'Cashless everywhere' may cut claims cost, say insurance companies

The ‘Cashless Everywhere’ initiative in non-empanelled hospitals is likely to reduce the claim costs of insurance companies as it will help reduce fraud and provide seamless medical assistance to customers, insurance officials said.

The General Insurance Council on Wednesday launched the ‘Cashless Everywhere’ initiative aimed at making cashless treatment available for policyholders even in non-empanelled hospitals registered under the Clinical Establishment Act.

“Apart from being a great customer convenience and experience-centric initiative, this will also aid in better cost management. Reimbursement claims witness much higher incidents of fraud and abuse as compared to cashless claims owing to early intimation, direct engagement with the hospital by the insurer,” said Bhabatosh Mishra, Director of Claims, Underwriting and Product at Niva Bupa.

“Through this initiative, frauds and abuses are likely to reduce resulting in better claim cost management,” Mishra noted.

The patients will now have access to choose from over 40,000 empanelled hospitals in India, instead of the few thousands that were available earlier.

According to officials, 63 per cent of the policyholders opt for cashless facility. The move is to bring the remaining 37 per cent under their ambit.

“The ‘Cashless Everywhere’ initiative will lead to an increased collaboration of insurers and hospital networks to offer hassle-free medical assistance to the insured customers, during hospitalisation,” said Parthanil Ghosh, President – Retail Business, HDFC ERGO General Insurance.

“Apart from the claims option, all other modalities of taking up the health insurance including the parameters of premium calculation, will remain the same, and hence no change in the premium amount is anticipated,” Ghosh explained.

The facility saves policyholders from the paperwork associated with the reimbursement process for the insured. Industry stalwarts reckoned the probability of fraud through the reimbursement mode tends to be slightly higher than through the cashless facility.

“ICICI Lombard launched the 'Cashless Everywhere' facility in March 2023 and when we looked at the average claims cost of the treatment done in a network hospital, vis-à-vis an average cost of claims done in a non-network hospital under the reimbursement mode, the probability of frauds through the reimbursement mode was slightly higher,” Gopal Balachandran, CFO & CRO, ICICI Lombard, said.

On the benefits, Balachandran added: “It is more convenient for the customer. Second, it helps us work with the hospital and make sure unwarranted procedures are not necessarily put on to the customer without compromising on the quality of healthcare. Since the process is more streamlined, the probability of higher incidences of fraud will see a reduction.”

Since the insurers are not bracing for a cost revision, the premiums are also not likely to see an impact.

“All other modalities of taking up the health insurance including the parameters of premium calculation will remain the same, and hence no change is anticipated in the premium amount,” HDFC Ergo’s Ghosh added.

According to the latest data released by the General Insurance Council, the health insurance premium during the April-December 2023 period rose by 21.36 per cent to touch Rs 79,559.39 crore from Rs 65,557.47 crore in the year-ago period.