IRDAI to insurers: Ensure cashless insurance claims are approved within 60 minutes

In a big relief to policyholders, Insurance Regulatory and Development Authority (IRDAI) has directed insurers to approve cashless claims within 60 minutes so that there is no delay during discharge and hospital beds do not remain unoccupied. The notification follows a Delhi High Court order which said insurance companies cannot take 6-7 hours for approving bills of Covid-19 patients during this time of crisis.

As of April 20, 2021, over 9 lakh Covid related claims have been settled by insurance companies for Rs 8,642 crore.

“This move from the regulator comes as a great help to the policyholders when the number of Covid-19 cases are growing rapidly. It has been witnessed certain Covid-related claims were taking time to get settled which was delaying the discharge process of the patient. However, with this new move of settling claims within one hour, that is, by setting an outer limit the customers will give much relief and can deal with the Covid-19 expenses easily. Though this move will surely put pressure on health insurers from an operational perspective, however, will be boon for policyholders” – Vinay Taluja, Chief Product Officer, Bajaj Capital.

Rap from Delhi High Court

Justice Prathiba M Singh on Wednesday took up individual pleas relating to admission to hospitals for Covid-19 treatment. While hearing the plea, she said that contempt action would be taken against an insurance company or a third-party administrator (TPA) if the court comes to know that processing of insurance claims is taking 6-7 hours. The court said that insurance companies should approve the cashless treatment with 30 to 60 minutes, as delay in discharging patients is leading to delay in admitting needy patients.

Last year in April 2020, the Insurance Regulatory and Development Authority (IRDAI) issued a circular stating that a decision on authorization and final discharge for cashless treatment shall be communicated to the hospital within two hours. Now, with the Delhi Court asking insurers to clear cashless settlement within 30-60 minutes, IRDAI has intervened reducing the turnaround time to one hour.

The circular issued today stated, “In the wake of prevailing conditions of  COVID-19 cases in the form of second-wave and in line with aforesaid directions of the Hon’ble High Court, the following directions are issued to all insurers:

1. Decision on authorization for cashless treatment for COVID-19 claims shall be communicated to the network provider (hospital) within a period of 60 minutes from the time of receipt of authorization request along with all necessary requirements from the hospital.
2. Decision on the final discharge of patients covered in COVID-19 claims shall be communicated to the network provider within a period of one hour from the time of receipt of the final bill along with all necessary requirements from the hospital.”