Money & Banking

Ambiguity in guidelines leaves Rajasthan’s Bhamashah scheme in poor health

Radhika Merwin | Updated on December 13, 2018 Published on December 12, 2018

The scheme provides a coverage of ₹30,000 (sum insured) for general illnesses and ₹3 lakh for critical illnesses   -  File photo

Continuing disputes between insurer New India Assurance and the State govt on the issue of de-empanelment of hospitals for fraud are a cause for concern

BL Research Bureau

The running disputes between New India Assurance and the Rajasthan government on the Bhamashah Swasthya Bima Yojana — the fount for the Ayushman Bharat scheme — over the extensive fraudulent practices must be resolved, especially if the Centre wants to get more insurance companies on board its pet insurance plan.


A large number of instances of fraud and rising claims under Bhamashah had led New India Assurance – the insurer offering the scheme – to issue de-empanelment notices to over 100 hospitals few months ago, a chunk of which was revoked by the government, according to reports accessed by BusinessLine and confirmed by sources within New India.

Bhamashah is a health insurance scheme that offers cashless facility to patients of families covered under the National Food Security Scheme in Rajasthan. The scheme covers 1,401 packages/illnesses – 46 reserved for government hospitals, 14 for private, 738 for secondary packages (general illnesses), and 663 for tertiary/critical illnesses.

The scheme provides a coverage of ₹30,000 (sum insured) for general illnesses and ₹3 lakh for critical illnesses. Until September, 92.54 lakh families were covered under the scheme.

The two-year scheme was launched in December 2015, with the second phase (2017-19) commencing in December 2017. At present, 893 private and 519 government hospitals are empanelled under the scheme. During claims analysis, New India found several irregularities and fraudulent practices by hospitals.

The frauds include impersonation, fake admission, fake surgical billing for services not rendered, multiple package blocking (one surgery performed, but multiple surgical package blocked), general ward to ICU conversion, government-reserved surgery done by private hospitals, claiming higher package surgery but performing lower package surgery, and policy violation by charging patients.

As per reports accessed by BusinessLine, the insurer found 290 hospitals involved in these wrong practices. New India issued de-empanelment notice to 116 hospitals on account of their involvement in fraud claims. But the Rajasthan government revoked this on 83 hospitals.

Under the RFP (Request for Proposal) document for 2015-17, under Clause, a healthcare provider (hospital) can be suspended by the insurer if it finds evidence of irregularities in claims data or during field visits. If subsequent investigations prove the complaints right, the insurer could move to de-empanel the hospital. In July, the State Government tweaked the guidelines for de-empanelment and penalty under Bhamashah, and detailed various categories of irregularities and the proposed action under each.

For instance, for simple/procedural errors, the action is mostly a warning. For serious issues, as listed by the guidelines, the action is rejection of claims and penalty under Clause 1.25.8.

Only if a hospital repeats the same offence for a third time can it be de-empanelled under Clause 1.25.9. Serious errors include hospitals charging money from patients, mala fide manipulation of patient’s live photo, submission of a package of higher value, and conversion of general ward to ICU.

Sources from New India and other players argue that such detailed categorisation of frauds and allowing three lapses by hospitals before the insurer can move for a de-empanelment create uncertainties and in a way legalise corrupt practices at hospitals.

Investigations by New India in one case found that different discharge summaries were prepared by the hospital. The discharge summary given to the patient stated hysterectomy as the procedure done, but the one given to the insurance company said that myomectomy had been performed. The decision of the insurer to de-empanel the hospital was revoked by the State Grievance Redressal Committee (SGRC) on appeal by the hospital on grounds that it was merely a ‘procedural error’.

Under the third category of offences listed by the revised guidelines by which the insurer can move to de-empanel a hospital included ghost beneficiaries, treating someone else in the name of the registered beneficiary, and claims packages for facilities not available in the hospital, among others.

But even in such cases, the final decision rests with the Rajasthan State Health Assurance Agency (RSHAA)/SGRC. A New India official, who did not wish to be named, said the company continues to issue notices to hospitals that have been carrying on fraudulent practices, but only a few of the insurer’s decisions are upheld by the RSHAA.

Top officials at RSHAA, contacted by BusinessLine, however, denied any instances of fraud or issues with the insurer over de-empanelment. “The issue only pertained to payment and settlement of claims between the insurer and RSHAA. The guidelines for de-empanelment were changed to bring more clarity to the process and on various categories of fraud.”

An e-mail sent by BusinessLine to the top management of New India remained unanswered.

Rising claims

The upshot of all this has been a sharp rise in the number and value of claims. According to sources, 4,000-4,500 claims are raised daily under Bhamashah, amounting to ₹4.5 crore as of November 2018 (against ₹1.9 crore last year). The sharp rise in claims has led to a substantial bump-up in the premium. From ₹370 per family, when the scheme was launched in 2015, the premium has gone up to ₹1,263 for the second phase (2017-19).

Published on December 12, 2018
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