The IRDA,the insurance regulator,on Thursday, has launched modified guidelines on health insurance product filing norms on proportionate deductions.


In the modified norms, the IRDAI has stipulated that insurers canot not recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims.


Insurers have  to define ‘associate medical expenses’ in the terms and conditions of policy contract as part of product design and  can propose proportionate deduction of the ‘associated medical expenses’ when a policyholder chooses a higher room category than the category that is eligible as per terms and conditions of the policy, said IRDAI.


However,the following expenses, according to the new norms, are not allowed to be part of the definition of ‘associate medical expenses.’.

-Cost of pharmacy and consumables;

-Cost of implants and medical devices

-Cost of diagnostics


Further, insurers are not permitted to apply proportionate deduction for ‘ICU charges’ as different categories of ICU are not there.


Insurers have to ensure that proportionate deductions are not applied in respect of the hospitals which do not follow differential billing or for those expenses in respect of which differential billing is not adopted based on the room category. This has to be  clearly specified in the policy terms and conditions, said the IRDAI..


In addition to the norms already specified in the existing guidelines on product filing in health insurance business, these additional norms are now specified by the IRDAI.


Bhaskar Nerurkar, head,health claims, Bajaj Allianz General Insurance commented that the new  guideline from the regulator is a welcome move as it will reduce the out of pocket expenses of the customers.


“IRDAI has mentioned that insurers need to define the associate medical expenses which will be deducted proportionately if a person opts for a higher room category than the category that is eligible as per terms and conditions of the policy. Additionally, it has mentioned that expenses like cost of pharmacy, cost of implants, cost of diagnostics, etc. will not fall under the definition of ‘associate medical expenses’ and hence, proportionate deduction for such expenses will not be applicable along with the ICU charges as well. Insurers will negotiate with their hospital networks to see that the increase in rates of the associate medical expenses with change in room category are in control so as to benefit the customer,” he said. 

The provisions of the new guidelines will be applicable to the health insurance products filed as per guidelines on product filing in health insurance business on or after 01st October, 2020. All policy contracts of the existing health insurance products that are not in compliance with these guidelines has to be modified as and when they are due for renewal from 01st April, 2021 onwards.


Meanwhile,the IRDAI has directed the insurers to keep the insured informed of the list of  Network Providers(hospitals)  and display the same on their website. Such list has to be also displayed geography wise and updated as and when there is any change in the Network providers.


The policyholders desirous of knowing the above details shall be able to access all the above information on visiting the website of their Insurers.


The medical infrastructure of the hospital should include informations  like total bed strength of the Hospital,number of doctors,total number of full time doctors with qualification approved by Medical Council of India (MCI) in the rolls of the hospital,number of consultants,number of surgeons or interventionists , total number of qualified nurses in the hospital,,total number of intensive care unit beds in the hospital and number of doctors (with Qualification of MBBS/MD) exclusively available for intensive care unit(ICU), and number of qualified nurses available exclusively in the Intensive care Units taking all the shifts together


All third party administrators (TPAs) have to  provide the link of the insurance company where the said information is available.


TPAs and Insurers also have to disclose the web addresses of the network providers enabling policyholders to visit the website of the respective hospitals for up to date information at any given point of time.


All Insurers shall amend their Service Level agreements (SLAs) with the Network Hospitals to ensure hospitals provide the above data for publication on Insurers website.


These directions will come into effect from 01st April, 2021 and the data for financial year ending 31st March, 2021 shall be published by 30th June, 2021, said the IRDAI..