Insurance is easy to buy but tough to claim, if you are an individual.  Raj Pradhan narrates a real-life story that takes you through the labyrinth of insurance company, broker, TPA and hospital to explain how to make a valid claim and how to avoid going out of pocket

Raj Pradhan

The point about insurance, in fact the very purpose of buying it, is defeated, if your claim is rejected. Only those who have been through the hard-knocks of getting a claim paid, know how complicated it is for those who do not have corporate support. The best way to understand the complexities and pitfalls is to take the reader through a real-life example of what can happen, even in the best case scenario. And, indeed, this case is probably as good as it gets. It pertains to an office assistant at Moneylife, Rajesh Juwale. The case was personally handled by this writer, who has studied almost every aspect of the insurance business in depth. Moreover, Moneylife has an excellent equation with the insurance company and the broker, with direct access right to the top, which ensured that we were guided well and the process was smooth. Yet, there were plenty of learnings for anyone who is under the illusion that buying the right insurance is the critical decision.

Rajesh suffered pain in the abdomen sometime in early April 2012. A quick visit to his doctor led to the administering of an injection and a recommendation of sonography which revealed a 16mm kidney stone. Rajesh’s first instinct was to avoid surgery and opt for ayurvedic treatment. The pain stopped, but another sonography a month later revealed that the stone was intact. We explained to him that our group mediclaim would allow him to get proper allopathic treatment.

Moneylife has a mediclaim arrangement with Bharti AXA General Insurance with no waiting period for pre-existing disease (PED). Such an option is available only for group covers and not on individual policies. Interestingly, this is the first time in over three years of taking the group policy that any of our employees was going to avail of mediclaim; and, it was our first year with Bharti AXA. As the insurance specialist at Moneylife, I was assigned the task of hand-holding Rajesh through the process. It was also a first-hand learning experience for me.

Our first challenge was to find the right hospital for the procedure (from the list of approved ones provided by the insurer or others). We got our first exposure to why insurance costs in India soar, right away. We had excellent options nearby which would have provided good, clean and cost-effective treatment. One was a well-known large hospital at Dadar and the second a smaller private hospital with a good reputation. But neither of them would accept a cashless procedure. This meant one of three options. First, the hospital would have to put funds at risk by paying for the procedure and wait for the claim; second, Rajesh would have to pay the costs and claim insurance, which at a multiple of his monthly income was simply unaffordable; and third, look for a more expensive alternative which provided a cashless facility. We were guided to one.

*Our first learning was that some good, cost-effective hospitals do not want the hassle of dealing with TPAs (third party administrators) or delays in payment by insurance companies. While many TPAs usually allege that hospitals are dropped from the list because of inflated bills or erratic services, nobody ever discusses payment issues and delays on the part of insurers or TPAs. Since the cost is borne by insurance companies, it is for them to consider that they eventually pay twice as much for non life-threatening procedures, only because smaller, cost-effective hospitals feel harassed by the claims process and have opted out.

We were informally guided by our broker to consider a kidney stone speciality hospital (RG Stone, Khar, Mumbai) which was on Bharti AXA’s approved list. While we zipped through the process, it was soon clear that an ordinary individual, especially not a very literate person like Rajesh, would be all at sea. In fact, negotiating the process of applying and getting insurance without a hitch needs to be approached like an assignment, with one person in the organisation or the family taking full responsibility. Here is why.

Confusion over Rules and Procedures

* Our second lesson was that brokers are also not very savvy about the rules and you need to know them yourself. For instance, we were first told that service tax is applicable for cashless facility and it has to be paid by the person insured. This would have been a blow, since the service tax component alone would have been nearly equal to Rajesh’s monthly salary. Neither he nor the office could have afforded this additional outgo. With a little research we found that a finance ministry notification had scrapped the service tax from 1 May 2011. That it was imposed in the first place reveals how thoughtlessly tax policies, especially those related to service tax, are being framed.

Next, we were told that application for cashless procedure was to be made only on the day of the procedure. Since we didn’t want to risk a rejection and since it was a planned and non-emergency surgical procedure, we insisted on prior approval. Here again, had we believed the so-called experts, we would have ended up with costs and delays or additional payments because of needless confusion. It would also have left the patient at the mercy of the TPA or, as in our case, a postponement (we were unwilling to cough up cash upfront) of the surgery. The important lesson here is to always get prior approval for planned procedures, irrespective of what the TPA or agent may tell you. It is only in an emergency that you don’t have a choice.

