Medical underwriting and risk adjustment practices: Ghana

Health insurance models vary from country to country. As highlighted in our first series of articles on international health markets, governments often dictate the role of private and public health insurance within any country. Milliman has produced a new series of blogs focused on the medical underwriting and risk adjustment practices of eight countries: Australia, Ghana, Ireland, New Zealand, Saudi Arabia, South Africa, Spain, and United Arab Emirates. This is the third article in our series.

Ghana reformed its healthcare provision and launched the National Health Insurance Bill in 2003 with an aim to provide universal access to healthcare. The law translated into the National Health Insurance Scheme (NHIS), which comprises three health insurance schemes:

• District mutual insurance
• Private mutual insurance
• Private commercial health insurance

Every Ghanaian resident is required to enroll in one of the three schemes under the law.

The paper summarizes the health insurance landscape and underwriting practices in Ghana.

District mutual insurance scheme
This is the most popular scheme available across all regions in Ghana, with more than 70% penetration. It is the most affordable and accessible scheme for all Ghanaians, especially for rural areas which have scattered healthcare services. This public/noncommercial scheme is funded by the government, by subscription premiums, and by a 2.5% National Health Insurance levy from the value-added tax (VAT) and a 2.5% social security contribution from the formal employment sector. The subscription premium is linked to member income and is free for the aged, the poor, and children under 18 years of age. Benefit coverage includes in- and outpatient treatments, drug costs, and diagnostics. Certain expensive treatments are excluded (joint replacements, treatments for cancers except breast or cervical cancer, transplants, cosmetic surgery, and orthopedic implants).

The district mutual insurance scheme has a wide network of public, faith-based, and private healthcare facilities that are accredited by the National Health Insurance Authority (NHIA). The National Health Insurance fund allocation to various district mutual offices is based on the previous year’s allocation and utilization. Although policy exists for reviews of these allocations based on health needs, it is seldom practiced. The Ministry of Health secures part of the health budget and allocates this fund to specific budget management centers (BMC), which in turn ensure provision of free services for emergency care as well as the national programs for tuberculosis, buruli ulcer, HIV and immunization, etc.

Started as a fee-for-service reimbursement, the NHIS moved to payments based on diagnosis-related groups (DRGs) in 2009. Recently a comprehensive revision and recalculation of DRG tariffs has been completed and revised tariffs are due to be implemented in October 2012. There have been issues with providers’ bias in favor of out-of-pocket paying and commercial insurance clients including reports of providers turning NHIS patients away. This is due to provider dissatisfaction with delayed payments by the NHIA and the perception of underpriced DRG tariffs. The revisions and recent modifications may address provider concerns and promote access for the members. However, the organized affluent workforce prefers the richer benefits and priority services at private and specialist networks of private commercial group health insurance.

Private mutual insurance schemes
Private mutual insurance schemes are run by community groups or social groups in some regions in Ghana. These group programs do not get any subsidy or funding from the National Health Insurance fund and primarily run on a not-for-profit basis. They are small local initiatives run by cooperatives for subsistence farmers, informal sector employees, and unemployed people. Benefits, coverage, and provider network vary among schemes.

Private commercial health insurance
Private commercial insurance is available from approximately 13 registered insurance companies under the NHIA. These companies offer individual, family, and group health insurance products with a variety of benefits and limits. Group insurance coverage for corporations dominates the private health insurance market. This is due to the tradition of health expenses historically being paid by employers. The last few years have seen an expansion in penetration as about a dozen new companies have filed for registration under National Health Insurance Act L650. Product benefits include inpatient and outpatient coverage up to defined benefit limits, expensive procedures, and cancer treatment. The commercial health insurers have a smaller network of private care hospitals and tertiary care hospitals in major cities. The typical client base of private commercial health insurance is employees of large banks, real estate, IT, and multinational companies. Products offer both a cashless facility for treatment taken from within a network provider and a reimbursement option for treatment taken from an out-of-network provider. Some richer products also include emergency evacuation and treatment abroad. Recently, a few products with health savings accounts (HSAs) types of benefits and top-up coverage for NHIS coverage are emerging. The private commercial penetration is primarily restricted to urban corporations in populous regions such as Ashanti and Accra. New industrial zones in Western region are increasingly taking up private group health coverage. Retail insurance for individual and family is available although not very popular. Most insurance companies provide health insurance as part of other general insurance products. Some companies provide medical insurance to expatriate population as a part of travel insurance or separate health insurance coverage.

