As Irdai gives 3-hour deadline to clear cashless health claims, here's what insurance industry leaders say

In a revolutionary step, regulator Irdai on Wednesday released a master circular on health insurance, specifying that an insurer has to decide on cashless authorisation within one hour of request and a 3-hour limit to clear the cashless claim. 

The master circular on Health Insurance products repealed 55 circulars issued earlier.

"To decide on cashless authorization requests immediately and within one hour and final authorization on discharge from hospital within three hours of request from the hospital," it said.

Sharing some of the salient features of the master circular, Irdai said that wider choice should be provided by the insurers by making available products/addons/riders by offering diverse insurance products catering to all ages, regions, medical conditions/ all types of Hospitals and Health Care Providers to suit the affordability of the policyholders.

It also specifies Customer Information Sheet (CIS) which is provided by the insurer along with every policy document.

It explains the basic features of insurance policies in simple words like type of insurance, sum insured, coverage details, exclusions, sub-limits, deductibles, and waiting periods.

In case of no claims during the policy period, the insurers may reward the policyholders by providing an option to choose such No Claim Bonus either by increasing the sum insured or discounting the premium amount.

For claim settlements, it said, the policyholder shall not be required to submit any documents rather insurers and TPAs should collect the required documents from the hospitals.

With regard to portability requests on the Insurance Information Bureau of India (IIB) portal, it said, stricter timelines being imposed for the existing insurer and the acquiring insurers to act.

An insurer is liable to pay Rs 5,000 per day to the policyholder in case ombudsman awards are not implemented within 30 days.

In the event of death during the treatment, it said, mortal remains to be released from the hospital immediately.

After Irdai releases the master circular, here's how leading insurance company officials have reacted to the development.

Shashi Kant Dahuja, Chief Underwriting Officer, Shriram General Insurance, said, "IRDAI’s new guidelines setting a 3-hour limit to clear the cashless claim and 1 hour to decide on the cashless authorisation request is a remarkable step towards increasing insurance penetration in India while keeping a customer-centric approach on priority." 

Speaking about the consequences a patient or their family can face due to delays in cashless claim decisions by the insurer, he raised several points such as-  

1. Payment pressure from the hospital: If a cashless claim is delayed, the insured or their family may need to arrange immediate funds, causing significant financial strain.

2. Additional charges: In case of delays, hospitals may charge additional half-day room charges or sometimes even if the discharge is in the late hours customer may have to stay overnight, which is an added expense and burden, this step of 3 hours final authorisation will significantly decrease such cases and expenses. 

As per the regulator, "If there is any delay beyond three hours, the additional amount if any charged by the hospital shall be borne by the insurer from shareholder's fund." this will have a significant impact on services.  Insurers will be prompt in providing approvals in stipulated time periods to avoid any additional charges which in turn will improve the cashless service to another level and high standards.

3. More hospital beds for patients: During the pandemic, there were a shortage of beds and other patients had to wait for a long. During that time, IRDAI instructed insurers to process COVID-19 cases in 1 hour. Now applying this to all hospitalisation is a welcome move and will ensure that beds in hospitals are timely vacated and patients waiting for beds get timely care.

4. Treatment delays: Hospitals might delay or withhold the patient's discharge, certain treatments, diagnostics, or procedures until they receive confirmation of payment from the insurer, potentially affecting the patient's health. Timely settlement will eliminate this problem.

5. Logistical burden: Family members may need to manage hospital paperwork, interact with both hospital administration and insurance representatives, and possibly seek alternative financial arrangements if the cashless claim is delayed.

6. Stress and anxiety: The uncertainty and financial pressure can lead to significant emotional stress for both the patient and their family members, potentially affecting the patient's recovery and overall well-being.

7. Disruption in hospital operations: Hospitals rely on timely payments to manage their operations smoothly. Delays in cashless claims can disrupt their financial management and affect the services they provide.

"With the new guidelines in force, the insured can focus on their recovery without the added burden of financial, emotional and administrative stress. These reforms will surely give customers a peaceful and quick discharge from hospitals, and competition among insurers will increase to provide state of art cashless services to attract new customers with best in class cashless settlement," Dahuja said. 

Siddharth Singhal, Business Head, Health Insurance, Policybazaar.com

"The IRDAI's three-hour limit for clearing cashless claims is a significant positive step towards streamlining the process for customers. From the insurers' perspective, this directive encourages better coordination with healthcare providers and necessitates improvements in the operational process. Also, the digitisation of medical records through the National Health Claims Exchange is effectively reducing turnaround times. It also facilitates a better exchange of health claim information between policyholders, providers, beneficiaries, and other relevant entities with an accurate and trustworthy framework. This drives the industry towards greater efficiency and customer satisfaction. However, standalone efforts aren’t sufficient; the entire ecosystem needs to come together to make this initiative a success. Fortunately, the government, regulator, and all stakeholders are aligned in this effort, working towards a more efficient and timely health insurance system for everyone. The guidelines also offer coverage to a wider population by ensuring better inclusivity as well as affordability which casts a safety net on every consumer segment effectively including senior citizens, people with PEDs, and the missing middle."

Krishan Mishra, CEO, FPSB India

"We applaud the IRDAI on the new master circular on health insurance that empowers policyholders with swift cashless authorization within one hour. By consolidating 55 earlier circulars, its a significant step to enhance transparency and improve service standards across the health insurance sector. This initiative will set the preface for a smoother, faster, and more inclusive claims experience for policyholders at large and encourage people towards the benefits health insurance."

Sachin Joshi, President, Claims, Liberty General Insurance 

"The IRDAI’s directive to clear cashless claims within three hours and respond to authorisation requests within one hour is a game-changer for the health insurance industry. This move ensures that policyholders receive swift approvals, allowing them to access necessary medical treatment without financial delays. The emphasis on prompt service and accountability through penalties for non-compliance will drive insurers to enhance their operational efficiencies.”

(With inputs from PTI)