As of August 2009 (Project kick-off)
The project represents an evolution of ideas and experience gained by SSP:
- 2007: (Version 1). Self Help Groups (SHGs) were demanding health insurance to deal with shocks. Pilot projects were undertaken to promote health awareness, to test a community-based hospitalization scheme, and to train Community Health Workers (CHWs). Their main role was to promote health-policies which promised the customer up to 200 USD of claims-based reimbursement during hospitalisation. The money was pooled-in to form a totally self-insured Mutual Health Fund. The total member base of the programme was ~ 4,500 lives. However, clients requested outpatient financing solutions.
- 2009 April Version 2. The CHWs roles were expanded. In addition to enrolling people into the program, they began to take basic health information, conduct preliminary diagnosis through a kit and sell a few common medications. Improvisation to the earlier model included - procuring a group policy with a regular insurer (to secure the fund), forming a panel of doctors who provided 50 per cent discount on consultations and simulating a cashless hospitalization process. The benefit of hospitalisation was enhanced to an annual cover of USD 667 for a family. To improve customer service and prevent moral hazards, a “network facilitator” was appointed who visited the patient at the hospital - during admission and discharge.
- 2009 October Version 3. The CHF Trust and governance structure was formed. A plan is in place to roll out in 100 villages. There will be one CHW per village to sell and service the product. Although a continuous enrolment was initially planned, after considering potential for adverse selection or delayed enrolment for those with a “wait and watch” outlook, a defined enrolment period will be piloted. The pharmacy model planned was to place a community pharmacy in villages, but due to licensing challenges, a “physician-office based” pharmacy model will be piloted. Based on prior experience, it was felt that 2 different price points for the health product would be feasible, and a source of cross subsidy. Thus, a more affordable option (“Silver”) of USD 13 and a more expensive product of USD 22 with richer benefits (“Gold”) will be offered. Without much data on willingness to pay, the project team will need to see how these first products are received. Community data did reveal a high seasonality of income due to the agricultural economy. For this project, September '09 – April '10 is believed to be the best period for enrolment and premium collection, taking into account timing of income and also outflows of discretionary money (such as festival and marriage seasons)
As of October 2009
The initial plan to launch in 100 villages was determined to be overly optimistic and too large for piloting. Instead, a phased roll out will be implemented, with 40 villages in October and another 80 in February 2010. The additional 20 villages (120 in total) will provide a buffer against drop-outs or poor uptake. Based on challenges to recruit, train and retain CHWs, a revised plan is implemented that splits - (I) sales of policies and (ii) servicing of healthcare delivery. Dedicated sales people will focus on sales, while the CHW will focus on community mobilization, awareness, health promotion, and after sales servicing. Compensation and incentive mechanisms will require further development and calibration. An initial hospital (3 facilities) and physician network (7) has been contracted. A drug-distribution center is set up to procure low-cost drugs from manufacturers, stock inventory and distribute it out to the physician network. A web-based IT system is also tested, which will enable both the field-staff and central-team to – capture customer registration data, generate photo-identity cards, tracking of hospitalisation and outpatient cases, capturing drug sales data and MIS report generation. Since October 2009, the sales model has undergone many changes. For Phase-1, the implementation team adopted a '2-tiered' structure with 1 Sales Agent appointed for every 5 villages (role being to – fill up registration forms, collect money and deposit in central office) and a Health Coordinator in every village (role being - to spread awareness about product and mobilise prospective customers for meeting the Sales Agent)
As of December 2009
The implementation team decided to split the roll out into 3 phases instead of 2. Now, phase 2 will include 40 villages in January 2010, and phase 3 will include the final 40 villages in February 2010. A primary reason for this further split was the intention to experiment with outsourcing of policy sales for one of the geographies, in lieu of fixed monthly professional fees, to a sister concern of SSP. This organization already had a sales force on the ground for retailing multiple products (such as cooking stoves, water filters, rechargeable lamps, etc) and the team believed that, if successful, this model will reduce fixed overheads of maintaining a dedicated sales force. Pre-existing conditions and maternity benefits were excluded (they were not excluded from the initial product design) from hospitalization benefit. Early experience with the pharmacy distribution shows demand for a smaller than expected set of “common” drugs (around 40 versus 100-200 initially planned). It appears that the drugs provided are at a 30-70 per cent discount from maximum retail price (MRP) to clients. Non-clients can also purchase these drugs at a 10 per cent discount from MRP. A gender bias is emerging in staffing:
- Male candidates for sales agents are hard to find, perhaps due to other employment opportunities. Thus only women have been recruited.
