Operating
System Standard (SCOSTA) specified by NIC, Government of India. Although the
standard has been defined for quite some time now, it could not be adopted for
implementation of any project. ECHS smart card project adopted the SCOSTA standard
from the pre tendering state itself. The use of this open standard would ensure
interoperability, compliance of International Security and Quality standards, and more
importantly vendor independence
ICICI Lombard General Insurance Company has launched family biometric cards to its
group health insurance policyholders. The card will enable policyholders to get hospital
treatment without making any advance cash payment.
Biometric cards authorize transactions based on the customers' fingerprints. The family
card covers the head of the family and three other dependants. The card contains a
smart chip, which carries biometric information, personal details as well as the
photograph of the policyholder and dependants.
The card also loads the sum insured that the policyholder is entitled to. So, when the
customer presents the card at the hospital, the balance in the card can be immediately
ascertained. Both dual magstripe cards and 32k chip smart cards are being used .The
cost per smart card comes out to Rs.100/-
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ICICI Lombard has tied up with neighborhood hospitals so that hand-held machines that
read these cards can be installed. One constraint due hand held point of sale machines
is that all software changes to these machines still have to be done manually, employing
low cost IT maintenance personnel it takes 2 to 3 months for all the changes to be done.
The primary objectives of this initiative are to reduce administrative hassles for the
customer and eventually drive down distribution costs.
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Outpatient Claims Concept Using Smart Cards
The next big untapped opportunity is the growth in Outpatient (OP) health insurance
claims in India and the use of smart cards thereof.
The proposed concept aims to allow for seamless transfer of data between the clinics
and Payors with respect to outpatient insurance claims. This can be arrived at by
bridging the gap on a common IT platform. As the current scenario has mostly claims on
Inpatient billing alone, there will be a mechanism working in parallel to accommodate
outpatient claims submission and approvals between Clinics/Hospitals and Payors which
will be hassle free and at a minimum investment. The mechanism will function on the
basis of a credit card concept with the use of smart cards. See below basic workflow and
diagram.
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Process:
Benefits:
1. More business opportunities for all parties as it is a value added service they can
offer.
2. The patient would have a hassle-free outpatient insurance claim.
3. The quality of service at an outpatient center will be enhanced resulting in
patient satisfaction.
4. Paper work and manual effort will be eliminated as all the transactions work
electronically.
Challenges:
1. The TPA and the clinic/hospital would have to be connected real time.
2. Hesitation to adopt an outpatient claims settlement considering the existing load
of inpatient claims.
3. Buy in from banks will become very essential.
4. Till a law comes into force the clinic/hospital, the TPA/insurance company and
policyholder will have to get into agreement for the authenticity of the
information recorded on the smart card.
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C.Claims process automation and Opportunities
There are notably two companies working in this field of claims automation which
provide an interface between the patient ,the TPA/Health Insurance Company both of
them being based out of bangalore ; 1. Health Sprint networks pvt. Ltd. 2. Health
Hiway Pvt. Ltd.
Its e-health services for rural areas will be launched in Gujarat and Andhra Pradesh by
connecting rural hospitals to those in metropolitan cities and rural customers with
microinsurance companies.
HealthSprint also has a tie-up with Yos Technologies to collaborate for creation and
maintenance of personal health records. The company's health insurance information
exchange platform is for patients whose hospitalisation expenses are settled directly by
the insurance company. Its corporate healthcare platform allows firms to manage pre-
employment and annual health checkups for employees online.
For pre-policy health checkups, insurance companies can schedule appointments online
for potential customers with networked labs and secure reports for underwriting
policies speedily. "These platforms are communication oriented and designed to enable
transparency, speed, traceability and accountability across healthcare players.
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Health Hiway Private Ltd.
In April 2007, IBM and Apollo Hospitals Group announced a joint go-to-market initiative
to build a National Health Data Network called “Health Hiway” to provide a diverse set
of software applications for the healthcare segment.
