Health insurance is a cause of concern for everyone. There are several issues that need regulatory intervention and direction. The Insurance Regulatory and Development Authority who have the task of protecting policyholders, has initiated several steps in this direction.

The Regulatory body has issued draft health insurance regulations addressing several areas of concern which were raised in public interest litigation (PIL) by social activist Gaurang Damani. The draft covers product design, renewability, portability, file and use procedures, protection of policyholders’ interest, servicing of health insurance policy, third party administrators (TPA), contract between insurer and hospitals and so on.

Among the more common issues that citizens face are rising health insurance premium, senior citizens’ inability to increase sum insured, mediclaim policies getting restrictive with different caps, increase in the number of claim rejections for frivolous reasons, cashless facility restricted to few hospitals, claims based loading even after decades of no-claims from the policyholder, stringent hospitalization intimation and claims submission deadlines, poor and delayed grievance redressal, several Third Party Administrator (TPA) issues which has harassed policyholders to no end and lack of control on medical charges of hospitals and consultants.

Obviously the regulatory intervention can play a great role since the quality and coverage of our public health services in India are so poor that an overwhelming majority has virtually no recourse to any kind of quality healthcare.

This must change. At the same time, a regulator is needed for the healthcare sector to ensure ethical and transparent standards. Clearly, India needs innovative models to tackle rising healthcare costs. We should not go the US way in which hospitals and health insurers thrive but patients are saddled with huge healthcare costs.

A practical solution is for hospitals here is to adopt low-cost models, taking a page from institutions such as Narayana Hrudayalaya and ArvindNetralaya that follow a high-volume, low-margin, standardised procedure-driven approach. Insurers can also offer volume discounts to pare costs. Health insurance, ultimately, has to be underpinned by a functional, publicly funded system of preventive and primary healthcare.

Innovative good features:

With the entry of exclusive health insurance companies in India, one can see the much-needed innovation in health insurance products. The recently launched health plans are customer-centric and offer some good benefits that cater to various requirements.

Stand-alone health insurance companies like Max Bupa, Star Health and Apollo Munich are pioneering innovation in health insurance policies and have done a good job so far. Some of the good features that can be seen in the recent health insurance plans are:

 

1. Lifelong renewability: In many of the recently launched plans, the insurers did not put a cap on the maturity age till which the plan can be renewed. Now, the plan can be renewed lifelong. And now, IRDA has issued a draft guidelines requesting for all policies to offer lifelong renewal facility.
2. No sub limits: For quite some time now, all health policies came with a sub limit on various heads. The health insurance policy puts a cap on your room rent to 1% of your Sum Assured amount. With the new policies from Star Health, Tata AIG and Apollo Munich, there is no restriction on the sub limits
3. Vaccination expenses along with maternity benefits: Some plans from Max Bupa Health Insurance Company provide first year vaccination expenses over and above the maternity benefits. This will provide further boost to provide proper and timely vaccinations for children.
4. Varied Premium structure for different zones: Some companies have introduced the concept of Zone Based Premiums for Metros and Smaller Towns. New India Assurance, Bharti AXA and L&T Insurance follow the practice of pricing their health insurance policies for small towns lower than the pricing in metro cities, simply because the medical expenditure and cost of treatment is lower in small towns
5. Day care procedure: Many medical insurance policies provide reimbursement for Day Care Facilities which does not mandate the policyholder to be hospitalized. But this concept is not very prevalent and most people with existing policies are not aware of the same. It’s now that few companies’ emphasis on this benefit and have started propagating this feature.

 

There are many such benefits that are designed for the benefit of the policyholders. Recently, the Insurance regulator has suggested some changes in the health insurance regulations and if passed into a bill, these changes will bring a smile on the faces of all the customers.

Claim Settlement:

Regarding handling health insurance claims, the Regulator is of the opinion that the system is working well, by and large. Last year out of the 47 lakh claims received, 9.4 lakh claims were rejected. The data shows that 80% of the claims are met and the industry has paid out as much as Rs.5,885crore.

