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Health insurance claim rule change: Cashless claims must be cleared in 3 hours

May 30, 2024

Health insurance claim rule change: The Insurance Regulatory and Development Authority of India (IRDAI) has released a master circular to streamline health insurance claim process. Previously, delays in claim approvals forced patients to stay in hospitals longer. Now, insurers have three hours to approve cashless discharge requests. Additionally, insurers will be liable for extra hospital charges due to delays.

Hospitalisation is an undesirable experience, but it can get really unpleasant when your insurance clearance gets delayed during discharge. Imagine this: After a couple of days in a hospital, the doctor comes on a round in the afternoon and declares you fit for discharge. Your family members pack your bags and run around to get the bills cleared by your insurance company. The clock strikes 7 but you are still at the hospital as your health insurance claim has not been cleared. The hospital will not discharge you unless the insurer signs off on the bills. You might now have to spend another night at the hospital, which will increase your bill. Such a situation is not an aberration.

Delays in settling health insurance claims by insurance companies or third-party administrators (TPAs) — which coordinate with the insured, the insurance company, and the hospital — have often become a nightmare for patients and their families. According to a survey by Local Circles, "In several cases cited by policyholders on LocalCircles, it took 10-12 hours after the patient was ready for discharge for them to get discharged because the health insurance claim was still getting processed. If they stay back at the hospital another day to do so, the cost of that additional night's stay has to be borne by them. According to several patients, this is the experience where the insurance company has already provided a pre-approval to the hospital's TPA desk before admission of the patient."

But such experiences might be a thing of the past because of the insurance regulator’s new rule in the health insurance claim process.

IRDAI sets a time limit for approving Health Insurance cashless claims
The Insurance Regulatory and Development Authority of India (IRDAI) has said that an insurer must grant the final authorisation within three hours of receiving a discharge request from a hospital.

"In no case, the policyholder shall be made to wait to be discharged from the hospital," the regulator said in a master circular dated May 29, 2024. "If there is any delay beyond three hours, the additional amount, if any charged by the hospital, shall be borne by the insurer from the shareholder’s fund."

The regulator added that in the event of the death of the policyholder during treatment, the insurer will:

i) Immediately process the request for claim settlement

ii) Get the mortal remains (body) released from the hospital immediately

Sanjiv Bajaj, Jt. Chairman & MD, BajajCapital Ltd says, "The recent circular by IRDAI, setting a 3-hour time limit for insurers to clear cashless claims, marks a significant step forward in the realm of customer-centric health insurance reforms."

100% cashless: IRDAI asks insurers to decide on cashless claims within one hour

Further, the regulator has asked insurers to strive to achieve 100% cashless claim settlement in a time-bound manner. In emergency cases, the insurer should decide on the request for cashless authorisation within an hour of receiving the request. IRDAI also asked insurers to put the necessary procedures in place by July 31, 2024, to achieve this goal. Insurers can arrange dedicated help desks at hospitals to assist with cashless requests, IRDAI said.

Moreover, the regulator has also asked insurers to provide a pre-authorisation process to policyholders through the digital mode. Pre-authorisation usually means the insurer sanctions an initial amount for treatment with an acknowledgment that the claim will be paid subject to the final invoice received from the hospital.

On settling health insurance claims, the regulator says, "No claim will be repudiated without the approval of PMC or a three-member sub-group of PMC called the Claims Review Committee (CRC). In case, the claim is repudiated or disallowed partially, details shall be conveyed to the claimant along with full details giving reference to the specific terms and conditions of the policy document."

Anuj Parekh, Co-founder and CEO at Bharatsure says, "This is expected to ensure that claims are not rejected arbitrarily and will ensure that due process is followed. This may result in lower claim rejection rates."

Diverse range of products for health insurance customers, how to use multiple health insurance policy
Further, IRDAI said a diverse range of insurance products should be made available to cover all ages, regions, occupation, medical conditions/treatments, and all types of hospitals and healthcare providers. This will help customers choose a scheme they can afford.

Narendra Bharindwal - Vice President, Insurance Brokers Association of India says, "Policies must be portable and underwriting policy should not discriminate against any particular group. The goal is to maintain high standards of customer service, ensuring an environment of trust and transparency in health insurance."

A policyholder can file for claim settlement as per his/her choice under any policy. The insurer of that policy will be treated as the primary insurer, said the regulator.

Policyholders who have multiple health insurance policies will get an option to choose which one they want to use to settle claims. The primary insurer with whom the claim is first submitted needs to coordinate and facilitate settlement of the balance amount from the other insurers, the regulator said in the master circular.

If there is no claim during the policy period, the insurer can reward the policyholders with an option of no-claim bonus either by increasing the sum insured or discounting the premium amount.

Bajaj said, "These measures are not only expected to increase the adoption of health insurance across India but also foster higher levels of trust between insurers and policyholders. With stricter review processes and a focus on maintaining high standards of customer service, IRDAI is ensuring a more transparent and reliable health insurance environment, ultimately benefiting the consumer."

[The Economic Times]

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