The controversy began three weeks ago when a few health insurance companies decided not to honour bills submitted by hospitals for settling claims of their patients. The reason: Hospitals allegedly overcharged for their services and presented inflated bills to insurance firms who pick the tab on behalf of their clients. For instance, many private hospitals charge more than Rs 70,000 for a Caesarean delivery. Insurance companies say the procedure shouldn’t cost more than Rs 45,000.
Third party administrators (TPAs), appointed by insurance firms to carry out paperwork for patients, form the third, contentious angle of the imbroglio. TPAs act as conduits between the hospital, insurance companies and patients. Insurance companies allege that hospitals have been presenting inflated bills aided by corrupt TPAs.
So, patients used to cashless hospital treatment with the flash of a medi-claim card suddenly find themselves struggling to pay their bills.
The Insurance Regulatory and Development Authority (IRDA) is yet to take a stand on the issue. IRDA chairman J.Hari Narayan did not respond to HT’s phone calls or text messages. A source in the IRDA, who did not wish to be identified, said the regulator was collecting all background information on the reasons that led to the impasse. The IRDA could ask insurance companies to adopt a grading system for hospitals based on parameters such as super-speciality facilities, technology, location and critical care infrastructure. If adopted, this would mean hospitals that score high on these parameters would be entitled to furnish fatter bills, a source said.
Insurance companies, on their part, have responded by spelling out a set of conditions for settling claims.
This is not a one-off instance. Settling insurance claims in India has never been hassle-free. Policyholders, consumer rights activists and lawyers HT spoke to, were of the view that insurance companies don’t hesitate to reject claims at the slightest of pretexts.
“There are two sides to an insurance business: collecting premium to expand the coverage of insured people, and settling claims. Companies focus on the first aspect and ignore the latter,” said Supreme Court lawyer Sudhir Mishra. In most cases, the fine print is not explained to policy holders as agents race against time to meet annual targets, added Mishra.
HelpAge India CEO Mathew Cherian said the sudden curb on cashless hospitalisation was a case of contract violation . “It is a violation of the terms of contract to provide cashless hospitalisation to subscribers and it cannot be suddenly scrapped ,” Cherian said.
Insurance companies, however, rejected the charge that customers were kept in the dark. “When making changes, we believe that clear and advance communication to customers is imperative,” said Antony Jacob, Chief Executive Officer, Apollo Munich Insurance Company Limited.