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Charged more? Insurance co must comply

Some months ago, my wife underwent eye surgery and as we had an insurance policy, we had sought pre-authorisation from the TPA (third party administrator) and this was done as per the Preferred Provider Network Tariff.

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Pushpa Girimaji

Some months ago, my wife underwent eye surgery and as we had an insurance policy, we had sought pre-authorisation from the TPA (third party administrator) and this was done as per the Preferred Provider Network Tariff. However, at the time of discharge, the hospital charged more than the approved amount and the insurance company says they are not bound to pay more than what’s authorised. What do I do?

Having agreed to a cashless package pricing for certain procedures under the Preferred Provider Network, the hospital should not have charged more, unless there was some unforeseen complication that required further treatment or expenditure. In such a case, if the extra expenditure is legitimate, the insurance company has to pay the additional amount. Even if it is not, it is for the insurance company to enforce the tariff agreed upon and ensure that the hospital returns the excess amount to you. Or the insurer can pay you and recover the amount from the hospital.

I would suggest that you lodge a complaint with the Insurance Ombudsman. You may be aware that you can seek redress from the Ombudsman for a variety of grievances, including any partial or total repudiation of claims, legal construction of insurance policies, delay in settlement of claims beyond the time specified in the regulations framed under the Insurance Regulatory and Development Authority of India Act, etc. 

You can get the complete contact details of the Ombudsmen located in different regions, along with their jurisdiction, on the website of the Office of the Executive Council of Insurers: ecoi.co.in/ombudsman.html. For information on the rules pertaining to the Ombudsman, you can go to the policyholder.gov.in. This is a website of the Insurance Regulatory and Development Authority, meant for policy holders.

Can you cite a decision of the Ombudsman in a similar matter?

Let me quote for your benefit a decision of the Tamil Nadu and Puducherry Ombudsman, M. Vasantha Krishna, in the case of M. Vijayalakshmi Vs The New India Assurance Company Ltd, decided on August 3, 2018.

In this case too, the policyholder asked for pre-authorisation for his wife’s total abdominal hysterectomy, under the Floater Mediclaim policy. As the hospital was part of the Preferred Provider Network, the insurer authorised the surgery at the PPN tariff of Rs 50,000 However, at the time of discharge, the hospital billed the policy holder for Rs 71,637, forcing him to pay an additional amount of Rs 21,637. But the insurance company refused to settle the additional amount on the ground that a) it would not pay more than the agreed PPN tariff; and b) the hospital had not shown any complication requiring additional expenditure in the discharge summary.

The Ombdusman, after hearing both the parties, made two important observations: (a) as per the policy terms and conditions, there was no restriction on settlement of claim beyond the PPN tariff; (b) it was true that the hospital should not have charged in excess of the agreed PPN tariff, but it was the responsibility of the insurance company or the third party administrator to enforce the PPN tariff. It had failed to do so.

So, on these two grounds, the Ombudsman said the insurance company should pay the additional amount of Rs 21,637 to the extent admissible as per the policy terms and conditions. The amount must be paid within 30 days. “According to Rule 17 (7) of the Insurance Ombudsman Rules 2017, the complainant shall be entitled to such interest at a rate per annum as specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999, from the date the claim ought to have been settled under the regulations, till the date of payment of the amount awarded by the Ombudsman” the award said.

The Ombudsman also pulled up the insurance company for not responding to the representation of the policy holder about the short settlement of the claim. “This was in gross violation of the IRDAI’s guidelines on customer grievance redressal, which stipulate that customer grievances should be acknowledged within three days of their receipt and resolved within 15 days. The Forum strongly advises the insurer to adhere to the guidelines of the Regulator in the matter of handling customer complaints,” the Ombudsman said.

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