INSURANCE REGULATORY AND
DEVELOPMENT AUTHORITY OF INDIA

CIRCULAR

23rd June

IRDA/TPA/MISC/CIR/117/06/2015

To,

All Insurers and TPAs,

Re: Discount on bills offered by Network Providers

During the course of settlement of claims under health insurance policies, either the insurers or the TPAs may be obtaining discounts from various Network Providers or also from other Hospitals outside the network. 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.

Where by virtue of any agreement, discounts are agreed to be received on the aggregated bills raised by the hospitals, every insurer or TPA shall appropriately identify and apportion the eligible amount of the discount to be underlying health insurance policy in respect of which the claim is settled so as to pass-on the benefit of the concerned policyholder or the claimant, as the case may be.

Towards the above, every insurer and TPA shall put in place; inter alia, the following procedures:

1. The insurers and the TPAs shall mandate the hospitals to reflect such agreed discounts in the final hospitalization bill of each claim, whereby the policyholder or the claimant can also be ware of the actual bill raised by the hospital.
    
2. Where the admissible claim amount is more than the Sum Insured, the agreed discounts shall be effected on the Gross amount raised in the bill, fore letting the policyholder or the claimant bear the costs over and above the eligible claim amounts.
    
3. Where the underlying health insurance policies have co-payment or the deductible conditions, the insurer or the TPA shall ensure that said co-payment or deductible is effected only after netting of the discounts offered by the hospital, if any.
    
4. The insurers and the TPAs shall ensure that every discount received or agreed to be received from the hospital is passed on to the policyholder or the claimant in respect of the underlying claim only in absolute monetary terms.
    
5. Every Insurer shall made these procedures as part of the details guidelines on claim settlement to be provided to the TPAs, in accordance with the provisions of Reg. 12 (b) (i) or IRDA (Health Insurance) Regulations, 2013.

The above procedure shall be applicable with immediate effect for both i.e. cashless services and reimbursements of all the claims on health insurance policies.

This is issued in terms of section 14 (2) of IRDA Act, 1999.

Yegna Priya Bharath

Joint Director (Health)

Parisrama Bhavanam, 5-9-58/B, 3rd Floor, Basheer Bagh, Hyderabad-500004

Phone: 040-23381100, Facsimile: 040 66823334, email: [email protected]

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DUTIES, POWERS AND FUNCTIONS OF AUTHORITY

1. DUTIES, POWERS AND FUNCTIONS OF AUTHORITY :-  

(1)   Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

(2)   Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include:-

(a)    issue to be applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;

(b)   protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;

(c)    specifying requisite qualifications, cold of conduct and practical training for intermediary or insurance intermediaries and agents;

(d)   specifying the cold of conduct for surveyors and loss assessors;

(e)    promoting efficiency in the conduct of insurance business;

(f)     promoting and regulating professional organization connected with the insurance and re-insurance business;

(g)    leaying fees and other charges for carrying out the purposes of this Act;

(h)    calling for information form, undertaking inspection, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business;

(i)      control and regulation of the rates, advantage, terms and conditions that maybe offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the insurance Act, 1938 (4 of 1938),

(j)     specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;

(k)   regulating investment of funds by insurance companies;

(l)      regulating maintenance of margin of solvency,

(m)  adjudication of disputes between insurers and intermediaries or insurance intermediaries;

(n)    supervising the functioning of the Tariff Advisory Committee;

(o)   specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f);

(p)   specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and

(q)   exercising such other powers as may be prescribed.