MR Microinsurance_2012_03_29.indd - International Labour ...

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6 Third-party payment mechanisms in health
micro insurance
Pascale LeRoy and Jeanna Holtz
This chapter is adapted from Microinsurance Paper No. 13, published by the ILO’s Microinsurance Innovation
Facility (2011). The authors wish to thank the following persons for their useful feedback and suggestions:
Lisa Beichl (Milliman), Denis Garand (DGA), Ryan Lynch (MicroEnsure) and Tara Sinha (VimoSEWA).
Some health microinsurance (HMI) schemes require patients to pay cash when
they receive healthcare services and then submit the receipts so that they can be
reimbursed by the insurer. For low-income households who may have to borrow
the funds from family, friends or moneylenders to pay for health care – and run
the risk that the insurer might reject the claim – the reimbursement method can
cause severe financial hardship that significantly decreases client value.
One way to alleviate this up-front payment is to set up a third-party payment
(TPP) mechanism with selected healthcare providers. A TPP can be defined as a
model for claims payment in which insured patients are not required to pay for
the cost of health services covered by the scheme. With the exception of any costsharing
(e.g. co-payment, deductible), an insured patient need not make an outof-pocket
payment when using healthcare services, and a third party (the HMI
scheme or another entity on behalf of the scheme) pays the healthcare provider
for the covered services it has provided to the patient. 1 TPP mechanisms encompass
terms of payment negotiated between the third party and preferred healthcare
providers, and usually include components to manage medical care such as
pre-authorizing hospital admissions.
This approach is not new in health insurance, though setting up and managing
a TPP mechanism for HMI poses unique challenges. Using a practice-based
approach, this chapter identifies lessons learned on the efforts of TPP mechanisms
to provide “cashless” access to insured persons (see Box 6.1).
The evidence for this chapter comes from a literature review, an online survey
of HMI schemes conducted by the ILO’s Microinsurance Innovation Facility in
2009, key informant interviews and, most importantly, in-depth case studies.
Seven schemes (see Table 6.1) were selected to detail lessons on designing and
managing a TPP mechanism. The selection criteria for inclusion of an HMI
scheme as a case study included its contribution to geographic diversity, and its size
(minimum 10 000 insured persons) and longevity (in operation for at least three
years).
1 Adapted from the glossary of the ILO’s Global Extension of Social Security (GESS).