Insurance: a grave need for stronger protection of policyholder rights
2 min read 20 Apr 2023, 11:42 PM ISTMedical insurance policies exclude ‘treatment for alcoholism, drug, substance abuse or any addictive condition and consequences thereof’.
PremiumThe other day, a claims executive arbitrarily rejected a hospitalization claim for a cardiac ailment. When the claim was reported, the executive had on his own initiative pulled out the past medical records of the patient. In there, he found mention of the patient’s smoking history. So, he quickly put the pieces together and concluded that smoking had caused the cardiac issue. Medical insurance policies exclude ‘treatment for alcoholism, drug, substance abuse or any addictive condition and consequences thereof’. The rejection considered smoking as an addictive condition and the cardiac issue as its consequence. However, this exclusion is meant to exclude treatment to cure the addiction or a direct outcome of abuse such as overdose. Circumstantial or indirect linkages of a habit to an illness, can at best, be a guess. Such adjudication has no medical basis except self-righteousness. Unfortunately, such activism is not uncommon. Sometime ago, a claim for liver cirrhosis was rejected because the patient used to occasionally consume alcohol. It is common knowledge that excessive alcohol can damage the liver. But, teetotalers also do suffer liver damage.
As a respite in both cases, the initial decisions were overturned when the matter got escalated. However, this was not before the patients suffered significant agony. Consider that the cardiac treatment was undertaken in a network hospital, so the patient was eligible for cashless claim settlement. The decision to reject the claim came several hours after the patient was discharged by the doctor. However, the patient was held up at the hospital until the bill was settled. The patient could not afford to pay the claim in cash. So, he had to stay overnight in the hospital. The final approval came only the next day. While the final decision was positive, it left a poor impression on the patient and his family. It is natural for the policyholder to now mistrust insurers. But, who pays for the agony? Where can policyholders go for such grievances?
Some of these issues are not limited to faults on front-line level execution, but are conscious policy actions of insurers. Consider the case of a stand-alone health insurer who suddenly decided to stop paying claims for treatment taken in non-network hospitals. Hundreds of claims were denied. The insurer cited a condition hidden, literally, between the lines of a completely unrelated clause and not in the spirit of current regulations on exclusions. The insurer itself kept the clause in abeyance for several years and had an established practice of paying all non-network claims. The insurer’s stand would not stand up to regulatory or legal scrutiny. Policyholders have limited recourse in such cases. The administrative burden to file a case with the ombudsman is significant and often outweighs the benefit of recovering a claim or an unfair deduction. Ombudsman decisions can take time, in some cases more than a year. Most claimants will just overlook small claims rejections then in the interest of moving on.
The regulator has put a solid framework of rules. For example, standardization of exclusions is a hallmark regulation to usher transparency. However, insurers are finding ways around it by taking liberal interpretations. Consider the case of another stand-alone health insurer who proclaimed that claims for oral chemotherapy are inadmissible unless the person is hospitalized. Traditional chemotherapy is administered intravenously. This does not require overnight hospitalization, still most insurers pay such claims regularly. With advancement of medicine, some types of chemotherapy can now be administered via oral pills. To clarify admissibility, the regulator had specifically mentioned oral chemotherapy as a modern treatment method which should not be excluded from health insurance policies. For an insurer to admit the treatment but mandate hospitalization is contradictory to the progress made in medicine. It is wordplay with regulations. A policyholder’s interests need to be forcefully protected. Without the deterrence of probable regulatory action, some may continue to experiment with liberal interpretations of regulations, at the cost of the policyholder. Currently, there is little incentive for an insurer to give the benefit of doubt to a policyholder, better train their claim executives, and keep the policyholder’s interest first.
(I am told that the decision on the cardiac claim was revisited only after the claims executive was informed that his skip-supervisor was a smoker too. He didn’t want to preach to the master.)
Abhishek Bondia is principal officer and managing director, SecureNow.in.
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