In earlier times, what is health insurance
and how are my claims settled was a common question. The public sector insurance companies used to settle all health claims on a reimbursement basis back in the day. However, with the beginning of the health insurance reforms in 2000 and with the subsequent entry of private players in the insurance sector, the cashless settlement system was born. It played a pivotal role in expanding the health insurance plans to a large extent – especially employee health insurance.
The cashless settlement of claims allowed the customer or patients to avail treatment at a panel hospital of the insurance company without bearing the financial burden of the treatment cost, which is significantly high in the event of a planned / unplanned surgery. The admitted customer need not even pay, except a nominal deposit charges during the process of admission. This gradually gave the customers more confidence in their health insurance policies and the freedom to avail treatments in the facilities of their choice subject to their coverage limits. Also hospitals started publicizing this facility, hoping more customers would come to them, as cost was not a major concern, after the introduction of cashless.
In this article we illustrate the various benefits that a cashless health insurance policy
provides to the customer:
Cashless claims allow a customer independence:
Given the financial independence offered to a patient while undergoing an emergency or an elective medical treatment, the cashless claims are observed to be predominantly for higher grade of surgeries (eg. Joint Replacement, Cardiac Stenting Bypass Surgery for the heart, etc), whereas the reimbursement claims are for lesser ailments or surgeries like (Fever, Appendicitis, Normal Delivery, etc). Also, more than 60% of all cashless claims are from tertiary care centers and from Tier 1 cities. Hence, if we directly apply the law of averages, then the cashless claim severity will always continue to be higher. That is why it’s a classical example where the law of averages is not done on apple to apple basis. When the base is higher, obviously the end result is expected to be higher.
Cashless claims ensure that the customer gets the best treatment possible:
Admission and nature of treatment can be questioned or challenged (by qualified doctors
of insurance companies), if found questionable in a cashless claim via direct discussion with the doctor and the patient can also be guided, whereas the same can seldom be done in a reimbursement case as the treatment has already taken place. Also if insurance companies finds some unjustified cost, they can again have a discussion with the hospital finance team. This all interaction is silently carried out between the insurance company / TPA and the patient keeps on receiving the treatment. Hence patient stays out of the administrative work, in cashless.
Cashless claims help provide other value added services:
The higher the annual payout by the insurance company to the hospitals, better would be the negotiation powers of the insurance company for discount and value added related discussions so that the benefits can immediately be passed on to the customers. The policyholders, in return, get to save on the sum insured of their health insurance
and can utilize the same in subsequent events of hospitalization. This is particularly useful in cases which require repeated OPD admissions (dialysis, chemotherapy, etc). Higher savings on sum-insured results in better insurance coverage for the customer, in event of another emergency or hospital admission, during the policy period.
Cashless claims serve as a safeguard against fraud:
If any network hospital is caught doing hard or soft fraud, then dealing legally, with the hospital becomes operationally easy for the insurance company, because of the legal MOU between the two parties. As per the new IRDA regulation, insurance companies have a better accessibility to the hospital administration. Many hospitals earlier, used to disagree with the surprise visits clause of insurance companies/TPA and also used to disagree in sharing the data in context to the infection control mechanisms. Now it’s a mandatory requirement, for which they need to abide. This ensures that the hospitals affiliated with insurance companies provide the best possible care to the customer.