The ultimate guide to cashless claims in health insurance: Everything you need to know

This comprehensive guide is a valuable resource for individuals recommended for hospital admission or daycare surgery. By following this step-by-step guide, you will gain a thorough understanding of every aspect of your cashless claim process. Keep this guide handy throughout your journey, from admission to discharge, to stay well-informed at every stage.

What is a cashless claim?

In a cashless claim, the insurance company takes the responsibility of paying the hospital directly for your treatment. However, this is only possible when the hospital has a tie-up with your insurance company. This is called Empanelment. If the hospital is empanelled by your insurance company, then it is a Network Hospital of your insurance company. Having said that, insurance companies sometimes have a Preferred Partner Network (PPN), which means apart from Network Hospitals, your insurer also has a PPN where it will offer a cashless facility. If your chosen hospital is neither a Network Hospital nor part of the PPN of your insurer, then you cannot enjoy cashless at the hospital.

Why cashless?

As explained above, since your insurance company will pay for your bill directly to the hospital, you do not need to pay for the bill if your cashless claim is approved. However, please be aware that even in a cashless claim, the insurer may not pay 100% of the bill amount due to the following reasons:

Your bill amount may be higher than the sum insured in the policy or the available balance after a few previous claims in the same policy period.
You chose a room category higher than the limit prescribed in your policy. The insurer will deduct a percentage of the whole hospital bill on a pro-rata basis.
There is a limit defined in your policy for expenses related to your surgery/procedure. If your bill is higher than that, the insurer will pay only up to the limit and the remaining amount you will have to bear.
There are items and services charged in your bill which are Non-Admissible Charges (NAC) as per the insurance policy. This means your insurer will not pay for them even in a cashless claim. Some hospitals use the term ‘non-medical charges’ which is nothing but NAC.

Therefore, keep in mind that Cashless is not ‘No Cash’ as some people may choose to believe. You may still end up paying some part of your bill in a cashless claim. However, since it takes some burden off your wallet, cashless hospitalization is preferred.

Do you have a valid insurance policy or insurance card?

To enjoy Cashless Hospitalization, you need to submit a print or a photocopy of your insurance policy or card to the hospital at the time of admission. If you are an employee of a corporate and covered in a group health insurance policy, the hospital may ask for a photocopy of the company ID card as well to process the cashless claim.

Therefore, make sure you have the latest year's policy copy with you. In case your insurer or company issues a new health insurance card every year, remember to carry the latest one to the hospital. The policy number, Customer ID, Member ID or TPA ID mentioned in your policy and card helps to identify the patient and her coverage.

Cashless is not available at your chosen hospital. What are your options?

This is a very real possibility because most hospitals are not empanelled with every insurer or TPA. While you may not get cashless at such a hospital, your treatment expenses are still covered as per your insurance policy terms and conditions. Make sure that the hospital falls in the definition of a hospital as per insurance guidelines.

When you do not get cashless at a hospital, you are expected to file a Reimbursement Claim with your insurer or TPA. In a Reimbursement Claim, the policyholder is required to fill up a Claim Form and attach all supporting documents for the claim. Once this documentation is complete, the policyholder must then submit the same to the insurer or TPA and cooperate with them with any further information required to process the claim.

What documents do you need to carry to the hospital?

Govt. approved ID proofs which can establish the identity of the patient and/or of the main policyholder must be carried to the hospital. The following documents should suffice for this purpose.

Copy of latest insurance policy certificate or Customer ID card provided by insurer/TPA
IRDA has made Aadhaar mandatory in any claim, so you must carry an Aadhaar card copy of the patient to the hospital along with insurance card/policy copies.
Some hospitals may also demand a photograph of the patient, so no harm in carrying a few passport-size photographs of the patient.
If the policy is given by a corporate, it is also useful to carry a copy of the employee’s company ID card.

Pre-authorization process

At the time of admission, the hospital needs to get formal approval from the insurance company to offer a cashless facility to every cashless-seeking patient. Through Pre-Authorization, the insurance company checks whether:

The policy is valid and the patient is covered in the policy
There is any sum insured available
The hospital is part of its cashless or preferred partner network
The prescribed treatment is covered in policy terms and conditions

Typically, the hospital needs to submit a form to the insurer or TPA explaining details of the treatment and expected length of stay and financial estimate of the treatment. The insurer then evaluates this information along with policy terms and conditions and gives provisional approval to the hospital to offer a cashless facility to the patient.

