Mediclaim policies: Understanding cashless hospitalisation
Wealth is a key factor in the first stage of Maslow's hierarchy of needs. In its true form wealth is a combination of three aspects namely good food, an adequate wardrobe and good health.
In today's topsy turvy world where there is intense pressure to get things done at a quick pace often a healthy lifestyle gets the brunt of it! The situation is so grave that you cannot afford to live without buying a health insurance. It's a useful financial tool which serves as a safeguard during testing times.
As with everything in life nothing is hassle free and this is also the case with health insurance policies, particularly the cashless insurance product. Although the product is designed to aid people during times of medical emergency to mitigate emotional and financial distress, sometimes it does not seem to serve its purpose as well as it should! There have been instances where some companies failed to honour their commitment to their customers resulting in loss of faith in the product itself!
In this article we will try to understand how cashless policies have been abused and what steps you need to take to avoid unpleasant surprises in the hour of need!
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What is Cashless Insurance?
Cashless insurance ensures that you and your covered family members get cashless treatment at the hospital, which is a part of the Third Party Administrator (TPA) network. The cashless service needs approval from the TPA based on the benefits covered under the policy.
Third Party Administrators (TPAs) have stopped offering cashless benefits to policy holders. Hospitals are also denying cashless benefits to genuine policy holders stating that payments were already pending from the insurance company. The reason provided by the insurers was that they were suffering losses due to higher claims against medical treatment provided to consumers.
On the other hand the doctor community argued that it's financially unviable to treat their patients at the abysmally low rates being offered by the insurance company. Caught in between the policy holder faces all the discomfort even after being diligent with his premium payments!
Why Hospitals and TPAs are denying this benefit to Policy Holders
Prior to 2010, cashless insurance in its true sense was a win-win situation for all the stakeholders. Policy holders were benefited as they were in a position to undergo costly treatments by paying an affordable premium. Hospitals and doctors were benefited as the number of patients they were serving headed northwards. Insurance companies were benefitted as they were able to tap a broader customer base.
The issue began when some hospitals started to indulge in overbilling resulting in inflated claims being sent to the insurance providers. With claim load increasing the insurance companies started delaying the settlement. This brewing issue came to the forefront in July 2010 when 18 insurance companies including the four public sector entities, dropped several hospitals from the list that allowed mediclaim policy holders cashless hospitalization on account of overbilling.
The spat then gathered momentum and resulted in the insurance companies arriving at a decision to negotiate fees directly with hospitals and doctors. They tried to insist on capping the fees for the different treatments and services offered by the hospital. Doctors and hospitals unwillingly accepted the offer initially but with the passage of time refused to go along with it. This resulted in hospitals denying cashless services to policy holders. The most affected entity in all of this chaos was the policy holder.
To settle the spat, in Aug 2010, IRDA issued a circular directing all insurers to ensure that patients should not suffer due to the insurer's negotiations with the hospitals. A PIL (Public Interest Litigation) was filed by social activist Gaurang Damani highlighting the plight of policy holders, especially after Third Party Administrators (TPAs) suddenly stopped offering cashless benefits.
IRDA responded to this PIL in September 2011 denying that the cashless treatment facility wasn't being offered by hospitals. IRDA stated that though the hospitals had refused to negotiate treatment rates for standard procedures with insurers they had subsequently agreed to the terms and conditions.
What can you do?
IRDA has a grievance mechanism in place for policy holders so you can write a mail to IRDA and you should also send a copy of the same to insurance ombudsman office. Details of the Insurance Ombudsman can be obtained from the Insurance Regulatory and Development Authority (IRDA) website www.irdaindia.org or from any Indian insurer's office. You can also approach consumer courts and register a case against the TPA.
You should take care of following points before buying medical insurance:
1. Cashless insurance gives you peace of mind but remember that it is only available in the hospitals, which fall under the network of authorised hospitals. Choose the hospital from the preferred network as cashless claims will be denied in other hospitals.
2. Check for the daily cap in case of hospitalization. Make sure that the daily amount is close to the prevailing rate.
3. Insurance companies do not provide 100% cashless benefits even though the agents claim so while selling the policy. Please confirm the claims with the insurance provider before buying the policy.
4. Confirm the maximum amount your policy will pay before buying the policy to avoid unpleasant surprises in future.
5. Check if the policy allows cashless transaction. There were incidents where the insurance companies refused to pay the cashless services as there was no cashless provision in the policy.
6. Check the exclusions and limitations section of your policy very carefully. This section explains what is not covered and what is not. All the if/but clauses of the policy are captured here.
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