Are package rates a solution to arbitrary claims settlement?

Mediclaim policyholders with cashless or reimbursement claim get a rude shock when the insurance company/third party administrator (TPA) approves partial amount for payment. In the cashless mode, you may have time to raise concerns and get higher amount approved before your procedure is done. In reimbursement mode, you have already left the hospital after the procedure and the only option is to continue your fight with the insurance company or give up.

In most cases, the insurance company will turn a deaf ear and show the “take it or leave it” attitude. So, you end up accepting the offer and keep quiet or get dragged for a long battle at the insurance ombudsman or consumer court. Are pre-declared package rates in a policy document a solution to arbitrary claims settlement? You will know what is paid by the insurer for the 42 standard procedures before you step inside the hospital.

Technically, if there is a proper contract between the hospital and insurer/TPA, cashless treatment should not have issues of partial amount approval. This is because the insurance company/TPA has already negotiated the rates with the hospital and hence ambiguity should not arise. But, there are numerous cases of cashless approval wherein the TPA may approve an amount lower than the hospital rate. Even with no fault of your own, you may have to face the brunt of under-approval by the TPA or over-charging by the hospital.

To add to the woes, government insurers stopped offering the cashless facility to the consumer since July 2010 in many of the leading hospitals. This impasse is primarily due to the inability of the insurers and medical fraternity to agree on package rates for the cashless facility. This has caused immense physical and mental hardships and financial strain to the consumer for almost three years now.

If cashless claim is out of question for the policyholder, reimbursement is a drawback for the policyholder as it means paying the hospital first and then receiving reimbursement from the insurance company. Many policies have room-rent and other restrictions, but even policies with no such restriction may not get the full amount approved simply because the hospital charges more than “reasonable and customary”. The insurer knows what it should pay for a specific procedure done in a particular type of hospital. It will also consider the room type where the insured stayed and city where hospital is located. The policyholder has no idea about what will be paid by the insurer and there starts the trouble for the insured.

If the package rate is known in advance, consumers can search for a facility which fits their budget and may even be able to negotiate with the doctors. There is a real need for it as Association of Hospitals and Bombay Nursing Homes Association submitted to the Bombay High Court that it cannot give fixed package rates and it is better for insurers to pre-declare package rates in their policy documents. AMC (Association of Medical Consultants) submitted to the Bombay High Court a document outlining its bracket rates stating that the rates are not meant to be a cap or limit to the fee of a professional and that the doctor’s professional charges if higher may have to be borne by the patient himself or herself. Considering these facts, it makes sense if the Insurance Regulatory and Development Authority (IRDA) asks insurance companies to pre-declare the rates for the 42 standard procedures in the insurance policy document.

Here is an example that works on similar lines: CGHS (Central Government Health Scheme) provides retired government employees fixed package amounts for standard ailments, as fixed by the government, by taking into consideration various factors like cost of treatment, doctor’s fees, etc. These retired employees can take treatment from any hospital of their liking (outside the government network). They know in advance how much minimum amount they will get, giving further transparency and uniform applicability in the interest of justice.

On a Saturday night during the hectic swell of New York fashion week, the founders of Made fashion week, the presentation-and-party platform that twice a year becomes a crackling nexus of downtown fashion, are happily installed at their favorite hangout, the Standard Grill. It's that rare calm in the storm of New York's show season when the three of them can sit down together and drink tequila.

As they do, Mazdack Rassi, Jenné Lombardo, and Keith Baptista slip into familiar roles. Rassi, a born host, does the ordering. Baptista, exhausted but composed, sinks into his seat—he just produced Altuzarra, his third major show in three days. Lombardo, meanwhile, keeps a restless eye on the table next to us, where a group of vanilla-looking young ladies are eating fondue and giggling as they sip from a communal punch bowl. Lombardo tries valiantly not to comment, but holding back is simply not her style. "Missionary sex," she snipes. "All year long."

Mogul talk it isn't. Lombardo's knack for trash talk is matched by her late-night stamina, and Rassi, too, seems to come alive when those around him are throwing back shots and clapping shoulders. (Baptista keeps more conventional hours, not to mention a lower profile. "I'm the safe one," he told me.) But their festive lifestyle takes nothing away from the fact that Made has become a serious enterprise, and one that's growing fast. Since 2009, when Made launched with MAC cosmetics as a sponsored initiative that provided 27 emerging New York designers with presentations at Rassi's Milk Studios free of charge, the program's profile and reach have skyrocketed. The party spirit isn't beside the point. It may be a major part of it.

On one level, the flag that Made has planted is about brick-and-mortar. There's been a perceptible geographic shift of New York fashion week in recent seasons, away from the carpeted, trade-show atmosphere of Lincoln Center and toward downtown. This shift comes to a head at Milk Studios, the Made headquarters. Made, its founders want to make clear, isn't Milk. Milk hosts it, and Milk also exists outside of it: as a year-round photo studio, gallery, and general crossroads of everything from music to the skater scene. Milk is a venue. Made is a "culture," an "ecosystem." You might invoke the all-powerful B-word: It's a brand.

Unlike venues, cultures and brands can travel, and a pair of ambitious recent efforts to export Made outside the downtown environment aim to help it do just that. One was the transfer of the trio's sponsored-hub model to Paris, the other the debut of their first collection, Made4Impulse, for the fashion-forward Macy's line. It begs the question: Does everyone want a piece of Made? On the retail side, the answer isn't yet clear. But on the sponsorship side, interest is high: Though MAC remains an important partner for Made, there's now a flow of inquiries so steady that a major agency, CAA, has been brought on to help sift through them.

Whatever else the trio's intentions may be, kicking up dust is key among them. "Disruptive" is how Rassi describes their approach, with boyish enthusiasm. "People say we're breaking the rules," Lombardo says. "I think we just saw the necessity for change."

It all began with a photo studio. Rassi, then working in real estate, opened Milk in the nineties. Calvin Klein showed there starting in 1998, and Rassi would let unknown designers piggyback on those shows with presentations of their own. The up-and-comers paid what they could for the privilege—until 2009, when the economy was in the tank and they couldn't pay at all. Rassi discussed the situation with Lombardo, who at that time worked for MAC. She convinced her bosses there to bankroll designer presentations and events at Milk—in exchange, Rassi said with offhand canniness, for "a little R&D."

Rassi remembers the early days fondly. "The energy was unbelievable. Kids running through the hallways, high-fiving each other—it was true collaboration, true New York." Realizing they needed production know-how, he and Lombardo brought in their friend Baptista, a highly respected event and show producer.