IRDAI reforms regulatory norms for expeditious treatment of cashless claims

The Insurance Regulatory and Development Authority of India (hereinafter “IRDAI”) released a comprehensive circular on May 29, 2024, effective immediately with certain exceptions and consolidating and replacing 55 previous circulars with the goal of enhancing service quality for policyholders. These new regulations will mandate insurers to approve cashless claims within one hour and issue final authorization for discharge from hospitals within three hours.

Insurers while offering products under the circular, shall abide by the following laws:

1. The Mental Healthcare Act 2017
2. The Rights of Persons with Disabilities Act 2016
3. The Surrogacy (Regulation) Act 2021
4. The Transgender Persons (Protection of Rights) Act 2019
5. The HIV and AIDS (Prevention and Control) Act 2017

The circular underscores the significance of a streamlined, expedited and seamless claims process, ensuring enhances service quality throughout the industry. Now let’s explore the main features of the aforesaid circular:

1. Approval for cashless facility

Insurer must aim to achieve 100% cashless claim settlement with a defined timeframe ensuring that instances of claims settled through reimbursement are minimized and restricted to exceptional circumstance only. Insurers are required to decide on cashless authorization requests immediately upon receipt, but no later than one hour. They must establish necessary systems and procedures by 31^st July 2024, at the latest. Insurers may set up dedicated help desks physically at hospitals to manage and assist with cashless requests. Additionally, insurers must provide pre-authorization to policyholders through digital means.

2. Final authorization for discharge

The insurer must provide final authorization within three hours of receiving the discharge authorization request from the hospital. Under no circumstances should the policyholder be made to wait for discharge from the hospital. In case of any delay exceeding three hours, any additional charges imposed by the hospital will be covered by the insurer from the shareholder’s fund.

In the event of the policyholder’s death during treatment, the insurer must: i) promptly initiate the claim settlement process; and ii) arrange for the immediate release of the mortal remains (dead body) from the hospital.

3. No claim bonus

Insurers have the option to reward policyholders who do not file claims in the form of a No Claim Bonus (NCB), bonus shall be disbursed based on the policyholder’s choice or explicit consent at each renewal, in the following manner:

1. Cumulative bonus: This involves an increase in the sum insured without a corresponding rise in the premium.
2. Discount on renewal premium

3. Wider choice of products

The circular requires insurers to provide a diverse range of products, add-ons and additional provisions tailored to various demographics, encompassing different ages, regions, occupations, medical conditions, treatments, and categories of hospitals and healthcare providers. This encompasses ensuring equitable treatment options across all medical disciplines including allopath and AYUSH.

5. Claim settlement process

The circular provides that no claim shall be rejected without the approval of the Product Management Committee (PMC) or a sub-committee of three members known as the claims review committee (CRC).  In case, if a claim is rejected or partially disallowed, comprehensive details must be communicated to the claimant, referencing specific terms and conditions in the policy document.

Upon claim clarification, insurers and third-party administrators (TPAs) must gather necessary documents from hospitals, policyholders are not required to submit these documents.

6. Multiple policies claim settlement

The circular addresses policyholders with multiple health insurance policies. It allows them to choose the policy under which they can get the admissible claim amount:

a. Indemnity policies:

A policyholder has the option to file a claim under any policy of their choice. The insurer of the selected policy will be considered the primary insurer. If the coverage provided by the chosen policy is insufficient to cover the entire claim amount, the primary insurer will request information about other applicable policies held by the policyholder.

They will then collaborate with other insurers to facilitates settlement of the remaining amount in accordance with policy terms, ensuring a seamless process for the policyholder.

b. Benefit based policies:

Upon the occurrence of the insured event, the policyholders are entitled to claim from all insurer under all policies they hold.

7. Redressal of grievances of the policyholder

The insurer must establish a robust grievance redressal process. The response letter from the insurer regarding any grievance should include contact details of the relevant insurance ombudsmen. These details are provided in case the policyholder remains dissatisfied with the insurer’s grievance redressal efforts and wishes to escalate the complaint further.

8. Implementation of ombudsman award

The insurer must adhere to the decision of the insurance ombudsman within 30 days of receiving the award. If the insurer fails to comply with the ombudsman’s award, they will be liable to pay a penalty of Rs.5000/- per day to the complainant. This penalty is in addition to any penal interest that the insurer may be required to pay under The Insurance Ombudsman rules 2017.

CONCLUSION:

The master circular on health insurance marks a pivotal move towards enhancing policyholder satisfaction. By advocating for complete cashless claim settlements, simplifying hospital discharge procedures, and introducing features such as the “No claim bonus”, IRDAI aims to deliver a smoother and more convenient experience for policyholders. The circular also guarantees a broader range of insurance products and equitable claim resolution processes, which are anticipated to fortify the health insurance sector and improve service standards for policyholders nationwide.