Times of India
By Manthan K Mehta

Policyholders Across India Picking Cashless System Of Claiming Insurance Over Reimbursements In Currency
Policyholders preferred the cashless system of claiming health insurance last year to cash reimbursements, making a deeper dent in the coffers of insurance companies, a study recently released by the Insurance Information Bureau (IIB) shows.

In 2009-2010, insurers had to fork out an average of Rs 25,384 per medical claim under the cashless system in comparison to the average of Rs 13,865 paid through cash reimbursements. The difference of 83%, some say, is a clear indication of what policyholders favour.

"More and more people are preferring to go for the cashless form of settlement. Nobody wants to pay from their pockets when such a facility is available," said Sudhir Sarnobat of Medimanage Insurance Broking, adding that that "the expenses involved today are huge".

Another reason for the disparity, Sarnobat explained, is that "these days, policyholders do not want to waste their time and energy on recovering money through the lengthy procedure of reimbursements".

Interestingly, the difference in the two forms of settlement has risen significantly in recent times. In 2008-2009, insurers disbursed an average of Rs 25,736 through the cashless method, although the figure for the reimbursement system stood at Rs 19,033–a disparity of about 35%.

Dr Dinanath Vedpathak, an insurance analyst, said: "The huge jump in the cost of cashless claims in the last one year has justified the introduction of Preferred Provider Network by public sector insurance companies. The figures show that earlier…there were no checks and balances to curb the fraudulent practices adopted by some health service providers."

According to the IIB, the preference for the cashless procedure extends across all 22 types of diseases considered for its study. In the case of arthropathic and mental disorders, the claims settled through the cashless system was more than double of that paid through reimbursements. For 11 other diseases, it is more than 50%.

A senior official from an insurance company said, "Cashless may be the preferred form of settlement, but it comes at a price for the policyholder. Many hospitals have different rates of treatment for cashless and reimbursement insurance policies. If the cost of treatment is higher under the cashless procedure, the consumer has to pay for it in the long term as insurance firms increase the annual premium."

Significantly, the study shows that the highest number of medical claims in 2009-2010 originated from hospitals that fall under Category A; meaning, from hospitals that have more than 25 beds and possess super-specialty facilities. During this period, a total of 47,374 claims were filed through Category A hospitals, for which insurance companies paid Rs 191 crore at an average of Rs 40,504 per claim.

Meanwhile, the average claim doled out for Category D (less than 15 beds with single specialty facility) and B (15-25 beds with multi-specialty facilities) hospitals was higher–Rs 41,602 and Rs 41,491, respectively. The number of claims originating from these two types of hospitals stood at 8,094 and 19,614, respectively.

Note:

• All claims paid in rupees
• Hospital A: More than 25 beds and super-specialty facilities
  B: 15-25 beds and multi-specialty facilities
  C: 15 beds with single or multi-specialty nursing home
  D: Less than 15 beds with a single specialty facility
  E: Single specialty or day-care hospital