In case of planned admissions, it is preferred to complete pre-authorization formalities 2-5 days before admission. However, in emergencies or unplanned admissions, pre-authorization must be sent within 24 hours of hospitalization.

Things to look for in pre authorization

Patient or their family member must verify these three aspects in the pre-authorization form:

The insurance details of the patient should be entered correctly. This will help the insurer to locate the patient’s insurance details at their end.
Room tariff and treatment estimate mentioned in the pre-auth form should match the information provided to you during admission counseling. There is always a chance of clerical mistakes here.
The patient’s past medical history, such as diabetes, hypertension etc is mentioned in the pre-auth form. Wherever possible, this section should be filled out after consultation with the patient. By giving incorrect information here, you may jeopardize the claim. Similarly, make sure that irrelevant diseases are not tick marked by mistake in the form by medical staff.

Check your insurance eligibility before admission

As laypeople, we do not understand medical or insurance jargon. For us, if the doctor says the patient has to be admitted, we follow that. Or when the doctor advises the patient to go for surgery, we go through that. Most of us have this belief that my insurance will pay for the expenses because the hospitalization happened on the advice of the doctor.

Unfortunately, insurance doesn’t work this way. Your insurance policy contains a set of benefits and a long list of limitations of coverage. We tend to only focus on our beliefs that the insurance MUST cover everything, without trying to understand insurance policy details. One in Twelve (8%) cashless claims get rejected due to some of these reasons:

Non-disclosure of pre-existing diseases (PED) at the time of buying the policy. Example – A previous surgery or a history of hypertension may have not been mentioned in the proposal form
Non-coverage of a disease since the policy was purchased recently and that treatment for the disease is in a waiting period. For example – Diabetes and its related complications are not covered for the first 3-4 years in some policies
The disease or reason for hospitalization itself is not covered in the policy. Example – Congenital diseases (disorders since childbirth), accident cases where the patient is under the influence of drugs or alcohol, treatment for mental disorders, ayurvedic treatment etc may not be covered
Hospitalization only for the purpose of investigations is not covered by your policy. Not your fault, as it may be on the advice of a doctor, yet the policy will not cover.
Cases where the need for hospitalization is not justified. For example – many admissions due to fever etc are not covered because your insurer may argue that the same treatment could have been given on an out-patient (OPD) basis and does not require a stay in the hospital.
If the patient is having a minor issue and the doctor is able to stabilize the patient and sends her back (hospitalization is for less than 24 hours) or if the family members take the patient back home without staying for a day – such cases are not covered by insurance.

Your claim may also be adversely impacted if the available balance in the policy is very less, or you occupy a ward which is higher than your room eligibility or there may be a significant co-payment option defined in the policy.

Hence, it is advisable to spend a few moments calling up your insurer or TPA at the time of hospitalization, or maybe go through the policy wording, before taking up a hospital bed.

Pre-authorization approval

After the application for pre-authorization is submitted to the insurer, it may take some time to evaluate the case. In a few cases, the insurer may want further information from the hospital such as investigation reports, proposed course of treatment, previous medical history, reason for hospitalization etc. to be sure about the coverage of treatment within the scope of the insurance policy. This can delay the approval of pre-authorization.

Upon approval, please remember that it is provisional and depends on the final discharge summary submitted by the hospital at the time of discharge. Pre-auth approval does not guarantee cashless approval at the time of discharge.

It is a general habit of insurers to approve a small amount when pre-auth is sent. For example, your estimate for treatment may be 3 lakhs, but the insurer will send pre-auth approval for just 1 lakh. Do not worry, this is updated from time to time as the hospital sends further enhancement requests during the course of hospitalization.

Do you need to pay any deposit to the hospital in cashless?

This is a grey area and the experiences of patients vary greatly. Since there is an element of surprise regarding whether cashless discharge will be approved or not, some hospitals tend to take a significant amount of advance cash from patients even when pre-auth may have been approved.

