AN insurer will now have to pass on any discount given by a hospital to the health insurance policyholder/claimant.

Also, the hospital will need to account for the discount in the final bill.

In a circular to insurers and third-party administrators (TPAs), who act as an intermediary between the insurer and the insured, the Insurance Regulatory and Development Authority of India (Irdai) has said they would have to mandate the hospitals to reflect the discounts in the final hospitalisation bill of each claim and the policyholder must also be aware of the actual bill raised by the hospital.

“While every insurer and TPA shall endeavour to get the best and cost-effective services to the policyholders or the claimants of health insurance policies, it shall be ensured that the discounts obtained from the hospitals, if any, are passed on to the policyholders or the claimants of the underlying health insurance policy,” says an Irdai circular.

In cases where the admissible claim amount is more than the sum insured, the discount will be reflected on the gross amount raised in the bill, before the policyholder bear the costs over and above the eligible claim amount. Where the particular policy has co-payment or a deductible clause, the insurer will have to ensure it is effected only after netting discounts, if any, offered by the hospital.

The regulator has said the discount should be in absolute monetary terms and every insurer must make these procedures a part of their detailed guidelines on claim settlement. The new norms will be applicable from immediate effect for both cashless services and reimbursements of all claims on health insurance policies. Since insurers conduct a lot of transactions with network hospitals, they negotiate better rates for various medical procedures and treatment and get discounts from them. Analysts say some part of the discounts are factored in by insurers while fixing the premium of the policies at the underwriting stage.

Benefits for policyholders with co-payment clause

The new norms will benefit policyholders, especially those who have a co-payment clause in their policy. In such a clause, a portion of the claim is paid by the policyholder and the insurance company chips in with the balance. The share of the company and the individual are mentioned in the insurance contract and this ratio generally varies from 10-25%. For example, if the claim is R1 lakh, and for the individual the co-pay ratio is 10%, then the policyholder will pay R10,000 from his pocket, while the insurer will pay the rest. So, if the discounts are factored in the final bill, the amount to be paid by the policyholder from his pocket will reduce accordingly.

Most health insurance companies — life, non-life and standalone — are encouraging policyholders to choose a co-payment clause to keep a tight lid on their claims outgo. Initially, it was offered in group mediclaim, but now most insurers have extended the same to their individual policyholders as well. The clause mainly discourages policyholders from availing of treatments in luxury hospitals, while also dissuading hospitals from going for unnecessary medical procedures.

In the co-payment clause, the premium is lower than a normal mediclaim policy. For example, a co-pay ratio of 20% could result in reduction of up to 15-20% of the premium. The higher the ratio, the lower will be the premium. A healthy individual whose chances of being hospitalised are low can opt for a co-payment clause while buying a health insurance policy. However, it is certainly not advisable for senior citizens as their chances of undergoing treatments will be high.

Buying the right policy

At present, all health insurance policies provide for entry age up to 65 years and there is no exit age for renewal once the proposal is accepted, provided it is renewed without any break. Health insurance can be in the form of either individual or floater policy and one can increase the sum insured at the time of renewal. The option of upgrading the policy at a later stage in life can become expensive and one may have to go for various medical tests.

One must look at a basic product that covers all members of the family and if the policyholder is not satisfied with the insurer, he can port the policy to some other insurer. For that, the policyholder will have to apply to the insurer at least 45 days before the premium renewal date of the existing policy. For all health insurance policies, insurers will allow access for treatment in network provider or in any hospital that is not part of the network provider across the country, except those excluded from providing services for health insurance policies.

Analysts say one must look at treatment-wise limit of amount that one can claim in a health insurance policy. There are certain policies that provide daily cash benefit for the days of hospitalisation. One must also note the terms and conditions of pre- and post-hospitalisation offerings, no-claim bonuses and waiting period for specified ailments that vary from company to company.

Healthy change

* Irdai has instructed TPAs to mandate hospitals to reflect the discounts in the final bill of each claim

* If the admissible claim amount is more than the sum insured, the discount will be reflected on the gross amount raised in the bill

* Irdai has said the discount should be in absolute terms and every insurer must make these procedures a part of their detailed guidelines

* The new norms will benefit policyholders, especially those who have a co-payment clause, wherein a portion of the claim is paid by the policyholder and the insurer chips in with the rest

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