GI Council may move SC to implead itself on standard rates in Covid therapy

Wants govt to prescribe treatment protocol and then fix the rates

The General Insurance Council (GI Council) is planning to move an application in the Supreme Court to implead itself in a petition that is seeking to subsidise medical treatment to covid-19 patients. The council wants the health ministry to fix uniform rates for all patients seeking treatment against the virus, irrespective of whether they are insured or not.

“We are planning to implead ourselves in the ongoing case in the apex court. We are in discussions on that matter and may file an application to implead ourselves in the PIL seeking to subsidise covid treatment rates”, said a source aware of the development.

“We are asking the government to prescribe the treatment protocol and then fix the rates for treatment. Otherwise what will happen is, those with high sum assured will be subjected to unnecessary procedures”, he added.

The council has written to the government, including the Prime Minister’s office, but has not got a response so far on the issue. “They need to keep in mind that insurance companies have only finite resources and the finite resources has to be used in such a way that the through the course of the pandemic, the insurers are able to provide their services”, he said.

So far, a few state governments have standardized rates for covid treatment. But states like Maharashtra have a clause that says only uninsured patients can avail off the advantage of standardized rates, thus creating a distinction between the insured and uninsured patients.

“It gives a wrong message to the society that it is better to remain uninsured than insure yourself. If you are an insured customer, and there is no standard rate of covid treatment, you may end up exhausting your sum assured in no time”, said the source.

Even people who have health insurance policies, which provide coverage for covid treatment, their sum assured varies from Rs 50,000 – Rs 1 crore. Hence, it is unfair to say that the standardization of covid treatment rates will not be applicable to insured people. Having an insurance coverage doesn’t mean that the customer can afford to pay from his pocket, experts said.

Insurers and the council have been pushing for standardization of rates as far as covid treatment is concerned because in the absence of standardized rates, hospitals are charging exorbitant sums of money. The council has come up with indicative rates for covid treatment which is meant to guide the insurers during claim settlement. But the hospitals are not very happy with the rates the council has come up with.

“If hospitals are allowed to charge more for the insured customer’s category, then insurance companies have to cough up much more than they can afford currently and this will lead to hardening of premium rates in the future. As it is the premium rates are high and with further hardening of rates, many people will not be able to insure themselves, resulting in insurance penetration going down further”, the source added.

The council is of the opinion insurance companies if forced to pay the exorbitant claims this year, may decide to exclude covid from the purview of health policies like AIDS is excluded. The idea is to have a reasonable rate that is based on actual outgoes of the hospitals and they should not be allowed to make profits beyond 10-15 per cent.

There is a view that since people have been postponing their planned surgeries and other not so essential hospital visits due the on-going pandemic, the hospitals are not operating at full capacity resulting in them incurring losses. To compensate that, hospitals, in some cases, are overcharging for covid treatment.

Invariably this also leading to a situation where the claim settlement is taking time. “If the billing is unusually high by the hospitals, then the scrutiny by insurance companies will be strict and as a result the insurers will be taking more time in settling bills. Let there be standardization in the rates then scrutiny by insurance companies will be normal”, the source said.

Non-life insurers, as of August 11, have received more than 100,000 claims to the tune of Rs 1,644 crore. Of the total claims received, nearly 66,000 claims amounting to Rs 628.95 crore have been settled so far. The average claim amount has come down as the council decided on the rates based on which the claims will be settled, and many insurance companies are using the rates while settling claims. Also, since the number of days a covid patient is spending in a hospital has come down, hence the average claim amount has come down.

Despite Covid-19 claims are rising fast, insurers are not overtly worried. They say claims from other segments have fallen, thus, balancing out the losses. However, the real worry is that the premium collection is not rising as fast as it ought to. Industry experts say the rising claims due to the virus will not impact the solvency margins of insurers.

The apex court is hearing a petition which has seeks to subsidise medical treatment for covid. The court has asked the government to frame guidelines regulating costs of Covid-related treatments. The government has told the court that the states can consider the rates fixed under Ayushman Bharat scheme or the central government health scheme for covid treatment.