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Outpatient insurance faces pricing hurdles

August 31, 2013

While some insurers have brought OP (outpatient) cover under cashless scheme for those hospitals that are under their network, observers state that it would take a while before OPD as a product category becomes popular in the health insurance space. “Out patient cover is one of the important emerging trends in the sector and we are working towards technically pricing it,” Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance said.

United India Insurance extends an OP cover under cashless scheme in some of its group policies on payment of additional premium. In some cases, insurers extended this as an add-on offering in their main mediclaim or standard health product policies with specific limits. The offerings also include vouchers to the insured for buying medicines at pharmacies or discounts while visiting a clinician or undergoing certain tests. The biggest concern if OP becomes a full fledged offering under health insurance would be that claim management would not be an easy task. “From a product standpoint, this offering entails frequent visits to a physician (especially in case of lifestyle ailments) and while the costs related to claims management rise, the bill amount is low (from Rs 300-500 per visit). On the other hand, hospitalization is not a frequent event and normally entails a lump sum payment and a one time claim settlement ,” Milind Kharat, CMD, United India Insurance said.

Costs also have a role to play. “Due to the higher assumption on incidence rates (near 100%); the OPD premium is often quite high. Therefore customers need to see added value on the offering that goes beyond cashless payment of OPD expenses subject to the limit,” Manasije Mishra, CEO of Max Bupa said. Moreover, medical reimbursements also can take some shine out of an OP offering. “Many people try to meet their out patient expenses through their annual medical reimbursements , the ceiling limit (no tax) of which is Rs 15,000,” Renuka Kanvinde, associate VP, health insurance, Bajaj Allianz General Insurance said.

Insurers also state that the need for enhanced coverage is more pronounced in those categories where customers have opted for the basic cover (Rs 1.5 to 2 lakh) and want to move into the next bracket. “There continues to be a rise in cost of medical procedures across the board. Customers who have a basic cover are on the lookout for an enhanced cover at the time of renewal,” Dr Renuka Kanvinde, assistant vice-president, health insurance, Bajaj Allianz General Insurance said.

There are other issues too. “In the absence of a national brand in the OP space be it dental, eye or even diagnostic , controlling frauds in matters pertaining in billing and uniformity in service for claims assessment and payment will be an issue,” Rahul Aggarwal, chief executive officer of insurance advisory, Optima Insurance Broker said.

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