Unhealthy surprises in new mediclaim norms

The next time you are admitted to an upscale hospital, read your medi-claim policy carefully. Starting April 1, medical insurers have imposed a limit on claims for room rents, intensive care, doctor's fees and other charges, raised premiums by 30 to 50 per cent, and increased the list of exclusions for all new medi-claims drawn up in the new financial year.

This means all policies issued after April 1, 2007 have the following restrictions for any one illness:

room rent restricted to 1 per cent of the sum insured and intensive care unit charges to 2 per cent, with the overall limit restricted to 25 per cent of the sum insured;

limits for surgeon, anaesthetist, medical practitioner and specialist consultant fees set at 25 per cent of the sum insured;

reimbursement for expenses incurred towards anaesthesia, blood, oxygen and operation theatre has been restricted to 50 per cent of the sum insured.

Over and above this, the minimum sum insured has gone up more than three times. In previous policies, the minimum sum insured was Rs 15,000 and other options were available in multiples of Rs 5,000. In new policies, the minimum sum insured is Rs 50,000 and other options are available in multiples of Rs 25,000.

Premium rates have also gone up considerably. A new age slab of 0-25 years has been created at a relatively low rate, but in other age slabs premiums have gone up by 30 to 50 per cent.

These changes have been made to reduce claims on high-value bills in "five-star hospitals", the higher cost of medicare as a result of technology advancements and to account for inflation. Premium rates have not been raised for six years. Last fiscal, mediclaim premiums were around Rs 3,500 crore, a 25 per cent annual growth.

Industry sources say insurance companies are currently paying out Rs 120 for every Rs 100 premium they get from policy-holders.

"The incurred claim ratio is 120 per cent in the health portfolio. We need to be clear about our overall liability. If the claim is more than what is provided for, the additional cost will be borne by the policy-holder," said an executive at Oriental Insurance Company.

Added Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers, "There have been substantial increases in healthcare costs over the last few years. This, coupled with an increase in awareness, is leading to ever-growing claims. One way for insurers to control cost is through cappings, though consumers may not fully understand the financial impact of these cappings at the time they buy the policy."

Mediclaim policies have also become more stringent in terms of the diseases they cover. Pre-April policies covered pre-existing diseases after four claim-free years even if the policy was held by another insurance company for the first three years.

Under the current policy, policy-holders need to be covered by the same insurer for at least four years.

Certain diseases or disorders arising out of diabetes and hypertension or both are now excluded (if they exist when the policy is taken for the first time), a condition that was not clearly mentioned in the earlier policy.

Further, the list of diseases that are excluded from the purview of the policy has been extended. Earlier, first-year exclusions included benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy, tympanoplasty cataract, hernia, piles, fistula, and benign prostratic hypertrophy.

Under the current policy, benign ENT disorders and surgeries like tonsilectomy, adenoidectomy, mastoidectomy and tympanoplasty come under first-year exclusions.

All other diseases and disorders carry a waiting period of two years and procedures like joint replacement carry a waiting period of four years.

Predictably, the medical fraternity is unhappy. "This is not the right way to correct a malpractice. A blanket cap on medical expenses is unrealistic. There should be a robust dialogue between healthcare providers and insurance companies to correct malpractices, if any," said Daljit Singh, president, strategy and organisational development, Fortis Healthcare Ltd.