1. Health Insurance – Role of TPAs May 2016 Strictly Private and Confidential 1

2. 2 Important Questions How do you put a giraffe in a refrigerator? How you put an elephant in a refrigerator?

3. 3 Important Questions (Cont…..) The Lion King is hosting a conference. All of the local animals are in attendance but one. Who is not present?

4. 4 Accident > Case Study 34 year old Indian male found unresponsive in a US residential swimming pool and could not be resuscitated Declared Dead by the reporting doctor after 45 mins of resuscitation ECG tracing was flat lined On autopsy, there were findings of: Pulmonary edema Active Lymphatic myocarditis of the cardiac conduction system No evidence of external/internal injuries He had no past history of any cardiac problems or any other health issues He was with his family in the hot tub before he went into the swimming pool with a lower temperature Was it an accidental death?

5. History of Medicine Stakeholders in Health Insurance Role of TPAs & Market Potential Health Insurance in India Contents

6. 6 History of Medicine > How did it evolve Medicine begun about 15000 years back Was defined as the Science of Uncertainty & Art of Probability The 1 st Recorded Doctors – SHAMANS Knowhow about Health, Life & Death Causes of Diseases – Evil Spirits, Demons, Vengeful Gods, Imbalance in the humors of the body Treatment Prescribed- Sacrifices Blood letting Medication Primitive man believed that spirits residing in the head created diseases Trepanning was done as the first ever “surgery” …to release the evil spirit

7. 7 Medicine > Milestones Hippocrates, “Father of Medicine” separated Practice of Medicine from Religion & Superstition Developed “Conduct for Doctors” First Epidemiological thinking Patients Symptoms, diet & fluid intake exercise Occupation Season of disease “Hippocratic Oath” taken till date Any doctor could be bribed into killing a patient….so the clause ‘ I will do no harm’ was imbibed Galen: 4 humors in balance: Blood, Phlegm. Black bile & Yellow bile Wrote Medical Books and started teaching First anatomist “OF AIRS, WATERS & PLACES”

8. 8 Surgery > Milestones Traditionally distinct from physicians Surgery is derived from Greek words for work and hand Barber Surgeons Physicians were more literate Mister/Doctor

9. 9 Medicine > Advancements Emergence of Iconoclasts Translation of Medical Books Common Sense Imagination Hard work & Dedication World Wars & Pandemics Discipline Engineering Technology

10. 10 Hospital > Advancements

11. 11 Medicine > Where we are today…..

12. India > Health Insurance Landscape 12 TH FIVE YEAR PLAN (2012-17) GOAL: 7-8% OF GDP Expenditure on Health: 4.1% of GDP (2013) - $ 80 Billion 63% Out of pocket expenses Hospital Industry: $ 46 Billion 25-30% population covered by Health Insurance for hospitalization Another 10% of population covered by non-insurance employer funding WORLD HEALTH EXPENDITURE Average Expenditure on a Western World view stands at 17- 22% of GDP USA 75% of total population covered by Health Insurance Healthcare: $ 80 Billion INDIA

13. 13 India > Health Insurance Landscape In “1 st Five Year Pan”, Govt of India envisaged Healthcare Delivery & Financing as primary responsibility of the State Healthcare is a concurrent subject i.e. both central & state govt. responsibility However the Govt expenditure as % of GDP hasn’t commensurated with the demand by population apart from the quality of delivery Currently, India faces a double burden of diseases: Infectious & Life style related Though, the measurable indices (IMR, MMR, Mortality Rate, Morbidity Rates) have shown improvement, India lags behind with disparity in accessibility of ‘Health to All’ To keep India’s Healthcare system in pace with its economic growth, would mean an increase in availability & health equity to each socioeconomic group Healthcare Goals can be summarized as: Improved Health Indices Pooled risk sharing, in conjunction with Government programs to avoid financial catastrophe Improved Healthcare Provision at all levels of Health…Preventive, Promotive & curative

14. 14 India > Healthcare Schema Public Healthcare Grant In Aid Providers Private Providers

15. 15 India > Public Health Care Landscape PUBLIC HEALTH CENTER COMMUNIT Y HEALTH CENTER RURAL HOSPITAL DISTRICT HOSPITAL TEACHING HOSPITAL TERTIARY CARE HOSPITAL TREATMENT IS SUBSIDIZED/FREE

