10th June 2024 (11 Topics)

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Cashless Health Claim Settlement

Context

Starting August 1, 2024, insurance companies in India are mandated to settle health insurance claims through cashless methods. This move by the Insurance Regulatory and Development Authority of India (IRDAI) aims to streamline and expedite the process of hospital bill settlement for policyholders.

Key-highlights of IRDAI’s decision:

Cashless Settlement: Insurance companies must adopt cashless settlement of health insurance claims, ensuring smoother and faster processing of claims for policyholders.
Procedures for Insurers: Insurers must establish dedicated Help Desks at hospitals to assist with cashless requests and provide pre-authorization through digital means.
Timely Settlement: Insurers are encouraged to achieve 100% cashless claim settlement within a specified timeframe, minimizing the need for reimbursement except in exceptional circumstances.
Claim Processing Timeframe: Insurers are required to decide on cashless authorization requests promptly, within one hour of receipt, and grant final authorization within three hours of discharge authorization from the hospital.
Compensation for Delays: In case of delays beyond the stipulated timeframe, insurers are liable to cover any additional charges imposed by the hospital from their shareholder's fund.
Dealing with Mortal Remains: In unfortunate instances of the policyholder's death during treatment, insurers must promptly process the claim and facilitate the release of the mortal remains from the hospital.

What are the likely impacts?

Positive Impact: The move towards cashless settlement of health insurance claims is expected to alleviate the burden on policyholders, making the process more efficient and less stressful, especially during times of illness or emergencies.
Reducing Challenges: With a significant percentage of policyholders facing difficulties in processing health insurance claims, the new mandate addresses concerns raised in surveys regarding claim rejection and time-consuming processes.
Policyholder Rights: IRDAI emphasizes policyholders' rights, including the option to port policies between insurers and ensuring seamless transfer of underwriting details and claim history.
Regulatory Oversight: The requirement for insurers to seek approval before repudiating claims and the establishment of clear procedures for claim processing aim to enhance transparency and accountability in the insurance sector.
Improving Accessibility: By eliminating the need for policyholders to submit documents directly, the process becomes more accessible and convenient for individuals seeking health insurance benefits.

Fact Box:

Indian Insurance market

At present, India is the 9th largest Life Insurance Market.
The Indian Insurance market is expected to reach USD 200 bn by 2027.
Insurance density in India has increased from USD 11.1 in 2001 to USD 91 in 2021 (Life insurance- USD 69, Non-life insurance – USD 22)
Insurance penetration in India has been steadily increasing (from 2.7% in 2000 to 4.2% in 2021)

Important Government Interventions

Insurance for all: To realise the dream of ‘Insurance for all’ by 2047, insurance regulators are taking many progressive steps like BIMA SUGAM, BIMA VAHAK and BIMA VISTAAR amongst others.
Digital Personal Data Protection (DPDP) Act, 2023 aims to help insurance providers to enhance data protection in the insurance sector.
Ayushman Bharat PM-JAY is the largest health assurance scheme in the world and is funded by the Government.
Financial inclusion programmes like Pradhan Mantri Jan Dhan Yojana, Jeevan Suraksha Bandhan Yojana and Pradhan Mantri Suraksha Bima Yojana, Atal Pension Yojana have played a pivotal role in bringing underpenetrated segment under the umbrella of insurance.

Other recent initiatives taken by IRDAI

Age Ceiling: IRDAI has lifted the age ceiling of 65 years for buying a medical insurance policy, a move that widens the insurance net and provides huge relief to senior Indians.
Time Limit for Approving Cashless Claims: IRDAI has mandated that insurers must grant final authorisation within three hours of receiving the discharge request from the hospital. If there is any delay beyond three hours, the additional amount charged by the hospital will be borne by the insurer from the shareholder’s fund.

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Cashless Health Claim Settlement

Key-highlights of IRDAI’s decision:

What are the likely impacts?

Fact Box:

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