Health insurance claim new rules: Irdai issues circular for insurers to decide on cashless authorisation in 1 hour

The Insurance Regulatory and Development Authority of India (IRDAI) released a new master circular on health insurance. According to this circular, insurers must decide on cashless authorisation within one hour of receiving a request.

This master circular replaces 55 earlier circulars and is aimed at empowering policyholders and strengthening inclusive health insurance, stated Irdai in a circular dated May 29

The circular consolidates information on policyholder entitlements in a health insurance policy for easy reference. It also highlights measures to provide policyholders with a smoother, faster, and hassle-free claims experience and ensure improved service standards across the health insurance sector.

“We are committed to aligning our health insurance offerings with the IRDAI's Master Circular on Health Insurance Business. Our goal is to provide policyholders with a wide range of products covering most medical conditions, including pre-existing diseases. We ensure equal treatment options across all lines of medicine, including Allopathy and AYUSH, and we strive to make 100% cashless services available," said Rakesh Jain, CEO of Reliance General Insurance.

"The new Master Circular requires insurers to process discharge authorizations within three hours, enhancing customer service and addressing a common grievance among policyholders," stated Manish Dodeja, Head of claims & Underwriting at Care Health Insurance. "Insurers are urged to strive for 100% cashless claims."

"The updated norms also encourage diversity in product offerings, catering to various demographics and medical needs. They allow policyholders with multiple policies to choose the policy under which to claim. Enhanced transparency is ensured by providing a Customer Information Sheet with each policy. Policyholders stand to benefit from No Claim Bonuses and have the flexibility to cancel policies at any time for a refund of the unexpired premium," Manish added.

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Salient features of the insurance regulator master circular

Final authorisation for discharge from the hospital

• The insurer shall grant final authorisation within three hours of receiving the discharge authorization request from the hospital. In no case shall the policyholder be made to wait to be discharged from the Hospital.
• If there is any delay beyond three hours, the additional amount, if any, charged by the hospital shall be borne by the insurer from the shareholder’s fund.
•  In the event of the death of the policyholder during the treatment, the insurer shall:

- immediately process the request for claim settlement.

-get the mortal remains (dead body) released from the hospital immediately

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Implementation of Ombudsman Award

• The Insurer is required to comply with the award of the Insurance Ombudsman within 30 days of receipt of the award by the Insurer. 
• If the Insurer does not honour the ombudsman award, the complainant will be charged Rs. 5000/—per day. This penalty is in addition to the penal interest liable to be paid by the Insurer under The Insurance Ombudsman Rules, 2017.

Approval for Cashless facility

•  Every insurer shall strive to achieve 100% cashless claim settlement in a time-bound manner. The insurers shall endeavour to ensure that the instances of claims being settled through reimbursement are at a bare minimum and only in exceptional circumstances.
• The insurer shall decide on the request for cashless authorization immediately but not more than one hour after receipt of the request. The insurer shall also implement necessary systems and procedures immediately and not later than 31 July 2024.
•  Insurers may arrange for dedicated Help Desks in physical mode at the hospital to handle and assist with cashless requests.
• Insurers shall also provide pre-authorization to the policyholder through Digital mode.

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Settlement of Claims

• No claim shall be repudiated without the approval of the PMC or a three-member sub-group of the PMC called the Claims Review Committee (CRC).
•  If the claim is repudiated or disallowed partially, the claimant will receive full details, referring to the specific terms and conditions of the policy document.
•  According to the claim's intimation, insurers and third-party administrators (TPAs) shall collect the required documents from the hospitals. Policyholders shall not be required to submit the documents.

The master circular aims to achieve 100% cashless claim settlement within a specific timeframe.

It proposes that cashless authorization requests be decided upon immediately, with a final decision made within three hours of the hospital's discharge request.

This initiative signifies a significant step in empowering policyholders, ensuring they receive top-quality care and service. It also promotes trust and transparency in the health insurance sector.

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