In the past few months, we’ve heard several stories of people with health insurance policies facing claim rejections, not getting cashless treatments, or having to pay hospital bills out of pocket for COVID-19 hospitalizations. There could be many reasons that insurers give for rejecting claims. Some situations are avoidable. You must ensure that a COVID diagnosis or treatment does not burn a hole into your hard-earned savings.
This article discusses some such key issues, along with actions you could take to avoid or reduce the financial burden of an already taxing health situation.
Claims declined for mild symptom cases: Health Insurance policies cover hospitalization treatments that are considered ‘necessary’ – where there is active treatment carried out in a hospital, under any local or international medical protocol. The claim could be declined if the hospitalization is only for monitoring or investigations, without active treatment. In the current pandemic, isolation of a patient who is asymptomatic/ has only mild symptoms, where treatment could be managed at home is considered hospitalization without any active line of treatment and hence claims are declined.
What you should do: If you are diagnosed as asymptomatic or have mild symptoms, based on your treating doctor’s advice, you must explore home isolation as an option. If your current residence cannot accommodate isolation, you should prepare yourself for bearing the cost of isolation at a quarantine centre from your own pocket, since this expense is out of the scope of any health insurance policy.
Cashless facility declined, deposit is required: It is being reported that hospitals, part of the empanelled cashless network of insurance companies, are often not honouring cashless facilities. These hospitals are demanding huge deposits before admitting the patient, despite a valid health insurance policy. Hospitals blame this on liquidity issues and delayed payments from insurance companies. Remember, a cashless facility is only an arrangement for convenience, but not a guarantee of any kind. It is dependent on contracts between hospitals and insurance companies. Both parties have the right to deny this arrangement at any point in time, if they are not happy. A very small fraction of a hospital’s revenue is dependent on the availability of cashless facilities – they get patients irrespective of cashless facilities being available. Insurers hardly have any negotiating power with hospitals, and hence hospitals decline the cashless arrangement whenever they want to. This is the reality.
What you should do: You must always double check with the hospital whether the cashless facility is available for your specific insurer. Provide it with a policy copy, if required. We recommend you to not depend on cashless services; always have an easily accessible contingency fund and if possible a credit card handy to sail through such situations. You can always make a reimbursement claim later.
High Deductions: Some hospitals are charging exorbitantly for rooms in COVID management, blaming it on the high costs of isolation wards, sanitization, waste management protocols, special teams, etc. If your policy has limits on room rent, then you will likely see major deductions in the following two forms:
-Difference between the room rent approved and room rent billed
-Proportionate deductions on all other expenses in the same proportion as the room rent approved to the room rent billed (excluding MRP products)
Here’s an example.
Say you have Rs 6 lakh health insurance cover and your hospital bill is Rs 500,000. Now, if hospital room charges per day are Rs 12000 and your policy room rent limit is Rs 6000 – then the insurer not only deducts Rs 6000 for every day you are hospitalized, but also further deduct proportionate 50 per cent (6000/12000) of all the charges levied by the hospital that are not MRP based (such as pharmacy bills). Despite having adequate coverage, you may face a deduction of around Rs 3 Lakh!
What you should do: Buying a health insurance policy with a room rent limit is a disaster waiting to happen. If possible, port to another policy/ insurer with adequate cover and no room rent limit. If you are unable to migrate for any reason, we recommend that you immediately invest in a Corona Kavach or Corona Rakshak policy as an additional shield for the high deductions due to a possible hospitalization. In the long run, you will need to create your own savings fund to compensate for the gap in your current policy due room rent limit. This will ensure your family always has access to the best healthcare treatment available.
Deduction against GIC Council’s pre-defined rates: Insurers have started paying based on the pre-defined rates recommended by the Insurers’ industry body, General Insurance Council (GIC) circular. Since mid-June 2020, any charge above these rates is being deducted. In many cases, this is resulting in significant cuts on the claim amount.
This circular is issued under the reasonable & customary clause that is part of every health insurance policy. This condition in health insurance policies protects insurance companies from excessive billing by hospitals. ‘Reasonability’ is measured by comparing the charges levied for similar treatment, offered by similar grade hospitals in the same geographical area.
For the COVID19 situation, the General Insurance Council proposed the reasonable charge insurers should pay, based on the city, hospital grade, and type of treatment (General, ICU, Ventilator, etc.) These are charges the insurer will pay in the absence of any government regulated rate. In case any government body has defined rates, then those government regulated rates would be paid.
What you should do: If you look at the approved charges of the GI Council, they seem reasonable. It will be unfortunate if you have severe deductions on your claim due to the overcharging done by your hospital. In the absence of government enforcement on these standard protocols and rates charged by the hospitals, the common man is likely to be the one to suffer.
The only way to avoid these large out-of-pocket costs is to keep a strict tab on the available limits (room rent limits etc.) in your policy, the government defined rates in your city, and the above GIC table before choosing a hospital or a hospital room category/package. For instance, the Maharashtra government has taken control of over 80 per cent of the beds in private hospitals. Similarly, the Delhi government has taken many measures. Ensure you are aware of these regulations and reservations before you agree for a certain package in the hospital.
While the pandemic has resulted in an unprecedented disruption, it has also uncovered big cracks that exist in our financial plans – the lack of adequate health insurance coverage, access to emergency/contingency funds. Hope all of us learn from this crisis that we are facing, and act immediately to ensure our families have robust financial protection for the future.
(The writer is the founder of Beshak.org, an independent consumer awareness platform for Insurance)