Four major nationalized general insurance companies United India, New India, Oriental Insurance and National Insurance have decided to stop cashless hospitalisation at select hospitals. They have made a preferred provider network list where most top hospitals have been excluded for cashless facilities for health insurance policies. Cashless facility can still be availed in case you are covered through a group health insurance plan.
These 4 companies had been working very closely with their TPAs (Third Party Administrators) for the past one year to administer the health insurance claims for cashless policies and drew up a list of the medical expenses that are incurred, which includes room rent, medicines and other miscellaneous expenses. What they feel is that charges are hiked up by hospitals and nursing homes, once they are aware that the customers have cashless hospitalization benefits. Hence an inflated bill is presented to the insurers for a similar expense as compared to another customer who does not have cashless benefit.
Also most of the policyholders with cashless hospitalization benefits are keen on being treated only in the top hospitals. This is why they are so upset and there have been so many objections to the preferred provider network. Smaller and medium scale hospitals have agreed to the rate provided by the insurers but the top hospitals have not, as they feel that they will not be able to provide service at the rate mentioned. Hence the top hospitals, who have not agreed to the rates, feature in the exclusion list of the preferred provider network list.
Is the elimination of cashless benefits for hospitalization detrimental to customers?
This withdrawal of cashless benefit by the four state run insurers has given rise to a huge outcry against public sector insurance companies. However once the initial hiccup is over, and people sit to realize that if hospitals are charging exorbitantly to customers with cashless hospitalization benefits, it is going to be a norm very soon. Hence whether they have insurance or not, the charges are going to be as high as it is now for customers with health insurance. Thus the soft target is going to be the naïve customers who didn’t even realize when and how the medical expenses of hospitalization shot up!
Also, the insurers are planning to design a product to ensure that cashless facility is available at top hospitals for those willing to pay for it. Thus each benefit is going to come with an additional price. Private insurers have not taken this step as they have been able to manage their health insurance claims better and have been able to keep cashless health insurance policies a profitable business.
But as far as state run general insurance companies are concerned, they are only willing to reimburse the claims after it has been settled by the customers and not extend a cashless hospitalization benefit to them anymore.
Our Conclusion
As of now, it has been found that hospitals do charge differently for different set of customers – some with insurance and some without insurance. This practice has resulted in health insurance companies incurring a higher cost thereby affecting their profitability. Health insurance companies provide great assistance to the policyholders and to continue this service, they need to be in sound financial condition. To curb the practice of over-pricing customers having insurance policies, this move to withdraw cashless facility was the need of the hour. In the shorter run, this may negatively impact some customers. But as a result of this bold move, if hospitals and insurance companies reach a common ground, there would soon be proper grading of hospitals and transparency in the pricing of services offered by hospitals.