16. 16 India > Private healthcare Schema NURSING HOMES, POLYCLINICS, TERTIARY HOSPITALS DISPENSAR Y, PHARMACY AYUSH/ ALLOPATHY FAMILY PHYSICIAN ANM, RMO, “WITCH DOCS” Utilization is primarily “Private Practitioner” Driven

17. 17 India > Healthcare Cost Private Sector CAGR -2% 12-14% 5-6% 9-10% Growth expected in Private Healthcare Delivery Format – Primary Healthcare Centres & Family Practitioners Secondary Care Hospitals – Multi Specialty Tertiary Care Hospitals – Super Specialty 70% Out Patient In Patient 80% The private sector has more than 70% market share in Out-patient and more that 80% market share in In-Patient care; however predominantly in urban areas. Currently, there are 300+ National wide programs implemented Utilization shows a trend of shift from Government Hospitals to Private Hospitals Reasons: Under par Expertise Infrastructure Quality of Care: Pre & Post Hygiene factors Shift in utilization to the Private Sector, increases the burden on Cost Risk sharing through Insurance is the instrument, through which better utilization of health resources is possible

18. 18 Health > The Iron Triangle Budget Allocated for Health Patient Access Insurance: Health& loss of Work Accessibility to expertise & Infrastructure Faster Diagnosis * Lawton Robert Burns Determining the right thrust and mix among the 3 angles constitutes a balancing act in resource allocation….the 180* law is sacrosanct Efficiency/Cost Containment Risk Pooling/Sharing Better Primary, Preventive & Promotive Care Low Priced, High Output Health Products High Quality Care Latest Medical Advancements Stringent Accreditations Levels for Provider/ Suppliers

19. 19 India > Health Insurance One of the forthcoming vertical under Insurance is “Health” In spite of constraints in market dynamics, Health Insurance has continued to grow, with a CAGR of 37% Currently, 25% of population covered, however for Universal Health Coverage, the Health Insurance by 2020, is predicted to be INR 40,000 Crore Professionals required to run this industry have increased in the same proportion, for all stakeholders Increasing trends in Health Insurance, will necessitate turning the current “Unregulated” Market into a “Regulated, Standardized Market” This will require expertise with market knowhow, to create a streamlined healthcare Delivery & financing System Innovation in Product Design, Sales & Marketing, Provider Networking, Standardization will be the “ need of the Hour” 37% CAGR

20. 20 The Healthcare Insurance Market in India Forecast Due to increase in insurance penetration and density, Health Insurance Premiums has grown at a CAGR of 32% between 2005-13 and this growth is expected to continue at a consistent pace in the following years. Public General Insurance Companies have a market share of close to 61% of total Health Insurance. New India Assurance Company Limited, National Insurance Company Limited, United India Insurance Company Limited, Oriental Insurance Company Limited are the key players Private General Insurance - 18 companies including ICICI Lombard, Bajaj Allianz, Royal Sundaram, Cholamadalam, HDFC Insurers dealing with Health have increased from 18 to 26 in the last 10 years Standalone Health Insurers include players such as Star, Apollo Munich, Max Bupa, Religare etc.. There are also certain life insurers with health component such as LIC, Maxlife etc

21. 21 India > Health Insurance Healthcare Insurance products have evolved over time, with a current wide array of designs. The policies have been designed from “All Exclusive” to now being “All Inclusive” products including: Vanilla Products: Mediclaim Senior Citizens Policy Products with coverage for Dental, Vision & OP Hospital Cash Benefits Personal Accident policies DRG products Specific Ailments (Critical Ailments, DM/HTN cover, Maternity Cover, AYUSH cover, HIV cover, Congenital Disease cover) Health Insurance Products : All Exclusive to All Inclusive Factors Driving Health Insurance Challenges and Opportunities facing Health Insurance Market Detariffing State & Centre Govt projects World bank funding Tier 2 & 3 cities Reinsurance Increase in Proposed FDI Opportu nities Indemnity cover Underwriting losses ↓Penetration ↑F&A claims No MX advancements covered Market GP driven Cross practice Wellness not practiced Consumers OP cover Specific Ailment Vision Dental Products Wellness management Risk assessment Disease management Promotive Preventive Health Indices Risk assessment Awareness drives Claims management Self Insured Corporates Unregulated segment Non standardized rates Non standard treatments Providers Poor access to health ↑Disparity for RX Poor accreditation stds Infectious disease on rise Govt. project not viable Governance Customer 70% with no Health Insurance ↓Death rate, ↑birth rate Increased awareness ↑ Employee benefits Provider Rising cost of treatment Medical advancements Increase in Corporate hospitals Challenge s

