‘Cashless everywhere’ insurance: The many challenges it faces and how the General Insurance Council aims to overcome them

Segar Sampathkumar, Director, Health Insurance, General Insurance Council

General and health insurers rolled out a ‘Cashless everywhere’ facility recently, allowing patient-policyholders to approach any hospital and make a request for cashless treatment.

This move will mean greater convenience for customers as they will not have to shell out huge sums up front from their pockets. For insurers, it potentially enables better control over fraudulent claims.

However, this is just step one and several hurdles need to be crossed for the smooth functioning of this facility across the country, Segar Sampathkumar, Director, Health Insurance, General Insurance Council, and the brain behind the conceptualisation of this industry-wide framework, told Preeti Kulkarni in an interview. Sampathkumar also played a key role in the creation of the Preferred Provider (hospitals) Network (PPN) for public sector insurers in 2010, and was the ombudsman for Chennai until last year. Edited excerpts follow:

Also read: Now, you can avail cashless treatment at any hospital

Could you elaborate on the purpose of the industry coming together to offer a ‘cashless everywhere’ facility?

According to industry data, only 63 percent of health insurance customers avail of cashless facilities when they get treated at hospitals. There is no reason why the remaining 37 percent should pay cash up front and claim reimbursement later. This is partly due to lack of awareness or the absence of cashless agreements between the hospitals of their choice and their insurers. ‘Cashless everywhere’ is a customer-friendly move that the insurers have come together to offer their customers.

So, can a customer now approach any hospital and ask for the cashless facility? How will this work at the back-end for insurers and hospitals?

Yes. The hospital should satisfy the criteria stated in the policy, which includes the stipulation on the number of beds. In the case of planned treatment procedures or surgeries, the customer will have to give a prior intimation of 48 hours to the insurance company. For emergencies, the policyholder can get admitted to a hospital and intimate the insurer within 48 hours of admission.

The hospital will have to send a cashless pre-authorisation request to the insurance company, which will then initiate the cashless activation process. If the claim is admissible, hospitals will be asked to submit a one-page agreement, a memorandum of understanding (MoU). Once this step is taken care of, the cashless authorisation will be given even if the hospital is not part of the insurance company’s network.

Even hospitals at remote locations with minimal access to technology can easily avail of this facility. All they need to do is send an email with a request for cashless authorisation to the insurance company. In future, it is possible that such requests will be accepted even over, say, WhatsApp. But at the moment, email is the mode that is preferred by insurers.

Also read: Moneycontrol-SecureNow Health Insurance Ratings: How to pick the most suitable policy 

Let’s consider a situation where a policyholder approaches a hospital that is not part of her insurer’s cashless network. The hospital, however, has cashless agreements in place with multiple other insurers. Which agreement will her insurer and the hospital pick in such cases?

The insurer will discuss these issues with the hospital during the 48-hour period. Even now, in network hospitals, the rates of insurer A and insurer B will be different. Similarly, the new insurer (the one that does not have a cashless tie-up with the hospital) will proceed as per the discussion with the hospital concerned on what would constitute reasonable rates. They will arrive at a consensus and initiate the cashless process.

The success of this initiative will depend on the hospitals signing agreements within 48 hours. Communication channels at insurance companies need to be set up to handle the gush of hospital queries and the 48-hour deadline. How confident are you that hospitals across the country will cooperate, given that there is no healthcare regulator in place that insurers and policyholders can approach to flag grievances and seek redressal?

Initially, there could be hiccups. The process will need to be streamlined over a period of time. Once the first agreement in a non-network hospital is put in place under the ‘Cashless everywhere’ framework, further cashless authorisations for that hospital  will become simpler.

Some hospitals allege that in certain cases, insurers delay payments…

The MoU that will be signed between the (non-network) hospital and the insurer is also an undertaking by the insurance company that the cashless authorisation will be honoured, subject to certain conditions—for instance, that the discharge summary be submitted with all the necessary details that the insurer would seek. At times, it is possible that there could be delays. But over a period of time, such issues will get ironed out.

By and large, insurers honour their commitments. They have to, as it is mandated by the regulator. Once the authorisation is given, payments are usually released on time.

What if the insurer and the hospital fail to reach a consensus in the 48-hour period?

If there is no consensus, the cashless facility will not be extended. The policyholder always has the option of submitting the bills and other documents and claiming reimbursement later. As usual, the insurer will evaluate the claim on merit.

However, we hope to arrive at a consensus in most cases. We are confident that what we propose to implement is practical. The stakeholders—insurers and hospitals—will have to work together towards this for the benefit of customers. There are a lot of advantages for the hospitals as well. This will facilitate healthcare access for a larger section of the population.

What are the other hurdles that you foresee in the path of smooth implementation of this initiative?

The most important issue is that the awareness levels among customers about the cashless facility need to be improved. Some hospitals not adopting the cashless facility is another challenge. And, of course, there would be rare cases when hospitals and insurers may not reach a consensus on treatment rates, which means cashless will not be offered.

Other challenges could come up as adoption increases—we will figure out in the days to come. We will keep monitoring the cashless utilisation rates and work towards eliminating any hiccups that might crop up.

Industry CEOs say that the initiative will help in fraud control. Could you cite examples on the kind of frauds that can be controlled?

If cashless payment becomes the default option, more and more customers will take this route. Insurers will get information about the hospital, location, infrastructure, facilities available and so on. They will be able to engage better with these hospitals. The availability of granular details under the cashless mode will help reduce frauds. This may not be possible through the reimbursement route, as there is no  direct involvement of the hospital. If payments are released directly to hospitals, we hope we can considerably reduce fraudulent claims.

Will it help control claim costs over the long-term, which can, in turn, slow the pace of health insurance premium hikes that people are seeing?

Bringing the cost of health insurance down depends on a lot of other variables as well. For example, rising healthcare inflation, change in individual policyholders’ choice of hospital or rooms and so on. It may not be possible to isolate this measure to find out if it has had a direct impact on claim costs. However, the expansion of the cashless facility and the adoption of cashless insurance as the default mode of settlement would result in long-term benefits for customers.

What kind of data do you hope this exercise will generate over the long-term? How will it help the industry, and in turn, customers?

It will help the industry on a number of counts. They will be able to collect data on the time taken for a discharge for a range of illnesses, the number of cases of particular diseases that are reported, number of hospitals in the network, cashless authorisation requests received, and so on. Overall, it’s the customer who will benefit as the cashless network expands. There will be discussions between hospitals and insurers over healthcare costs, too. Frauds can be controlled more efficiently. Overall, it’s a win-win for all.