Not Quite Cashless—Pre-hospitalisation Expenses from Your Pocket

* A third learning was that even if you have a cashless facility, the cost of registration as well as initial consultation and tests have to be borne by the patient. These are expensive in a speciality hospital and negligible in small ones. But since the latter are usually unwilling to offer cashless facility, it is a double whammy for poorer or middle-class patients. The cost of consultation and tests are usually reimbursed by the insurer—provided that a procedure is, indeed, recommended and done. (Mediclaim without outpatient department cover is reimbursed only if it leads to any medical procedure.)

* Our fourth learning was about finding out the cost of procedures and tests.  Hospitals do not offer simple online charts with the approximate cost of various procedures (many large hospitals do have voluminous charts with cost of various services, including rooms, doctors’ fees and charges for various tests). But it is impossible to arrive at even an approximation of the likely cost or what may be outside the insurance claim, based on these charts.

Social activist Gaurang Damani, who has filed a public interest litigation in connection with insurance, says, “Rate chart should be prominently displayed at the hospitals. This may be the domain of Medical Council of India (MCI), but if Insurance Regulatory and Development Authority (IRDA) can instruct insurance companies to deal only with hospitals that provide rate charts for full treatment packages, that would be great. If package rates cannot be displayed since they may not be standardised across insurance companies and hospitals in a particular geography, rate chart can be conveyed to the consumer in the insurance policy document. There is a lot of randomness in these rates.”

In our case, we had the opportunity to check RG Stone’s charges at two different locations in the same week. We found that the doctor’s consultation fees at RG Stone Khar was Rs700 and we paid Rs3,000 for an IVP (intravenous pyelogram), while RG Stone, Mira Road (a Mumbai suburb, where RG Stone is a part of the Bhaktivedanta Hospital) charged Rs400 and Rs2,700, respectively. One reason could be higher realty rates at Khar, but it shows that you may pay different rates even in a branded chain for the same service. Of course, this does not affect a patient who has an insurance cover but what does such randomness do to healthcare costs?

After the mandatory tests and examination, the very warm and helpful doctor at RG Stone explained his condition to Rajesh and recommended two alternative procedure options—PCNL (percutaneous nephrolithotomy) which needed two days of hospitalisation or ESWL (extracorporeal shock wave lithotripsy), an outpatient procedure. The doctor’s preference was for PCNL (because the stone was big) and he pointed out that the ESWL may need multiple sessions.

Interestingly, the cost difference between the procedures was more than 70%. According to the TPA desk at the hospital, the cost would be Rs56,470 for PCNL versus Rs32,500 for ESWL (maximum three sittings). Again, the cost of expensive procedure option is borne by the insurance company. We tried to ascertain what their thoughts are.

Dr Amarnath Ananthanarayanan, CEO and MD, Bharti AXA, said, “As the choice of hospital is a patient’s prerogative, there is no compulsion for the patient to opt for a particular hospital. Generally the patient opts for the hospital based on the doctor’s advice especially in surgical cases involving specialist surgeons. So in most cases the hospital choice is independent or irrespective of the hospitalisation charges. The approval from the insurance company normally would be on the basis of the room rent as well as the costs of treatment in a particular hospital apart from what would be covered under the terms of the insurance policy that the customer holds.”

Shreeraj Deshpande, head of health insurance Future Generali, said, “The amount payable for cashless treatment is decided on the class of hospital and the city it is located in. The differences in the procedure cost arise due to the higher charges of room and surgeon charges. The hospitals have differentiated tariffs for their room types and, hence, the insurer would be aware of the same at the time of taking the hospital on the network. As long as the hospital adheres to its published tariff or negotiated rates, we do not question them.”

Dr Damien Marmion, CEO, Max Bupa Health, said, “We have detailed Service Level Agreements (SLA) and negotiated tariffs with clear understanding of the non-payable items. We don’t have exclusions on different procedures, so long as they are related to the line of treatment. If the customer chooses a network hospital that is more expensive then we would pay the higher expense.”

Antony Jacob, CEO, Apollo Munich told us, “In India, we do not use any scientific methodology for grading providers to determine the quantum payable. This is based on experience of reasonable charges for a particular type of provider.”

