Cashless Health Insurance Payments – A COVID-19 Convenience or Disaster ?

Disbursement of Claims and Obstacles

The second wave of the COVID-19 pandemic in India has unleashed mayhem across the country, creating a severe health and humanitarian crisis. Insurance claims due to COVID-19 illness have seen a sharp increase, and all the insurance companies are feeling the heat. 

We have observed that in the last seven days, COVID-19 claims coming in the form of ‘cashless claims’ have more than doubled and are rising at a very fast pace” says Dr Bhabatosh Mishra, Director, Underwriting, Claims and Product, Max Bupa Health Insurance.

At the same time, we are receiving reports that network hospitals connected to insurance companies are denying the cashless facility to the patients and insisting that they pay in cash.

Why are hospitals insisting on cash payments?

Cashless claims means that the policy holder does not have to pay cash to the network hospital; instead, the bills will be settled between the hospital and the insurance company. Under regulation 31(a) and 31(d) of the Insurance Regulatory and Development Authority of India (Health Insurance) Regulations, 2016, insurance companies may provide cashless services in agreements with both public and private networks.

A similar provision may be found in regulation 3(1)(a) of the Insurance Regulatory and Development Authority of India (Third Party Administrators – Health Services) Regulations, 2016. This enlists the Third Party Administrators medical obligations to the insured patient under the cashless scheme.

Even during the first wave of the COVID-19 pandemic, hospitals had started refusing cashless facility for COVID-19 patients. 

One of the most important reasons that network hospitals are insisting on cash payments first is because of delay of approval from the insurance company under the cashless schemes. A minimum of 6 to 7 hours delay of approval by the insurance company creates friction in the system.

The problem for the hospitals is this massive delay. Holding a bed for the incoming or outgoing patient, be it at the time of discharge or death, takes up hospital resources and money. 

What are the insurance companies doing?

According to some, these private hospitals are using the COVID-19 mayhem to mint money. They are engaged in overcharging the panicked patients into paying for beds that are not medically required, use of new high-end antibiotics like Targocid and Meropenem, and instances of false positives and false hospitalisations

It seems that the friction is created simply because the insurance companies are doing their jobs. Since the final settlement has to happen between the insurance company and the hospital, the companies are strict in approving only the justifiable expenses under the cashless scheme. This is different from the cash payment scheme where the burden could be put solely on the patient to submit a claim, fight for it alone, and hope to get the reimbursement. 

In terms of insurance claims, how are the first and second waves different?

For one, there is consensus in the industry that average claims (from the first wave) have increased from Rs. 1.3 Lakh to Rs 1.4 Lakh. While this may seem to be a small change for one patient, it is significant for the insurance companies. 

Apart from use of new antibiotics, there have been reported cases of fraudulent claims. In the time of the second wave and the panic that it has caused to the Indian health infrastructure, it becomes very difficult to physically visit hospitals and verify cases.

Another important aspect with the health infrastructure in shambles is the “lack of adherence to standardised treatment protocols”, according to S Prakash, MD, Star Health and Allied Insurance.

What are the authorities doing to solve this problem?

IRDAI (Insurance Regulatory and Development Authority), is the insurance regulator in India and comes under the jurisdiction of the Ministry of Finance. On 22nd April 2021, it asked insurance companies to take “appropriate action” against network hospitals that are denying the cashless facility to COVID-19 patients. This advisory came late, only after the companies complained about higher COVID-19 related claims in private hospitals. Rajasthan is leading the way forward with its Chiranjeevi Health Insurance Scheme under which every resident of Rajasthan can claim upto Rs. 5 Lakh in medical expenses, with the entire treatment being effectively cashless.

While we know the factors that have caused the second wave of COVID-19 to strike all across India, the lack of responsibility of the governmental authorities should also be noted. Due to the collapse in health infrastructure, doctors and nurses have no choice but to differ from standard treatment protocols simply because standard treatments are not available. It is not surprising that insurance companies now find different claims seeking approval because of the change in treatment protocols. 

Back in August 2020, the High Court of Kerala praised the Pravasi Bharatiya Bima Yojana which provides insurance claims for Indian emigrants. According to the Ministry of External Affairs’ notification cited in the judgment, this scheme also provides for cashless hospitalisation along with the claims, which becomes extremely beneficial for Indian overseas workers.

More on the positive side, in March 2021, Madras High Court formed a committee to consider how insurance coverage can be provided for advocates enrolled with the Bar Council of Puducherry and Tamil Nadu as well as their family members.

In these dark times, it is a proud moment to see the Madras High Court take a stand for the practicing advocates of the Bar Council of Tamil Nadu and Puducherry. However, these ailments of the advocates in South India are shared by advocates all over the country. We can only hope to see such a positive response in efforts to provide aid from all the other State Bar Councils as well as the Bar Council of India

Observations

The friction that COVID-19 patients witness between the hospitals and insurance companies is evidence that the Indian health infrastructure is being heavily tested. In these difficult times, we expect the Central and State governments to put aside petty politics and salvage the infrastructure, provide much needed oxygen, beds and important medicines like Remdesivir.

If you are a COVID-19 patient or their next of kin with health insurance coverage: –

  •  You need to ensure that you have your health insurance policy number and policy document handy at the time of hospitalisation. 
  • Go digital and save soft copies in your mailbox. 
  • Inform the insurer (the company) and the Third-Party Administrators of your policy as soon you are hospitalised. 
  • While it is best to locate a network hospital for treatment, the current scenario makes it difficult to find a hospital of your choice. 
  • In case of reimbursement claims, submit the discharge summary, along with other bills and claim form, as soon as you recover.

About the Author – Aditya Pratap

Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.

This Article is made by Aditya Pratap in assistance with Ambuj Sachan.

Cases argued by Aditya Pratap can be viewed here.

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