More than half the claims were settled within 30 days. The most frequent claims are from fever due to unknown origin followed by cataract.  The issue is where demarcation occurs considering the spirit of regulations and recognizing the practicality of dealing with claim. A large part will get addressed when medical protocols get standardized.

Some work has been done by IRDA in collaboration with chambers of commerce and industry to develop protocols. So far, they have developed 10 of them. IRDA has written to the ministry of health, which has set up an expert body to finalize the protocols. It has not yet been notified to IRDA, but they should be close to standardizing 80 processes (medical protocols).

Co-Pay System:

Recently, New India Assurance, the largest non-life Insurer of India, added reputed Jaslok hospital in Mumbai to its list of Preferred-Provider-Network (PPN). Its mediclaim policy states that there will be 20% co-pay for customers going to Jaslok hospital. On this issue customers are not happy since they have to bear the cost of co-payment.

The regulator has a different view and has clarified that, “We have issued a circular that customers should have access to current list of hospitals on PPN. If insurance companies have a clause in the policy about a specific hospital on PPN charging co-pay, then it is as per the contract. If customers are not happy with it, they can always move to another insurance company’s product.”

Mandatory Renewal Notice:

Health insurance is a cause of concern for everyone. With rising medical inflation and annual hike in health insurance premium, quality healthcare seems to be a distant dream, except for the elite who can afford the expensive hospital treatment or pricey health insurance premiums. Insurance companies do not renew policies automatically and therefore, most of the policies get lapsed.  There is no renewal notice sent to each policyholder. IRDA does not want to mandate renewal notices as it can get gamed. If the regulator mandates it and if the insured say that they have not received it, will the cover be considered as continued? The policyholder will go to court over the dispute. There are certain things that are not mandated. The customer knows the annual cover due date and hence can do the necessary renewal.

Cover for HIV infected people:

IRDA has released an exposure draft, proposing to make it compulsory for insurers to provide cover to people suffering from HIV. This is also for people who are exposed to the threat of being infected with HIV.   Persons who are not yet showing AIDS symptoms but are in stage 1 or 2 of HIV infection and those who comply with the treatment protocol of the medication can avail of this cover.

IRDA has further explained that insurers would not be allowed to reject claims from a person who was HIV negative before the policy, but subsequently got infected. It stated that insurance companies can term HIV/AIDS as a critical illness and also provide the cover under group insurance schemes.

The draft further says that all life and non-life insurers will ‘have to put in place an underwriting policy on health insurance coverage for persons suffering from HIV.  It has invited comments from insurers within a months’ time. However, the biggest challenge to the proposal is in deciding the pricing of these products, as there is shortage of data for analysis and research in the health insurance sector.

A slew of changes:

The Regulator announced a slew of changes in health insurance. After a clean-up act in life insurance, the watchdog appears to have turned its attention to health insurance. Indeed, the exposure draft guideline issued by it has proposed changes in every facet – product structure, renewability and claim settlement included.

Though these are exposure draft guidelines, the reason they gain such importance is that these are going to be the final guidelines, with some very minor changes.

 

• Product design: To begin with, any one up to the age of 65 years can now buy a health insurance product. This move aims to include more senior citizens under the health insurance ambit. So far, insurers could deny cover to people over 60 as it was not mandatory. What’s more, a lifetime renewability of health insurance product may also be possible. With some companies setting the renewability age to just 50-55 years on the basis of your past records, this will be a big breather.
• Hospitalization & settlement: If these guidelines come into effect, the preferred network of hospitals clause will be removed. This means you can go to any hospital at the time of need and won’t have to pore over a booklet to find out which hospital has an agreement with your insurer.

 

IRDA has also sought more clarity from insurers at the time of policy issuance and settlement. So, a standard policy form will be issued, which will highlight important policy details for the customer’s ease. The policy document is also required to mention the cumulative bonus that a policyholder earns.

A company rewards you with a bonus when you don’t make any claim for a specified period of time. At the time of settlement, the regulator has introduced a form asking insurance companies to provide clear reasoning for claim rejection. A detailed explanation will also have to be given at the time of loading of policies. Loading refers to the increase in premium after a claim has been made.