A better system of estimating charges may actually help insurance companies, because many of those insured would be able to opt for lower cost options, simply because of their familiarity or proximity to place of work. Not everybody who has a valid insurance policy wants an expensive five-star hospital but, in the absence of adequate ground work by insurers, people are actually nudged towards more expensive hospitals.

In our case, the tests and consultations happened in one sitting. We had to pay the upfront charges of over Rs4,200 (including medicines). The TPA told us that registration and non-medical charges imposed by hospitals would not be borne by the insurance company. Further, we found that some hospitals insist on a cash deposit from the patient even if a cashless procedure is approved—just in case there are complications or need for extension of hospital stay. We were fortunate that neither was required at RG Stone. But it is another factor that needs to be kept in mind while opting for cashless group insurance—there are many costs that are outside the claim and can tot up to a neat sum that may be beyond the means of all employees. Although RG Stone had none of these charges or demands for deposits, they did ask us for a blood cross-matching and reservation which cost a few hundred rupees and had to be done at a separate facility, the cost of which was not covered by insurance.

The key here is to know that there will be many such costs that would need to be borne by the patient which are impossible to estimate even while opting for a cashless procedure. These costs are higher when the hospital is fancier. For the patient, it is a Hobson’s choice—you can opt for a less expensive facility (save the insurance company money), forgo cashless, but still be penalised by way of not getting a full reimbursement. Or, you can go to a more expensive facility, where the bulk of expenses are cleared under the cashless facility, but the extra charges/fees and costs, that are not included in the cover, could be very steep for employees lower in the organisational pyramid.

Smaller companies who offer mediclaim to employees must know that they will have to bear these costs as a medical advance to the employee, until the insurance claim is paid. But we are not sure if insurance companies, looking to expand their footprint, have examined these operational issues or attempted to find solutions in their own interest.

Enter the TPA

The TPA desk (RG Stone Hospital employee) filled up the cost of treatment to be submitted to Paramount TPA for clearing cashless treatment. It was Rs52,470 + Rs4,000 including a room as 1% of the sum insured. But instead of an instant approval, there were a couple of additional wrinkles. The TPA desk, which probably fills out requests for clearance day-in-and-day-out, had omitted to provide a break-up of Rs52,470 while the extra Rs4,000 was lumped under ‘miscellaneous’ and the TPA (Paramount) raised a query.

When the approval did come in, it was only for Rs52,470. We were clear that Rajesh was not going to pay the miscellaneous Rs4,000, nor would Moneylife. More frantic phone calls to the Hospital and TPA followed and we learnt that Rs4,000 was for Cystoscope (camera) used during the surgery. Since the camera was reusable, the insurer was correctly willing to pay only the rent for it. This was sorted out quickly. The TPA desk at the Hospital told us that the procedure would be done within the sanctioned Rs52,470 and we would not have to pay for the camera. We have no idea what that was about, but the fact is that we did not pay; we don’t know if it was due to our direct access to Bharti AXA’s top management. Would someone else in our place have had to cough up Rs4,000 for a camera that the hospital uses once and keeps it? We believe so.

Fortunately for us, the surgery went off smoothly and we are happy that the insurance also covers the post-operative procedures such as ‘stent’ removal, sonography and medicines which are required to be done a month later. Our final takeaways from this experience are:

1. Mediclaim usually covers treatment that requires 24-hour hospitalisation with a few exceptions. Some insurers, however, cover day-care procedure like lithotripsy. More and more day-care procedures are covered in mediclaim due to technological advancements that do not need 24 hours or more of hospitalisation. You need to be aware of them.

2. Claiming insurance money is a fairly tough process. If it is not an emergency, it is worth your while to spend time to learn, ask plenty of questions and make an appropriate choice.

3. Ideally, go for cashless in a pre-planned procedure. It eliminates nasty surprises on what the insurance company is willing to pay.

4. In case of reimbursement, Bharti AXA allows patients to get an estimate of costs before the procedure and submit it to the TPA prior to the procedure—they will give you an assessment of what can be claimed and the final payment would be more or less than the estimate. Future Generali India Insurance gave us similar feedback. However, not all TPAs will provide you the approximate costs. Max Bupa Health was clear that, given the complexity of procedures and expenses, they would not be able to give an indication unless all papers are submitted. They also recommend opting for cashless treatment. Apollo Munich had a similar view. Under the garb of ‘reasonability’ in charges (without clearly stating so), the reimbursement may be trimmed, to your dismay. Insurers can also deny on the technical ground of delay in receipt of hospitalisation intimation or claim submission, even though IRDA circular clearly states that claims should not be mechanically denied on violation of timelines. Moreover, there could be delay in payment, depending on your insurance company. We came across a horror story of an insurer who took almost one year to reimburse a cataract claim payment. IRDA draft guidelines state that claim payment should be within 30 days of submitting all the documents, but it is not yet implemented.