22. 22 India > Health Insurance Stakeholders Governmen t Employers Individuals Philanthropi c Orgs Health Insurers Managed Care Health Plans for Masses Hospitals OP Care Physicians Alternative Medicine Nursing Homes Pharmacies Wholesalers Distributors Group Purchasing Orgs Pharmaceut icals/Biolog ics Medical Devices Surgical Devices Medical Suppliers PAYERSPROVIDERS PRODUCERS ProvidersDistributorsSuppliersInsurersPayers REGULATORS CONSUMERSPUBLIC HEALTH

23. 23 India > Role of TPAs

24. 24 India > TPA Concept Concept of the Third Party Administrator commenced in 2001 Basic Goal: Act as an intermediary between the Insurer & Beneficiary Facilitate Cashless benefit to the policy holders Eligibility: Registered under Companies Act Only function as a TPA Paid Up Capital: INR 1 Crore At least one of the directors of the TPA will be a Doctor with MCI registration Foreign equity not to exceed 26% CEO & CAO have to be certified in Insurance (Fellowship or Associateship) License is granted by IRDA for 3 years At present, there are 28 licensed TPAs, with 5 major players, controlling about 70% of the TPA market

25. 25 India > Scope pf TPAs Financing & Insurance Care ManagementCare Delivery Product Developme nt Pricing Risk Assessment Client Mgt. Sales/Chan nel Mgt. Governmen t Mgt. Customer Mgt. Claims Customer Service Enrollment Billing Software Telecommu nication Education & Awareness Appeal/ Grievance Mgt. Member Services Network Developme nt Provider Education Credentialin g Practice Mgt. Analysis & Reporting Utilization Mgt. Case Mgt. Demand Mgt. Disease Mgt. Outcome Measureme nt & Monitoring Quality Mgt. Primary Care Specialty Care OP Care Pharmacy Ancillary Care Long Term Care Rehabilitati on Care

26. Case Studies 26 TPA Capabilities > Cost Containment > Fraud and Abuse  Databases of Procedures  Databases of Providers  Databases of High End Drugs  Databases of Implants  Definitions of Room Rent Inclusions  Health Index: benchmark Average payout for procedure In addition to field investigations, abuse has been reduced by use of the following  Incidence Rates per Procedure per district  Utilization per hospital per procedure  Physician Database & Utilization review of each physician  Multiple hospitalizations of same family  Incidence of Emergency hospitalizations  More than 100% occupancy of hospitals  LOS too high/low as per STGs  Exceptions like complications/comorbidities beyond predefined target  High incidence of infectious diseases in non endemic geographies Abuse Triggers  COLI  Hospital Type  Comorbidity  Complications  Demographics of Patient  Qualifications of Providers Based on various triggers, a scoring pattern has been created. Each hospitalization is scored if found in suspicious category; full fledged investigation is to be conducted

27. 27 MDIndia Capabilities > Current Team & Manpower Scalability Training Team members with 2 MBBS Trainers 12 Non Medical Staff 2254 Para Medical Staff 8 Allied Medicine Doctors 317 MBBS Doctors 31 MD & Above Doctors 48 Current Talent Pool Founded in May 2011, MDIndia NetworX is the sister concern of MDIndia TPA, one of India’s largest IRDA Licensed Third-party Administrator (TPA), currently servicing more than 80M members in 11 states. We work with a network of 5000 healthcare providers, 2500 professionals which include more than 400 doctors

28. 28 India > Role of TPAs EarlierPresentFuture Insurance companies covering hospitalization costs. alone Limited penetration of health insurance policies Limited presence of TPAs Insurance companies covering hospitalization costs and also exploring outpatient cost coverage Wider penetration of health insurance policies – Need for TPA services Significant growth in # of TPAs Extensive OPD +IPD insurance cover TPAs extending front end services – Primary care Growth in Managed Care concept EVOLUTION OF TPA Increasing health treatment costs ~80% of healthcare expenses in India is borne by the individual calling for innovation in Insurance segment offerings Gatekeeper Model Insurance companies' need to contain costs – Preventive care LEADING FACTORS ENTRY LEVEL Operations Corporate Servicing Client Servicing Customer Care MIDDLE MGT Backend Ops Transition Team Business Excellence Wellness Mgt. Provider Mgt. SENIOR MGT Regional Heads Project Heads Process Heads CORE TEAM Pan India Ops Head Finance Head CMOs CEOs CAOs

29. 29 Questions……..