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A mountain to climb

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There was palpable excite-ment in the air as the 23September launch of Ayush-man Bharat drew closer.Dozens of articles appeared

in all kinds of newspapers, more inthe small local publications in differ-ent parts of the country than in themainstream national papers. YouTubehas also put out many trending videoson the eligibility criteria and how youcan check if your name is included inthe initial list of beneficiaries.

In some videos, Indu Bhushan,CEO,Ayushman Bharat, has appearedin person, while Dinesh Arora, dep-uty CEO, has posted photos on Twit-ter, showing bunches of personalisedbeneficiary letters being distributed in

Rathu block near Ranchi (Jharkhand).Given that this is expected to becomethe world's largest publicly fundedhealth insurance scheme, the feelingof anticipation is no surprise. However,Bhushan and Arora were not availablefor interviews.

Interestingly, the monikers beingapplied to Ayushman Bharat havestarted multiplying - the NHPS, whichdescribes the main part of the scheme,is to be managed under the NationalHealth Protection Mission (NHPM),through the National Health Agency(NHA), while the entire plan has beenplaced under the umbrella of the Prad-han Mantri ]an Arogya Yojana (PM-JAY). Incidentally, the NHA would havestate-level counterparts known as the

State Health Agency (SHA) to share theresponsibility to some extent.

Since the NHPS is primarily intendedto cover the expenses of hospital-basedtreatment of various diseases, theAyushman Bharat plan has anothercomponent running parallel to NHPS,which is to establish 150,000 wellnessand primary care centres all over thecountry. This is intended to take careof minor ailments that do not requirehospitalisation. At this point, littleinformation is available about thembut being the first point of contactwith ordinary people these wellnesscentres could make or break the entireplan in the future.

Some 24 states have gone aheadand launched their own versions of

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the scheme - UP, Rajasthan, Chhat-tisgarh and ]harkhand being somenotable examples (see Business India,12-2S February 2018). In other states,politicians at various levels, frommunicipal councilors to villagepanchayat members, have been bom-barded with queries about how to reg-ister for the scheme although very fewhave been able to provide answers.Everybody was being told to wait forthe nationwide launch this week.

Publicly funded health insuranceschemes have existed in the past - atthe Central level, there was the Rash-triya Swasthya Bima Yojana (RSBY).Individual states have been operatingtheir own schemes: Arogyasri in undi-vided Andhra Pradesh, Yeshasvini inKarnataka and Mahatma ]yotiba Phule]an Arogya Yojana in Maharashtra arejust a few examples. Health industryexperts are already saying that stateswhich have been operating their own

When fullyfunctional in 2022,Ayushman Bharatwill be the largestpublicly fundedhealth insurance

scheme in the world,covering nearly 500

million people

-= » scheme would be better placed to2:~ participate effectively in the NHPS.The decade-old RSBY (inception:

~ 2008) and some of the state level~ schemes are likely to be subsumed

into Ayushman Bharat, while otherstates are looking at alternative mod-els such as Healthcare Trusts (similarto the UK's National Health Service).Yet others like Delhi, West Bengal andOdisha have defiantly tried to givenames with a regional flavor or reflect-ing the achievements of the rulingparty in that state.

The initial list of beneficiaries wasput together from the Socio-EconomicCaste Census (SECC)conducted in 2011(since the Census is conducted once adecade) but would be supplementedfrom time to timefor the benefit ofthose who meet theeligibility norms insubsequent years.This in fact is thefirst likely source ofexclusion of largenumbers of peo-ple living far awayfrom the well-con-nected cities andtowns - the firstmountain thatthe governmentauthorities wouldhave to climb, sothat the naysayers and cynics are notproved right.