5. If the day-care procedure you intend to undergo is not specified in the policy wordings, it is a grey area. But, don’t lose heart as you may be able to persuade and prevail. A lot will depend on the negotiation power of the intermediary. Group policies carry more weight; a good intermediary can prove to the insurer/TPA the medical nuances of the procedure that will actually help the insurer due to lower cost than regular procedures that need hospitalisation.  

6. If the insurer/TPA brushes you off, you can still seek justice at the Ombudsman or a consumer court. If you purchased mediclaim in good faith and are convinced that the insurance company should pay, go for the fight. In a recent decision from the consumer court, Oriental Insurance Company was told to pay medical expenses of Rs93,800, with 9% interest from August 2010 along with compensation of Rs9,000. The insured, Abhay Bharad, had approached the consumer forum after the insurer refused to reimburse his expenses for radiotherapy treatment for a knee ailment which involved 21 daily sittings and not hospitalisation.

7. Remember, there are always costs involved even in cashless (registration, tests, deposits, incidentals and, strange costs like those for a camera); it is better to try and get an estimate of these costs before choosing where to get yourself treated.

8. Insurance advertisements make it appear that insurance is easy to buy and easy to claim. In reality, the claims process is tough to negotiate, especially for those who are less educated.

9. Finally, be meticulous in your paper work and don’t, under any circumstance, delay the submission of the claims request.

10. The difference in the cost of diagnostic tests is enormous. A television show has recently exposed the kickbacks involved in these recommendations. So put your foot down if needless and repetitive tests are prescribed. Also, shop for good places that offer the same investigation at lower costs. In our case, Rajesh was charged Rs900 for one sonograph, but paid just Rs350 for the second one at Navneet Jain Health Centre, at Dadar, Mumbai.

11. Medicine costs can also upset budgets. Some pharmacists offer discounts ranging from 5% to 10% to regular users. Moneylife’s Cover Story (9 September 2010) has already reported wide variation in the prices of branded medicines and not just branded versus generic.

12. Rajesh was prescribed Cetil 500mg (Cefuroxime) which costs Rs264 for four tablets. Low-end Cefuroxime branded Forcef (Aristo) costs Rs206 for four tablets, while high-end Ceftum (GSK) costs Rs332 for four. Alevo (Levofloxacin) which was also prescribed costs Rs44 for five tablets. Low-end Levofloxacin branded Leeflox (Centaur) costs Rs37 for five, while high-end Tavanic (Aventis) costs a whopping Rs475 for five! It is, indeed, tough to get into such detail. Hopefully, somebody will help create a web resource for checking comparative prices at least for those who are net-savvy.

Cashless Approval – What Turnaround Time (TAT) To Expect? 

• Bharti AXA works with TPAs. CEO Dr Amarnath, says, “Cashless approval TAT takes anywhere between two to four hours after receiving the complete information; it is 24x7 round the year in case of an emergency.” Our experience was that it took longer, and was not wrinkle-free, due to incomplete submission by hospital TPA desk.

• Max Bupa Health does not work with TPAs. According to CEO Dr Damien Marmion, “Cashless approval can take four hours from the time of complete request. Our cashless authorisation team works 24x7. Infrastructure limitations at the hospital can extend the time till the next day as hospital TPA desk closes in the evening.” 

• Apollo Munich works with one preferred TPA (Family Health Plan) which has a dedicated unit. Its CEO Antony Jacob, says, “Apollo Munich has a turnaround time of approximately two hours.” 

• Future Generali India Insurance has set up an in-house claims department last year which is appreciated by many. They don’t work with TPAs any more and this is a growing trend. CEO Shreeraj Deshpande says, “The average time for processing a cashless complete in all respects is 30 minutes from receipt of information. We work 24x7 irrespective of any public holidays.” He too says that further delays, if any, are due to hospital TPA desk not working 24x7, on weekends or public holidays.