A few hospitals follow the practice of taking a small token advance. This is to be offset against the patient’s liability to pay for non-admissible charges. If any extra amount is available after the settlement of non-admissible and co-pay charges, hospitals generally return the same to patients through cash or cheque.

Insurers and TPAs have largely been silent on this and there are no standard guidelines. How much is asked from you as the advance amount is based primarily on market practices prevalent in your area.

Things to take care of during hospitalization

You may submit previous medical records, doctor consultation notes or investigation reports. Chances are the hospital may sometimes send some of these records to an insurance company during cashless claim or preserve these files in their hospital medical records department.

The problem here is you lose the previous medical record without having a copy. In case you were to apply for pre-hospitalization expense claim, originals of these medical records would be required in the claim. Therefore, it is advisable to share copies of previous medical records with the hospital. Only if they are necessary to get the present cashless claim approved should the earlier records be given.

Do you need to stay at the hospital for 24 hours?

People need to be hospitalized for various reasons. Someone may be very sick requiring admission in ICU for a few days. Someone may have surgery and within 2-3 days the discharge may take place. Given the advancements in medical science, nowadays patients may be discharged the same day after undergoing daycare procedures. In a few cases, to stabilize the patient, the doctor may admit the patient for a few hours and conduct some investigations and then discharge.

Daycare procedures covered in the policy do not require overnight stay. In every other case, for the claim to be valid, the patient must stay in the hospital for at least 24 hours. This is mandatory as per insurance terms and conditions. Many patients and their families take the patient home in less than 24 hours of hospital stay, only to find their claim getting rejected. Whatever the reasons, if you take the patient home in less than 24 hours, the insurer has the liberty to reject your claim.

Day of discharge

Individual experiences may vary, but largely, the flow of events on the day of discharge goes like this. The treating doctor comes on regular rounds and upon reviewing the progress of the patient, advises discharge. An executive will then prepare the discharge summary and get it approved by a doctor. In parallel, the billing desk starts compiling the in-patient bill by adding up services and medicine bills. Depending on the kind of hospital, this stage can take 2-5 hours.

After this, the insurance coordinator of the hospital sends scans of these documents to the insurance company to process the claim. Two things can happen – (1) Insurer doesn’t need further information and processes the claim (2) Insurer needs more details about treatment or billing and raises queries. Considering that most of this operation happens over emails, there’s bound to be some delay in reading and responding to emails.

If it’s the first case, your claim can get processed within 2-6 hours depending on the load on the claims team on that day. If it happens to be the second case, it can take a very long time, sometimes even extending to the next day.

Most patients and families get really upset with this delay. When the patient is fit to go home and if made to stay in the hospital for claim approval, it results in moments of dissatisfaction. However, you should understand that cashless is not a blank cheque, rather the insurance company has to decide their as well as the patient’s liability in the claim. It takes time to gather the information. Also, consider the fact that this process is not perfect given the high level of human interaction and individual involvement in claim processing.

So what are your options for a quick discharge from the hospital?

Here are some options you are exercise to avoid the waiting game at the hospital for discharge:

Pay the bill in cash, receive the bill and later get it reimbursed. This is called a Reimbursement Claim.
You can deposit an amount equal to the bill value with the hospital but ask them not to settle the bill and continue with the cashless process. Whenever the hospital receives the approval, they can settle your liability in a claim against your deposit. You can get your money back within the next few days.
If none of the above options suits you, keep following up with the insurer to check the claim status. If it is getting stuck somewhere in need of information, you can prompt the insurance desk. However, this option has limited benefit.

Your cashless got approved. Do you still need to pay anything?

