CCI to post-mortem cashless mediclaim issue soon

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Jul 30 2010, 04:38am hrs
The Competition Commission of India (CCI) may take up the cause for consumers who have been hit hard due to the new arrangement entered into by leading insurance companies. In the new arrangement, the insurance companies will stop making direct payments to hospitals on behalf of their policy holdersa pre-requisite as per the cashless mediclaim policy they offer.

According to CCI sources, though the commission is yet to take a final call, however, it may soon start a thorough review of the matter to see if there have been any breach of the Competition Act, 2002.

Earlier this month, leading insurance companies that provide mediclaim policies withdrew the cashless arrangement with all major hospitals, including private hospitals like Fortis, Apollo and Max in Delhi and NCR, thereby forcing the consumers to shell out the entire money on the spot.

Under the Competition Act, CCI is empowered to take up suo moto cases and if enough evidence is found can even order an investigation. MM Sharma, head, competition law practice at Vaish Associates, a corporate law firm, said on two fronts there appears to had been a breach of sections 3 and 4 of the Competition Act.

Firstly, there appears unfair trade practice since the insurance companies withdrew the policy in the first place. Secondly, if all the insurance companies have withdrawn the cash less facility at one go, there appears a coordinated behaviour on their part, he added.

Sharma said before the CCI can take any action, the commission would have to prove the above with concrete evidence, which may be a challenging task. A senior CCI official said on conditions of anonymity the issue of insurance companies withdrawing the cashless facilities was a very complex issue. Often it has been observed that just because a patient is covered by a mediclaim policy, the hospital charges a much higher price, thereby creating huge financial problems for the insurance companies, he said.

Since the commission got notified in May, 2009, it has had over 35 pending cases. While the CCI is yet to pass the final verdict on any of the cases, it has already earned the reputation of being a watchful regulator to safeguard consumer interests.