As has been reported widely, the AB-NHPS will offer a government-fundedhealth insurance benefit of up to ~Slakh per family per year to 100 millioneligible families. For their own calcula-tions, the NHPSplanners have assumedthe average family to comprise of fivemembers. However, the authoritieshave made it explicitly clear that therewill neither be a cap on family sizenor on the age of the insured persons.Thus, the actual number of beneficia-ries belonging to the 100 million eligi-ble families could be somewhat higherthan the estimated SOO-SSOmillion.

Shared premiumThough it is basically a health insur-ance plan, it will be completely free ofcost for the insured persons and theinsurance premium will be paid jointlyby the state and Central governments.

At the moment, it has been decidedthat the premium will be shared in theratio of 60:40, with the Central govern-ment disbursing the greater share. TheNHPS management has made specialefforts to emphasise that those consid-ered eligible do not have to make anypayment - this is in response to somenews reports of independent partiesdemanding payments of U,100-1,300as 'registration fee'.

The insurance premium that the gov-ernment is willing to pay has becomea subject of contention with huge vari-ations from one state to another, whilesome insurance companies feel thepremium is attractive enough. "Yet,when the Maharashtra governmentoffered B30 for a ~2 lakh cover in its

Mahatma ]yotibaPhule ]an Aro-gya Yojana, mostlyeverybody madesome money," saysa senior executiveof a leading ThirdParty Administratorin western India.Thus, he feels, thepremium offer ofU,100-1,300 isquite reasonable.Others, however,are less sanguine onthis point.

Third PartyAdministrators (TPAS) are indepen-dent, private companies engaged byhealth insurance companies for thetask of processing the claims and mak-ing payments - either to the individualinsured person or (in case of a cash-less scheme) to the hospital providingthe healthcare service. All TPAshave tobe compulsorily registered with JRDA(Insurance Regulatory & DevelopmentAuthority). In the earlier avatars ofhealth insurance, whether RSBY,state-funded or privately purchased, theTPAswere blamed for everything thathappened to go wrong. Thus, the TPASwere allegedly delaying payments tothe hospitals concerned, while the hos-pitals were allegedly inflating patients'bills to cover the deficit! In the RSBYandother publicly funded schemes, storiesof rampant fraud and mismanagementwent around with unerring regularity.There were a few honourable excep-tions, such as the Chief Minister's

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Comprehensive Health InsuranceScheme in Tamil Nadu and the RajivArogyasri Health Insurance Scheme inundivided Andhra Pradesh.

Now, it is the turn of the TPAs toblame the government. Firstly, onlythose who have experience of pro-cessing at least 50,000 claims (with acumulative value of noo crore) in thepast year are eligible to bid. This meansall the claims have to be worth at least~2 lakh (to reach the target) while inactual practice, many claims are muchsmaller. Incidentally, the claim valueof noo crore has to be certified by thebidding company's chartered accoun-tant, and this, according to knowl-edgeable sources, leaves the route openfor all manners of sharp practices!

Secondly, some TPAs are sayingthat the processing fee in the AB ten-der document is not adequate. "To getahead in the bidding process, every-body is making unrealistic offers. Laterthey would find they are not earn-ing enough to maintain the peopleneeded on the ground to give a qualityservice," a TPAexecutive says on condi-tion of anonymity. However, VikramChhatwal, a director with Med-Assist,one of the biggest TPAs in the coun-try, feels that it is early days yet. "Thefee for existing insurance claims worksout to about 5-7 per cent of the claimamount. Most companies have notquite worked out whether this wouldbe sufficient," Chhatwal says.

Bone of contentionOn the other question of preventingfraud, which was a common allega-tion with reference to RSBYand otherschemes, the Central government hasdecided to take a series of special mea-sures. Earlier this month, it invited anumber of major players in IT-basedfraud prevention such as Lexis-Nexis,L&T Technologies, IQVIA,etc. The sur-prise participant was IQVIA, which isa later-day version of IMS Health, theglobally renowned healthcare marketresearch agency.

