Bone marrow transplant - Rs 800,000, cancer treatment through chemotherapy - Rs 300,000, kidney transplant - Rs 150,000 onwards. . .

The costs at corporate hospitals are skyrocketing, but if your parent, your spouse or you are a member of the Andhra Pradesh police department you need not worry.

In a novel self-insurance scheme, that has absolutely no participation from the insurance companies, the entire police department in the state today is covered for medical exigencies.

Since January 1999, 85,000 members of the Andhra Pradesh police department, ranging from a constable to a director-general of police, have been contributing a small amount from their salary towards a trust.

A trust to ensure that they with their immediate families (that is about 325,000 lives) get free treatment at 20 corporate hospitals in the state, for a sum up to Rs 800,000 a year!

Moreover, what stands out is the fact that the amount deducted from their salary for this purpose, is a mere Rs 60 per month!

"The government provides Rs 75,000 per year for medical expenses to each government employee. However, today that amount is not enough to treat major ailments like bone-marrow transplant or cancer. So a scheme was initiated with H J Dora, who was the state DGP then, to formulate a trust that provides self-insurance for the department," Ramana Reddy, the pioneer of the scheme says.

Reddy was with Apollo Hospitals' third party administrator (TPA) - Family Health Plan before, and is now the principal officer of Helios Insurance Services Private Limited, a broking agency.

"Besides, there was another issue of the officers or constables being posted in areas away from the family. So we did not want their family members to run from pillar to post for treatment expenses in their absence," Reddy says, explaining that it is a self-insurance scheme because no insurance agency is involved in the administration.

The scheme covers the police department employee, his spouse and his children (up to the age of 21 years) till he or she renders service to the department.

"An amount of around Rs 6.12 crore (Rs 61.2 million) is collected annually from the department. If an insurance agency was involved in it, the premium amount would have run into about Rs 15 crore (Rs 150 million) per year, which would have been a difficult sum to collect from the employees. Besides, it would have been the insurance company that would have laid down the rules and not the police department. Moreover, insurance companies provide cover only up to Rs 500,000," Reddy says.

Explaining the administration, Reddy says that the amount collected through deductions is deposited in banks for safe custody and interest gains. It is then withdrawn from the bank as and when the purpose arises.

All the police department members are given photo ID cards and an authorisation letter that enables them to use the services of the listed hospitals. During emergencies, however, an authorisation letter is also not required, he adds.

The ailments that are covered include acute appendicitis, malignant tumour, renal failure, angioplasty and congenital heart disease among others.

"It is a cashless self-insurance scheme and the payment is made to the hospitals within a month's time," Reddy says.

"About 11 hospitals in Hyderabad, two in Visakhapatnam, three in Vijayawada and one in Kurnool, Warangal, Rajahmundry, Tirupathi and Karimnagar each, are empanelled in this service," Reddy says, adding that the treatment costs have been negotiated with the hospitals leading to a reduction in expenses.

"For instance, we negotiated with the Nizams Institute of Medical Sciences, to reduce medical costs by about three per cent as the sheer volume of business helps the hospitals to earn profits," Reddy adds.

Apollo, NIMS, Care, Kamineni and Indo-American Cancer Institute are some of the hospitals in the city that are empanelled in the scheme.

While initially, it was Family Health Plan that was handling the administration, today it is another TPA - Good Health Plan, that has won the contract. The contract, incidentally, is coming to an end next year.

The fact, however, that based on its success even the Karnataka police department adopted the scheme in 2001, shows that the scheme is worth being replicated by other departments as well.