June 14, 2024

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EXPLAINER: Cashless treatment for policyholders in every hospital – Healthcare News

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Cashless hospitalisation benefits will now be available for policyholders at all hospitals, irrespective of whether these are part of the insurer’s network of empanelled hospitals. Saikat Neogi takes a look at how this initiative will make healthcare more accessible and reduce the financial burden on those seeking medical treatment

New health insurance initiative

Health insurance policyholders can now avail cashless treatment in hospitals in the country that are not in the network of their insurance companies. The General Insurance Council, in consultation with all general and standalone health insurers, has introduced a “cashless everywhere” initiative in which a policyholder and his family members covered under an insurance scheme can get admitted to any hospital without making any initial payment. The insurer will settle the bill as per the terms and conditions of the policy on the day of discharge. The initiative will encourage more customers to opt for health insurance, control expenses and eliminate claims-related frauds. The real-time verification of the insured patient will help in settling the claim faster and and make it hassle-free. During FY 2022-23, general and standalone insurance companies have covered 550 million lives under 22.6 million health insurance policies.

How to get this service at non-network hospitals

To avail the cashless service for any emergency treatment, the policyholder or a family member will have to inform the insurance company or the Third Party Administrators (TPA) within 48 hours. For elective procedures, the customer will have to intimate the insurance company at least 48 hours prior to the admission. Along with the pre-authorisation form, customers will have to send the medical documents of the insured, including test reports, doctor’s prescriptions, etc. The claim should be admissible as per the terms of the policy and the cashless facility will be admissible according to the operating guidelines of the insurer.

In case the insured is being treated for a disease that is not covered under the terms and conditions of the policy, then the insurance company will reject the cashless claim. As most health insurance plans cover pre-existing diseases after a waiting period, the insured will have to keep in mind that the cashless claim request will be rejected if the waiting period is not yet over.

Current procedure for cashless claims

At present, the cashless facility is available only at hospitals with which the respective insurance company has an agreement. If the policyholder chooses a hospital without such an agreement, the cashless facility is not offered, and the customer has to go for a reimbursement claim, which delays the claim process and often leads to litigation. Also, if the documents sent to the insurer or TPA are incorrect, the insurer will deny cashless claims.

The upfront payment and other out-of-pocket expenses put the finances of the customer under severe strain. Reimbursement claims can be long-drawn as the insurer will scrutinise all the hospital bills, prescriptions, test reports and discharge summaries before settling the claim.

Data from the Insurance Regulatory and Development Authority of India’s (Irdai) annual report of FY 2022-23 show that 63.62% of the total number of health insurance claims were settled through cashless mode and 34.76% through the reimbursement mode where the insured patients were admitted to hospitals that are outside the insurance company or the TPA network. Insurers have settled around 2% of their claims amount through both cashless and reimbursement mode.

Health insurance coverage

During FY 2022-23, general and health insurers paid Rs 70,930 crore for 23.6 million health insurance claims. The average amount paid per claim was Rs 30,087. Two-third of the claims were settled through TPAs and the rest were settled through in-house mechanisms.

The claims ratio of health and life insurance segments have fallen to the FY 2018-19 levels after a spike during the peak of the Covid-19 pandemic. The net incurred claims ratio of health insurance business dropped to 89% in FY 2022-23 as compared to 109% and 94% in FY 2020-21. The net incurred claims ratio of individual health business came down to 76% in FY 2022-23 from 96% in FY 2022-23. For group business, it fell to 96% from 119% during the same period.

Sector-wise, the net incurred claims ratio (net incurred claims to net earned premium) of public sector health insurers dropped to 105% in FY 2022-23 from 126% in FY 2021-22. For private sector health insurers, it dropped to 87% in FY 2022-23 from 105% in FY 2021-22. For standalone health insurers, it dropped sharply to 62% from 81% during the same period.


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