Health insurance: IRDAI new norms leave no room for ambiguity in policies

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Updated: Jul 27, 2020 9:19 AM

Irdai’s standardised terms and clauses include terminology to be used in health insurance policies, and norms to be followed by network hospitals

The guidelines will help policyholders to understand their policies without any ambiguity.The guidelines will help policyholders to understand their policies without any ambiguity.

In order to ensure uniformity in terminology being used in health insurance policies, the insurance regulator has issued guidelines on standard definitions for all health covers. The guidelines will help policyholders to understand their policies without any ambiguity. Among other things, the Insurance Regulatory and Development Authority of India’s (Irdai) standardised terms and clauses include terminology to be used in health insurance policies, nomenclature and procedure for critical illnesses, items for which optional cover may be offered by insurers and standards and benchmarks to be followed by hospitals in the provider network.

Standard definitions

The guidelines mention that any one illness means a continuous period of illness and includes relapse within 45 days from the date of last consultation with the hospital or nursing home where the treatment was done. Irdai has underlined that co-payment will mean a cost sharing requirement the policyholder will bear, which will be a specified percentage of the admissible claims amount. However, a co-payment will not reduce the sum insured.

Deductible will mean the insurer will not be liable for a specified amount in case of indemnity policies and for a specified number of days/hours in case of hospital cash policies before any benefits are paid. Insurers, however, will define whether the deductible will be applicable per year, per life or per event and the manner of applicability of the specific deductible.

Day care treatment will be medical treatment or surgical procedure undertaken under general or local anesthesia in a hospital or day care centre in less than 24 hours due to technological advancement.

Domiciliary hospitalisation will be medical treatment for an illness which in the normal course would require care at a hospital but is actually taken while confined at home. The requirement will be the patient is not in a condition to be taken to a hospital, or the patient takes treatment at home on account of non-availability of bed in a hospital. Pre-existing diseases will be those diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer.

Irdai has standardised the nomenclature and procedure for 22 critical illnesses that could form part of a health insurance policy. All health insurers will have to use the definitions without exception wherever the products are offered for coverage.

Optional items

In case of optional items such as baby food, belts, braces, etc., where the insurer has a list of expenses not covered under the policy, it has to be mentioned in the policy and the detailed list has to be put up on the insurer’s website to enable the policyholder to refer to the details. The guidelines mention that items such as hand wash, caps, cradle charges, etc., can be subsumed into costs of room charges and all claims will have to be settled as per the terms and conditions of the policy contract. Insurers have to ensure that items which are part of room / surgical procedure / treatment (including diagnostics) not be billed to the policyholders by the hospitals and every insurer shall inform or notify the same to the hospitals and the policyholders.

In fact, all insurers will now have to make it part of their service level agreement with the network providers or hospitals in case of cashless cases. In case of reimbursements (with other than network providers), insurers will have to settle the claims as per the terms and conditions of the policy contract. Experts say the new guidelines will bring clarity to how hospitals do billings, reduce treatment costs and help insurers to settle claims faster.

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