The General Insurers’ (public sector) Association of India (Gipsa), the body that represents managements of the four PSU insurance companies, believes the new preferred partner network (PPN) system will gain general acceptance and more hospitals are likely to come under its ambit.

A Gipsa official said the PPN system would also prompt private sector general insurance companies to have a rethink on the their health insurance portfolios and initiate similar discussions with hospitals to bring down their healthcare costs.

Gipsa chief executive officer A K Singhal told Financial Chronicle that many of the high-end hospitals that were initially wary of the system are likely to come on board soon.

“We are getting the feedback that many of the hospitals that were initially not keen to join the PPN system are now reviewing their rates to align themselves with the requirements of the new system,” Gipsa’s cheif executive officer said.

However, he did not want to name the hospitals that are in the process of bringing down their rates to adjust to the PPN system.

Under the PPN system, the four general insurance companies — New India Assurance, United India Insurance, Oriental Insurance and National Insurance — have fixed a ceiling on the costs that hospitals will be allowed to charge from patients holding health insurance policies in order to qualify for cashless claims facilities.

Policyholders, who prefer to seek treatment at hospitals where the costs of identified treatments exceed the caps set by the four insurers, will have to adopt the reimbursement route to get their claims settled.

Pawan Bhalla, chief executive officer of Raksha TPA, the nodal third party administrator for the north zone to negotiate with hospitals to join the PPN system, said talks were in an advanced stage with various high-end hospitals.

“We will soon have many of the top-notch hospitals under the PPN system. Several big names that were staying away from PPN are now willing to come on board,” he said.

Third party administrators are intermediaries who help general insurers settle policyholders’ claims, both through cashless and reimbursement routes.

Gipsa’s Singhal felt even private sector insurance companies are likely to gradually veer towards a similar system.

“PPN is a policyholder-friendly system. After all, if healthcare costs are high, insurance companies will ask for higher premium from policyholders to meet their claims outgo. The entire insurance sector is set to benefit if hospitals start charging reasonable rates from patients. There may be some variation in rates from hospital to hospital depending on the facilities offered, but things were going out of hand and needed to be checked,” Singhal said.

General insurance companies have been bleeding on the health insurance portfolio as their claims outgo has been far in excess of their premium collection. The loss ratio in some instances worked out to as high as 130 per cent, meaning for every Rs 100 premium collected the claims outgo has been as high as Rs 130.