Standoff between hospitals & insurers result in lower cashless settlement of claims

Disputes between hospitals and insurance companies relating to pricing has resulted in cashless settlement of claims languishing at low levels. For 2023-24, non-life insurers and pure health insurance companies settled 58.39 per cent of the total number of health claims through cashless mode slightly up from 55.74 per cent claims settled in 2022-23 showed the IRDAI Annual Report 2023-34.

A senior insurance official explained, “There are several issues why cashless settlement of claims is not at the desired level of 90-100 per cent. First is that insurers and hospitals keep entering into pricing contracts and if the cost of the treatment increases and the hospital raises the treatment cost beyond the pre-determined rates, the insurer would not give the pre-authorisation. Sometimes, insurers suspect treatment is being taken for a pre-existing disease and want to investigate and therefore does not give pre-authorisation.

At times, insurers have not cleared the dues of hospitals and therefore the hospital demands a deposit amount from the policyholder. Insurers also need to put in more effort. So both sides need to co-operate.”

"Another issue is that the definition of a hospital has widened and even a small nursing home can be in the network of hospitals of

insurance companies. So, the denominator is increasing and contracts with hospitals are becoming time consuming,” added the official.�

Insurance policy owners often complain that health insurance companies still don’t have transparent web-based communication systems for

claims processing. They tend to rely on emails and calls from hospitals that results in time consuming claim approval and for them to be discharged from the hospital. Further, there’s a perception among policy owners that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts according to a recent survey by LocalCircles.

During 2023-24, non-life and health insurers have settled 2.69 crore health insurance claims and paid an amount of Rs 83,493 crore towards

settlement of health insurance claims. In terms of mode of settlement of claims, 58.39 per cent of the total number of claims were settled

through cashless mode and another 39 percent through reimbursement mode. Insurers have settled one percent of their claims through “both

cashless and reimbursement mode”.

In terms of cashless claims in amount, 66.17 percent or Rs 55235 crore were settled through cashless mode said the IRDAI Annual Report

2023-24 compared to 63.62 per cent or Rs 45128 crore in the year ago period.

Another official said that the “Cashless Everywhere” initiative launched by the non-life insurance industry in January 2024 would help

improve the cashless settlement of claims in the coming quarters. He also said that for higher claim amount of Rs one lakh and above the

cashless settlement is higher at 75 per cent of the claims.

The average amount per health insurance claim has risen to Rs 31086 during FY24 from Rs 30087 in FY23.�

During 2023-24, insurers have settled about 83 percent of total number of claims registered in their books and have repudiated about eleven

percent of them and the remaining about six percent were pending for settlement as on March 31st, 2024.�

However, the Master Circular on Health Insurance Products effective October 1, 2024 provides some hope as it requires insurers to decide

on cashless authorization requests within one hour and final authorization on discharge from hospital within three hours of request

from the hospital. According to experts the move will significantly improve customer experience for the patient and their family members.

If there is any delay beyond three hours, the additional amount if any charged by the hospital shall be borne by the insurer from the

shareholder's fund. Insurers also have been asked to avoid coercive practices regarding the selection of hospitals. Cashless services must be provided for� both planned and emergency treatments said the new guidelines.