Cashless health insurance? More pain than gain

The purpose behind buying health insurance is that if you or a family member needs medical treatment, at least the need for immediate finances is met. Cashless settlement policies are aimed to go a step further. Insurance companies tout cashless settlement policies as customer-friendly and convenient. Unfortunately, for many who have bought these policies, the experience has not lived up to the promise.

What is mediclaim cashless settlement? It is a kind of health insurance policy, which allows you to get treatment at a hospital (hospitalisation, surgery, or both depending on the kind of policy) without having to pay for it at the hospital.

The insurance company settles the bill directly. The aim is that you should not have to worry about arranging funds when faced with a medical emergency that needs hospitalisation.

You, however, need to go only to a network hospital. With other mediclaim policies, you can go to any hospital, settle the bill yourself and claim insurance later.

How it should work?

Ideally, with cashless settlement you should be able to walk into a network hospital, give them your card number and get the treatment without paying a paisa. That would be possible if your policy covers hospitalisation and the surgery.

In case of pre-planned hospitalisation, you should get it pre-authorised from third-party administrators. A TPA is an important intermediary between the insurance company and the hospital. It verifies your policy details, on behalf of the insurer, and gives clearance for the cashless services to be processed.

In case of an emergency, you only have to give the network hospital the cashless treatment card number. In emergency cases, TPAs should not take more than six hours, and not more than four days for other cases.

Also, like any insurance policy, your cashless settlement policy will work only under certain conditions. You need to be sure of the details of the policy like which are the network hospitals, or which illnesses and surgeries are covered.

What could go wrong?

Even after this, things can go wrong. When the Delhi-based, 35-year-old Debasish Das, who works with a publishing company, found blood in his stool, he feared the worst. But, what he had not expected was the problems he would have to go through with his cashless settlement policy from National Insurance.

Das had to go for an operation immediately. He informed the insurance company and the TPA Alankit Healthcare. Things became complicated when, after the surgery, Das was diagnosed with high blood pressure. That meant more days in the hospital. The total cost came to Rs 32,000. The TPA, however, said it would reimburse only Rs 14,000.

Das contacted his agent who advised him to pay the full amount to the hospital and then claim from the TPA. He did this but it was only after two months of chasing that the TPA coughed up 80 per cent of the total amount. Despite repeated attempts, the TPA did not give its views on the issue.

Satish Kumar (name changed), who worked in a software company in Chennai, was rushed to a network hospital when he met with an accident. Although his cashless card was produced, the hospital still asked his friends to pay Rs 20,000-30,000 upfront, and get it reimbursed from the TPA later. An insurance broker had to intervene and ask the TPA to verify details and process his cashless policy soon.

Buying a cashless settlement mediclaim policy would be of no use if the insured has to either pay the hospital himself and get it reimbursed later, or run from pillar to post for the 'pre-paid' facility.

Who's To Blame?
 
User ignorance: Most people have a cashless settlement policy because their company offers it to them. They are not aware of how the policy works. Girish Rao, MD, TTK Healthcare Services, which has tied up with 4,000 companies, says that most people do not send an authorisation request in advance even when surgeries are planned. "The request usually comes at the last moment, creating tension for everyone - the patient, the TPA, and the hospital."

Rao adds that people forget to renew their policies. Also, while buying a policy, people don't find out the expenses and surgeries it covers. So, when a TPA rejects their request, the customers feel cheated.

Under fire: TPAs, who are meant to make life easier for both the insured and the insurers, actually end up doing the opposite. Anand Patwardhan, chairman, Consumer Guidance Society of India, says that although TPAs make tall claims about their turnaround time, in reality it takes them over a week to get in touch with the customers. In an emergency case, a six-hour wait could mean death for the insured.

There are more complaints regarding mediclaim cashless settlement policies than for even vehicle-related claims, says Patwardhan. More complaints for mediclaim policies may be due to the fact that they are more serious and complicated than other kinds of cashless settlements.

Wrong practice: Hospitals too share the blame as there is no uniformity in their charges. Shreeraj Despande, head (health, travel and accident insurance), Bajaj Allianz General Insurance, says: "Many software professionals admit their wives in expensive hospitals for child delivery because the cost is borne by their company." The cost of delivering a child can vary from Rs 10,000 to Rs 30,000, depending upon the hospital.

Dr Alok Roy, vice president (operations), Fortis Hospitals, says: "The first question that patients face at the time of admittance in a hospital is not about their illness, but whether they have insurance. The price for a patient without insurance is usually less than for a person with insurance."

Hospitals in their defence say that the differential pricing is done as insurance companies take up to six months to clear bills.

Getting Out of the Quagmire

With all the parties bending the rules, a clean-up act will not be simple. Roy of Fortis says that hospitals should be patient-friendly and have single window clearance for cashless settlements.

Despande says that by dumping its TPA and forming an in-house health administrators' team in 2005, Bajaj Allianz General Insurance has reduced complaints like misinformation and non-receipt of cards for cashless settlements and health cards by around 70 per cent.

V. Jagannathan, managing director of India's only pure-play health insurer, Star Health Insurance, says that claims from cashless mediclaim can be reduced even at the time of underwriting (taking up the right kind of risks) and delivery.

"There are many people who make wilful claims. A cataract operation costs Rs 10,000 at a good hospital, but they will go to a more expensive one."

Cashless settlements form just four to 20 per cent of the total hospitalisation expenses in India. For these policies to become more successful it is important that insurance companies ensure that customers are able to experience the convenience.