Daman overhauls hospital insurance

The new system will reimburse hospitals according to average cost of treatment, to dissuade doctors from ordering unnecessary tests.

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ABU DHABI // The UAE's largest health insurer has introduced a repayment system it says will bring down the cost of insurance by cutting down on unnecessary tests and treatments given to hospital patients.

Daman, the national health insurance company, announced yesterday that its Diagnosis Related Groups billing system would reimburse hospitals and clinics the average cost of treating a particular diagnosis - rather than the actual cost of each patient. There will be a cap on payment for each diagnosed condition.

It is hoped the system will force doctors to think more carefully about what treatments are essential for their patients, but critics fear it could dissuade them from ordering tests that could prove crucial out of fear they would not be covered.

Although the system currently applies only for holders of Daman's basic insurance, it will be extended to all policies - including Thiqa, the free insurance provided to Emiratis - by the end of next year.

Dr Jad Aoun, Daman's chief medical officer, claimed the change would not deprive any patients of services.

"There will be no change felt by either the patient or the doctor other than a dramatic improvement in health care," he said. "This will only affect hospitals, who will be forced to become more transparent and efficient. We will pay hospitals package cost, and they have to manage within this package. So if they go spending more than the package allowance, they will be the ones losing money."

He said hospitals would be under greater pressure to manage the cost of their patients and that it would also make hospital negotiations with patients clearer.

Ultimately, said Dr Aoun, the process should help to keep insurance costs down.

However, Allison Ramsay, the managing director of Al Rawdah German Medical Centre in Abu Dhabi, warned there could be mixed results.

"The good thing is that it will make doctors think carefully about what investigations and what treatments they are going to go with because of the worry about financial reimbursement," she said.

"On the other hand, it would be a bad thing if some doctors begin to avoid doing a test that might later prove crucial, just because they are worried it will not be seen as necessary and not fall under the reimbursement cap."

Hospitals that accept Daman Basic Insurance cards have already started using the new system.

A consultant at Mafraq Hospital in Abu Dhabi said that although the system was complicated and would require extra paperwork, it was likely to prove "very beneficial" to government-run hospitals.

"There are a lot of things that government hospitals do not bill for, because they are funded by the Government," he said.

"Since that is being phased out and hospitals will have to pay for themselves by 2013, this means that we can now bill for things like admission to the intensive care unit, which we never did before."

He said little would change for doctors practising correctly.

"If anything, this will force doctors to stop giving patients unnecessary tests and ultrasounds and so on just to protect their backs, even if the patient doesn't need it," he said.

Dr Ahmed Shanker, a paediatrician at Mora Medical Centre in the capital, said it would also stop patients demanding unnecessary tests unless they were prepared to pay. "Some patients think they are the doctors, and demand extra scans even if the doctor insists they don't need it," he said.

Countries including the US, Germany, Australia and Singapore use similar systems.