A blog published last year by Cege-dim Insurance Solutions explains thatfraud may be of four different kinds:• Identity theft (substitution ofinsurance eligibility cards, can bechecked through digital ID, biometricvalidation or other similar means);• Over consumption or false prescrip-tion (document falsification, can beprevented through real time consump-tion controls, analytics and utilisationreview over a long period);• Extra billing or over billing (preven-tion through dual card access, anddouble payment controls); and• False declaration by healthcareproviders (prevention through net-work validation at point of claim,correlation between prescription andexecution of the service).

An even bigger bone of contentionis that all the states may not work withthe insurance companies. At present,11 states have tentatively adopted theAssurance model (also being dubbed asthe Trust Model), five others have cho-sen the pure insurance model and four

states have gone for the hybrid model.In the Trust Model, the state govern-ment would create a corpus fund intowhich both the Central and the stategovernments contribute their respec-tive shares and the beneficiaries wouldbe paid from this fund. In Chhattis-garh, for example, Religare HealthInsurance has won a bid to provide acover of just ~50,000 per family for apremium of n,lOO, while the Gujaratgovernment has tied up with OrientalInsurance to provide a similar coverfor B61! Thus in most states, the num-ber of potential insured persons wouldbe drastically reduced, thus makingthe arrangement unviable for the var-ious insurance companies. Interest-ingly, Chhatwal says the role of theTPAs would be unchanged in boththe models.

While the debates on the natureof funding for Ayushman Bharatbegan quite some time ago, estimatesof the outlay during the first year of

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operations range from H2,000 crore tonO-35,000 crore. In the annual bud-get for 2018-19, the provision for NHPSis just ~2,000 crore, leading to somesceptics to doubt the scheme itself.But those in charge of implementingthe scheme have insisted that theywill not draw back because of shortageof funds.

Much greater challenges await thegovernment and the various partici-pants in the NHPS, particularly whenit comes to actually delivering thehealthcare services. There are slightlyover 23,580 hospitals in the public sec-tor, state and Central put together, andabout 156,000 primary health centres(PHCS).The latter would playa role inthe primary care component of Ayush-man Bharat but not really in the NHPSpart. About 19,800 of the hospitals(with 280,000 beds) are in the rural andsemi-urban areas, while the remaining3,770 hospitals (with 431,000 beds) arein the bigger cities and towns. Thus

the rural hospitals are much smallerin size than the urban ones. However,according to the government the ruralpopulation is believed to be about 70per cent of the total, while the restlives in the cities. But the reality isatleast 20 per cent live on the fringesof cities and are not really rural! Giventhat a relatively higher proportionof the poor live in villages or semi-urban areas, the proportion of NHPSbeneficiaries could well be higher. Thisalso means that many of the existingrural hospitals and semi urban hospi-tals would have to be expanded in sizeand some PHCS upgraded to becomeproper hospitals as fast as can be done.Will the necessary resources for thatbe made available?

Involving private sectorComing to the urban areas, where a lotof public hospital beds are located, thehospitals are overloaded far beyondtheir design capacity. Obviously, ifthe faith of the general population inthe public healthcare system is to berestored even partially, these hospitalstoo would require massive expansionprogrammes. It can be argued thatas rural health services improve, themigration of medical treatment seek-ers to the big cities would ease up tosome extent. But that too would taketime - perhaps a few years!

On the other hand, the private sec-tor in healthcare currently provides75-80 per cent of the total services(by value), of which the small andmedium hospitals of less than 50 bedsaccount for about 56 per cent. Clearly,without the participation of the pri-vate hospitals, NHPS does not haveeven a fighting chance of success, andthe government knows this as well aseveryone else.

Some experts have calculated thatabout 6,000 private hospitals of allshapes and sizes, located all over thecountry would have to participate. Buta position paper brought out by theFederation of Chambers of Commerce& Industry (FICCr)at the end of August(during the FICCI-Heal conference)puts forward the idea that the reim-bursement packages for most ailmentsoffered by the government are quiteinadequate. The NHPS has compileda massive document listing out thesanctioned reimbursement rates for

some 1,350 commonly required med-ical procedures that usually involvehospitalisation.

