Do you pay more under cashless medical policy?

Barely 96 hours after admitting his ailing mother to the hospital, Suresh Kannan was shocked to get a call from the hospital administration asking him to pay more money. The hospital informed him that his Rs 7-lakh insurance cover was nearly used up and hence, he would have to deposit additional funds to ensure his mother’s hassle-free treatment. 

Health insurance companies have been seeing an increase in cashless claims over the years, as it is convenient for customers. But many customers have had experiences similar to Kanan. Hence, it is not surprising for customers to think that hospitals overcharge people who have a cashless medical insurance. But is it really the case? What safeguards can you take to avoid such a scenario? Read on.

Cover against overcharging

There are multiple advantages for opting for cashless claims. Customers get access to best hospitals in the country that are on insurers’ network, without worrying about the cost one might incur. It also eliminates multiple documentation cycles from the customer’s standpoint as the insurer corresponds directly with the hospital for all required information. This enables quick decision making and turnaround time. It reduces out of pocket expenditure of the customer and she/he pays only for non-payable items. 

But customers allege that hospitals/nursing homes try to quickly extinguish the sum assured, in case of cashless facility. Insurers say that such scenarios happen when customers opt for the best treatment facilities including expensive rooms, or when they go to a high-end hospital. 

"There may be certain hospitals which may overcharge, but it cannot be generalised for all hospitals. We need to also consider certain other parameters that decide the total cost of treatment, such as room type, treatment protocol, specialist doctors fee etc. Besides, while opting for cashless service consumers tend to go in for the best facilities available in the hospital. This, therefore, can result in faster exhaustion of sum insured," said Mayank Bathwal, CEO Aditya Birla Health Insurance. 

While consumers should seek the best treatment facility for their loved ones, they should be cautious of overtreatment and always take the second opinion in the case of complex procedures, he added. 

A customer should choose the right hospital depending on one’s medical problem. "For a routine procedure like an appendix removal or a fracture that can be treated at a small hospital, one should not exhaust the sum insured by going to a high-end hospital," said out S Prakash, chief operating officer, Star Health and Allied Insurance.

At the time of empaneling the hospital on the insurer's network, a thorough verification of the facility is done in terms of infrastructure, infection rates, clinical outcomes, etc. This ensures an element of transparency between the insurers and the service providers or hospital from the cashless servicing standpoint. 

While empaneling the hospital, insurers also benchmark the schedule of charges of the hospital against other providers of similar category, in the same vicinity. “With this, there hardly remains any scope for manipulation in charges. Hence, the argument that the sum insured quickly gets extinguished still remains a question," said Bhaskar Nerurkar, head – health administration team, Bajaj Allianz General Insurance.

Reach out to insurers 

Customer have to exercise caution and be aware of charges levied during hospitalisation. You should report to the insurer in case they notice any inconsistency in what is charged, as against the treatment done. 

Insurers take over-charging allegations seriously. "Insurance companies arrive at the tariffs based on various factors like demography, type of hospital facility, consultants profiling, volume discounts basis footfall, etc. In case it is observed that there is evidence of provider abusing the cost or SI, then the insurance company will de-panel such hospitals, which is a big financial loss," said Sukhesh Bhave, head- accident & health claims, SBI General Insurance.

Every insurance company that offers cashless hospitalisation service has a strict audit mechanism for the hospitals. Vikas Mathur, head – health, Universal Sompo General Insurance said that customers on their part can also seek advice from their insurance company about the charges quoted by the hospital for the treatment. 

"We have agreements with empanelled service providers for cashless hospitalisation, which helps avoid any deviations in agreed tariff rates, hence helps to restrict hospitals from overcharging the insured customer. In order to control increased outgo towards claims, which would deplete the sum insured, insurance companies have preferred network hospitals that have agreed to a preferential pricing for insured customers, resulting in lesser outgo towards claims saving the sum insured available to his future needs," he added.

Most hospitals charge their professional fees, medical procedure and lab services based on the type of room category opted by the customers. "All these charges are pre-defined and agreed between the hospital and insurance companies / Third Party Administrators (TPAs). Henec, there is meagre chance to put out sum insured by other means, unless particular treatments are more expensive than the available sum insured. Customers should opt for admission in a suitable room category according to their sum insured and eligibility, as this will have a direct impact on the overall expense," said Sanjay Datta, chief - underwriting & claims, ICICI Lombard General Insurance. It is advisable to buy a top-up policy that will cover expenses if the sum insured in the base health policy gets exhausted, he added.

Cheaper rates for cashless

On the bright side, some customers say that when they opt for the cashless facility, some hospitals give them better rates. "Yes, given that we have packages pre-agreed with a large number of network hospitals, our customers do get benefit in terms of the rates being changed to them, which are usually better than retail rates the hospital charges," said Bathwal of Aditya Birla.

Jyoti Punja, chief operating officer, and customers officer, Cigna TTK Health Insurance said that there are often contracted rates between the hospital and the health insurance company for cashless treatment, and not for reimbursement. "There may be instances where hospitals would provide discounts that could be 5-20% and would vary from hospital to hospital. The hospitals could provide discounts because of the number of claims that could be on the higher side," she added.

Most insurance companies / TPAs negotiate tariff rates with hospitals, which is generally lesser than their rates for cash paying patients. "This generally happens because insurers have a large customer base and act as an aggregator for the hospitals and in return, they offer a better rate for customers," said Datta of ICICI Lombard General Insurance.