Kerala’s health insurance scheme, Ayushman Bharat-Karunya Arogya Suraksha Padhati (KASP), has undoubtedly been a major fiscal disaster, with huge cost overruns and high rate of overdue claims.
To those wondering how an insurance scheme meant to provide health cover for the poor can end up as the State’s nemesis, the Comptroller and Auditor General’s (CAG) just-released audit report on AB-PMJAY would be an eye-opener.
The report is a telling commentary on how the implementing agency of KASP – the State Health Agency (SHA) – has been running the scheme with no checks and balances, that Kerala now figures prominently in all the major lapses/frauds that the CAG has unearthed .
According to the CAG report, as on November 22, the total unprocessed claim amount across the country is ₹6,052.43 crore, of which Kerala accounts for unsettled claims worth ₹985.28 crore, from 8,43,790 claims.
The CAG report clearly states that “Kerala’s SHA had not conducted any medical audit, death audit, beneficiary audit (post discharge through home visit), pre-authorisation audit, and claim audits (rejected as well as approved claims).
More seriously, the Third Party Administrator (TPA) contracted by Kerala’s SHA to scrutinise claims had also not conducted any beneficiary audit (post discharge through telephone and home visits) or preauthorisation of claims audit”
“The shortfall in conduct of audits resulted in a lax control environment with possibility of unauthorised/ excess payments of claims, fraud and shortcomings in facilities to be provided to the beneficiaries,” the CAG has noted.
‘Dead’ patients
One of the major scams unearthed by the CAG audit is that patients earlier shown as ‘dead’ in a previous hospital admission by the Transaction Management System (TMS) software, continued to avail further treatment under the scheme. The State topped the country when it came to this scam, with the State paying out ₹2,60,09,723 as treatment claim amount to 966 “dead” patients.
CAG report points out that there have been cases wherein, same patients seem to have been admitted in multiple hospitals during the same hospitalisation period. Again, Kerala was one of the States from where the highest number of such frauds were found.
As public health experts in the State have pointed out earlier, the problem is not with KASP per se, but the unprofessional manner in which it is run.
Lack of scrutiny
The concept of health insurance scheme itself calls for a robust monitoring mechanism so that the claims are scrutinised and untenable claims weeded out. This financial discipline is necessary for the sustainability of any health insurance scheme.
The CAG report clearly points out that this is where Kerala’s SHA has failed miserably. KASP, which was launched in alignment with Ayushman Bharat in insurance mode in April 2019, was shifted to the Trust/assurance mode in 2020. It was projected that avoiding the insurance company and running the scheme directly through SHA would make KASP more profitable.
“Insurance claims ratio has been traditionally high in Kerala, which boasts of a high health-seeking behaviour. This called for stringent financial discipline and scrutiny in running KASP. However, the SHA seriously lacks the technical expertise or resources to professionally manage the scheme. It has not even been able to ensure that the TPA it recruited is doing its job properly,” a health finance expert pointed out.
In the past three years, KASP has bled the State finances dry, paying out ₹1,400 crore in claims settlement in 2021-22 and ₹1,630 crore in 2022-23, more than double the budget at which the State had been running health insurance schemes till 2021. It has pushed public hospitals in the State to the brink of financial ruin because the SHA currently owes over ₹820 crores to both public and private hospitals as claim reimbursement arrears.
