The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that insurers and TPAs (third party administrators) pass on all discounts (received from hospitals) to policyholders while settling health claims.
A recent circular issued by IRDAI stated, "While every insurer and TPA shall endeavor to get the best and cost-effective services to the policyholders or the claimants of health insurance policies, it shall be ensured that the discounts obtained from the hospitals, if any, are passed on to the policyholders or the claimants of the underlying health insurance policy".
IRDAI's directive, now supposed to be a part of every insurer's claim settlement process, stresses on leveraging the discount, thereby subsidizing the claimants' expenses. The regulator also informed that all discounts need to be specified in absolute terms in the final hospitalization bill of every individual claim. This would ensure awareness and transparency.
In cases where the hospitalization expenses exceed the sum insured, the discount must be calculated on the gross amount stated in the final hospital bill. If the expenses still exceed the eligible claim amount, only then need the policyholder bear the difference in cost. Also, if the health insurance policy has any co-payments or deductibles, this should be calculated only after factoring the discount.
The above conditions, mandatory for every insurer, shall be implemented with immediate effect for cashless services and reimbursements.