Taking the health insurance segment to a new level, general and health insurance companies have decided to offer 100 per cent cashless treatment across the country from January 25. The step, initiated by the Insurance Regulatory and Development Authority of India (IRDAI), is expected to boost insurance penetration in the country and ease the claims process of policyholders and hospitals, thus avoiding delays and disputes normally seen in the reimbursement mode.
Under the ‘Cashless Everywhere’ system, the policyholder can get treated in any hospital they choose without paying any amount, and a cashless facility will be available even if this hospital is not in the insurance company’s network. This means the policyholder can get admitted to any hospital without paying any advance money, and insurance companies will pay the bill on the discharge day.
According to the General Insurance Council, the apex body of general insurers that is a co-ordinating member under the ‘Cashless Everywhere’ system, the customer should inform the insurance company at least 48 hours before admission. “For emergency treatment, the customer should intimate the insurance company within 48 hours of admission. “The claim should be admissible as per the terms of the policy and the cashless facility should be admissible as per the operating guidelines of the insurance company,” it said.
Segar Sampathkumar, Director of health insurance, GI Council, said the 100 per cent cashless system will be backed up by a technological platform with the aid of the National Health Authority. The new system of cashless payments, apart from needing a technological platform, also needs a lot of standardization of rates and services.
What’s the situation now?
During the fiscal 2022-23, 56 per cent of the health claims were settled through the cashless route, according to the IRDAI Annual Report.
The cashless facility is currently available only at hospitals where the respective insurance companies have an agreement or tie-ups. If the policyholder chooses a hospital without such an agreement, the cashless facility is not offered now, and the customer has to go for a reimbursement claim, further delaying the claim process and leading to disputes. Policyholders in rural and semi-rural areas often find it difficult to access hospital networks for the cashless facility.
Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance, and Chairman of the General Insurance Council, said, “Today if you see only about 63% of customers opt for cashless claims, while the others have to apply for reimbursement claims as they might be admitted to hospitals that are outside their Insurer or TPA (third party agents) network.”
Will the move boost insurance penetration?
Insurance officials say the ease of claims settlement without burdening the policyholders financially will be a win-win situation for all three parties involved – hospitals, the general public and insurers. The biggest beneficiaries will be the policyholders, who won’t have to shell out money during the treatment period depending on the policy terms.
“The new initiative will encourage more customers to opt for health insurance. We also see this as a step towards reducing and in the long run, eliminating fraud, which has been plaguing the industry in a big way and reducing trust in the system. Overall, it’s a win-win for all the stakeholders,” Singhel said.
“The Councils – industry bodies Life Insurance Council and General Insurance Council – are playing a very prominent and active role for enabling common empanelment and interoperability with hospitals. This will make claim processing of health insurance seamless and frictionless for the policyholders,” IRDAI Chairman Debasish Panda said recently.
If all insurers developed solutions that allowed members to go cashless at all hospitals, it would be a game changer for the health insurance industry and would improve the insured experience, which, in turn, would aid in increasing penetration. “If this is successful, it will be an excellent move. There will undoubtedly be some glitches initially, but once resolved, it will be a fantastic thing for the insured,” said Sudip Indani, National Head- Health & Benefits, Howden Insurance Brokers (India).
What are the issues in reimbursement mode?
Patients struggle to identify hospitals in the insurer’s network and, if not discovered, end up paying from their pockets and claiming reimbursements later. This leads to several difficulties, frustrations and delays that can last for weeks.
Often, despite having insurance, customers do not have enough money to pay for hospital expenses and end up borrowing at exorbitant interest rates as urgent cash for hospitalization. If the hospital bill is high, patients find it difficult to arrange funds if they are in the reimbursement mode, as witnessed during the peak of the Covid pandemic. Patients are also asked to pay a hefty amount as an advance in the reimbursement system.
The common complaint among customers was that insurers normally cut the claim amount drastically and even rejected claims on various pretexts in the reimbursement mode.
What’s to be kept in mind?
In the cashless system, insurers will pay only up to the amount taken as a guaranteed sum in the policy. If the guaranteed sum is Rs 5 lakh, insurers will pay the hospital up to Rs 5 lakh during the year. Moreover, in the case of some illnesses, there’s a waiting period of two or three years before the insurance coverage is applicable.
Customers must read the policy documents carefully to see the waiting periods and choose the plan with the least waiting period and those which cover the maximum number of illnesses.
How many claims were settled?
During 2022-23, general and health insurers settled 2.36 crore health insurance claims and paid Rs 70,930 crore towards settlement of health claims as against Rs 69,498 crore in the previous year. The average amount paid per claim was Rs 30,087 in 2022-23 as against Rs 31,804 a year ago, according to the IRDAI Annual Report.
In terms of the number of claims settled, 75 per cent of the claims were settled through the TPA and the balance 25 per cent of the claims were settled through an in-house mechanism. In terms of the mode of settlement of claims, 56 per cent of the total number of claims were settled through cashless mode and another 42 per cent through reimbursement mode. Insurers have settled two per cent of their claims amount through “both cashless and reimbursement mode”, IRDAI said.
The health insurance segment is expected to cross the Rs one lakh crore mark in premium mobilization during fiscal 2023-24 with insurers mobilizing Rs 79,559 crore during the nine-month period that ended in December 2023.