Chances are high that you either faced or heard about claim rejection stories during the peak wave of COVID-19. It was the time when hospitals were full and exorbitant prices were charged for medicines and oxygen cylinders. Consider this: As per the latest annual report released by the Insurance Regulatory and Development Authority of India (IRDAI) around 29 per cent of COVID claims (cumulative upto March 2022) were either disallowed or repudiated by insurance companies. According to statistics, insurers received Rs 34,598 crore as cumulative claims out of which they settled claims worth Rs 24,362 crore. Out of the total claims received, Rs 7223 crore got rejected while Rs 2782 crore were disallowed.
Insurance experts say while the number is high, some of the common reasons for claim rejections were improper documents, unnecessary tests, and incidences where treatment was not according to the standard procedure prescribed by ICMR. Moreover, due to unavailability of beds many people preferred to get treated at home which they later found out was not covered under their health insurance policies. “While evaluating claims requests, we also needed to check whether or not the medicines administered were in line with the severity of the patient’s condition (including co-existing conditions and other complications). During COVID we were witnessing incidences of unnecessary tests and hospitalisation, while ICMR had already provided standard protocols for the treatment process. The COVID claims which were disallowed by the insurers were typically the ones that did not either meet the ICMR criteria for the need of hospitalisation or the treatment being administered was not in line with the standard protocols,” says Dr. Bhabatosh Mishra, Director Underwriting, Products and Claims, Niva Bup Health Insurance.
During first two phases of COVID, as per the expert, there are also instances that many hospitals were not sharing sufficient documents and sent only customer’s positive report for insurers to adjudicate the claims. This led to more queries. “As an insurance provider, we needed to evaluate the severity of the patient’s condition to know whether he met the hospital admission criteria or not. As a responsible health insurer we adhered to government, WHO, AIIMS and ICMR’s guidelines on severity classification and to judge the need for hospital admission vis a vis home quarantine. We saw many people with severe disease suffer during COVID peaks due to not getting a hospital bed. It is also not morally and socially right for someone to get admitted out of fear even if the condition doesn’t warrant so and bereft someone who genuinely needs a hospital bed at that time,” says Mishra.
On the repudiated claims, S. K. Sethi, Director, RIA Insurance Brokers says that they are those who, during peak time of Delta wave got themselves insured but could not get this written on prescription and paid high fees to doctors/ attendants and could not produce valid receipts. These were the claims that got rejected, largely.
How to ensure a smooth claim settlement?
One of the reasons for the rejection of COVID claims was home treatment. The bills were submitted without proper doctor’s prescriptions. “Reason for the large number of claims disallowed/ repudiated during the pandemic was that an exceptionally very large number of claims were lodged by insured, who could not get beds in hospitals. They were compelled to be treated at home under difficult circumstances. We as specialized health -Insurance brokerage firm guided our clients to get a doctor’s prescription which mentioned that home quarantine/ isolation is prescribed as no bed is available in hospitals. In such cases we can say with satisfaction that all claims were paid.” says Sethi.
Another common reason for claim rejection is the waiting period. For example, pre-existing conditions are covered only after a certain number of years. Other reasons for which claims generally get rejected include non-disclosure of diseases, fraudulent claims, and filing a claim for a condition that is specified under permanent exclusions by the regulator, among others. “To avoid claim rejection the customer must correctly disclose his health status at the time of policy issuance. He should also understand the policy benefits and terms and conditions such as waiting period, etc. well enough to ensure that he does not file any claim which is liable to get rejected as it does not meet the criteria," says Mishra.
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