It is highly likely that there will be some amount due from your end even in a cashless claim. This amount can be as small as Rs 500 to even up to the bill value itself. Read on for the list of deductions in a cashless claim;

Non-admissible charges: These are charges generally not covered in any insurance policy. Service charges like Admission fees, Medical Record charges etc. and the cost of consumables such as gloves, swabs, thermometer, hand sanitiser etc are part of a list of ‘Non-Admissible Charges’.
Co-pay: This varies from policy to policy, but if your policy specifies a co-pay for the patient, then it would mean 5-50 percent of the bill value may be payable by the patient.
Proportionate deduction: The majority of people do not check their room rent eligibility. If they choose a room category higher than that specified in the policy, expect a pro-rata deduction on the whole bill value.
Treatment capping: Surgeries for cataract, hernia, piles etc and maternity cover mostly carries a sub-limit, i.e. insurance defines a limit of their liability lesser than the sum insured when you take any of these treatments. It is not the rule; some policies may not have this cap.
Sum Insured exhausted: There is a fair chance that your policy may not have enough balance available to cover the treatment cost. In such a case, the difference amount has to be borne by the patient.

What documents you must collect from the hospital at discharge?

Following documents you must try to receive when leaving the hospital:

A copy of the Discharge Summary
Duplicate bill and letter of settlement
Original Payment receipts of all payments made to the hospital
Copy or original reports of lab investigations, X-ray, CT, MRI etc.
Other medical records submitted by you at the time of admission

What if cashless claim is rejected?

It is highly unfortunate if your cashless claim gets rejected at the time of discharge. The hospital will demand you to settle the bill within a couple of hours. If you are unprepared financially, this can really be a moment of distress. That is why we recommend that every patient should use the duration of hospitalization (or even the days leading to hospital admission) to keep sources of finance ready. God forbid if the claim were to be rejected due to valid or invalid reasons, discharge from the hospital will be dependent on bill settlement.

A question must be appearing in your mind – Why would an insurer reject a cashless claim when pre-auth was approved? This can happen due to many reasons which may or may not be entirely in your control.

The good news is, you can still file a reimbursement claim with the insurer and claim your expenses. It may not be as comfortable a process as a cashless claim, it still gives you an avenue to satisfy the insurer with the requisite details for claim approval.

Not just that, if you are not satisfied with the reason provided by the insurer for the rejection of your claim, you can file a complaint with the grievance management team of the insurer and get the matter sorted. If you still do not get a satisfactory response from the insurer’s grievance team, you can pursue your complaint with the Insurance Ombudsman.

What next after cashless claim approval?

Now this is the interesting part. Almost everybody is unaware of Pre and Post Hospitalization Claims. Almost everybody is unaware that the amount (except for non-admissible charges) not paid by the insurer in your cashless claim can be claimed from any other health insurance policy of the patient! Almost everybody misses to claim their Hospital Daily Cash benefit provided in their policy.

Pre and post hospitalization claim

Barring a very few policies, almost every health insurance policy provides benefit to patients to claim their out-patient expenses for doctor consultation, medicines, lab investigations, diagnostic scans, physiotherapy etc. incurred within a duration of 30 days before admission and 60 days after discharge. As per some policies, this benefit is even extended up to 60 days before admission and 90 to 120 days after discharge. What this means is that all expensive CT and MRI scans that the doctor ordered, or all the money spent on doctor visits and medication, or the package charges for post-surgery physiotherapy can be recovered in your insurance policy.

You must submit a reimbursement claim for pre and post-hospitalization expenses.

Subsequent claim for the unpaid claim amount

In every case where the patient has coverage in more than one insurance policy, and there is an unpaid amount left by insurance in the first claim, this unpaid amount can be claimed from the second or third insurance policy of the patient.

The basic rule of thumb is this – As long as the patient has eligibility in any of her insurance policies, her claimable hospitalization expenses can be spread over any number of policies. In a simple layperson example, if you had 3 policies of Rs 100 in each and your hospital bill is Rs 250, you can claim Rs 100 from any 2 policies and Rs 50 from the remaining policy.

Hospital daily cash benefit

It is surprising how little people know about their insurance cover. Generally added as a benefit in individual insurance policies, Hospital Daily Cash is a feature that pays a fixed amount for every day of hospital stay. This is meant to provide for the conveyance and food expenses of the patient's attender. Hospital Daily Cash is given over and above the hospital claim amount and needs to be claimed through a reimbursement claim. The amount of this daily benefit varies from Rs. 500 to Rs 3000 per day that a patient stays in hospital. Check your policy eligibility to get more details.