Kerala: Public hospitals facing financial crisis over non payment of claims under KASP scheme

The AB-KASP was turned into an assurance mode by the Kerala government in April 2020 through a government order when delays in claims settlement and high claims rejection rate by the insurance companies crept up. The State Health Agency (SHA) was then given the responsibility to operationalise AB-KASP in the assurance mode, in which the government would be directly involved in settling the claims.

The GO focused on, "auto approval of pre-authorisations from public hospitals," and the insurance agencies were taken away from the picture. However, the assurance mode seems to have increased the financial stress on the public hospitals in the state. 

Speaking to the Hindu, a public health expert pointed out, "Kerala’s own health financing schemes (RSBY/CHIS/CHIS-Plus and KBF) were providing most specialty and superspecialty packages, and that too at a lower resource envelope, well before the implementation of AB-KASP in 2019. The beneficiary count remains the same at 41.2 lakh families. Former Finance Minister, Thomas Isaac, had at the time pointed out that AB was going to be a drain on States because, given the low Central share, States would end up paying a premium of ₹5,000-₹7,000 per head. Yet, the State chose to launch KASP in alignment with AB." 

He said that even though AB-KASP has been able to provide free treatment to lakhs of poor people in the state, the government cannot sustain a health financing scheme without any financial discipline or cost control mechanism. 

The D. Narayana Committee was set up in 2018 with the aim to study the implementation of KASP in alignment with AB in Kerala. It had recommended the setting up of "a robust accounting mechanism to track pending payments to public hospitals" and an "effective utilization of these funds for improving service delivery in hospitals." 

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