• TPAs recommend that you keep aside “2-3 days for cashless approval of pre-planned procedures to ensure all queries are resolved.” 

Emergency Hospitalisation

It’s a running movie in a fast-forward mode. In case of emergency hospitalisation, it is best if you and your family are prepared to work in an organised manner. Here are a few tips:  

• Know your insurer/tpa, broker/agent. Have all the contact details. Confirm with the intermediary the role they will play in case of your medical emergency. 

• Understand what is covered and not covered. Ideally, find out things when there is no emergency! Ensure that there is no change in policy wording during renewal. 

• Keep mediclaim policy documents, policy ID card, updated cashless hospitals list, insurer/TPA phone numbers, email and postal address in a place accessible to your family at home and even during travel. The postal address is needed for pre-and post-hospitalisation expenses reimbursement for cashless treatment. 

• Photo identity proof (passport, drivers’ licence, PAN card) of the insured are needed during cashless application and reimbursement claim submission.

• Research the local hospitals and nursing homes. Narrow down to one or two hospitals which offer cashless as well as facilitate most of the medical procedures. Check the TPA desk at these hospitals and get their contact information. 

• Keep all medical reports, pharmacy bills, lab/diagnostic bills, etc, to establish a trail for your medical need. It is required for cashless approval and claims reimbursement. Keep photocopies of all the documents before submitting originals to insurer/TPA.

• Be ready to pay for incidentals (that may or may not be reimbursed). Keep emergency cash at home as it may be needed even for cashless treatment. Registration and non-medical expenses are not covered.

Co-payment and No-frills Mediclaim: Will it be win-win for insured and insurer?

When mediclaim policy offers cashless at high-end hospitals like Hinduja, Lilavati, etc, in Mumbai, it is tempting for the insured to indulge in the best of medical treatment even for non-life-threatening procedures. There can be a huge variation in costs among different hospitals for the same procedure. The insured may not worry, as making a claim is looked at as ‘payback time’ for getting the benefit of premium payment over a period of time. The insurer pays the claim but, ultimately, the insured pays with possible increase in the premium. 

Co-pay means that the insured is required to bear a certain percentage of expenses incurred on the hospital bill. For example, if co-payment for a procedure is 30%, it means the policyholder will pay 30% of the procedure amount while the insurer will pay the balance. Health insurance claims data shows that as the sum insured (SI) increases, so does the average claims size. Co-payments bring partial responsibility of payment and, hence, scrutiny as well as possibly negotiation of hospital charges by the insured. Are co-pays the new weapon to fight excessive hospital charges and an answer for making the insured responsible? 

The co-pay clause is applied in different ways by insurers. Some may apply it when a policyholder gets treatment in a non-PPN (preferred provider network) hospital. In some cases, co-pay may be applied only to certain ailments specified in the policy or medical expenses related to pre-existing conditions. Others may insist on co-pay if the policyholder undergoes treatment in certain metropolitan cities. 

Check out how the co-pay is applied in your policy, as it may even be subtly applied in conjunction with room rent. In this case, you will not see the word co-pay in the policy, but it works in a similar way. Some policies pro-rate the claim based on your room rent and actual room you availed. For example, if the room rent limit is 1% of SI and assuming SI of Rs2 lakh, your room rent limit is Rs2,000 per day. In case you avail a room of Rs3,000 rent, your full claim amount is pro-rated to pay only 2/3rd of the claim. The remaining 1/3rd will be borne by the policyholder.

The main advantage of co-pay to the policyholder is a lower premium. Higher co-pay may lower the premium. Unfortunately, the co-pay clause is rife in senior citizens’ mediclaim where premiums are not low. It means that the age at which you need medical facilities the most is when you will also have to bear the burden of hospital bills partially. Star Health’s Senior Citizen Red Carpet policy has 50% co-pay for PED and 30% co-pay for all other claims.

Some insurance companies, including Bharti AXA, are looking to launch no-frills health insurance covers. No-frill policies may have lower limits on hospital room charges, disease-wise coverage limit or limited choice of hospitals one can go to, to avail both cashless and reimbursement facilities. According to Bharti AXA, “The aim is to give the aam aadmi a product that is affordable and provides maximum benefit at minimum price. One of the options is to restrict the hospital room rates which could also translate into customers not choosing to go to hospitals with high room rents.”