What's the impact from Great Eastern-Mount Elizabeth pre-authorisation fallout? | Deep Dive podcast

Key Concepts

• Pre-authorization (Pre-auth): A service by insurers to assess a claim before admission to determine if they will pay for it, typically for planned admissions.
• Letter of Guarantee (LOG): A guarantee from the insurer to the hospital that they will pay up to a certain amount, allowing the patient to be admitted without a deposit.
• Medical Panel: A network of doctors and specialists that an insurer recommends to its policyholders.
• Fee Benchmarks: Standardized prices for medical procedures and services used to control costs.
• Reasonable and Customary: A term used in insurance contracts to define the amount an insurer will cover, based on what is considered standard for a particular service in a given area.
• Risk Adjustment: Using advanced analytical methods to compare healthcare costs and outcomes fairly, accounting for differences in patient risk factors.
• Value (in healthcare): The outcome of a medical service divided by the cost of the resources used.

Great Eastern's Policy Change

• Great Eastern (GE), a major Singaporean insurer, has stopped pre-authorization for Mount Elizabeth Orchard and Mount Elizabeth Novena hospitals.
• This means policyholders may need to pay upfront and seek reimbursement later or obtain a Letter of Guarantee (LOG).
• GE is not refusing to pay claims, but making the process more challenging.
• GE's rationale is that these hospitals have higher charges for similar outcomes compared to others.
• This move aims to encourage clients to consider other hospitals with potentially lower costs.

Pre-authorization vs. Letter of Guarantee

• Pre-authorization:
  • Approval sought before admission for planned procedures.
  • Provides assurance to the patient that the claim will be paid up to the agreed amount.
  • Hospitals may waive deposits with pre-auth approval.
• Letter of Guarantee:
  • Guarantees payment to the hospital up to a certain amount.
  • Allows admission without a deposit.
  • The insurer may still assess the claim and potentially recover the money from the patient later.
  • Does not guarantee the insurer will pay for the full treatment.

Implications for Policyholders

• Increased Stress and Uncertainty: Patients may feel stressed due to the lack of guarantee about coverage and potential out-of-pocket expenses.
• Need for Education: Policyholders need to understand their insurance coverage, disease conditions, and potential risks.
• Checking with Insurer: Without pre-auth or LOG, patients should check with their insurer about coverage before treatment.
• Awareness of Exclusions: Policyholders should be aware of pre-existing conditions or treatments excluded from their policy.
• Limited Recourse: If an insurer changes its policy, policyholders have limited recourse.

Reasons for Differing Hospital Charges

• Different Customer Segments: Private hospitals cater to different customer segments with varying service expectations.
• Service Offerings: Differences in clinical expertise, equipment, and service offerings contribute to price variations.
• Facility Fees: OT (Operating Theatre) facility fees and bed charges vary significantly between hospitals (e.g., five-star vs. three-star).
• Surgeon Fees: While surgeon fees can be standardized with fee benchmarks, other costs contribute to overall price differences.

Public vs. Private Hospitals

• Public Hospitals:
  • Generally do not require pre-authorization.
  • Fees are more predictable and within insurers' acceptable ranges.
  • Experience is generally fuss-free for policyholders.
• Private Hospitals:
  • More variability in costs due to doctor pricing and facility fees.
  • Longer waiting times in public hospitals.
  • Private hospitals offer faster access to doctors and diagnostic tests.

Fine Print and Considerations

• Covered Treatments: Be aware of what is covered by your insurance policy.
• Excluded Treatments: Understand what is typically rejected, such as cosmetic or unnecessary surgeries.
• Pre-existing Conditions: Know if any pre-existing conditions are excluded from your policy.
• Value: Insurers are willing to pay for value, defined as the outcome divided by the cost.
• Service Quality vs. Clinical Quality: Differentiate between hospital facilities that impact service quality (e.g., lobster on the menu) and those that impact clinical quality (e.g., robotic surgery).

The Role of Data and Negotiation

• Data-Driven Decisions: The ability to compare healthcare costs and outcomes using risk adjustment is crucial.
• Negotiation: Insurers and healthcare providers are constantly negotiating prices and service agreements.
• Premium Inflation: Premium inflation is a concern for everyone, and insurers are trying to manage costs to reduce premium increases.
• Rising Healthcare Costs: Rising healthcare costs affect society as a whole, diverting resources from other areas like education.

The Insurer-Doctor-Patient Triangle

• Information Asymmetry: The insurer often lacks the detailed information that exists between the patient and the doctor.
• Trust: Patients rely on their doctors and insurers to work together to provide the best options.
• Cost Considerations: Insurers must balance individual patient needs with the need to be fair to all policyholders.

Future Outlook

• Premium Escalation: Premium escalation is likely to continue due to rising hospital claims.
• Equilibrium: Insurers and healthcare providers need to find an equilibrium to manage costs and ensure access to care.
• Aging Population: The aging population will continue to drive demand for healthcare services.
• Government Intervention: There may be a point where the government needs to step in to help manage healthcare costs.

Conclusion

The decision by Great Eastern to discontinue pre-authorization at two major private hospitals highlights the ongoing tension between insurers, healthcare providers, and patients regarding costs and value in healthcare. While pre-authorization provides peace of mind, it also adds administrative costs. Policyholders need to be proactive in understanding their coverage and making informed decisions about their healthcare choices. The industry needs to focus on data-driven approaches to define and measure value, ensuring that patients receive appropriate care at a reasonable cost.