By proposing to standardize terms and claims procedures in health insurance, the Insurance Regulatory and Development Authority (Irda) has made your job of understanding a health insurance policy a tad easier.
On 11 January, Irda came out with a draft exposure on standardization in health insurance. This draft not only has standard definition for 46 health insurance terms that you see in your policy document, but also has standard claim forms, listed exclusions and a customer information sheet that will summarize the basic policy features.
This draft is not new in the sense that the industry has been deliberating on making processes smoother and health insurance terms more standardized. For instance, in 2008, General Insurance Council (GIC), the industry body, came out with a standard definition of pre-existing disease. “Standardization has been on the agenda for the last three-four years. But largely it was through self-regulation. That didn’t work and now the regulator has stepped in. This is a good move and should make health insurance more transparent,” says Mahavir Chopra, head, e-business and personal lines, Medimanage.com, a health insurance portal.
But to what extent will it improve processes and how far will it go in making the health insurance policy agreement simpler to understand?
Faster claims settlement
One of the biggest issues in health insurance currently is delay in claims settlement. By standardizing the claims forms, the process is expected to become faster. A standard claim form means that regardless of your insurer, the form will seek the same information.
“This has been the best move because this will really help in reducing confusion. Not only will the policyholder have a better understanding of the information needed to make a claim, the hospitals will also be better equipped to fill up the claim forms and interact with the insurer. This should reduce the time taken to settle a claim,” says Chopra.
Insurers think so too. Says Sreeraj Deshpande, head-health insurance, Future Generali India Insurance Co. Ltd, “Currently, there are so many different formats for pre-authorization and claim forms from different insurers. Add to that, the different ways in which the TPAs (third-party administrators) seek information. By standardizing the claim form, hospitals too will be encouraged to standardize their bills or discharge summary. This will only lead to a faster settlement of claims.”
Hospitalization: In case of a cashless settlement or hospitalization in a network hospital, hospitals settle bills directly with the insurer. But for this, a pre-authorization form that has your information and lists the medical condition and cost of treatment needs to be prepared.
Irda has proposed to standardize this form. To smoothen the process further, these forms will be in an optical character recognition format, which will enable data entry from handwritten paper to computer systems. The hospital will then send this form to the TPA or the insurer for cost confirmation. “Usually the insurer will not agree to pay the entire cost until the treatment is complete. But if it’s a package treatment then the insurer will agree to pay the full amount,” says Chopra.
The regulator has proposed an outer limit on the time it should take for this pre-authorization to come from the insurer. In the draft, it has mentioned an outer limit of 12 hours. “This is very relaxed as most insurers maintain a turnaround time of 3-6 hours,” says Kapil Mehta, director, Securenow.in, an insurance portal.
Once the pre-authorization form is processed, the policyholder is admitted to the hospital and the treatment begins. “In between if the cost of treatment goes beyond the pre-authorized limit, the hospital will have to file another pre-authorization form for the enhanced limit,” says Deshpande.
Discharge: At the end of the treatment, you and the hospital will fill up the claim form and the hospital will give documentary proof such as discharge summary, medical bills, pharmacy bills, and diagnostic tests to the insurer along with the claim form. This form along with the documents required is also standardized to smoothen the process.
In case of a reimbursement policy, where you bear the cost of hospitalization and get it reimbursed from the insurer, the policyholder will have to give all the relevant documents himself.
For a policyholder, the process of claims settlement is not the only stumbling block. Understanding the policy document, especially what it excludes, is crucial but it eludes most policyholders.
In order to address that, Irda has not only standardized terms used in health policy documents, but has also listed the items that can be excluded from the policy. For these items, you will have to pay yourself. “The list is pretty much the same but there used to be a lot of confusion. For instance, some insurers paid for the gloves used and some didn’t but now the list clearly mentions that sterilized gloves are payable by the insurer. The idea is to remove all confusion and make exclusions transparent so that the insured person also knows what is excluded,” says Chopra.
But in standardizing the terms, Irda may still have left a few loose ends. For instance, the biggest confusion has been on the definition of pre-existing diseases. The GIC had defined a pre-existing disease to mean any condition, ailment or injury for which the insured person had symptoms and/or was diagnosed and/or received medical treatment within four years before buying the policy. After a waiting period of four years, these pre-existing diseases will be covered.
A simple inference is any ailment that you have had in the past four years and you are aware of before buying a health insurance policy will be treated as a pre-existing disease and will not be covered for the next four years. In the fifth year the insurer will cover these ailments. A fresh ailment for the period you were insured is not a pre-existing condition.
Irda has used the same definition to define the pre-existing disease but experts feel that it’s not watertight. “A major reason for claims rejection is pre-existing diseases. The definition should clearly indicate that diseases which the policyholder is unaware of should not be treated as a pre-existing disease. A customer may have a cyst and he may not be aware of the symptoms, yet the insurer can treat it as a pre-existing disease since the definition states any condition, ailment or injury for which insured person had symptoms and/or was diagnosed. This definition needs to be more watertight,” says Mehta.
Irda has reiterated its intention to bring transparency and streamline processes in health insurance with this draft exposure. Last year in May it focused on product design with draft guidelines on features such as lifetime renewability. However, those draft guidelines are yet to see the light of the day. Hopefully this year, these drafts will become law.