Did you know that many insurers allow only seven days after hospital discharge to submit reimbursement claims? These rules are now being enforced strictly. Policyholders should be aware that a delay may invalidate their claims

Did you know that many insurers allow only seven days for submitting reimbursement claims or mediclaim after discharge from a hospital? While private sector insurers are reportedly following the practice, now public sector insurers are also planning to do the same in order to curb fraudulent submissions.

G Srinivasan, chairman and managing director, United India Insurance Co Ltd told Moneylife, "It (mediclaim submission) was already implemented by a few companies in the market. We are starting to enforce the same to have control over claims. When a policyholder is admitted to a hospital, we need to know so that we can talk with doctors or do our investigations. The time limit for submission of claims should not be too long. If there are genuine reasons for delay the policy conditions can be waived at various levels. It will help in fraud control. If there are post-hospitalisation bills, they can be submitted as a separate claim later."

This means, whether the patient has fully recovered or is still undergoing post-hospitalisation treatment, he or his caretaker will have to submit the mediclaim within seven days from hospital discharge. Moreover, the claim may have to be filed in person or couriered to avoid any delays concerning postal services. Strict enforcement of this move is likely to cause inconvenience for policyholders.

According to the standard mediclaim policy, expenses incurred 30 days before hospitalisation and 60 days after discharge are payable as per the policy terms and conditions. Post-hospitalisation claims may have to be separate from the hospital claim.
 
Insurance companies have a point that delay in claims submission helps fraudsters to cook up fake documents that adversely impact insurers' claims ratio. The flip side is any genuine delay in claim submission will now need authorisation and hence additional red tape for it to be accepted by an insurer.

According to M Ramadoss, chairman and managing director of The New India Assurance Co, "There are time limits for intimation of the claim and submission of claim papers as per policy conditions which may differ between companies. Such time limitations are put in all policies."

Many insurance companies mandate policyholders to contact them or the TPA (third party administrator) within 24 hours of hospitalisation. In addition, insurance companies are also not obligated to send the policyholder renewal notices. The onus is on the policyholder to be aware of his own responsibilities and the fine print in his mediclaim policy.

The United India Insurance circular specifies claim documents have to be submitted within seven days from the discharge date. Any delay up to 15 days can be condoned by the divisional manager. Beyond 15 days, the power to condone has been vested in the hands of the regional officer.

According to a New India Assurance individual mediclaim policy, preliminary notice of claim should be given to the company/TPA within seven days from the date of hospitalisation for reimbursement claims. Final claim along with hospital receipted original bills/cash memos, claim form and list of documents as listed in the claim form etc., should be submitted to the policy-issuing office/TPA not later than 30 days from hospital discharge.

According to Rohan Dukle, director, Magus Corporate Advisors Pvt Ltd, an insurance claim consultancy firm, "With the total de-tariffing of the non-life industry post-2006, resulting in major price wars in hitherto profitable segments such as fire, engineering (insurance) etc., there is increased pressure on the bottom lines of insurers. This coupled with the lower ceding commissions has resulted in tremendous pressure on the insurers, forcing them to reconsider pricing. With the constant influx of new entrants into the non-life segment, this pressure is not expected to immediately reduce. As such therefore the insurers are being more stringent in passing of claims. This stringency is even more evident in the case of mediclaim which is repeatedly seeing high incurred claim ratios."

"Traditionally, in a tariffed regime, it was seen that the insurers followed the policy of 'pay if you can, reject if you must'. With the exigencies of the current scenario, this policy is slowly seeing a change, with insurers taking a close look at the fine print whenever there is a claim. With the redressal mechanisms such as consumer courts or civil courts (in case of rejected claims) taking substantial time to provide relief, insurers may tend towards rejecting claims in case of borderline claims," he added.

It has been reported that New India Assurance will approach the Insurance Regulatory and Development Authority (IRDA) to allow it to curtail the stipulated period for submission of claim papers from the existing 30 days to seven days.

 — Raj Pradhan