- Only women drug sale agents have been recruited due to belief they are more trustworthy and hence, there would be little or no leakage of drugs stocked at the doctors' premises.
As of January 2010
The product is launched in the second batch of 40 villages. Initial uptake is lower than expected, so enrolment will be offered continuously and the team will monitor for adverse selection. Additional steps are being taken, such as – conducting promotional events at village-markets where there is an inflow of people from surrounding 10-15 villages, forming enrolment teams who would spend 2-3 days in a village promoting the product and registering customers and offering a discount for immediate enrolment after a campaign. While the cost of customer acquisition went up, the enrolment figures also increased by more than three-fold.
Refinements to the product continue. For example, the full exclusion of pre-existing conditions was determined to be difficult to identify and enforce, so this exclusion was limited to just 2 procedures which early data show potential for abuse - hysterectomy and surgery for kidney stones. Maternity benefits however continue to be excluded for the 1st year. During enrolment, the sales staff reported challenges to obtain the necessary documents and to obtain photos for all family members. Clients or prospective clients mentioned that a 1 year waiting period for maternity is not desirable, and the definition of a family to be up to 5 persons also was an unwelcome limit for some.
The implementation team has observed some challenges with the physician office based pharmacy model, and they understand better that those doctors who dispense drugs which provide a significant source of income are reluctant to modify their prescribing or pricing patterns. This challenge is felt to be a key factor in 4 of 7 doctors initially contracted dropping out of the network. SSP can also observe over-prescribing and a lack of standard prices and documentation by providers. As learnt later, a key reason for such behaviour was because the initial participating doctors were approached with a commercial proposal, and not a social one. Therefore, their incentive to be a part of the program was misaligned.
With respect to sales and servicing, there has been some turnover of the Health Coordinator staff in part due to delay of the roll out (no income, lost interest), or dissatisfaction with compensation. A commission sharing arrangement is emerging where agents will share half of earned commissions with Health Coordinator and/or SHG leaders who facilitate village level sales. SSP is further refining its sales approach based on whether a village has a doctor present. Where there is, CHWs will focus more on “activation” to encourage clients to visit the doctor for appropriate care. Finally, the effectiveness of the sister organization of SSP to whom a part of the sales was outsourced will also be tested. Sales staff report difficulty for community members to pay the full premium, and have been requested to allow instalments. This will be pursued through SHGs.
As of July 2010
The product has been launched in more than 150 villages, against the originally planned number of 120. This is because there was significant consumer demand in the adjoining villages; leading to the Sales Agents enrolling members in these villages also. As long as there is no additional operational requirements (like more staffing, expansion of provider network, additional travel expenses), the implementation team did not envisage any issue with this arrangement. The hospital network now comprises of 10. Approximately 1200 policies have been sold, covering 5000 lives. Overwhelmingly, clients prefer the cheaper Silver product, which accounts for 98 per cent of all enrolment. The product is experiencing a bias in enrolment of male children (70 per cent of total children enrolled). This seems to be due to the limit of 5 persons per policy and the decision of some families to preferentially insure boys over girls. People defined as Below Poverty Line (BPL) comprise of 44per cent of the program, despite already being eligible for comparable hospitalization benefits for a small annual fee of INR 30 (ca. US$0.70) through a national health insurance scheme sponsored by the Government of India, called Rashtriya Swastya Bima Yojana (RSBY).
Due to the challenges of working with local doctors of varying preferences, multiple drug models seem to be emerging. In some places, completely self-owned pharmacies and clinics are set up. In others, tie-ups are made with existing pharmacies. However, there are stringent regulatory requirements for these models, availability of licensed chemists limited and both capital costs and running costs very high. Hence, the preferred model still continues to be that designed initially – that of a doctor who stocks drugs and dispenses them to the consumers, post consultation. Some of these doctors prefer to buy the drugs upfront, while others do not want to carry the risk of inventory. For the latter, drug sales agents are deployed at their premises.