Underwriting practices in Ghana
Underwriting practices in Ghana vary across different health insurance schemes.

District mutual health insurance scheme offices are not allowed to underwrite under NHIS law. The subscription is open to any Ghanaian resident who lives within its geographically defined area. The service provision is restricted to the network providers, who have predefined DRG-based payment systems. In theory, a gatekeeper system exists where services at regional (secondary) and teaching (tertiary) hospitals are based on referral from lower-level services. Most secondary and tertiary healthcare providers accept direct patients for outpatient as well as inpatient care. The subscription does have a waiting period of the first six months for new registrants or for renewals for enrollees with lapsed policies. The scheme allows portability in that a resident can register with a new district mutual office on change of residence or area.

Private mutual health insurance schemes are small initiatives oriented to social schemes and no underwriting is conducted.

Private commercial health insurance schemes have limited underwriting practices. For individual and family health insurance, there are no regulatory restrictions on underwriting. The proposers with medical disclosure and higher ages are medically underwritten. Many insurers seek a medical evaluation report by a physician as a part of the application and may conduct medical tests based on disclosures. The processes are not standardized and, because demand within the retail market is limited, the underwriting function is not well developed. Insurers file their products with the regulator and primarily rely on permanent exclusions, waiting periods, or benefits limits to manage their risks.

Group health insurance by private commercial health insurers is competitive and prices are driven by market premiums. Benefit plans are tailored for each corporation, including differential benefits for different levels of staff within the same corporation. Age band and benefit coverage are the prime considerations but group insurance is also heavily affected by prices of other insurers or discounting for volumes.

Data availability and risk adjustment practices
The healthcare providers segment is generally disorganized, with variable standards of documentation and poor data availability. Some data is published by the larger providers and Ghana health services but is incomplete and inadequate for meaningful analysis. Both providers and scheme administrators are focusing on the lack of data, but that awareness has not yet led to action. Some recent externally funded projects have been initiated to build capacity within scheme offices and providers but are at very early stages.

The National Health Insurance fund allocation to various district mutual offices is based on the previous year’s allocation and utilization. Although policy exists for a review of allocation based on health needs, it is seldom practiced. Data quality needs significant enhancement along with a commitment to storing and managing data. Until good data is available and analyzed purposefully, the NHIA and BMCs will be very limited in identifying and prioritizing health spending for risk adjustment.

For the commercial health insurers, claims data capture is poor and claim experience analysis is not available for any formula-based pricing. The current business models and lack of data mean that insurers do not consider using risk adjustment. They do not price for health status/conditions and the information is nonexistent to predict spending or health status. The insurers do not maintain—and therefore do not have—historical data to generate any trends or predictive analysis. The NHIA is trying to generate consensus among insurers to submit claims data summary to its regulator. Till that happens the data management will be limited to ad hoc analysis used by different insurers.

Conclusions
The NHIS is facing various operational challenges in the district mutual insurance schemes. Increasing the member penetration and provider relationships are the immediate priorities. Risk adjustment approaches by the NHIA will be critical for financial sustainability as the scheme is reportedly in debt for the last few years. With increasing inflation and utilization trends, the NHIA will need to continually monitor and modify its benefits and operations to deliver on its promise.

Private commercial health insurance, particularly for group health insurance, is growing steadily and remains profitable. As the economy improves with Ghana’s emergence as an oil-rich country, the demand may grow further. It is unlikely that the market is ready for a major shift. With the recent influx of new players, the premiums for private health insurance will continue to be market-driven.