According to the company website –‘Claims Xchange is an advanced online platform for
Hospitals and TPAs to manage their customer’s claims processes online though an
integrated system. Claims Xchange does away with the time-consuming process of
faxing papers, couriering medical reports, claim papers etc. of the user between the
Health Service Provider and the TPA. Overall use of the application saves a lot of time as
TPA’s response time is relatively low when compared with manual processes
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Enhancement – Further enhancement of the claims amount once preauthorization is
taken.
• Incomplete information
• Fax transmission errors and fax transmission losses-visual artifacts
• No alert mechanism & status of patient request
• High Turnaround time
• No mapped flow of information
• Identity validation – transmission losses
• Current process – D/S and bills are sent to TPA after discharge of patient
• Ambiguity over non payables
• Possible disputes arising out of information provided at time of pre-authorization
and discharge summary. Rejection and delayed payments.
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• Manual process does not have provision for auto adjudication.
Patients
Insurance Company
Healthcare Payors- TPAs and Insurance companies responsible for approving patient's
claims submitted by providers.
40
The following figure shows the typical claims process which would be followed in case a
medical services provider like hospital would move over to an automated claims product
on a web based model.
The following would be the likely network architecture for the automated claims
product.
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The following is the comparison for the turnaround time (TAT)for both Pre-
authorization and enhancement in terms of both manual and automated modes.
Process Acknowledgement
Manual Pre-auth 4-8 hours
Manual Enhancement 4-8 hours
Automated Pre-auth within 2 hours
Automated Enhancement within 2 hours
Claim and release of 45 to 60 days or more
payment
Number of phone calls minimum 3 calls
made for each process
Source: HealthHiway.
The following is a gap analysis done on the TPA industry in terms of the gap in manual
resources .We have assumed the average hospital spend of Rs.30000/- per claim. The
breakup for the initial 30 lakh claims is 40% cashless and 60% as reimbursement cases.
We are further assuming that every cashless claim will hit the TPA system twice for both
Pre authorization and Settlement .Reimbursement claims are being assumed that they
will be processed by the TPA system in a single shot. If we assume a conservative 20% of
Network Claims processed twice (2400000) plus reimbursement claims (1800000) will
be reprocessed for additional information etc. then 840000 claims will again hit the TPA
system. Assuming 2% of the above cases will be reopened the Total claims after
distribution will be 5124000.To this we add the 5 million claims that are expected to hit
after the expected success of programs like RSBY , we are seeing a total claims figure of
10124000.If we take the standard industry averages the present gap in manual
resources at the TPA level comes to 825 persons for the present and is expected to grow
to 1432 by the next year if we take a 30% growth rate .With the industry making losses
and margins nonexistent it makes sense to go for automated lower and efficient cost
options like Claims Exchange
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GAP Analysis of Manual Resources for TPA Industry
Break Up
Cashless 40% 1,200,000
Reimbursement 60% 1,800,000
Claims Distribution
Network Claims Processed Twice (Cashless Pre -
auth+Settlement) 1200000X2 2400000
Reimbursement Claims (single shot process) 1800000
Info Cycle @20% of above Claims processed further 840000
Reopen Cases @ 2% 84000
Total Claims after Distribution 5124000
INDUSTRY AVERAGES
No of Working days 250
Avg claims Per Person Per Day (PPPD) 20
Avg Settlement Time ( Days) 10
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References
WWW.Healthhiway.com
WWW.IRDA.GOV.In
‘Health Care in India caring for a billion people’: IBM Global business services report.
Economic Times
WWW.Smartcardforum.org
WWW.Chipcard.ibm.com
WWW.rbi.org.in
Dr. S.D. Page, Bimaquest - Vol. VIII Issue II, July 2008, “SYSTEMS INTEGRATION:
IMPERATIVES TO INSURANCE INDUSTRY IN INDIA (PART-1)”
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