Some cash flow challenges are arising because the insurer (Oriental Insurance Company Ltd) is scrutinizing claims more thoroughly, and requesting more justification. SSP is monitoring and trying to determine best ways to manage claim turn around, which is currently 60 days or more.
As of February 2011
Results for the CHF as of January 2011 were generally well below target, and presented a difficult challenge to the project team. Only 2,600 policies had been sold, with approximately 2,100 active at that time, covering approximately 10,000 lives (30,000 lives had been targeted). Two hundred ten (210) villages as opposed to the planned number of 120 were included in the enrolment area based on requests to include families in neighboring villages. Enrolment for the total villages represented amounted to only a three per cent penetration. Sixty two per cent of members were clustered in 30 villages, 20 per cent of members resided in the next group of 30 villages, and the final 18 per cent were dispersed in 150 villages.
Policy renewals had started with 16 per cent of policies coming due as of this time. Though the actual number of cases to be renewed was still fairly low, the initial renewal rate was 27 per cent versus a target of 60 per cent. Further, the incidence of hospitalization among clients was 11 per cent, more than double the benchmark of four per cent that had been expected. It was found that approximately 40 per cent of hospitalizations were due to highly preventable common water-borne diseases that could have been treated in an outpatient setting. The higher rate of hospitalizations contributed to a claims ratio in excess of 300 per cent and an expense ratio of 136 per cent. Though higher than desired, these ratios were not unexpected for this early stage of project development.
The provider network now comprised of nine hospitals plus discounted outpatient services at four clinics owned by the CHF Trust together with nine contracted clinics (scaled back from the originally planned number of 25). Only about half of the total enrolled members had access to the discounted outpatient services, and for most of these members, the discounted outpatient consultations and drugs were on offer for only a short time. As a result, visits for outpatient services were only 0.2 visits per member per year compared with an expected level of one outpatient visit per member per year.
Where discounted outpatient services were accessible, SSP noted that 89 per cent of 450 households surveyed were satisfied with the CHF as the discounts allowed them to save an average amount equivalent to approximately 40 per cent or INR 300 (US$6.67) of the premium paid for the CHF scheme.
The villages with the highest level of promotional effort showed higher penetration (11 to 12 per cent versus three per cent overall). Additionally, central to a key learning objective of the project, SSP observed that villages with access to discounted outpatient services reported a lower hospitalization incidence (7 per cent) compared to hospitalization rates of 14 per cent in villages without access to outpatient services. This could suggest that an indirect benefit of outpatient services may be to reduce inpatient utilization. With respect to renewals, again though early days, SSP observed that clients who had experienced discounted outpatient services available through the CHF were three times more likely to renew their membership.
The sales and health promotion staffing model now included 15 CHWs who, after a three month intensive training, focused on health education and basic treatment. The CHWs were trained for 3 months on preventive health measures and to provide health services rather than enrolment. A five percent commission of INR 35 (US$0.75) per enrolled family proved to be insufficient and after some CHWs dropped out, and the CHW activity was stopped entirely. A team of approximately 75 Sakhis (sales assistants), took responsibility for health promotion, sales and enrolment with a commission of ten per cent of premium.
Problems in submitting claims to the insurer through its third party administrator persisted. As of February 2011, of 329 claims submitted, some 60 per cent were rejected due to failure to submit the claim within the stipulated seven day limit, which was unrealistic for small rural providers.
The CHF experienced a cash flow squeeze, which forced it to delay payments to some hospitals beyond the 30 day maximum turnaround time that it had promised. Overall, this challenge required significant staff resources to analyze and try to resolve, and frayed relations with hospital partners. In February 2011, Oriental agreed to re-process pending claims. The team began to work through the backlog. The frequency of claim rejections during this period for other reasons (e.g. eight per cent for ineligibility) have been acceptable, and the preauthorization and adjudication processes managed by SIS were working smoothly.
During the last half of 2010, SSP experimented further with the outpatient services delivery model, ending up with two ongoing models:
1. Self-owned clinics with drug inventory supplied by SIS: Only two of the 25 self-owned pharmacies remained in operation. The two clinics offered discounts to patients of approximately 40 per cent. The clinics provided control of provider treatment and dispensing behaviours, but also had high fixed costs. This model could be viable in more densely populated town centers, where visits could be high enough to cover the high cost structure.
