Ahmedabad Hospitals and Nursing Homes Association (AHNA) has written to health insurer, Star Health and Allied Insurance, threatening to discontinue the cashless facility unless a host of issues are resolved by October 15.
This drastic move by the association follows a spate of claim rejections by the company, that too after initial approvals. Other issues include, delays in clearing payment dues, charges fixed by the companies that hospitals deem ‘unsustainable’ and even delisting of hospitals from the company’s networks.
Star Health says it has received the communication from AHNA but rules out any disruption of insurance claim payouts for policyholders.
“As of now, there is no imminent discontinuation of cashless facilities at any of the member hospitals of AHNA. We are in talks with member hospitals and are confident of addressing their genuine concerns within the next few days while also clarifying our stand,” a top official of Star Health and Allied Insurance said. The company offers cashless facilities at 14,500 hospitals across India.
Currently there aren’t any signs of the cashless facility being discontinued as insurers and third-party administrators (TPA) say they are striving to meet the goal of 100 percent cashless settlement within the next couple of months as suggested by Insurance Regulatory and Development Authority of India (IRDAI).
Insurance experts say such issues get resolved once hospitals and insurance companies come to an understanding. “Both hospitals and insurance companies are interdependent. Policyholders need insurance coverage for costly procedures. Once a hospital is blacklisted, it doesn’t remain blacklisted forever,” they said.
But Star Health isn’t the only entity in the line of fire. AHNA had, on August 7, 2023, asked the Gujarat Government to clear pending dues worth Rs 650 crore arising from the Mukhyamantri Amrutam Yojana (MAY) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Failing to clear the dues would force hospitals “to stop services to patients under these schemes,” AHNA had said.
In January 2023, the State Anti-Fraud Unit of the government-led health insurance scheme Pradhan Mantri Jan Arogya Yojana (PM-JAY) unearthed irregularities in the functioning of three Surat hospitals and disempanelled them from the network. IRDAI too has seen an 81 percent rise in claims from Gujarat State between 2020 and 2022.
Once empanelled, hospitals agree to offer medical procedures at a set rate to policyholders. When the medical bills are higher than market rates, insurers and third-party administration companies, who act as intermediaries in settling insurance claims, raise an alarm.
Inflated bills lead to faster absorption of sum assured and a higher premium. This vicious cycle is affecting the affordability of insurance for policyholders. Most insurance companies and TPAs are in constant engagement with network hospitals and medical associations to improve procedures and ensure zero disruption in services such as withdrawal of cashless facilities, among other things.
Star Health said it settles all legitimate claims. “Rejection of claims mainly happens when policy conditions are not met, like excluded ailments, claims within waiting period, sub-limits in sum insured, pre-existing diseases, non-disclosure of major ailments and other similar well defined non-payable reasons,” it said.
Insurance companies claim they have been using experience in the medical field and robust artificial intelligence to identify irregularities and monitor claims from flagged hospitals.
According to insurers, deficiencies from hospitals include unnecessary in-patient admissions, high usage of antibiotics, unindicated investigations, differential room tariffs, unauthenticated lab reports, incomplete treatment documents, violation of agreed pricing, prolonged stay at hospitals, inconsistent billing, intervention and distortion by third party aggregators.
“Hospitals indulge in wrong practices of admitting patients when hospitalisation is not required or conducting diagnostic tests where not required. Policyholders increasingly opt for cashless facilities to avoid out-of-pocket expenses and less documentation. Hence, discontinuation of the cashless facility has now become a tool in the armoury of hospitals,” says the Health Insurance Head of a Mumbai-based general insurance company.