Wealth is a key factor in the first stage of Maslow’s hierarchy of needs. In its true form, wealth is a combination of three aspects namely good food, an adequate wardr-obe and good health.

In today’s world, where there is an intense pressure of work, people unknowingly ignore their health leading to grim situations later in life. The situation is so grave that you cannot afford to live without buying a health insurance, which is a useful financial tool that serves as a safeguard in testing times.

Although the health insurance is designed to aid people during times of medical emergency to mitigate emotional and financial distress, sometimes it does not seem to serve its purpose as well as it should. There have been instances where some co-mpanies failed to honour their commitment to their customers resulting in the loss of faith in the product itself.

In this article, we will try to understand how cashless policies have been abused and what steps you need to take to avoid unpleasant surprises in the hour of need.

What is cashless insurance?
A cashless insurance ensures that you and your covered family members get cashless treatment at the hospital, which is a part of the third party administrator (TPA) network. The service needs approval from the TPA based on the benefits covered under the policy.

What is the problem?
The third party administrators (TPAs) have stopped offering cashless benefits to policy holders. Hospitals are also denying cashless benefits to the genuine policy holders stating that the earlier payments were already pending from the insurance company. The reason provided by the insurers was that they were suffering losses due to higher cla-ims against the medical treatm-ent provided to the customers.

On the other hand, the doctor community arg-ues that it’s financially unviable to treat their patients at the abysmally low rates being offered by the insurance company. Caught in between, the policy holder suffers even after paying premiums regularly.

Why policy holders are denied benefits?
Prior to 2010, cashless insurance in its true sense was a win-win situation for all the stakeholders. The policy holders were benefited as they were in a position to undergo costly treatments by paying an affordable premium. The hospitals and doctors were benefited as the number of patients they were serving headed northwards. The insurance companies too were benefitted as they were able to tap a broader customer base.

The issue began when some hospitals started to indulge in overbilling, which resulted in inflated claims being sent to the insurance providers. With the claims’ burden increasing, the insurance companies started delaying the settlement.

This brewing issue came to the forefront in July 2010 when 18 insurance companies including the four public sector entities, dropped several hospitals from the list that allowed mediclaim policy holders cashless hospitalisation on account of overbilling.

The spat then gathered momentum and resulted in the insurance companies arriving at a decision to negotiate fees directly with hospitals and doctors. They tried to insist on capping the fees for the different treatments and services offered by the hospital.

The doctors and hospitals unwillingly accepted the offer initially but with the passage of time refused to go along with it. This resulted in hospitals denying cashless services to policy holders.

The policy holder ended up being the most affected entity in all of this chaos.

Current situation
To settle the spat, in August 2010, IRDA issued a circular directing all the insurers to ensure that patients should not suffer due to the insurer’s negotiations with the hospitals. A PIL (public interest litigation) was filed by a social activist, Mr Gaurang Damani, highlighting the plight of policy holders after the third party administrators (TPAs) suddenly stopped offering cashless benefits.

IRDA responded to this PIL in September 2011 denying that the cashless treatment facility wasn’t being offered by the hospitals. IRDA stated that though the hospitals had refused to negotiate treatment rates for standard procedures with insurers, they had subsequently agreed to the terms and conditions.

What can you do?
IRDA has a grievance mechanism in place for policy holders so you can write a mail to IRDA and you must also send a copy of the same mail to the insurance ombudsman office.

The details of the insurance ombudsman can be obtained from the insurance regulatory and Development Authority (IRDA) website www.irdaindia.org or from any Indian insurer’s office. You can also approach the consumer courts and register a case against the TPA.

Important checks
You should take care of following points before buying medical insurance:

1 Cashless insurance is only available in hospitals, which fall under the network of authorised hospitals. Choose the hospital from the preferred network as cashless claims will be denied in the other hospitals.
2 Check for the daily cap in case of hospitalisation. Make sure that the daily amount is close to the prevailing rate.
3 Insurance companies do not provide 100 per cent cashless benefits even though the agents claim so while selling the policy. Please confirm the claims with the insurance provider before buying the policy.
4 Confirm the maximum amount that your policy will pay before buying the policy to avoid unpleasant surprises in future.
5 Check if the policy allows cashless transaction. There were incidents, where the insurance companies refused to pay the cashless services as there was no cashless provision in the policy.
6 Check the exclusions and limitations section of your policy very carefully. This section explains you about what is covered and what is not. All the if and but clauses of the policy are captured here.

(The writer is CEO of BankBazaar.com)