15 january 2013
In a move that will reduce disputes and enable customers to make better choices, the insurance regulator has decided to standardise definitions, forms and processes in health insurance.
Henceforth, for all insurers hospitals will mean medical institutions with at least 10 inpatient beds, all policies will mean the same thing when they talk about covering critical illness and healthcare providers can follow the same procedure when dealing with 23 companies. The circular comes at a time when the Insurance Regulatory and Development Authority is under pressure to resolve difference between hospitals and insurers following a public interest litigation which seeking court intervention on cashless claim settlement.
According to Shreeraj Deshpande, head of health insurance at Future Generali Insurance, the move toward standardisation would reduce disputes with insurance companies, improve turnaround time in settling cashless claims and will make it easier for customers to compare products. "Insurance companies will be free to design the extent of coverage, but the definitions of various policy terms would be the same across companies" said Deshpande.
Hospitals will also find it easier to deal with insurance companies. There have been cases when insurance companies have authorised payments up to Rs 40,000 but refused to pay for more than a fourth of that on the grounds that various expense items are non-medical in nature. The grounds for such disputes will come down substantially. Agreements between hospitals and third-party administrators will be standardized and all companies will have an identical claim form.
"This will address structural issues in the industry such as the lack of trust between hospitals and insures. It will reduce misselling by agents who try to arbitrage between different definitions of the same cover" said Sanjay Datta, head, underwriting and claims at ICICI Lombard. "It will not address the variation in costs for treating cataract operations across hospitals and the process of treating. "