Companies are imposing caps on many common ailments like cataract and hernia, surgeon's fees, room rent, diagnostics and medication. They also fix a lower limit fixed for parents or dependants.
Besides insurers have also begun restricting the hospital network that can be accessed.
"Insurance companies are now negotiating with corporates to make their group health covers more viable by introducing sub-limits or caps within the policy for many common ailments like cataract and hernia, surgeon's fees, room rent, diagnostics and medication. There is also a lower limit fixed for parents or dependants," said Mr Girish Rao, Managing Director, Swiss Re Healthcare services.
"These sub-limits are being put in by the insurer after studying treatment costs in a particular location," he added. These are ailments where there seems to be maximum variation in treatment cost. For instance, a cataract operation can cost Rs 15,000 to Rs 75,000 depending on which hospital the treatment is sought. Sub-limits have also been introduced for ailments where the insurer has received the highest number of claims.
In the past ten months alone, insurers have hiked the premium of their covers by 30-100 per cent, put in sub-limits for the most common ailments and limited the access to treatment to a pre-determined list of suitable hospitals.
The reason for these drastic changes?
With the beginning of the free price regime from January, insurers are no longer subsidising health insurance covers of corporates to secure their more profitable fire (property) insurance policies. All portfolios now have to be priced independently.
It is a common complaint among insurers that hospitals overcharge when a patient is covered by health insurance. Until last year, insurers have seen adverse claims ratios of as much as 250 per cent which they have managed to bring down to 130-150 per cent by increasing the premium for group covers.
"Earlier, the premium rates had not really kept pace with the health inflation or the claims ratios," said Dr Sandeep Dadia, Director, Enam Insurance Broker.
Insurers have also begun restricting the hospital network that can be accessed under the policy.
"Insurers may put in a predetermined list of say 20 hospitals in a city like Bangalore, where employees will be covered for their treatments. For the first time, corporates are directly negotiating with hospitals for a better bargain just like they do with other vendors," said Rao. In some cases, corporates are also choosing a co-payment structure where the employee foots part of the bills.
"Sub-limits and co-pay options are introduced as per corporate requirements. It has been a standard practice in the international markets...," said an ICICI Lombard official defensively.