IRDAI Prefers Cashless Mode in Health Insurance

The Insurance Regulatory and Development Authority of India (IRDAI), the apex body for insurance in India, has expressed its preference for cashless health insurance as opposed to the reimbursement mode. The IRDAI aims to make the claim settlement process more convenient and efficient for policyholders.

In this blog, we will delve into the benefits of cashless health insurance and also discuss the challenges faced in implementing this mode of transaction and how to overcome them. Let’s explore the topic in-depth to understand why the IRDAI prefers a cashless mode in health insurance.

Modes of Health Insurance Claim Settlement

Health insurance is a crucial financial instrument that helps individuals manage the financial burden of medical expenses. When policyholders incur medical expenses, they can file a claim with their health insurance provider to get reimbursed for the costs. There are two primary modes of health insurance claim settlement: cashless and reimbursement.

The cashless mode of claim settlement refers to the process in which a policyholder can avail of medical treatment at a network hospital without having to pay for the expenses upfront. The insurance provider directly clears the bill with the hospital. The policyholder needs to inform the insurance company beforehand and provide their health insurance policy details. Cashless claim settlement is convenient as it eliminates the need for the policyholder to pay for the medical expenses out of pocket.

On the other hand, the reimbursement mode of claim settlement involves the policyholder paying for the medical expenses upfront and subsequently filing a claim with the insurance company for reimbursement. The policyholder needs to submit all relevant medical bills, receipts, and documents as proof of the expenses incurred.

The IRDAI has encouraged the use of cashless health insurance as it is a more convenient and efficient mode of claim settlement. The cashless mode ensures that the policyholder does not face any financial burden while availing of medical treatment and also reduces the hassle of submitting and verifying reimbursement claims. However, the availability of cashless claim settlement is dependent on the network hospitals that have a tie-up with the insurance provider.

Advantages and Issues of Cashless Health Insurance

The IRDAI has been promoting the use of the cashless mode in health insurance. Here are the advantages and issues with the cashless mode of health insurance claim settlement:

Advantages of Cashless Health Insurance:

  1. Convenience: Cashless mode of claim settlement is more convenient than reimbursement as it eliminates the need for the policyholder to pay upfront for the treatment expenses and then wait for reimbursement.
  • Saves time: In cashless mode, the hospital settles the claim directly with the insurance company, which saves a lot of time in terms of documentation and follow-up with the insurer.
  • Network hospitals: Most insurance companies have a network of hospitals where the cashless facility is available. This allows policyholders to choose from a wide range of hospitals and avail of quality healthcare without worrying about the payment.
  • Better hospitalisation experience: Cashless facility ensures that the policyholder can focus on the treatment and recovery of the patient without worrying about the financial burden.
  • Emergencies: In an emergency, the cashless facility can be a lifesaver as it ensures immediate treatment without any delay in arranging funds.

Issues with Cashless Health Insurance:

  1. Limited network hospitals: Cashless facility is available only at network hospitals, which may limit the choice of hospitals for the policyholder.
  • Quality of healthcare: Policyholders may have to compromise on the quality of healthcare if they choose a network hospital with a lower quality of service.
  • Pre-authorisation: In cashless mode, you will require pre-authorisation for treatment exceeding a certain amount. This can cause delays and may also result in the rejection of the claim if not done properly.
  • Rejection of claim: Cashless claim can be rejected by the insurer if the policyholder does not follow the procedures and guidelines set by the insurer.

While cashless health insurance has advantages in terms of convenience and time-saving, policyholders must also be aware of its limitations and issues before making a decision. It is important to carefully review the terms and conditions of the insurance policy and choose a network hospital with quality healthcare and a good reputation.

The Way Forward

The IRDAI has made a commendable effort to promote the cashless mode of settlement in health insurance. While investing in healthcare policies has primarily attracted attention because of tax benefits in health insurance, the promotion of cashless health insurance could further improve the penetration of health insurance. This move will undoubtedly benefit policyholders, insurers, and healthcare providers. However, some areas still need improvement to make cashless health insurance more efficient and accessible to everyone. Here are some possible ways forward:

  • IRDAI should continue encouraging insurers to increase their network of cashless hospitals and healthcare providers.
  • Insurance companies should make it easier for policyholders to understand the cashless claim process by providing clear and concise information on their websites and through customer service channels.
  • Incentives to healthcare providers will encourage them to participate in the cashless network by offering better rates to insurers and patients.
  • IRDAI should also ensure strict regulations and guidelines to prevent fraudulent practices and ensure transparency in the cashless claim settlement process.