Revolutionizing health insurance: The potential of claims exchange and ABHA ID

Imagine a unified platform where all hospitals, insurance companies, and stakeholders come together to digitize and streamline this process. Enter the National Health Claims Exchange (NHCX), an initiative developed by the National Health Authority (NHA), the Union health ministry, and the Insurance Regulatory and Development Authority of India (Irdai). This digital public good promises faster, transparent, and efficient claims processing, enhancing patient experiences while reducing operational costs.

What was once a concept became a reality last week when insurers such as Reliance General Insurance and HDFC Ergo became among the first to process a claim through NHCX. An HDFC Ergo policyholder undergoing a planned medical procedure at Jupiter Hospital in Thane, near Mumbai, had their policy details effortlessly fetched using the ABHA ID (Ayushman Bharat Health Account Identity) after the hospital notified the insurer.

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"We provided pre-authorisation approval within 39 minutes and the discharge approval was completed in 49 minutes. The auto filling of the patients' policy details in NHCX expedited the entire process, ensuring a swift response and we successfully processed the claim of ₹45,345," says Parthanil Ghosh, president – Retail Business, HDFC Ergo General Insurance.

The current scenario versus NHCX

Currently, patients must present their insurance cards to hospital staff, who manually fill out claim forms, scan documents, and upload them to the insurer's platform. This manual verification process is fraught with friction due to non-standardized and non-digital procedures.

NHCX aims to revolutionize this. Each policyholder will have an ABHA ID, a digital healthcare identity akin to the Aadhaar for citizen identification. Healthcare providers will share patient details through this ID, and insurers can access it similarly. NHCX, combined with ABHA ID, acts as a communication protocol among payers (insurance companies), providers (hospitals, nursing homes), beneficiaries (policyholders), and other entities. The system is designed to be interoperable, machine-readable, auditable, and verifiable for accurate and trustworthy information exchange.

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Digitizing the entire healthcare chain, however, presents significant challenges. "The success of NHCX will depend on the network of healthcare providers being integrated on the platform and policyholders generate their ABHA ID for storing our health data. I would like to see a heightened awareness among citizens and hospitals about the same along with policyholders opting for cashless mode of claims settlement," noted Ghosh.

The ABHA ID card

To process claims via NHCX, obtaining an ABHA health ID card is mandatory. This unique 14-digit digital identification number stores a person's entire medical history, from consultations and prescriptions to diagnostic tests. This central repository simplifies access and tracking of health documents for patients, hospitals, and insurers. As of February 2024, over 525 million ABHA IDs have been created.

"ABHA ID creates a centralized repository for your medical records, simplifying the sharing process with healthcare providers and insurers. With your medical history readily available, doctors can offer more informed treatment plans, and ABHA ID can streamline insurance claims by easing medical record retrieval," explained Narendra Bharindwal, vice president at Insurance Brokers Association of India (IBAI).

Data privacy issues

To be sure, without patient consent, no third party can access their details. Only qualified institutions across the healthcare segment are authorized to source health records, according to Anuj Parekh, Co-founder and CEO of Bharatsure.

"While on paper, a robust data privacy mechanism is in place, it remains to be seen how the issue of data privacy evolves as it is yet to get implemented on a wider scale," he said.

Incentivizing policyholders to obtain an ABHA ID could further streamline insurance processes.

Insurance companies should develop use cases for the purchase front, such as offering discounts for sharing personal health records, Parekh suggested.

Integration of healthcare providers

The challenge of integrating all hospitals and nursing homes into the NHCX platform remains. While some may lack the resources to join the digital infrastructure, HDFC Ergo's Ghosh is optimistic.

Even small nursing homes now have the technology to integrate with open APIs, he said. "Why I am saying so is because out of HDFC ERGO’s Ergo's 12,000+ network hospitals, almost 1,700 which contributes more than 50% of the claims are in the advanced stage of getting integrated with NHCX. We have already onboarded eight hospitals as guided by NHA and General Insurance Council as part of the pilot project," Ghosh added.

To support this integration, the government has launched the Digital Health Incentive Scheme (DHIS), encouraging healthcare institutions to join the NHCX ecosystem. "NHA is actively working to include nursing homes and hospitals in the National Health Consent Ecosystem (NHCE) through incentive programmes, offering rewards to healthcare providers for joining the NHCE. Additionally, they are collaborating with healthcare associations and organizations to promote the benefits of NHCE participation," said Bharindwal of IBAI.

Impact on insurance costs

Industry experts believe that digitizing the claims process will enhance transparency and reduce operational costs. This reduction should be reflected in lower insurance premiums, as decreased insurance fraud—a significant factor in premium hikes—will mitigate unnecessary expenses.

Additionally, hospitalization costs are expected to decrease due to the increased efficiency of the system. It will be interesting to see if insurance companies and hospitals will pass on the cost benefit to the people. Ghosh said while premiums may not come down (since medical inflation will continue to be on an uptrend) immediately but the rate of increase in premiums will surely come down with lower fraud rate and reducing operating cost.

The road ahead

The NHCX initiative is just beginning, setting the stage for a digital ecosystem to address long-standing issues in hospitalization and claims processing. The industry must prioritize integrating with the platform to meet Irdai's directive of authorizing cashless hospitalization within one hour and final discharge approval within three hours, with a deadline of 31 July.

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"The digitization efforts of the UK's National Health Service (NHS) and the USA's Health Information Exchange have yielded mixed results. It is expected that this initiative will take a considerable amount of time before achieving its defined objectives. With continuous collaboration and investment from all stakeholders, it can bring a win-win solution for customers, hospitals, and insurers," says Surinder Bhagat - vice president, Employee Benefits at Prudent Insurance Brokers.