Cashless health insurance may not work in case of emergency hospitalisation

China: The hospital's general manager has been suspended over the incident, as have "responsible persons" at the outpatient department. (Representational image)

In the past, if you or anyone in your family got hospitalised, you needed to pay the hospital bill out of your pocket first, and then claim for the expenses from the insurer.

The process is called a reimbursement claim. This required you and your family to keep some cash ready at all times -- to pay the hospital for the treatment. However, this was long ago when cashless facility wasn’t introduced. Now, insurers have a list of network hospitals where you can get the insurer’s early approval that they will authorise your claim and pay the amount directly to the hospital. This process is known as a cashless claim.

Also read: Lesser-known reasons why health insurance claims can get rejected

The general perception is that once your insurance company offers a cashless feature and you hold a cashless card, you will never have to pay for a hospitalisation in a network hospital, even in case of emergencies. This is not entirely true.

You may ask why!

Let’s understand the basics first and then I will explain.

What does a cashless claim promise?

The cashless claim process promises easier and quicker claim settlement. One, because there is no need to arrange for large amounts of cash if you’re claiming on a cashless basis. And, two, it saves you from the hassle of managing paperwork -- as the insurer and the hospital directly interact and exchange the documents.

Also read: The multiple issues around COVID-19 claim settlement

 How do cashless claims work?

Usually, pre-authorisation is required in case of cashless hospitalisation. So, in the case of planned hospitalisation, this is what the cashless claims process would look like -

 You’ll have to inform the insurer about the hospitalisation, recommended treatment, cost of the treatment, etc. through the hospital insurance desk.

1. The hospital insurance desk will ask you to submit several documents, like your health card, identity proof, policy documents, etc. They will then submit these documents directly to the insurer.
2. The insurance company will evaluate everything and provide a pre-authorisation for the amount that they will pay. A pre-authorisation is an initial promise-to-pay for the patient’s treatment. After this, you can get admitted and undergo the necessary treatment at the hospital.
3. Before discharge, the hospital desk will send the final bill to the insurer for evaluation. The insurer here will issue a final authorisation that promises to pay the authorised amount to the hospital. The hospital will hence, not recover this authorised amount from you.
4. Of course, in case there are certain expenses that are not approved by the insurer, you’ll have to pay for these out of your pocket.

 Unfortunately, it may not hold true in a couple of scenarios, especially during emergencies. Read on.

 Cashless facility may not work in emergencies

It’s important to note that cashless offers convenience but it is not an emergency service. While the cashless process explained above can be applied to emergency hospitalisations too, due to shortage of time, it may often not really work on ground.

Here are two common scenarios we have experienced, where cashless may not immediately work, and hence the need for cash.

 Getting the pre-authorisation may take time

Insurers usually take 6 to 24 hours to give their first approval -- the pre-authorisation. They manually evaluate your policy coverage, see if the treatment you need to undergo is covered or not as per the policy conditions, etc.

Now, you won’t be able to wait this long during a medical emergency, and hospitals wouldn’t process the admission without the pre-authorisation. Hence, despite the availability of a cashless facility, you’ll have to make an advance payment at the hospital so that you can get admission to the hospital.

Only when you make the advance payment will the hospital admit you to a room or a ward, and begin the treatment.

The TPA desk at the hospital does not remain open 24X7

Unlike an insurance company or the Third Party Administrator (TPA) that processes claims 24X7, the insurance desk at the hospital that handles the claims may not be open 24X7. They are usually open for 12 hours and may remain closed on holidays. If you are hospitalised during a time when the hospital desk is closed, the hospital will not be able to initiate the cashless claim process until the next working hour. In such situations, the hospital may demand an advance deposit from you to admit the patient and start the treatment.

 So, how can you be prepared?

You may not really be happy after reading about this. But here’s how you can stay prepared in such scenarios.

 1. In case of planned treatments...

If your treatment is a planned one, you can visit the hospital and begin the process for your cashless claim beforehand. This way, your cashless request will be approved on the date of admission, and you will not have to make any payment in advance.

 2. Have an emergency fund and a credit card ready

Always maintain an emergency fund and an active credit card. These will come in handy in case you need to pay an advance to get admitted to a hospital.

 Store documents in one place

Keep all documents, like your Cashless Card, Policy Document, Aadhar Card, etc. in an easy-to-access drive folder. This will ensure you or your family have access to all the documents you need for an admission, even in an emergency.

 These three things will ensure that you and your family have the best cashless claim settlement experience.