The FICCI report titled Demystify-ing healthcare costs: A scientific approachpresents a costing exercise for a vari-ety of medical procedures across ninehospitals (including two public hos-pitals as well) spread out over Chen-nai, Kolkata, Delhi, Agra, Mathura andPatna. The study has covered simpleoperations like hernia repair and cat-aract surgery to major ones like angio-plasty and knee joint replacement.FICCI's calculation is based on TDABC(Time Driven Activity Based Costing),which is a globally accepted manage-ment tool, which takes into accountall the various inputs that go into pro-viding a healthcare service. Using thismethod, they have computed the aver-age cost incurred by the hospitals fora CABG(coronary artery bypass graft)

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Hospitals which offer state-of-the-art procedures for

treating advanced medicalconditions would have

invested a significant amounton laboratories, patents and

personnel, and may not be ableto sufficiently recover costs

Dharminder Nagar,MD, Paras Healthcare

or heart bypass surgery to be H,8S,032(by comparison, the NHPS packageoffers H,03,000). Likewise the NHPShas sanctioned U4,7S0 as against theFICCIestimate oH83,886. The starkestcomparison is for uterus removal sur-gery, where the NHPSpackage is just 37per cent of FICCI'Sestimate, and caesar-ian section (24 per cent of FICCI esti-mate) and cataract surgery (34 per centof estimate)!

"The Ayushman Bharat packagerates are far from transparent, andhence we have no idea how they havearrived at those rates," says ShenoyRobinson, MD, Catex Health, Benga-luru, which provides real time med-ical consultation and treatment topatients in the comfort of their homes.

He is also one of the prime movers ofthe Technical Committee on Healthformed recently by the Confederationof Indian Industry (CIl).

While most industry watchers aresaying they cannot understand thebasis for the NHPScalculations, PankajGupta, professor & president of theIndian Institute of Health Manage-ment Research (now known as IIHMRUniversity), jaipur, says that in mostcases, the NHPS rates are 20 per centbelow the CGHS (Central GovernmentHealth Scheme) packages.

Preferring the middle groundSeveral others, however, do not agreewith the FICCI stand. "The proportionof patients who might require tertiarycare such a CABGor knee replacementare just 3-4 per cent of the total 55 croreinsured persons," says Vivek Desai,managing director, Hosmac (HospitalManagement Consultancy Services),based in Mumbai. Hosmac is the larg-est independent consultancy firm inIndia that handles hospital projectsat every stage from market researchto commissioning. He points out thatthe volumes of patients that come toany NHPs-empaneled hospital for rou-tine requirements in general surgery,maternity and gynaec services, eyesurgery, etc, would be huge enough tojustify the lower costing.

Dharminder Nagar, managingdirector, Paras Healthcare, whichruns a bunch of hospitals in Punjab,Haryana and Bihar, prefers the mid-dle ground. "For hospitals which offergeneral treatment for most commonmedical conditions, current treatmentrates would be adequate. However,hospitals which offer state-of-the-artprocedures for treating advanced med-ical conditions would have investeda significant amount on laboratories,patents and personnel, and may notbe able to sufficiently recover costs,"he says.

Likewise, Anant Pandhare, medicaldirector, Hedgewar Hospital, a 300-bedfacility in Aurangabad, feels that thecurrent rates are just below the costsof the non-profit hospitals as well. "Atthe present rates, it will be difficult toprovide at least SOper cent of the med-ical procedures," he says. Recalling hisexperience with the Mahatma PhuleHealth Insurance Scheme, he adds,

"We were facing a deficit of about ISper cent on each patient in the earlystages, when we were classified as Blgrade. Later when we were elevatedto A-grade, and therefore entitledto somewhat higher rates of reim-bursement, we were able to recoverour costs."

