Changes to Health Insurance Claim Rules: IRDAI Says Cashless Claims to be Processed in 3 Hours

In the past, patients had to remain in hospitals for longer because of delays in claim processing. Insurers now have three hours to grant petitions for cashless discharge. In addition, additional hospital costs resulting from delays will be the insurer’s responsibility.

30th May 2024

By Khushi Maheshwari 

Being admitted to the hospital is never fun, but when your insurance clearance is delayed during discharge, it may become very uncomfortable. 

Consider this: following a few days in the hospital, the physician determines that you are well enough to be discharged during an afternoon round. Your family members pack your things and dash to get your insurance company to pay the bills. You are still in the hospital when the clock strikes seven since your health insurance claim has not yet been approved. If the insurance company does not approve the bills, the hospital will not release you. Your price will go up if you have to stay at the hospital for an additional night. This is not an isolated instance.

Patients and their families frequently experience a nightmare as a result of insurance companies’ or third-party administrators’ (TPAs’) protracted delays in resolving their health insurance claims. TPAs work in tandem with the insured, the insurance company and the hospital. In numerous situations reported by policyholders on LocalCircles, it took 10–12 hours after the patient was ready for discharge for them to be discharged because the health insurance claim was still being processed, according to a Local Circles poll. They will be responsible for paying for that extra night’s stay if they decide to remain at the hospital for another day. 

Several patients have reported that in this instance, the insurance provider gave the hospital’s TPA desk a pre-approval prior to the patient’s admittance. However, a new rule in the health insurance claim process from the insurance regulator may make such instances obsolete.

The IRDAI has established a deadline for approving cashless claims for health insurance.

An insurer must provide the final authorisation within three hours of receiving a hospital discharge request, according to the Insurance Regulatory and Development Authority of India (IRDAI).The regulator stated in a master circular dated 29th May, 2024, that in no case would the policyholder be required to wait to be discharged from the hospital. It was also mentioned that if there was any delay beyond three hours, the additional amount, if any charged by the hospital, would be borne by the insurer from the shareholder’s fund.

The regulator further stated that in the case the policyholder passes away while receiving treatment, the insurer will: i) expeditiously handle the request for claim settlement; ii) arrange for the timely discharge of the policyholder’s mortal remains (body) from the hospital.

According to Sanjiv Bajaj, Jt. Chairman & MD of BajajCapital Ltd, it was stated that the recent circular by IRDAI, which set a 3-hour time limit for insurers to clear cashless claims, marked a significant step forward in the realm of customer-centric health insurance reforms.

IRDAI has requested that insurers make a decision about cashless claims in an hour.

In addition, the regulator has mandated that insurers work toward a 100% cashless claim settlement within a given time frame. In an emergency, the insurer ought to make a decision regarding the cashless authorisation request within sixty minutes of receiving it. To do this, IRDAI also requested that insurers set up the required processes by 31st July, 2024. 

According to IRDAI, insurers can set up specialised support desks in hospitals to assist with cashless requests. Additionally, the regulator has requested that insurers offer policyholders a digital pre-authorisation process. When a claim is pre-authorised, the insurer often approves a certain amount for treatment and notes that payment of the claim will depend on the hospital’s final invoice.

Regarding the settling of health insurance claims, it was stated by the regulator that no claim would be repudiated without the approval of PMC or a three-member sub-group of PMC called the Claims Review Committee (CRC). Additionally, it was mentioned that in case the claim was repudiated or disallowed partially, details would be conveyed to the claimant along with full details giving reference to the specific terms and conditions of the policy document.

Anuj Parekh, Co-founder and CEO at Bharatsure, commented that it was expected that this measure would ensure that claims were not rejected arbitrarily and that due process was followed, potentially resulting in lower claim rejection rates.

A wide selection of goods for those with health insurance, including information on using several health insurance policies.

IRDAI further stated that a wide variety of insurance plans have to be offered to cover various demographics, including age, geography, occupation, medical conditions and treatments, and hospitals and healthcare providers of all stripes. This will assist clients in selecting a plan that they can afford.

According to Narendra Bharindwal, Vice President of the Insurance Brokers Association of India, it was stated that policies must be portable and underwriting policy should not discriminate against any particular group. It was further emphasised that the goal was to maintain high standards of customer service, ensuring an environment of trust and transparency in health insurance.

Under any policy, a policyholder may petition for claim settlement in the manner of their choosing. According to the regulation, the insurer of the insurance will be regarded as the principal insurer. Policyholders with several health insurance policies will be given the choice of settling claims through one of those policies. According to the regulator’s master circular, the primary insurer, to whom the claim is initially made, is required to arrange and expedite the settlement of the remaining amount from the other insurers. The insurer may offer policyholders a no-claim bonus if there are no claims made throughout the duration of the policy. This incentive may take the form of an increase in the total insured or a discount on the premium.

Bajaj mentioned that these measures were expected not only to increase the adoption of health insurance across India but also to foster higher levels of trust between insurers and policyholders. It was noted that with stricter review processes and a focus on maintaining high standards of customer service, IRDAI was ensuring a more transparent and reliable health insurance environment, ultimately benefiting the consumer.

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