Page 48 - Insurance Times September 2023

Discounts not given/less than agreed rates given by network provider
Insurer No. of claims No. of claims where agree No. of claims where hospital Excess
provided by auditee discount was not given by gave lesser/incorrect agreed amount
organization hospital and TPA failed to discount and TPA failed to paid
& audited deduct agreed discount deduct correct agreed discount (Rs. in lakh)
NIACL 1,154 29 26 10.14
OICL 559 11 3 12.57
Total 1,713 40 29 22.71

10. Irregular payments on implants 12. Non-reflection of discount in hospital bills
Implants are medical devices such as cardiac stents, heart Regulation 20(9) of the IRDAI
valves, orthopedic implants, dental implants, etc. Cost of such TPA - Health Services Regulations 2016 and IRDAI circular
implants are fixed by National Pharmaceutical Pricing dated 23 June 2015 provided that final bills of the network
Authority (NPPA) and hospitals. List of documents to be provider need to reflect discount amount. The format of
submitted at the time of claim includes invoice for implant provider bill as prescribed in Schedule D of dated 28 March
and sticker details for implants as a proof. Test check of 1,912 2016 has a mandatory column for depicting the discount.
claims revealed that in 26 claims amounting to Rs. 34.98 However, test check of 2,934 claims by Audit revealed that in
lakh, implants cost allowed by TPA was not supported by 774 claims out of 2,934 claims paid by the four PSU insurers
separate bills/ invoices and stickers. OICL accepted (January/ (NIACL: 55, UIICL: 287, OICL: 404 and NICL: 28) discount
October 2021) the Audit observation and stated that they percentage and amount was not mentioned in the hospital
have initiated recovery process in three cases. bills NIACL replied (January 2021) that since the change is
required at the hospital end, they are verifying the relevant
Claims where sticker/bills for implants cases and stated that they cannot insist, since hospitals have
were not available their own practice. NIACL further stated (October 2021) that
the TPAs have been advised to work out the issue with hospital
Insurer No. of claims No. of claims Claim amount to mandatorily reflect the discount amount agreed and TPAs
prodived by where bills were paid on need to state discount rate agreed vis-à-vis actual discount
auditee not available for such implants given by the hospital in the claim settlement letter.
organization payment towards without bill
and audited implant cost (Rs. in lakh)
13. Non-verification of KYC
NIACL 1,154 11 17.19
As per SLA all claim files should, inter alia include Know Your
OICL 559 10 11.87 Customer (KYC) documents as a part of each claim file. Further,
NICL 199 5 5.92 as per IRDAI circular (February 2013) on Anti-Money
Total 1,912 26 34.98 Laundering/ Counter Financing of Terrorism, General
insurance companies were required to carry out KYC norms
11. Non-deduction of TDS on claim payments
made to hospitals
The insurance companies while releasing/ making payment
to hospitals for settlement of medical/ insurance claims are
liable to deduct tax at source under section 194J36 of Income
Tax Act. During data analysis in UIICL, Audit observed that in
42,847 claims out of 65,46,129 claims, TDS amounting to Rs.
14.01 crore was not deducted from payments made to
hospitals. UIICL replied (July/ October 2021) that they had
identified the problem and corrected the system and correct
TDS is being deducted now. Moreover, the Company started
filing revised TDS returns with Tax Authorities for previous
years also, wherever anomaly was noticed.

The Insurance Times September 2023 43