General insurers crackdown on claim exaggerations

Hospitals and insurance companies tie-up with each other so that the former is included in the network of insurance company

General insurance companies are now looking at cracking down on hospitals which overcharge for standard procedures.

Compared to the past many years wherein hospitals that were a part of the network of the insurer or outside of it used to have different charges for those with insurers and without it had been having different rate cards for those with a policy. This is now being reversed.

Sanjay Datta, chief of underwriting and claims, ICICI Lombard General Insurance said, "We are questioning the hospitals when we have found that they have overcharged for a standard procedure. Here, they are required to explain as to why that surgery/procedure incurred that higher cost than what is the norm."

India does not have a health sector regulator to operate the activities and functioning of hospitals. Due to this, there are no standard procedure rates and the insurers depend on hospital data to analyse some trends.

Insurance sector experts said that by having dealt with hospitals for the past 8-10 years, there is some understanding and data available on what some standard procedures like appendicitis, kidney stone removal would cost. Hence, if a hospital charges a much higher amount than what is usually charged for these procedures, there would be questioned by the concerned hospital.

Hospitals and insurance companies tie-up with each other so that the former is included in the network of the insurance company. Hence, if any policyholder is required to undergo any treatment for a medical condition, they can get it as a cashless claim in any of these hospitals. This means that they are not required to pay any money and the hospital directly settles this amount with the concerned insurer.

Some companies which have large instances of cashless claims, also mostly have fixed rates that are agreed upon in the beginning of the agreement itself. Rakesh Jain, CEO, Reliance General Insurance explained that majority of their claims were cashless wherein they have a pre-agreed rate. "For reimbursements, if claims are exaggerated we query the customer to check with the hospitals," he added.

To remove the inadequacies in the hospital network, the Insurance Information Bureau of India has already created a list of hospitals with unique identity numbers to avoid duplication, the next phase is to create a list of standard charges for procedures across the country. This, say insurers, could be arduous task considering that there are tons of hospitals, and some of them could be unwilling to share data.

Some inadequacies in pricing is fine according to insurers. Only when the charge is much higher is when they intervene. K G Krishnamoorthy Rao, managing director, Future Generali India Insurance said that these hospitals could either be part of their network or out of it.

"If the cost differs by 5-10%, we are fine, but if there is a huge exaggeration we need to question them and we are doing it. They need to justify why their rates are so high. This is also important from a customer's perspective, because while we may pay the claim, the individual's limit may get reduced," he said.

Another measure that is in the works is having electronic medical records. Electronic Medical Record (EMR) would enable healthcare providers to have a coded integrated health care system. With EMR being in place, all medical records of customers will be available in an electronic format. However, sharing of this data with insurance companies is still be some time away.