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New India Assurance has paid Rs34,313 towards a mediclaim that was earlier rejected by the TPA on flimsy grounds. But, payment towards visiting charges and investigation were prorated based on room rent limit. Is it justified or is the TPA being unscrupulous?
Sujit Banerjee (name changed), a retired senior citizen of 73 years of age, had approached the Moneylife Insurance Helpline seeking help with his rejected mediclaim on flimsy grounds by TPA (third party administrator). Due to Moneylife’s intervention, Mr Banerjee got a payment of Rs34,313 from New India Assurance, but the payment towards visiting and investigation charges were prorated based on room rent limit. Is it justified?
There will be reduction in payment for visiting charges and investigation depending on what was allowed for the room for which you were eligible, but should the payment be prorated? Policyholders need to check what the insurance policy wordings specify about room rent limit and its impact on other charges. If the mediclaim policy clearly states that the charges will be prorated if you avail a room with higher rent than your limit, then it is acceptable.
How does room rent limit affect mediclaim payment? Unfortunately in India, many hospitals charge differential amounts for doctor’s visit, investigation and other charges based on the room you avail. For example, if you go for a private room, the doctor’s visit charges will be higher than what you would have paid if you were in shared room. If you avail of room higher than what your cover allows, the insurance company is right in not just disallowing the difference in the room rent, but also for the other charges.
Some policies go a step further and specify that they will pro-rate the claim based on your room rent and actual room you availed. For example, if the room rent limit is 1% of the sum insured (SI) and assuming SI of Rs1 lakh, your room rent limit is Rs1,000 per day, in case you avail a room of Rs2,000 rent, your full claim amount is pro-rated to pay only half of the claim. The remaining half will have to be borne by the policyholder.
What the New India Assurance Mediclaim 2007 policy states - “In case the insured opts for a room with rent higher than the entitled category (1% of SI), the charges payable under clauses 2.3 and 2.4 shall be limited to the charges applicable to the entitled category.” If the TPA is paying on a prorated basis for all the claims, then it is either wrong interpretation or wilful approach to short-change the insured.
For example, in the case of Mr Banerjee, he had availed a room of rent Rs4,500 when he was eligible for only Rs1,000. The deduction of visiting charges of Rs4,200 was Rs3,267 while the deduction of investigation charges of Rs6,200 were Rs4,823. What it means is that the TPA has prorated the payment by a factor of 4.5. The paid amount for visiting charge is Rs4,200/4.5 = Rs933, while the paid amount for investigation charge is Rs6,200/4.5 = Rs1,377.
Correct approach – “If other charges vary, but not in proportion to room rent, then only deduct such proportion of variation.” It means that if in this example, the visiting charges for the room of rent Rs4,500 is only double of the charges for room rent of Rs1,000 then the deduction should have been Rs2,100 instead of Rs3,267. The TPA is doing the easy calculation of prorating instead of really finding what is the difference in the visiting and investigation charges for the room with rent Rs1,000 versus that of Rs4,500. New India Assurance is reconsidering the Mr Banerjee’s claim after Moneylife’s intervention on proration of doctor’s visit and investigation charges.
If your charges for a doctor’s visit, investigation and others mentioned in clauses 2.3 and 2.4 of New India Assurance Mediclaim 2007 are prorated based on room rent limit, here is what you can do. Find out from the hospital the charges for doctor’s visit, investigation and others for the room to which you are entitled based on your insurance cover. If the deductions based on TPA doing the prorating is higher than what it should be based on what you find from the hospital, you can fight to get higher payment from the insurance company. If it does not give justice, go to the Insurance Ombudsman.
But, there are specific conditions under which the New India Assurance TPA has valid reasons to do the prorating of claim. Where it is not possible to ascertain what the degree of variation is, either by reference to previous bills or authentic tariff, New India Assurance TPA may deduct all charges except medicines and consumables proportionately. Also, where the hospital does not have rooms in the entitled category at all, or where the minimum room tariff is higher than the entitled category proportionate deductions will have to be made by the TPA. It means prorating of doctor’s visits, investigation and other charges are valid in the above two scenarios.
In case you have an insurance issue, please write to Moneylife Foundation. Click here