L&T General Insurance Co. Ltd promises a six hour response guarantee on cashless claims in health insurance. Tata AIG General Insurance Co Ltd goes a step further and says it will take just four hours on its policy called MediPrime.
Apollo Munich Health Insurance Co Ltd promises an amazing one hour and five minutes claims approval time. These are but three examples of the latest trend in medical insurance in India — quick claims settlement.
The time taken to settle a claim is an important factor for people seeking a medical insurance policy, but claims settlement is a layered process and the quick turnaround time promise may not actually mean that you will be able to walk out of the hospital, with all the bills paid by your insurer, as soon as you get discharged. Read on to know what these advertisements really mean. But first, let’s understand the process of cashless claims.
A cashless claim can be divided into two stages: the pre-authorisation stage and the final authorisation stage. When you walk into the hospital, you will be directed to the third-party administrator (TPA) desk where you will fill a pre-authorisation form. This will include your insurance details and a preliminary doctor prognosis and the recommendation to get hospitalised.
An interim cost structure is prepared and is given to the insurer who will authorise the cashless claim, assuming all details are correct and you are entitled for the claim. “This authorisation is not a final acceptance or rejection by the insurer. As the treatment commences, the diagnosis could completely change which may have a bearing on approval. This means the claim could also get rejected if more facts come to light.
Hence the insurers don’t normally authorise the full amount, but a portion of it,” says Deepak Mendiratta, managing director, HII Insurance Broking Services Pvt Ltd, an insurance broker with a strong focus on health insurance.
This stage of claims approval is more like a provisional authorisation where the insurer only communicates to the hospital whether the claim is admissible or not. “Consider this as the first installment by the insurer. Diagnosis is an evolving process and as the treatment progresses, there could be changes to the final amount to be claimed. We authorise 80-100% of the claim amount initially,” said Gagan Bhalla, director, development and strategy, Max Bupa Health Insurance Co. Ltd.
The second stage of claims approval kicks in at the time of discharge. A discharge summary along with hospital bills is sent to the insurer. The insurer scrutinises bills and settles it directly with the hospital. “This is a tricky part because the final claim will undergo several levels of scrutiny.
At this stage the insurer may ask for additional documents to ensure that the billing has been done properly. All this can take time. In case of group insurance, this process is faster but in case of individual policy this process can take 4-6 hours,” said Mendiratta.
For a policyholder, back and forth between the hospital and the insurer at this stage means having to wait in the hospital. “This can be very frustrating for the patients. Often those who have cash prefer to pay the final bill and then collect the money from the insurer later on,” added Mendiratta.
Ideally one would want the last stage of claims settlement to get smoother, but what insurers usually promise is a quick turnaround on the first stage of pre-authorisation. In case of an emergency, a quick turnaround time in the first stage helps but in case of a planned hospitalisation, which forms the bulk of hospitalisation cases, the process of pre-authorisation can be initiated in advance.
“We commit a 4-hour turnaround on claims authorisation because in case of an emergency, a policyholder should be able to access the hospital immediately without worrying about claims approval. Our final claims settlement is faster but we don’t commit a turnaround on that,” said Gunjan Ghai, vice-president, marketing and e-commerce, Tata AIG General Insurance Co Ltd. Usually the authorisation happens soon.
“A 4-hour turnaround is standard. In fact the newer companies even approve claims in a couple of hours,” said Kapil Mehta, managing director and principal officer, SecureNow Insurance Brokers Pvt Ltd.
But it is important to keep in mind that claims approval may not always translate into claims settlement. “The insurer will revert to you within the stipulated time period whether the claim will be settled or not settled. Claims approval does not mean the final bills will be settled,” says Srikanth G, vice-chairman and director, Healthcare Professional Associates, a group involved in women and children healthcare.
The settlement is decided only after the treatment is complete and the insurer has all the details of the treatment. “For instance a lady gets hospitalised due to hypertension, on preliminary diagnosis the doctor would recommend hospitalisation and the insurer will approve the claim.
But during the course of treatment and the time of discharge the insurer finds out that the lady was pregnant and had hypertension as a result. The insurer will refuse the claim since it’s not covered under most of the retail policies,” said Mendiratta. Or the extra levels of scrutiny may reveal a pre-existing ailment which got missed in the initial diagnosis. Hence it’s the final claim settlement that remains very crucial.
But this still remains a challenge. “Final settlement of the claims is a mess. In 50-60% of the cases, the insurer will ask for additional documents to ensure hospitals haven’t over-billed and hospitals are very inefficient in paperwork. So the entire process can get delayed.
The hospitals should sort out their paperwork and update the insurer constantly instead of bunching up for last minute. The insurers should also run a 24x7 claims settlement service,” said Mehta. Then there are obvious cases of fraud. “It’s prevalent in tier-II and tier-III cities. The hospital will charge the insurer for a different line of treatment in order to bill extra. I have seen delay in claims settlement of even three days,” said Srikanth.
While it’s reassuring to see that the insurers are promising a quick turnaround on claims approval, you shouldn’t set much store by it.