India plans insurance reforms to rein in healthcare costs, sources say

India is considering significant reforms to its health insurance sector to curb escalating medical costs, sources claim. The reforms, expected by the end of the year, will address issues such as benchmarked treatment rates, a nationwide claims exchange, and standardised tariffs, according to the sources familiar with the matter.

Medical inflation in India currently stands at around 12% to 14% annually, a rate that puts pressure on households and prompts authorities to seek ways to standardise pricing and coverage. Industry estimates suggest that a substantial portion of health claims, between 10% to 15%, may be fraudulent or unwarranted. The chief of the Insurance Regulatory and Development Authority of India (IRDAI) will chair a panel comprising regulators, industry leaders, hospitals, and the Confederation of Indian Industry (CII) to oversee the reforms.

The reforms aim to reduce disputes and fraudulent claims by standardising treatment rates agreed upon between insurers and hospitals. Additionally, a uniform list of admissible treatments will be introduced, making coverage provisions easier for policyholders to understand. A common health insurance product will be required for all insurers, alongside existing plans, to standardise coverage and rates for various illnesses and procedures.

Implementing a National Health Claims Exchange is also part of the plan. This platform, developed by India's health ministry and the insurance regulator, will facilitate the sharing of claims and billing data between hospitals and insurers, enabling faster settlement of claims through quicker verification and enhanced price transparency.

The reforms are expected to contribute to making private healthcare more affordable and spur a greater proportion of India's population to invest in health insurance, currently at less than 4% of GDP, compared to a global average exceeding 7%.