Hospitals to drop HMOs over debts, poor tariffs

Private healthcare providers have resolved to jettison all existing contracts with private health insurance companies across Nigeria by January 31, over poor tariffs and huge backlogs of debts.

The faceoff rides on the back of loss accruing to providers from the disparity between what health maintenance organisations (HMOs) offer as a premium on enrollees and the soaring cost of services.

The Healthcare Providers Association of Nigeria (HCPAN) says members bear the larger portion of the risks in a faulty model of financing where HMOs no longer pay capitation but insist on unprofitable tariffs that leave them with roaming enrollees.

Adeyeye Arigbabuwo, national president, HCPAN, speaking at a briefing in Lagos, said the body served notices to HMOs over a year ago to restructure tariffs to include an upward review that reflects the economic realities around the operations of medical practitioners.

If operations go on based on the last agreement the association struck in 2020, health facilities would hardly survive as preparation to see and examine patients would have drained capitation – which often doesn’t come, Arigbabuwo said.

“What you see now is titled diagnosis-related tariffs. At times, they say their patients are roaming. Even if you have 2,000 enrollees to attend to, it does not increase the value of practice, nor does it spell out well what health insurance should be. As long as they don’t make capitation again, there is nothing for providers to push pre-planning,” he said.

The relationship between the duo has become a head and neck one, with the shrinking size of Nigerians’ out-of-pocket spending on health. But it now seems that the HMOs have proven effective at consistently supplying large numbers of patients that keep hospitals busy and not necessarily profitable.

The valuation of health services is based on inappropriate pricing tools, according to the association. HMOs arbitrarily set premiums on unrealistic low rates often in the bid to acquire clients and outdo competition. They also transfer assets to bidders, sometimes without revealing the whole picture of the liabilities being acquired.

Meanwhile, several medical consumables have more than doubled in costs since the COVID-19 pandemic started, while the high rate of loss of skilled manpower has raised the cost of retaining talents by at least 300 percent.

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The consequences leave facilities struggling to fund operations, impacting the quality of health outcomes for enrollees. And with the current feud and lack of clarity on how fast both parties will come to terms, tough times are ahead of patients.

Despite the benefit HMOs bring in bringing patients to providers, Abiodun Kuti, national president, Guild of Medical Directors, said the remunerations were very low and the timing of payments had been elongated despite protests.

What suffers in the situation of funding deficit is the quality of service, Kuti said, noting that inflation has caught up with the cost of operations and the tariff has not reflected it in the last three years.

Similarly, Kayode Adesola, former vice president, Association of Nigeria Private Medical Practitioners (ANPMP), explained that medical consumables sometimes determine the level and quality of medical response that some HMO patients get as it often counts for loss to the providers.

A pint of intravenous fluid has, for instance, skyrocketed, rising from about N150 to between N650 and N800. Unfortunately, most HMOs reimburse the provider facilities with between N250 and N350, and the same applies to drugs.

“Instead of using these things to save lives, according to our training, we are hampered and bothered about who picks up the bill at the end of the day. Yet, we are getting more deprived of medical personnel,” he said.

Resolutions

The association wants HMOs to adjust existing contract documents using HCPAN tariffs as a benchmark. It will no longer tolerate owing of providers in excess of 30 days as such HMOs will be mandated to pay cumulative interests on such debts.

It is asking that in cases where valuations are not captured in tariffs, HMOs should engage with such groups, given that the issues may be broad and price changes could be unpredictable.

It says there might be a need for periodic review based on trends of increases in the costs of goods and services health products. It has plans to tackle undue maltreatment and victimisation of members such as undercutting service tariffs or unjust transfer of enrollees.

However, the association says it remains open to negotiations.