There’s some good news for policyholders fatigued by litany of excuses from insurers for rejecting claims. TheInsurance Regulatory and Development Authority (Irda) has recently proposed standard definitions for certain clauses and exclusions in health policies. If implemented, the proposal could ensure more clarity for customers at the time of buying policy as well as filing claims.
“It is a welcome initiative. It seeks to bring clarity on some of the common terms used in health insurance contracts and excluded items. It also seeks to standardise some important documents like claim form and discharge summary,” says Segar Sampathkumar, DGM, New India Assurance. The insurance regulator has also put up a draft customer information sheet on its website, which, as the name suggests, details the information most relevant to policyholders.
Often, the source of disputes between the insured and insurer is the ambiguity in policy wordings on expenses that are payable and the ones that do not qualify. To minimise the heartburn that varying interpretations cause,Irda has drawn up a list of as many as 203 items or expenses that the insurance company need not pay for. “This will reduce the disputes between hospitals and insurers/TPAs and make the process much smoother. However, if any insurer wants to cover some of these items he is free to do so,” says Shreeraj Deshpande, head, health insurance, Future Generali. The long list includes hospitalisation for diagnostic or evaluation purposes, stem cell implantation or surgery, nursing charges in post-hospitalisation period, cosmetic products, baby and infant food, weight control programmes, cost of spectacles, eye lenses, walking and hearing aids, service, documentation or administrative charges and so on. “Almost all policies have a list of standard exclusions like cosmetics and other charges which may not have a bearing on the treatment undertaken. This list spells out item-wise exclusions which brings lot of clarity to the hospitals and patients on what is covered and what is not,” says Sampathkumar.
Likewise, it has also proposed to standardise the definitions of 46 terms including room rent, pre-existing diseases, ‘medically necessary’ treatment, and reasonable charges. For instance, pre-existing diseases will mean ‘any condition, ailment or injury or related condition (s) for which you had signs or symptoms, and/or were diagnosed, and/or received medical advice/treatment within 48 months prior to the first policy issued by the insurer’. Now, insurers have been following and using this definition for the last few years, but Irda’s stamp will ensure that the company cannot wriggle out of its commitment citing policy wordings. Similarly, reasonable charges would mean ‘the charges for services or supplies, which are the standard charges for the specific provider and consistent with the prevailing charges in the geographical area for identical or similar services, taking into account the nature of the illness /injury involved’. It also listed critical illnesses and related conditions, which are admissible for claim purposes. According to Sampathkumar of New India, these developments bode well for the health insurance space. “It may be recalled that the General Insurance Council’s definition of pre-existing disease brought in lot of clarity to the market. Similarly, some of the common definitions are now getting standardised,” he says.
SIMPLER CLAIM PROCESSING?
The insurance regulator has also put out template of standard claim form and pre-authorisation form, which is to be submitted at the time of getting admitted in hospitals. According to industry players, this will improve the claim disbursal process. “Standardising the pre-authorisation form as well as claim form will help speed up the process of cashless claims by eliminating to and fro communication,” says Deshpande. “Standardisation of codes for billing would enable the claimant understand the deductions, if any. Similarly, standardisation of codes of disease would help the TPA settle the claim at the earliest. Guidelines on claim settlement will be of great help, as all TPAs now follow their own standards,” says Viren Ahuja, head strategy & director of claim consultancy firm Magus Corporate Advisors. “The draft also mentions timelines for settlement of claims.
This would help the customer get the claim disbursal in a seamless manner.” Then, there are other proposals that have the potential to change the way the entire business is conducted. Third-party administrators (TPA), for one, could see their powers curtailed heavily. “TPAs will not be able to carry out the business of insurance companies – like claim settlement or rejection. Instead, insurance companies will have to handle the claims directly. Also, insurers will have to sign agreements with the hospitals now, as opposed to contracts between TPA and hospitals earlier,” explains civic activist Gaurang Damani who had approached the Bombay High Court with a plea seeking clarity in claim settlement procedures followed by insurers, among other things. As a result, Irda framed the draft health insurance guidelines last year. “If insurance companies really start looking into claim rejections by the TPA, and analyse mistakes made, it will help the claimants. As of now, insurers go entirely by the verdict of a TPA, without even going through the documents,” says Ahuja. While the effectiveness of these measures will be seen only after their actual implementation, policyholders hassled by legalese in their policy documents can consider it as a step towards simplification of this rather cumbersome process.