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Nurses at a hospital in Dubai. Industry sources say a 14 per cent rejection rate by insurers is hurting the bottom line. Picture for illustrative purposes only. Image Credit: Ahmed Ramzan/ Gulf News

Dubai: Hospital operators in Dubai are facing the same problems as the city’s residents do when seeking treatment — delays in getting insurers to process and approve their claims fast enough.

But in the case of the former, such delays are proving extremely injurious to the well-being of their business operations.

It has reached a stage that the processing of claims submitted by health care operators could take anywhere over six months and even stretch to as long as two years.

And these are not insignificant amounts either, thus impacting on the cash flow of the hospital or clinic.

“Health care sector operates on a heavy operating expenditure, which is why any delay in recovering dues from insurers can be critical to a business’s well-being,” said Jobilal Vavachan, CEO at Aster Pharmacy and Clinics, in a recent interview to Gulf News.

14%

rate of rejection of claims by insurers in 2018, up from 10% in 2017

“Even worse is the increase in rejection of claims by insurers — from less than 10 per cent of all claims submitted in 2017, it has shot up to 14 per cent at the end of last year.”

Health care sector operates on a heavy operating expenditure, which is why any delay in recovering dues from insurers can be critical.

- Jobilal Vavachan, CEO at Aster Pharmacy and Clinics

The rise should also be taken in context of Dubai now having mandatory medical insurance for all, which obviously has led to a surge in insurance claims filed by hospitals and clinics.

But, even then, industry sources say, a 14 per cent rejection rate is hurting the bottom line.

“This directly impacts on a hospital or clinic’s revenues — there definitely needs to be a much better way this issue is handled,” Vavachan added. “Right now, this is proving quite a burden for the health care operators.”

Others in the local health care sector echo these opinions, with some suggesting that insurers are getting away playing hard ball.

Hospital operators have been voicing these concerns to Dubai Health Authority, and hoping it would intervene decisively to create a more level playing field.

Health Authority set to enforce strict guidelines

So, what can the DHA do? Should guidelines be brought in ensuring all claims are processed within a definite time frame, which would even apply to re-submission of rejections?

According to Saleh Al Hashimi, CEO of Dubai Health Insurance Corporation (DHIC), which oversees the process in the emirate, “Guidelines have been there. However, we are now revising them and we are going to put strict policies in place on both adjudication and settlement.

Guidelines have been there. However, we are now revising them and we are going to put strict policies in place on both adjudication and settlement.

- Saleh Al Hashimi, CEO of Dubai Health Insurance Corporation (DHIC)

“Having said that, the [insurance] payers and [health care] providers are two business entities that engage with each other in legally binding agreements.

“Therefore, they should know their rights clearly under such agreements.”

Health care operators are hurting

It has been a difficult few months for the health care industry. There has been much market talk about layoffs, extended “vacations” for personnel, and even cuts in the salaries and benefits to even doctors. A lot of this stems from what the wider economy went through and the subsequent job losses that happened across industries, which also led to families being forced to return to their home countries.

Guidelines have been there. However, we are now revising them and we are going to put strict policies in place on both adjudication and settlement.

- Saleh Al Hashimi, CEO of Dubai Health Insurance Corporation

One health care operator puts the cost of delays or rejections of insurance claims on a clinic in stark numbers. “To set up a mid-sized clinic with five or six doctors and support staff, you need a capital expenditure of Dh5 million to Dh6 million, based on today’s cost structure. To that, you will need a monthly working capital requirement of Dh1 million or so.

“If insurance claim payments are received only after six months, a newly set up centre will not be able to function effectively. The challenge then becomes how to manage the internal payment cycle, which is why there are so many stories circulating about salary delays, staff retrenchments, and even closures of a business.”

Where the solutions lie

If insurers and health care operators arrive at a system where claims get squared off within three months, that should give hospitals and clinics some breathing room. Most industry sources agree that anything lower than a three-month claims cycle would be difficult to maintain.

Insurers, on their part, believe that ample time is required to process, because not doing that would only lead to a surge in the costs they have to bear. For now, most insurers are operating profitable medical lines, unlike in their motor or general insurance business.

But insurers reckon that some sort of give and take should be there for all parties. For the longer term, the solution lies in digitising the entire claim submission and approval process.

Delays in payment have led to the suspension of services to insurers or affected the capabilities of providers to continue services.

- Leigh Dauncey, Sales Leader at Mercer Marsh Benefits

Leigh Dauncey, Sales Leader at Mercer Marsh Benefits, “Our concern would be the potential impact this could have on our clients in terms of access to care. As we have seen in other markets, delays in payment have led to the suspension of services to insurers or affected the capabilities of providers to continue services.

“The ultimate solution is the digitalisation of the entire end-to-end process, which will have a positive impact, reducing the administration burden on providers and insurers and reducing the time spent on account reconciliation.”

He’s got a point … but for the moment, local health care providers just want to get their dues. Paid back ASAP.

* The delay in processing insurance claims and clearing payments is entirely a business-to-business issue between the insurer and health care provider. Health care operators are quick to point out that none of the delays in claims processing directly affects insured individuals seeking medical care. As soon as the insured has his requests approved by his insurer, the consultation and treatment can start.

* Health care operators flag the rise in claims rejections as impacting their cash flow as much as delays do. “Because if you have made a claim for Dh700 with the insurer and then it finds a service that was provided for Dh60 was wrong, then the entire claim gets rejected,” said a hospital operator. “Then we have to go through the whole re-submission process. We’ve received statements of claims from 2016 being sent back in April last.”