Explained | MEDISEP, Kerala's health insurance scheme

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A comprehensive health insurance scheme for government employees and pensioners has been a longstanding demand. The ball was set rolling during the second year of the first Pinarayi Vijayan ministry. The then Finance Minister T M Thomas Isaac declared the government's intent, without giving the proposed health insurance any name, in his 2017-18 Budget Speech.

Now, in the second term of the second Pinarayi Vijayan Ministry, the health insurance scheme has evolved into perhaps the country's largest health insurance scheme for government employees and pensioners. It is said the three-year scheme will benefit 30 lakh people.

It has a basic package and an additional package for 'catastrophic' illnesses, both together for a premium of Rs 500 a month.

The scheme has been christened Medical Insurance for State Employees and Pensioners, better known by its acronym MEDISEP. Chief Minister Pinarayi Vijayan will launch MEDISEP on July 1.

Basic Benefit package

MEDISEP will provide coverage of up to Rs 3 lakh per annum for the eligible expenses incurred by the beneficiary for the listed procedures under the Basic Benefit Package (BBP) for three years. A total of 1920 treatments and surgical procedures will be covered under the scheme.

The beneficiary has to be admitted for at least 24 hours to be eligible.

The BBP coverage includes the cost of medicines, procedures, doctor and attendant fees, room charges, diagnostic charges, implant charges and dietary charges availed from empanelled hospitals.

The most number of treatment packages under the BBP is for general Surgery: 197. Cardiology has 168 packages, and surgical oncology has 156 packages. Dental surgery has 147 and orthopaedics has 144. Plastic surgery has 111.

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Sum assured under BBP

The beneficiary will have a coverage of Rs 3 lakh a year. Even then, a 'floater' mechanism embedded in MEDISEP can enlarge the coverage up to even Rs 6 lakh.

Here is how. Out of the Rs 3 lakh, Rs 1.5 lakh is fixed in nature and the other Rs 1.5 lakh can be utilised on what has been called a "floater basis" each year.

Meaning, that the first component of Rs 1.5 lakh, which is fixed, will lapse at the end of each year. The floater component, if not exhausted in the year, can be carried over to the subsequent years of the policy.

This means that if the floater component is left unutilised in the first year, it will spill over into the next year and provide the beneficiary with an insurance cushion of Rs 4.5 lakh. If still left unused, the floater component will further bulge, giving the beneficiary a cushion of Rs 6 lakh in the third year.

Cashless facility and other benefits 

MEDISEP will provide a cashless facility for the enlisted procedures and will cover all pre-existing diseases. The coverage is restricted to the empanelled public and private hospitals under the scheme.

However, in case of accidents or other medical emergencies included in the approved list of treatment and procedures, coverage will be provided even if done in non-empanelled hospitals. But in such cases, it will not be cashless. The treatment cost will be reimbursed to the beneficiary based on the approved rates/package of the scheme.

The expenses incurred for the 15 days till the hospitalisation (pre-hospitalisation period) and for 15 days after hospitalisation (post-hospitalisation phase) will also be covered under the scheme.

New-borns, including twins, of an insured mother will be covered from day one up to the expiry of the current policy plan period. All congenital diseases of new-born will also be covered under the scheme.

‘Unspecified Procedures’ will also be covered under the BBP but the insurance amount will be limited to Rs 1.5 lakh. New diseases like COVID-19 will also be covered based on the regulatory provisions issued by the Insurance Regulatory and Development Authority of India (IRDAI) from time to time.

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Basic Benefit Package rates

The costing of the BBP package includes three components: procedure cost, implant cost if any, and room charges.

Procedure costs - It will include all cost components related to medical consultation and treatment: pre-hospitalization expenses, medicine and consumables, diagnostic and laboratory investigations, procedures including surgeries if any, doctor, and nursing charges, discharge medicines, and post-hospitalization review if required. 

Implants - The cost of the implants will be based on the maximum ceiling price fixed by the National Pharmaceutical Authority of India (NPPA). 

Room rates: For General Ward up to Rs.1000; for Semi-Private Ward up to Rs.1500 and Private Ward up to Rs 2000. Any charge over and above the

ceiling rates prescribed would have to be borne by the patient. 

Costly procedures under BBP

The costliest procedures under the BBP are in Cardiosurgey, the ceiling rates for most of which are in the Rs one lakh and Rs two lakh range. 

The costliest procedure under the BBP is Aortic Stenting (Single), for which the approved rate is Rs 5.78 lakh, which is above the insurance coverage. The patient will have to bear the additional cost. This procedure is the only one in BBP that costs more than the maximum insurance cover of Rs 3 lakh. 

However, the floater component will allow beneficiaries to cover even this cost. If Rs 1.5 lakh is left unused for two years in a row, the patient will get a total cover of Rs 6 lakh in the third year.

