In a policyholder friendly measure, the Indian insurance regulator has proposed that insurers and health insurance claims processing agencies should mandate hospitals to reflect the negotiated discounts on the bills so that the policyholders are aware of the actual rates.
The Insurance Regulatory and Development Authority of India (IRDAI) has also proposed a minimum start up capital of Rs.5 crore for third party administrators (TPA-health insurance claims processing agency) and a minimum working capital limit of Rs.1 crore.
Coming out with an exposure draft on the regulations to govern TPAs as the current one is around 14 years old, the sector watchdog said according to the draft regulations, either the insurers or the TPAs may be obtaining discounts from various hospitals during the course of the settlement of claims under health insurance policies.
"It shall be ensured that the discounts obtained from the hospitals, if any, are passed-on to the policyholders or the claimants of the concerned health insurance policy," states the draft regulations.
They also propose that insurers or TPAs should apportion the discounts received on the total bills raised by the hospitals to the relevant policy/claim so that the discount is passed on to the policyholder/claimant.
According to the proposed regulations every insurer and the TPA shall put in place the following procedures:
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* The insurers and TPAs shall mandate the hospitals to reflect such agreed discounts in the final hospitalisation bill of each claim, by which the policyholder or the claimant can also be aware of the actual bill raised by the hospital.
* Where the admissible claim amount is more than the sum insured, the agreed discount shall be effected on the gross amount raised in the bill, before letting the policyholder or the claimant bear the costs over and above the eligible claim amounts.
* Where the underlying health insurance policies have co-payment or the deductible conditions, the insurer or TPAs shall ensure that the said co-payment or deductible is effected only after netting of the discounts offered by the hospital, if any.
* The insurers and the TPAs shall ensure that every discount received or agreed to be received from the hospital is passed on to the policyholder or the claimant in respect of the underlying claim only in absolute monetary terms.
* Every insurer shall make these procedures as part of the detailed guidelines on claim settlement to be provided to the TPAs.
* The above procedures shall be applicable to both cashless services and reimbursements of all the claims of health insurance policies
Former IRDA member K.K.Srinivasan told IANS that there is a "growing suspicion that behind the back of insurers, TPAs are getting paid directly by hospitals based on the quantum of insurance claim settlements" and the proposed measures will help curb such unethical practices if prevalent.
" Consequently it will also help insurers to control claim costs and eventually benefit the policy holders since increased claim costs are passed on to the policy holders by way of increased premium rates and saving in claim costs by way of reduced premium," he said
According to industry officials, it is for the first time IRDA is stipulating minimum start up capital of Rs.5 crore, earlier stipulating only a minimum working capital limit of Rs.1 crore.
As per the proposed regulations, the existing TPAs will have one year time to increase their paid-up capital.