Something similar is also part ofthe NHPS plan, according to whichhealthcare institutions having anaccreditation from the NABH(NationalAccreditation Board for Hospitals) canclaim an additional 10-15 per centover the standard package rates. TheNABHhas two levels of accreditation -an entry level with some relaxation inthe standards, which is reviewed aftertwo years and a full accreditation,which is given for three years.

"In view of this, a lot of small andmedium hospitals are approaching usfor consultancy services. But they areonly interested in us getting them thecertificate," says Bhupendra KumarRana, former director & CEO, NABH,who runs his own enterprise namedQAI(Quality & Accreditation Institute).

There are a number of contentious

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issues related to accreditation of hospi-tals - only about 600-700 hospitals ofall sizes have the entry-level accredita-tion, while another 550 or so have thefull accreditation. Until now, the IRDAhad a rule that allowed only NABH-accredited to offer a cashless insur-ance facility. However, that standardmay have to be diluted or modified sothat vast number of hospitals requiredfor NHPS can do the same. Hence,Ayushman Bharat needs a propermonitoring mechanism, says Rana.

Thus, while the big-name hospi-tals in the metro cities could chooseto stay away, the hospital chains likeApollo and Wockhardt that have prop-erties in the Tier II and III towns standto gain a lot. Same is the case withhundreds of small and medium hos-pitals that provide secondary care butare not even equipped for high-endsurgical procedures.

In early 2018, Hosmac received sev-eral requests for hospital project con-sultancy from interested parties basedin really small towns such as Pali inRajasthan and Nandurbar in Maha-rashtra. One person in Dharampur,

Gujarat is planning to set up a largehospital with the primary intention ofcatering to Ayushman Bharat clientele.During the 18-24 months that it willtake these greenfield hospital projectsto be commissioned, the local nursinghomes in each of these towns wouldtake up the slack.

Besides, the Central governmentis pushing the large corporates to usethe 2 per cent mandatory CSR budgetto build new hospitals and provide ser-vices for AB patients. Hosmac has beenapproached by a number of large cor-porate houses, whose CSR budget runsinto hundreds of crores!

"Any hospital with 10 or more inpa-tient beds with basic amenities, 24x7electricity, waste management facili-ties, etc. is a compulsory requirement.Investments in IT infra and a full-timemedical coordinator for this schemeis a necessary condition for empanel-ment. Many private hospitals strug-gling for clientele could open theirdoors to patients under this scheme,"says Nagar.

Project costsIncidentally, the hospitals being builtnow with the Ayushman Bharat inview would have to make every effortto control the project costs - and eventweak the design and architecture foroptimum utilisation. These hospi-tals would have to build a higher pro-portion of sharing rooms and fewerrooms for single patient accommoda-tion. This would not only enable tooptimise the space but also managewith a lower nursing staff, apart fromreducing electricity consumption,air-conditioning costs, etc.

In this respect, hospitals in stateslike Andhra Pradesh, Gujarat, TamilNadu and Karnataka which alreadyhave considerable experience in cater-ing to public-funded health insurancepatients would be better placed totake full advantage of the NHPS. Thus,Yashoda Hospital in Hyderabad, whichhas been dealing with Rajiv Arogyasripatients for the last several years, has aseparate 300-bed facility set aside forthese patients!

A promising spin-off from the NHPSis that publicly owned hospitals andnon-profit hospitals run by charitabletrusts would get their costs reimbursedas per the defined package rates. This

means the institutions which werehitherto compelled to provide freetreatment to their citizens and had tostruggle with severe budgetary con-straints, could find themselves in amuch more comfortable position.The non-profit hospitals would thenbe able to keep their donations forcapital expenditure instead ofusing the amounts for meeting theoperational expenses.

