Consumer Guidance Seminar on Medical Insurance, Part 3: Evaluation of Claim Reimbursements

Part 3 of 5: Evaluation of Claim Reimbursements

Next, Ms. Usha V. Girish, Chief Manager, Health Department, United India Insurance Company, spoke on “Evaluation of claim reimbursements”. She began by assuring the audience that even though she represented an insurance company, she understood the consumers' point of view well. Moreover, her company was a public sector undertaking and therefore not as profit-oriented as other private sector insurance firms.

Representing the insurance sector, she explained that the company selling a policy, was in fact “selling a promise” and were duty-bound to pay out hospitalization and emergency costs. She reiterated that there should be standardized refunds that make the process fair and transparent to all consumers within the customer base. On the contrary, unfair reimbursements were likely to affect the total financial base, indirectly affecting all consumers. It is therefore imperative that due-diligence is demonstrated by the company at the time a payout is requested. She said that insurance companies are duty-bound to pay hospital charges but not the luxury or "hospitality charges". So, contrary to common public impressions, they are not arbitrarily charging for everything.

She went on to explain the various types of insurance policies, namely, base policy, top-up policy, critical illness, group policy and government schemes. The group policy is tailor-made for various group requirements. She mentioned that United India Insurance had 3 major government insurance schemes in Tamil Nadu namely, the Chief Minister’s Scheme, Employees’ Scheme and Pensioners’ Scheme.

Except in the case of fixed benefit schemes, health insurance covered incurred medical expenses. A typical health insurance has many standard terms and conditions such as waiting period, capping, co-pay and enhancement of sum insured. She advised consumers to read these terms and conditions carefully. For instance, in cataract coverage, a controversial issue, the cost of the procedure can vary from costs nearly Rs. 19,000 to Rs. 35,000 across India.  However, “refractive error” corrections are excluded from payment. She repeated how necessary, it was therefore to be familiar with the policy’s terms & conditions. She said that United India Insurance was regulated by Insurance Regulatory and Development Authority (‘IRDA’) and that every word of the policy document was read and scrutinized for consumers’ protection.

She explained that while previously a Rs. 1 lakh coverage was sufficient, in today’s disease scenario, the amount would be woefully inadequate. She explained about the different types of policies shortly. A top-up policy comes under a very cheap premium rate as compared to the base policy. That’s how they have costed and priced the products.

There were two modes of settlement, namely cashless or reimbursement. Cashless mode is available in network hospitals where the insured does not pay cash upfront. The reimbursement process works like this: the insurance company is intimated about the hospitalization, the insured makes the expenses directly to the hospital and submits the bills to the insurers. Next, the claim form is submitted within the stipulated time to the insurer along with all original bills, discharge summary, medical reports and other relevant documents.

She compared cashless to reimbursement mode next. The preferred mode is normally cashless. The advantages of the cashless mode are as follows.

1. No need to worry about carrying cash.
2. Negotiated package by insurer. So no bargaining necessary there.
3. Hassle-free treatment as the claims are settled directly to hospital.

The disadvantage is that the insured can seek treatment only in a network hospital.

The advantages of the reimbursement mode are as follows.

1. Treatment can be sought at any hospital.
2. No need for any prior approvals.

The disadvantages are:

1. Financial worries along with treatment worries
2. Unwanted/unwarranted tests by service providers
3. Will have to answer queries from insurers
4. There may be deficiency in collecting and compiling relevant documents
5. There may be a time gap between incurring expenses and receipt of payment from insurers - a one or two month gap is typical.

Next, she discussed 3 popular myths about cashless and reimbursement modes.

1. Since the average outgo in reimbursement mode was better, the reimbursement mode was to be preferred. TRUE. She confirmed that it was so since it was a natural feature intrinsic to the cashless packaging mode of negotiations.
2. Next, cashless packages do not guarantee high-quality treatment. FALSE. As an example, United India firm starts with the best quality treatment (e..g. contact lens for eyes) and then negotiates with hospitals for discounts such as “volume discounts” for bringing in so many customers. So there are no compromises on quality in cashless packages.
3. Finally, reimbursement entitles the insured to get entire amount spent on hospitalization. FALSE. The Insurance firm looks only at the cost of the medical procedure for repayment and not as cashless package or reimbursement mode to decide the percentage that will be borne by the firm. This myth is probably used by agents, Third-party Administrator (‘TPA’), or “bad hospitals” to convince patients so that they can wriggle out of the situation and put the burden on the patient finally.

Dr. Arjun Rajagopalan said that PSU insurance companies have a social responsibility unlike private sector firms and so they cannot increase premiums randomly for reasons of profit. He sympathized with PSU insurance companies in general and United India Insurance in particular that they have to take extra criticism from the public just because they are run by the government.

Q & A

1. Q: Why are insurers sending patients to the hospitals again and again to respond to queries and to contact doctors in hospitals for clarifications, etc.? Why cannot they take up the responsibility themselves?

A: Patients’ medical records are confidential and can be obtained only with patients’ permission. Insurers are not allowed to do this directly.

1. Q: Why are insurance companies not customer-friendly? Why ask customers to refer to websites when several customers are unable to understand the information on the web or even access the web?.

A: Due to the large customer base, companies are unable to respond to individual queries. All relevant information has therefore been made available on the company’s website. Dr. Arjun added that while in today’s information age this is acceptable practice, there was also a toll-free number available, as well as offices all over the country.

1. Q: How are senior citizens able to know which hospitals to choose from as the lists appear to change frequently? If the customer has an older edition of the list,  they have a hard time choosing the right hospital. Why don’t insurance companies make documents simpler and also connect more with the customer base at the grassroots more to satisfy their needs and doubts?

A: Customers can always come to the nearest office to get their doubts cleared with their policy document on hand.

1. Q: You send agents to make the initial deal but for claims reimbursement, the  insured have to run everywhere. Can agents not help more in the claims process also?

A: Yes. It is that way, she clarified. Most of the claims are currently submitted by agents themselves. Customers, are requested to contact agents for completing the claims process, or the company if unsatisfied or still in doubt.

Video link available here: https://www.youtube.com/watch?v=m_jXxuZnNiU