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Can insurers disallow charges levied for PPE kits and non-medical items?

There are times when more than 50 per cent of the total claim is disallowed

August 19, 2020 / 09:34 AM IST

Jehangir B. Gai

Insurance companies tend to avoid paying claims under various pretexts. When no excuse is available to repudiate them, the claim is paid, but with several deductions by finding faults with the billing. An insurance company argues that it is liable to reimburse only "customary and reasonable charges," and uses this expression to make huge deductions in the claim amount by arbitrarily determining what a doctor or a hospital should charge as reasonable fees.  Besides, insurers also disallow several items which are used while performing various procedures for which the patient has been billed, by terming these as non‑medical expenses and consumables. There are times when more than 50 per cent of the total claim is disallowed in this manner.

During this pandemic doctors charge higher fees, as they are exposing themselves to risk while treating patients. Besides, all healthcare professionals have to also incur additional expenses for PPE kits and masks. The biggest blow to consumers is that insurance companies refuse to reimburse these expenses and deduct huge sums from the claim amount. Are such deductions permissible, or can the consumer fight for reimbursement?

Getting reimbursed fairly

A mediclaim policy is a contract between the insurer and the insured, which provides for reimbursement of medical expenses incurred by the insured. The healthcare provider, whether it be a doctor or a hospital, is not a party to the contract. So the crux of the issue is whether the insured can be deprived of reimbursement of the amounts charged to him.


The law in respect of the fees which a professional can charge is well settled, viz., that a professional is free to decide what he should charge. The amount can vary, depending upon the place of practice, the difficulty and complexity of the treatment or surgery, the seniority of the doctor, and his skill and reputation in the medical field. In fact, even a court has no authority to question the reasonability of a professional's charges, as observed by the National Consumer Disputes Redressal Commission in B.S. Hegde v/s Dr Sudhansu Bhattacharya.

Legitimate and necessary usage

Consumables, disposables and safety equipment are used whilst treating a patient, so that the infection of one patient is not transmitted to another. So the use of such materials is legitimate and necessary. These expenses cannot be arbitrarily disallowed as is being done by insurance companies. Where consumers have gone to court, they have been able to secure justice by getting directions for insurers to pay for these items. In a recent case, the insurer was ordered to pay the disallowed amounts of Rs 3,500 towards nursing and hospitals utilities, Rs 69,088 for consumables used in the operation theatre, Rs 6,914 for pharmacy and medications used during the surgery, and professional charges for Rs 49,500.

The simple principle and logic is that the insured does not have any bargaining power, and is required to pay the bill raised by hospital, and so the insurance company is duty bound to reimburse the expenses incurred in accordance with the coverage specified in the policy.

If the original policy, which was first issued did not contain any exclusions, the insurer cannot subsequently insert exclusions at the time of renewal.

Even though insurers know that the disallowances are not permissible, they continue to make wrong deductions. While those who fight it out get their rightful dues, the vast majority of people are not inclined to take legal action, which benefits the insurers and allows them to profit at the cost of the hapless consumers.

(The writer is a consumer activist and has won the Govt. of India's National Youth Award for Consumer Protection)
first published: Aug 19, 2020 09:34 am
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