Context: Recently, Insurance Regulatory and Development Authority of India (IRDAI) has proposed for a separate regulator for the healthcare segment.

Reason: The health insurance segment may be regulated by the insurance regulator, but the health care market is devoid of any such authority, resulting in people sometimes bearing the brunt of exorbitant hospital bills.

• The non-life insurers received around 3 million health claims; 2.75 million have been settled for around Rs 25,000 crore. Life insurers have settled over Rs 14,000 crore in Covid-related death claims since the pandemic struck.
• The medical inflation in the country is around 15–20 per cent per year and the premium doesn’t correct for three years at least. Given that medical inflation is higher than general inflation, there needs to be a correction cycle from a pricing standpoint.

Tariff in Hospitals

• Tariff in hospitals is the price of hospital services set by regulating authorities.
• Purchasers i.e., government, health insurer, patients, etc., must pay that financial amount to the hospital authorities in exchange of receiving services.
• The hospital service tariff affects health system costs, hospital efficiency, access to health services, and the satisfaction of both patients and hospital service providers.

Current Scenario in Tariff Structure of Hospitals

• Individual hospital empanelment process: Health care schemes and private insurance have individual hospital empanelment process, which replicates various activities and contributes to inefficiency and duplication of processes.
• No regulation: Hospitals keep changing tariffs on a regular basis. There is no body to regulate them on tariff structure and grading.
• Unequal inflation: The regulator does not allow insurance companies to raise premium every year though there is around 10-15 per cent inflation of hospital charges at present.
• Inadequate Infrastructure: IRDAI doesn’t have the infrastructure to regulate hospitals.

Proposed Changes

• Common empanelment portal: IRDAI recommended to have common empanelment portal which can be utilised by all the schemes/insurance companies with standardised empanelment criteria.
• Separate Regulator: IRDAI has proposed that either there must be a separate regulator for the healthcare segment or IRDAI must be allowed to regulate hospitals.
• Standardization: IRDAI is striving for standardisation of charges of medical procedures.