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State Government to Call for New Tender as Medisep Fails

Published On Sep 17, 2019, Updated On Jan 28, 2020

The state government washed off its hands from any liability by putting the blame of Medisep’s failure on Reliance General Insurance Company Ltd (RGIL). Medisep is a health insurance programme being run for the government servants and pensioners. Under the scheme, the government was the one to decide the existing package rates that will be followed, which were to be fixed under Karunya Arogya Suraksha Paddhati (KASP). This actually leads to a complete failure, as informed. 

As told by a senior official, RGIL did not fix the rates of the treatment package. Instead, the costing committee set by the government fixed it. “However, the government had been advised that as the target population covered was different from KASP and considering the cost of private hospital rooms/wards, the rates be revised suitably. However, it was the government’s decision that the hike cannot be more than 25% and that rationalisation of treatment costs had to be brought in,” the official told. 

The government tried to talk sincerely to a lot of stakeholder hospitals in detail directly and convince them to join and participate. But Medisep started performing badly in May itself owing to government’s failure in persuading its premium health institutions including MCC, RCC, and SCTIMST to agree with the treatment package rates as per Karunya Arogya Suraksha Paddhati. 

Medisep was supposed to be launched initially on 1st June. The talks with the private sector hospitals were being carried on smoothly until May. “The crisis in Medisep was precipitated by the stalemate over the RCC and SCTIMST’s refusal to implement KASP. Private hospitals’ argument was that if the treatment package rates are not acceptable to premier government hospitals, how can it be viable for the private sector. Their argument was infallible and the collective campaign against the scheme worked." 

The government as well failed drastically in understanding the market dynamics. It also couldn’t understand the fact that many authorities were in the scene which wouldn’t want Medisep to proceed because it would affect the market seriously if 11,00,000 government servants and pensioners get an insurance cover.

Medisep has a primary yearly coverage of maximum of Rs. 2 Lakh and additional coverage of Rs. 9 Lakh for critical illnesses. When the Proposal request for the Scheme was made, the government had put a limit on the yearly premium amount at Rs. 3,600. RGIL won the tender at a quote of Rs. 2,999.

All the government insurance companies who were the participants in the original tender quoted annual premium ranging between Rs. 10,000 and Rs. 17,000.  

The government has now called a new tender to float the Medisep programme. It would have to revise the treatment package rates, which means that the yearly premium amount and a monthly contribution of the employees will also rise which is currently fixed at Rs. 250.    

But it could be a really time-consuming process and the most comprehensive and biggest insurance scheme yet, Medisep could get postponed for the longest period of time.

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