• Treatment of multiple policies: If you have more than one health insurance policy, you can get the claim settled completely by any one of the insurers. It is left to the companies to settle the bill amongst themselves later. Earlier, the insurers had to share the claim payouts and these generally led to delays in claim settlement.
• Alternative treatment: With the rising popularity of alternative medication, IRDA had been mulling bringing health insurance under the umbrella. Finally, there seems to be headway. These guidelines say that non-allopathic treatment in any government recognised hospital will also be eligible for insurance.
• Standard definition: In the absence of a standard definition for critical illness, companies were rejecting several claims. Now, there will be a standard definition of the term (and other terms) for all health insurance companies.
• Medical reimbursement: Once these guidelines come into effect, you will get a full refund for the medical test you undertake before taking a policy. The medical reimbursement for the policyholder will be pegged at 50% for non-life and 100% for life.
• Policy tenure: IRDA has also put a cap on the minimum policy term. With this, policies offered by life insurance companies should have a minimum term of four years. On the other hand, any health product from general insurance companies will have a minimum term of three years. The rationale behind this is that a longer term allows for a better servicing of the policy.

Sensible health covers:

Sensible universal health cover for masses is certainly a possibility in India. The government-initiated products like RSBY (RashtriyaSwasthyaBimaYojna) has done well for the masses with premium as low as Rs400 per family for a cover of Rs30,000 sum insured.

They cover primary and secondary health care. Arogya Shree is another success story in Andhra Pradesh which covers tertiary health care i.e. covering only if any procedure is performed. A product, which is a combination of two, can be promoted to masses for bulk penetration. This can be offered to certain section of society at nominal cost.

The other half of the population, which is at a higher income level, can buy this product at a higher rate, which will still be much lower than an individual mediclaim product. The product may be up to certain sum insured. If anyone needs higher sum insured, they can buy ‘top-up’ policy to cover over and above the sum insured.

IRDA has suggested insurance companies to offer a special window for fast-tracking on senior citizens grievance redressal. Some companies have started it.

Mediclaim should be offered entry till age 65 years and exit age till minimum 80 years. For new product approval, the Regulator is asking for no limit for entry and exit age. The existing mediclaim products may not offer this feature.

The  premium rates for the young are higher than what really should be due to the need to keep senior citizen premium low. There is a built- in normalisation to benefit senior citizens. The Insurance Council and the insurance industry have to come up with a minimum standard to cover these.  Insurers have to respond as an industry to this demand and the need of the society.

Minimum cover for the disadvantaged and the disabled will necessarily have to be offered and there should not be ground for increase in price or rejecting any case. Anything above the minimum will have to be gradually improved with buildup of more experience.

The draft rules on health policies say an insurer can raise the premium based on the age of the insured, though insurers will have to disclose upfront premiums charged from senior citizens. Building a database on claims history should follow, especially for this group, to help insurers price these products.

The Regulator wants that  no party should be refused an insurance policy and disability should not be a ground for rejecting insurance. It is also against the rules to refuse medical insurance to senior citizens. The enforcement on the ground may need to be tightened. The other half of the population, which is at a higher income level can buy this product at a higher rate, which will still be much lower than an individual mediclaim product.

The product may be up to certain sum insured. If anyone needs higher sum insured, they can buy ‘top-up’ policy to cover over and above the sum insured, which is offered by this mass product. Now insurers should be responsible  for  carrying  out  an empanelment  process of hospitals or healthcare  providers  to  provide  Cashless facility to the policyholder.

The TPA role is effectively marginalised. They should also provide coverage to Non-allopathic  treatments  provided  the treatment has been undergone in a government hospital or in any institute recognized  by  the government. ID card to have logo of the insurance  Company.  Incase the policy is renewed, provisions to be established by the insurer to ensure there shall not be any need for re-issue of fresh cards provided there is no change in the details of the policyholder. It means auto-renewal of same ID cards.

All insurers shall have an agreement directly with the hospitals to establish the list of network providers. This is expected that these positive changes in the Health insurance will certainly improve the health of the health insurance in India.

By: RANA J.K., Chief- Customer Service,Unison Insurance Broking Services P.Ltd., Haryana, Published in “The Insurance Times”, November, 2012