IRDAI ask insurer to settle claim with hospitals as per cashless agreement

Insurance regulator IRDAI has directed insurers to settle cashless COVID-19 claims as per the tariff decided by insurers, hospitals and third-party administrators (TPA). Insurers shall make efforts to have an agreement with health providers on rates for treatment of Covid-19 similar to other diseases for which rate agreements are in place. For cashless claims, insurers have been asked to settle claims based on agreed rates. Some insurance companies have agreements with hospitals on treatment charges for infectious diseases. So, even if COVID-19 is not specifically mentioned, it being an infectious disease, some insurers are rightly settling claims as per the agreed rates for infectious diseases.

The regulator has advised insurers to go by their tariff, as negotiated with the hospital. If insurers do not have agreements with hospitals on COVID-specific rates, the generic discounts negotiated on room rent and other charges may apply.Insurers have cashless agreements in place for regular and non-COVID treatment procedures. The regulator has advised insurers to go by their tariff, as negotiated with the hospital. If insurers do not have agreements with hospitals on COVID-specific rates, the generic discounts negotiated on room rent and other charges may apply.

Industry-watchers feel this could mean higher claim settled amounts for policyholders, at least on the cashless side. At present, state government or GI Council treatment rates are taken as benchmarks and claims settled accordingly. This has meant significantly lower claim amounts paid as hospital charges are much higher, with policyholders having to shell out the balance from their pockets. However, you could still see deductions – hospital bill items not payable – due to room rent sub-limits or co-pay, for instance. Also, insurers and hospitals have been in discussions over COVID-19 rates for quite some time, without any breakthrough in sight. So, it remains to be seen whether the hospitals will accept state government or GI Council rates as reference rates in the cashless agreements.

In the case of reimbursement claims, insurers have been asked to settle claims as per policy terms and conditions. The regular deductions will apply, but the deductions that would have been made due to the General Insurance Council’s indicative rate chart will not be allowed now.

Insurers and hospitals have locked horns since the initial days of the pandemic in India, with policyholders having to deal with significantly lower claim amounts settled as a result. The regulator has now nudged insurance companies to sign agreements with cashless network hospitals on COVID-19 treatment charges like they have for other procedures. This is what regulation 31 of IRDAI’s health insurance regulations require them to do. So far, they have been settling claims on the basis of state government-prescribed rates or GI Council rate chart. Now, they will have to enter into agreements with hospitals clearly specifying tariff for cashless COVID-19 treatment.

The IRDAI has asked insurers to get into agreements with health provider/ hospitals, with state government or GI Council rate structure as reference rates. Till then, they will have to settle claims as per the tariff negotiated with hospitals – for instance, room rent, doctor’s fees, surgeon’s charges, investigation cost. Further clarity is awaited on how these directives will be implemented on the ground and whether insurers can continue to go by state government/GI Council charges until they sign agreements with hospitals.

As per the GI Council, wherever Covid-19 treatment charges have been published by any government authority those charges will be applicable for making the claim. GI Council rate structure will apply where the authorities have not specified any standard charge structure. There are some state governments that have excluded privately insured patients from the purview of their prescribed COVID treatment. But most states have not specifically mentioned that privately insured patients cannot take the benefit of government-prescribed rates. It is not clear whether insurers will go by the government rate structure or policy terms and conditions in such cases.

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