| Challenges to Effective and Profitable Health Insurance in China: |
It is easy to write health insurance in China. It is extremely challenging to do so while remaining profitable for your underwriters. If health insurance underwriting results are not profitable, few underwriters will offer the insurance or remain in this market for any extended period of time.
In the "international health insurance" market which Shanghai TaiKai's foreign affiliate (GBG) specializes in, we have seen this trend repeat itself time after time. A health insurance underwriter who is successful in their domestic health insurance market decides to expand their business by offering "international" health insurance beyond its borders. After a few years of significant underwriting losses on their international business, their headquarters executives decide to "pull back" and refocus their health insurance business on their domestic market. These otherwise successful insurance firms ended up losing money because they got into a business area (international health insurance) where it became too difficult for them to measure risk, deal with foreign hospitals, control claims, and correctly price and market their products. The results were big underwriting losses and withdrawal from the international health insurance market. Similar challenges are also faced in China.
While the details may be different in China the above principles are not so different. How do you measure risk? How do you control risk? How do you deal with hospitals? How do you minimize fraud and abuse and control claims? How do you properly price your benefits and policies while keeping the price within limits that the market will accept? It is easy to raise premium prices to cover losses. But if prices become higher than the market is willing to pay we end up insuring more and more sick people as the healthier clients elect to self insure.
Shanghai Tiecare's Approach and Services:
Shanghai Tiecare and GBG have invested heavily in technology. Over the past 5 years and have developed an extensive data base on claims experience, medical usage and prices at the "high end" of the health market in China which we define as group health insurance for major companies utilizing the "VIP or Foreigner" wings of major Tier 3 hospitals in China and thousands of similar international hospitals around the world.
1. Health Insurance Policy Design & Pricing:
Through our foreign partner's many years of international health insurance experience and our own 5 years of experience in China, we are able to draw upon our extensive database of hospital charges, disease and treatment frequency and user reaction to various co-pays and deductibles as they impact on utilization rates. We also draw upon experience in incentives to direct users to more cost effective hospital providers. Our actuaries ability to draw upon this vast database enables them to design and price health insurance policies which are both attractive to clients from the benefits point of view, priced competitively and profitable to our underwriters.
2. Hospital Management - China
Here in China our hospital management program is an integral part of our strategy for containing costs for our insurance clients. Our team of medical professionals work very closely with our 90 direct billing hospitals in China. This number of hospitals is constantly growing as we add new hospitals and clinics in response to the needs of our insurance and corporate clients. As a result of this relationship with the hospitals our clients receive "cashless service" at the hospitals upon presentation of their health insurance card which is attractive and convenient for the patient. In many cases we are able to negotiate lower prices with health providers. Our guarantees and administrative support to the hospitals enables them to make this arrangement work smoothly. And because of our constant work with the hospitals we are able to monitor treatment as it is taking place in the hospitals to satisfy our underwriters that the treatment given is reasonable and the patient being treated is actually the insured member. Abuse and fraud are minimized resulting in savings for the insurer and eventually lower premiums for clients.
3. Hospital Management - International:
Medical costs vary widely from country to country. And within each country there are wide variations in cost from hospital to hospital. For an insurance company to cover clients internationally for health insurance price control is an absolute requirement. An international network of pre-established hospital relations with known costs and billing procedures. With a pre-established network relation with hospitals it is usually possible to negotiate significant price discount in return for prompt reimbursement. In the United States our network hospitals exceed 4,000 facilities and more than 400,000 physicians. Our price discounts in hospitals in the USA are 40% off their regular price because of the volume discount. With doctors the discount in the USA averages 25%. In the 250 hospitals in other countries our discount averages 20%. This enables our underwriters to offer quality benefits to their clients with reasonable projections of costs and underwriting profits，and set up “Usual and Customary” standard.
4. Customer Service / Call Center:
Many of the problems health insurance firms face with their clients are a result of misunderstandings and clients not understanding fully what their policy covers and does not cover. It is the experience of Shanghai TaiKai that first rate customer service representatives play a critical role in minimizing misunderstandings and frustrations that clients experience. Clearly written employee benefits handbooks explaining coverage and limitations along with on site company seminars are offered. Clearly communicating to the client over the phone and by e-mail where in the policy wording the issue (conflict) is addressed goes a long way in minimizing negative feelings towards the insurance company when benefits are denied. Although disappointment remains in many cases, the frustration of feeling unfairly treated is usually eliminated. This can reduce the chances of nuisance law suits.
5. Claims Management:
Our claims management software is the heart of our claims control and underwriting profitability system. Our well trained claims processors and supervising medical professionals review incoming claims from hospitals and individuals. For hospitalizations pre-authorization is required to determine eligibility of coverage and the reasonableness of planned treatment and expenses. No pre-authorization is required for routine out-patient care but incoming claims are reviewed and entered into the claims software systems database using standard ICN-9 codes identifying diagnosis and treatment. Claims are adjudicated and an Explanation of Benefits (EOB) sent to the client explaning the payment or denial of benefits. Payments are made to the individual or hospital on behalf of the underwriter. Data entered into the claims management software system then become a very valuable database which our actuaries can manipulate to detect trends, either positive or negative in a timely fashion so that hospital providers who are overcharging or over utilizing through unnecessary tests and procedures can be identified at an early date and corrective action taken. It similarly allows us to track which clients are over utilizing benefits so that HR departments can be involved at an early stage to discourage employees from abusing their benefits and head off the necessity of high premium increases. This is highly appreciated by corporate clients and underwriters.
International Emergency Medical Assistance
Our 24 hour a day emergency hotline provides emergency medical assistance to our insured members. Wherever a member is traveling and has a medical need he or she can call the hotline and speak directly with multilingual (including Chinese) experienced medical staff who can answer questions and arrange for medical treat in thousands of hospitals and clinics around the world. If necessary, a member can be evacuated by plane or other means to health facilities in another country if adequate medical facilities are not available in the country where the member is traveling when the medical crisis hits.