Similarly, medical colleges, bothprivate and government-owned,would be able to avail of reimburse-ment for their costs of treating patientsin the respective hospitals. At present,even the private medical colleges areforced to provide free treatment tothese patients, so that they agree to beexamined and handled by dozens ofmedical students every day! Many pri-vate medical colleges that were unwill-ing to invest in their own hospitals

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has the ability to stimulate the econ-omy due to its impact on the healthof the labour force as well as provide anew ecosystem in healthcare business,which can sprout a thousand newladders of commercial success."

Addressing the gathering, ProbirDas, senior vice-president, HealthcareFederation of India (NATHEALTH), said:"The cost structure still needs work.While for many procedures the costmay be optimum, for several others, itmay require a re-think. The ideal wayto resolve this problem will be to keepthe cost of medical devices outside theprocedure costs. Also, given the factthat international MedTech compa-nies use their global network to trainphysicians and develop modern ther-apies in India, they should be consid-ered as a vital pillar for consultationand programme development."

Last, but not the least important;healthcare workers would be requiredin huge numbers - according to oneestimate, the number of doctors wouldhave to be doubled, and that of nurseswould have to grow to three-fold ofthe present numbers. Apart from this,there would be pathology laboratorytechnicians, physio-therapists, dieti-cians and other placed in the broad cat-egory of 'allied healthcare' resources.In addition, there would be a need forengineering and civil maintenancepeople for the newhospitals expectedto come up everywhere.

The Health Sector Skills Council(HSSC), which functions in partner-ship with the National Skills Devel-opment Council (NSDC), under theministry for skill development, canplay the role of regulator much likeIRDA is doing for the insurance indus-try. This would ensure that the newinstitutes which are bound to come upeverywhere have a uniform quality,and the trainees that come out fromthem are truly competent to join thehealthcare industry.

That it is an uphill task, not justfor the government but also the otherparticipants, is a given. The privateand public sectors will have to worktogether to make the enterprise a suc-cess. Like it was said of the banking sys-tem in America during the 2008 crisis,Aysuhman Bharat is too big to fail.

BUSINESS INDIA. THE MAGAZINE OF THE CORPORATE WORLD

could now be motivated to build therequired facilities.

There is little point in build-ing new hospitals or expanding theexisting ones if they cannot be sup-plied with high quality medicinesin sufficient quantities, medical gad-getry and diagnostic laboratory equip-ment and trained human resources atall levels.

Uncertainties prevail in the matterof medicinal supplies, which wouldneed time to become available acrossthe country, particularly since theCentral government's Ian Aushadhischeme has not really taken off. Thepush towards generic (non-branded)medicines that are sold in bulk quan-tities has evoked strong protests frommedical circles as well as other quar-ters. In fact, a fresh lawsuit filed lastmonth by one Sanjay Kulshreshthais pending before the DelhiHigh Court.

On the other hand, many of thetop 20 pharmaceutical companies inthe country derive only a small partof their annual revenues from hospi-tal sales. According to a report fromIMS Health (renamed as IQVIA somemonths ago), the top ranking company,Sun Pharma had a total India sales of

~8,029 crore, of which U,004.3 crore(say, 12 per cent) came from hospitalsales. For Cipla, holding the next posi-tion, the total India sales for 2017-18was ~S,867crore (hospital sales: ~81S.4crore). This is significant because theNHPS reimbursements would usuallyinclude medicines used within therespective hospitals, but this segmentappears to be a low priority for thepharma giants!

On the question of high-tech med-ical gadgets, a majority of which areimported a fierce policy battle is beingfought between the two major indus-try associations - AiMed and MTaI.The former, headed by Rajiv Nath,managing director, Hindustan Medi-cal Devices (HMD), has been conduct-ing a high-decibel campaign againstmultinational companies.

New ecosystemMTaI (Medical Technology Associationof India) on its part organised a one-day workshop in Delhi last fortnightto formulate a road map of participa-tion in Ayushman Bharat. "We admirethe vision of inclusion behind Ayush-man Bharat and the programme'smassive scale," MTaI chairman PavanChoudary said at the workshop. "It

• SUM!T GHOSHAL

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