Despite the proliferation of insurers and products, health insurance policies in India which are supposed to provide cashless reimbursement of hospital bills, rarely serve their intended purpose. Fortunately, the General Insurance Council, the industry body, has finally initiated steps to try and resolve at least one impediment to cashless treatment, which is the requirement that the policyholder use a hospital from the insurer’s approved network. The Council has data showing that as many as 37 per cent of health insurance customers incur out-of-pocket expenses on hospitalisation because they are unable to avail of cashless treatment. It is now proposing a ‘cashless-everywhere’ facility that will allow patients to file insurance claims, irrespective of whether they take treatment in a hospital in the insurer’s approved network or outside it.

If this facility takes effect, policyholders will get much-needed flexibility to choose their hospital based on their comfort with the treating doctor and proximity, which is critical in emergencies. However, the transition to cashless-everywhere is unlikely to be easy. To avail of it, the industry expects a customer who is undergoing elective surgery to intimate his insurer 48 hours before admission. Emergency treatments are to be intimated within 48 hours after admission. The hospital is expected to share its treatment costs with the insurer ahead of treatment, so that the two parties sign off on a Memorandum of Understanding pre-authorising the claim. Given that agreement on tariffs is the main stumbling block to the expeditious settlement of claims even in network hospitals, it is moot if the MoU will go through smoothly in the new system.

If it fails to materialise, the customer will be back to square one. India has small hospitals and clinics in every nook and corner with minimal standardisation in their treatments, procedures and tariffs. Therefore, there is also the question of whether insurers will accept claims from any healthcare provider. Patients are anyway subjected to interminable waits at the time of discharge, as the insurer and hospital wrangle over the bill. Third-party administrators’ numbers and capacity to service claims has to increase manifold.

The insurance industry will also have to do much more than waive the network hospital requirement, if it is to deliver on the promise of cashless treatment. Cashless mediclaim is a misnomer because full reimbursement of hospital bills is the exception rather than the rule. The claim settlement ratios of health insurers hover in the 60-80 per cent range, while it is upwards of 95 per cent for life insurers. Complaints lodged with the insurance ombudsman show that health and general insurers often take refuge in fine print on policy exclusions and ambiguity on pre-existing medical conditions, to turn down claims. The Insurance Regulatory and Development Authority of India also needs to crack the whip on insurers, so that they are upfront with customers on their actual claims record.