Earlier this month, Nikunj Tiwari, an advertising executive from Delhi, faced a dilemma and had to make a quick decision. His father was ill with COVID and awaiting hospitalisation. Tiwari had two choices — incur the medical expenses himself and claim reimbursement from the insurer later, or opt for cashless settlement of the claim. Reimbursement meant he could immediately get a bed for his father. Cashless meant the claim would be settled between the insurer and hospital directly but involved him spending two hours awaiting approval from the insurer, with no guarantee a bed would be waiting when he got the green light.
In the end, it was an easy decision to make. “There was a long waiting list and if I waited one to two hours to get cashless approval, the bed would have been allotted to someone else. So, I opted for reimbursement,” says Tiwari. However, the reimbursement hasn’t been a smooth affair. “My father is discharged now and I have submitted claims for approval with the third-party administrator. We have been told that several hospital charges for infection control will not be payable by insurers,” he lamented.
Like Tiwari, many Indians across the country have been battling COVID on one side and fighting to get their insurance claims settled on the other.
Amidst the second wave of the virulent disease, around 171,000 health insurance claims related to medical expenses worth Rs 6,649.53 crore incurred in treating the virus are lying with insurers, awaiting settlement.
As of April 28, there were 1.1 million COVID-19 health claims worth Rs 15,568 crore filed with insurers. Of this, 930,729 claims worth Rs 8,918.57 crore have been settled, according to General Insurance Council data shared with the Finance Ministry.
Insurance sources said that the claim delays are primarily because of disagreements between hospitals and insurance companies on the claim amount and charges imposed. Since this claims data is not publicly available, insurers did not want to comment on the record.
“The claims delay is because cashless is not being accepted at hospitals. There is also a discrepancy in the bills being charged,” said the head of claims at a standalone health insurer.
Cashless settlement is not being accepted at some hospitals because of disagreements between these institutions and insurers over how much should be charged.
Hospitals have told insurers that they will follow the rates agreed in service level agreements. Cashless authorisation was earlier required to be done within two hours and that time has been cut down to 60 minutes. As long as the network hospital and insurer agree on the rates, approvals are typically given in 60-70 minutes.
From May 2020, hospitals had increased treatment costs due to infection-control measures adopted after the COVID-19 outbreak. This was passed on to customers, resulting in higher bills.
Here, COVID-related infection-control measures such as testing in-patients and staff, PPEs for health staff, social distancing protocols and human resources costs is resulting in bills getting inflated by 15-20 percent over regular charges. Insurers are not willing to bear these costs.
“Our costs have gone up due to additional safety standards, including PPE kits, masks and the need to purchase ventilators, oxygen and also other injections with rising cases. It is the insurer that has to bear the costs for the policyholder,” said Aryaman Parmar, Chief Operating Officer at Alok Hospital in central Mumbai.
Differences over rate card
In June 2020, insurers, through their industry body General Insurance Council, had formulated a standard rate card for all COVID-19 hospital treatment. However, as reported by Moneycontrol earlier, hospitals have not fully adhered to these rates.
“Hospitals are at fault, and not insurers. We are paying whatever is applicable as per the pre-agreed rates with the network hospitals,” said the chief executive of a mid-size general insurer.
Customers, meanwhile, have been filing complaints over delays and rejection of medical claims by insurers.
Sujata Gupta, a 37-year-old software professional from Kolkata, said that her cashless treatment in March for COVID-19 was not approved by the insurer (citing procedural issues) and only Rs 80,000 of the Rs 2.7 lakh bill has been settled so far.
“I was told that the Remdesivir injection price was not payable by insurers since it is not a proven treatment. But how am I at fault since it was the doctor that prescribed it,” she said. Gupta is planning a file a complaint with the Insurance ombudsman in the city over the pending payment.
Amidst the rise in delays, the Insurance Regulatory and Development Authority (IRDAI) has asked insurers to authorise cashless COVID-19 within one hour of receiving the required documents. There were 3.17 million active cases of COVID-19 in India as of 8 am on April 30.
A Delhi High Court order dated April 28 directed regulator IRDAI to advise insurers to communicate their cashless approvals to hospitals within 30-60 minutes. This was to ensure that there is no delay in the discharge of patients and hospital beds do not remain unoccupied. But this is feasible only if the network hospital and insurer arrive at a consensus on the rates to be charged for the particular patient.
“We are in constant touch with insurers asking them to expedite the claims process. Even if there is disagreement over some portion of the hospital bills, it can be sorted out later. The customer should not suffer,” said a regulatory official.
Finance ministry nudges IRDAI
Moneycontrol had reported earlier that Finance Minister Nirmala Sitharaman has asked the Insurance Regulatory and Development Authority of India (IRDAI) to direct companies to prioritise COVID-19 claims.
Sitharaman had also said that reports are being received about some hospitals denying cashless insurance.
Following this, IRDAI sent a circular to insurance companies asking them to expedite the settlement of COVID-19 claims. Insurers are currently in the midst of redrafting their service level agreements with the hospitals. Errant hospitals could even be dropped from the cashless network.
“While reviewing cashless requests, insurers are also advised to ensure that policyholders are charged as per the rates agreed to by network providers wherever applicable. Insurers are also advised to ensure that hospitals do not levy additional charges for the same treatment other than those rates agreed with the insurers,” the circular said.
India reported 386,000 new COVID-19 cases over 24 hours, as of 8 am on April 30, taking the total number of cases to 18.7 million. There were 3,498 deaths in that period, taking the total official death toll to 208,000.
IRDAI is keeping a close watch on the claim delays and rejections. Since hospitals do not have a regulator, insurers say their hands are tied.
“Once the intensity of the second wave of COVID-19 reduces, we, as an industry, would need to engage in detailed discussions on new rates for treatment for all infectious diseases and future pandemic outbreaks. This also opens room for legal agreements being signed between hospitals and insurers, where violation by both parties could lead to penalties,” said the chief financial officer of a bank-led insurer.