2. Rural “cash and carry” model: Nine village based doctors, who were less established and therefore more willing to comply with a discounting approach, were enlisted. The doctors were willing to use a generic based drug formulary operating under contract to the CHF Trust. Doctors purchased low cost drugs from SIS at discounts of approximately 25 per cent of MRP and in turn dispensed the drugs at a lower than average cost to CHF members. The viability of this model is sensitive to the volume of both CHF members and non-members (who pay non-discounted fees).
By May 2011, the program was focused in 70 villages where there was high potential and the response was evident on the benefits of the program. The hospital network was retained at ten multi-specialty and specialty hospitals and the OPD network spanned ten clinics including three CHF Trust owned clinics. Generic drugs were centrally procured and stocked at the warehouse in Solapur and distributed through OPD clinics on cash and carry basis. The well established CHF Trust supervisors took on larger roles in promotion and lead generation while the Sakhis completed enrolment process with the community members.
In February 2011, with the support of the Facility, an in-depth evaluation of the performance of the CHF and underlying drivers of results was undertaken. The evaluation allowed the project team to further analyse and reflect on lessons learned to date, and to review and refine next steps to optimise the performance of the CHF and to work toward a sustainable future. Accordingly, the action plans were revised from April 2011.
As of June 2011
In response to the challenges experienced with claims and learning more about preferences of the targeted population, a wide range of strategies were used to promote insurance and educate families on how to be healthier through preventive measures such as better nutrition and hygiene. These programs included a newsletter, published with the endorsement of hospital and physician leaders or other opinion leaders, which featured the benefits of the CHF product and highlighted client experiences which were positive. Member sensitization camps were held for more than 1600 persons, and further community support was evidenced by a local radio sponsorship. SSP had organized a mobile skit to emphasize the key messages that included ownership of the CHF by a local community Trust that was operating a low cost, transparent program for the benefit of the community. The SSP arranged for live testimonials from satisfied clients to be delivered in over 50 villages. Enrollment was observed to grow where potential clients could hear testimonials from neighbors who had accessed hospital services and had a positive experience. Overall, it appeared that word-of-mouth was an effective and necessary promotion strategy, without which the deep rooted beliefs about insurance and medical care being poor value could not be overcome.
By 1st June 2011, the SSP switched from a cashless to reimbursement approach for claims. This was due to increased scrutiny of claims by Rashka, the third party administrator, and resultant delays in settlement of claims and to reduce working capital requirements for CHF Trust to advance payments to hospitals before receiving reimbursement from the insurer. This also reduced the financial risk borne by the CHF Trust for any claims denials. SSP observed the average cost per claim falling by approximately 20-30 per cent. Simultaneously SSP decided to temporarily stop enrolment from June 1st for three to four months coinciding with the monsoon and agriculture season.
All active policyholders were informed by letter and signed an agreement that from 1st June 2011, they were responsible for payments to the hospitals in case of hospitalization and would receive reimbursement from the CHF Trust within one month of submitting an approved claim. Similarly, a letter was issued to all hospitals by the CHF Trust informing them that patients would pay all bills directly to the hospital.
SIS had been contracted at the inception of the project to operate the community pharmacies, the outpatient clinic and inpatient hospital network and to oversee project management and information systems support. The greater geographic focus in fewer villages resulted in lower utilisation of drugs, forcing the closure of the SIS operated stocking point (warehouse) in May 2011. Similarly, the switch from a cashless to a reimbursement policy for claims and the pause in enrolment resulted in a much reduced role for SIS. As of June 2011, SIS transferred all the network facilitation roles, project management and liaison with insurer and its TPA to the CHF Trust/SSP field teams.
Renewed efforts were made from May 2011 by SSP to reduce the time for hospitals to fulfill documentation requirements for claims submission. The turnaround time to obtain a complete hospital bill was reduced from 60 days to 15 days, a significant improvement but still short of the seven days stipulated by the insurer. SSP established direct contact with the TPA. In June 2011, SIS provided SSP training on claim data entry, submission and online tracking. Oriental was informed of the claims experience, in particular the deterioration of the claim ratio, for the scheme.
Date of last Learning Journey update: November 2011