Health Insurance: How cashless claims can be settled faster

The insurance regulator has set a three-hour limit to settle cashless claims. Saikat Neogi identifies the bottlenecks in the health insurance claim settlement process and what hospitals and insurers need to do to speed it up.

What is the new timeline to settle cashless claims?

THE INSURANCE REGULATORY and Development Authority of India (Irdai) has directed health insurance companies to settle cashless health claims in three hours. The insurers will have to provide pre-authorisation for cashless requests to the policyholder via digital mode within an hour. If there is a delay in settling the claim by more than three hours, the additional amount charged by the hospital will have to be paid by the insurer from shareholders’ funds.
Insurers have to also ensure that hospitals release mortal remains immediately in the event of a death during treatment. In case the claim is repudiated or disallowed partially, details have to be given to the claimant with reference to the specific terms and conditions of the policy document. The new rules are to be implemented by July 31. Currently, after the treating doctor gives the approval for discharge, a hospital typically takes 6-8 hours to process the bills. It takes another 4-6 hours for the insurer to clear the bill, by which time another half-day’s charges are added to the final bill.

Why does this process take a long time?

CURRENTLY, THE COMPLEXITY of insurance products coupled with a lack of expertise among third-party administrators (TPAs) is the biggest roadblock in settling claims faster. TPAs only process the claim and escalate it to the insurance company for the final decision. Most often there is a delay in the exchange of information between the hospital and the insurance company and delay in submission of discharge summary and bills to the TPA. Disputes arise if the hospital does not follow the package rates. In that case, the insurer will not settle the bill and delay the claims settlement.
Insurers that have an in-house claim settlement process have faster turnaround time to settle claims compared to TPAs. According to the regulator’s new norms, insurers and TPAs will now collect the required documents from the hospital and not ask for them from the insured.

How can insurers and hospitals adhere to the new timelines?

TO FOLLOW THE new norms, the claim settlement procedure has to be overhauled at both the hospital’s and insurer’s end. Hospitals should charge the agreed amount and if there is any deviation from the package it must be intimated to the TPA immediately. Insurers must seek billing-related clarification from the hospital on a daily basis and sort out any issue immediately instead of waiting for clarification on the day of the discharge. Experts say the hospital billing portal should be linked to the TPA or the insurer for seamless approvals. In case of any deviation from the package rates, the hospital must take the patient’s consent and inform her about any out-of-pocket expense.

Striving for 100% cashless claim settlement

THE REGULATOR HAS underlined that every insurer will have to achieve 100% cashless claim settlement and instances of claims settled through reimburse-ment should be the bare minimum and happen only in exceptional circumstances. In FY23, 56% of the total number of health insurance claims were settled through the cashless mode, 42% through reimbursement mode and the rest through a combination of cashless and reimbursement modes, data from Irdai’s annual report show.
In fact, in January this year the General Insurance Council, in consultation with all insurers, has introduced a “cashless everywhere” initiative in which a policyholder and his family members covered under an insurance scheme can get admitted to any hospital without making any initial payment and the insurer will settle the bill as per the terms and conditions of the policy on the day of discharge. The real-time verification of the insured will help in settling the claim faster.

National Health Claims Exchange in the pipeline

THE GOVERNMENT’S NEW digital information platform called National Health Claims Exchange, which is likely to be launched in the next two to three months, will help to settle claims faster. The platform will create a standard interface and will include all stakeholders such as hospitals, insurers and TPAs. Hospitals will be able to submit claims electronically through the portal and all health-related information of the insured will be uploaded on the portal. The exchange will share claims information digitally and insurers can process them without any paperwork. The portal will help to reduce the time taken for pre-authorisation and discharge approvals and also bring down insurance premiums by reducing claim processing costs in the future. At present, hospitals use different private portals to process claims which, at times, take even 8 to 10 hours after the hospitals send the final bills for discharge. If all hospitals are mandated to join the portal, this can be a game-changer.