The ceiling for Intracranial balloon angioplasty with stenting, a highly in-demand procedure, is Rs 2.03 lakh.

Catastrophic illness

In addition to the BBP coverage, MEDISEP will include an additional package for transplant/catastrophic procedures. Catastrophic illness has been defined by MEDISEP to mean severe illness requiring prolonged hospitalization for recovery. These illnesses (speciality and super speciality) involve high costs for treatment and may incapacitate the person from working.

Catastrophic packages include liver transplant, bone marrow/stem cell transplant, cochlear implantation, renal transplant, knee joint replacement, total hip replacement, auditory brainstem implant, isolate heart/isolated lung transplant, heart-lung/double lung transplant, and cardiac resynchronisation therapy with a defibrillator.

Catastrophic package costing

The costing of the catastrophic package is inclusive of four components: procedure charges, implant costs, room charges and investigation costs.

All the packages will have a single package rate and any additional expense above the ceiling rates will fall on the beneficiary.

The ceiling rate for liver transplants, for instance, is Rs 18 lakh. For renal transplant, it is Rs 3 lakh. For heart-lung transplants, it is 20 lakh. For a cochlear implant, it is Rs 6.39 lakh. For total hip replacement, it is Rs 4 lakh. And for an auditory brainstem implant, it is Rs 18.24 lakh.

Nonetheless, the attendant medical or surgical complications will also get covered in the package and empanelled hospitals have been told that the additional amount should not be charged from the beneficiary.

The insurance company has set apart a corpus fund of not less than Rs 35 crore exclusively for catastrophic illnesses.

Beneficiary contribution

An amount of Rs 500 will be deducted from the salary of employees and the monthly gross entitlement of pensioners during the three years of the scheme. The annual contribution, therefore, will be Rs 6000 per beneficiary.

Though Rs 6000 will be deducted from the beneficiaries, the government will annually pay only Rs 4800 (plus GST) per beneficiary to the Oriental Insurance Company Limited, which has been awarded the tender to implement MEDISEP.

This additional premium collected from the beneficiary will be used by the insurance company if the corpus of Rs 35 crore it had set aside for catastrophic illness proves to be inadequate. 

Who will benefit

The scheme is intended to provide comprehensive health insurance coverage to all serving employees of the State Government, nearly five lakh of them, who are covered under the existing Kerala Government Servants Medical Attendant (KGSMA) Rules, 1960, and an approximately equal number (5 lakh) of pensioners.

Service employees include teaching and non-teaching staff of Aided Schools and Colleges. Besides, employees of the universities who receive grant-in aid from the State Government and Local Self Government Institutions and the directly recruited personal staff of the Chief Minister, ministers, Leader of Opposition and Chief Whip, Speaker, Deputy Speaker and the Chairmen of the Financial Committees have also been included as beneficiaries. 

Even the employees of the High Court of Kerala are also included, as they too come under the KGSMA Rules.

Pensioners include teaching and non-teaching staff of aided schools and colleges, and pensioners of the universities which receive grant-in-aid from the State Government and LSGIs. The directly recruited personal staff pensioners/family pensioners will also benefit.

In addition, the scheme will also include newly recruited employees and their families, part-time contingent employees, part-time teachers, teaching, and non-teaching staff of aided schools and colleges and their family and pensioners and their spouses and families pensioners on a compulsory basis.

Joining the scheme will be mandatory for all the above categories. However, for Civil Service officers serving under the Government of Kerala, joining the scheme is optional.

If beneficiaries and their dependents are factored in, the total number that would benefit from MEDISEP will be over 30 lakh.

Who are the dependents 

Partner. Parents who are fully dependent on the beneficiary. Children.

If both the parents are beneficiaries, children will be included as dependents of only one beneficiary. 

Who will not benefit

The employees and pensioners of autonomous bodies, cooperative institutions and boards will not be eligible - the employees and pensioners of KSRTC, KSEB and Kerala Water Authority. Employees and pensioners of the Human Rights Commission and the State Information Commission have also been left out.

What if an employee opts out

If an employee opts out during the policy period, she can ignore the remaining premium if no claims were made while in office. But if claims were made under the BBP, she will have to pay the premium of the entire year or years she had been a beneficiary; if she had ejected out in the first year itself, she has to pay only Rs 6000, the annual premium. If she had benefited from the 'additional benefit package' for catastrophic illnesses, she will have to pay Rs 18,000, the entire premium of the policy period of three years, irrespective of the years she had been a beneficiary.

What if an employee is suspended

If an employee is under suspension, the premium during the period will be deducted from the subsistence allowance of the suspended employee.

What if an employee takes LWA

Those who opt for leave without allowance (LWA) for a short spell not exceeding the period of one year during the policy period will have the option to remit the premium in advance. If this is not done, the entire premium arrears will be deducted lump sum from the first salary drawn after rejoining duty.

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