Avoid reimbursement claims to reduce stress during hospitalisation

Check the hospital's network status before admission and complete pre-authorisation on time

A recent survey by Policybazaar found that cashless claims offer health insurance customers a better experience than reimbursement claims. The survey covered 2,228 customers across metros and Tier-II and Tier-III cities who underwent hospitalisation themselves or attended to family members, and then filed a health insurance claim between August 2024 and September 2025.

 

Why cashless works better

 

Cashless claims are simpler and more seamless. The insurer settles the hospital bill directly, so the customer does not have to pay from their own pocket. “This reduces the need to arrange a large sum during hospitalisation,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan.

 

Cashless treatment is available at the insurer’s network hospitals. These hospitals work with negotiated package rates and have a dedicated insurance or third-party administrator (TPA) desk. The insurance or TPA desk liaises with the insurer on the patient’s behalf. “This coordination makes authorisation faster,” says Arora.

 

In a cashless claim, the TPA desk and nursing station help submit the documents. “The customer does not feel the burden of documentation,” says Amit Chhabra, chief business officer, Policybazaar. Cashless claims, therefore, require less personal effort at a difficult time.

 

When reimbursement becomes necessary

 

Customers usually file reimbursement claims when the hospital is not part of the insurer’s cashless network. This situation is becoming rare because most insurers have about 15,000–20,000 hospitals in their cashless networks. “Some small hospitals in far-flung areas may still remain outside the cashless network,” says Chhabra.

 

A medical emergency may also force the customer to go to the nearest hospital. “In such a situation, the customer may not have time to check whether the hospital is in the insurer’s network,” says Arora.

 

Some patients also continue with a doctor or hospital they have trusted for years. That doctor or hospital may not be part of the insurance network. Sometimes patients go to a reputed hospital that may not have a cashless tie-up with their insurer.

 

Many policyholders do not know which hospitals are empanelled with their insurer. “Some assume that every hospital offers cashless treatment and discover the gap only at admission,” says Arora.

 

Cashless approval typically takes about three to four hours at the time of discharge. “Some customers do not want to wait and leave the hospital. They then file a reimbursement claim later,” says Chhabra.

 

Why insurers deny cashless claims

 

Insurers may deny a cashless claim if they suspect fraud. “Fraud may involve a customer who is not actually hospitalised,” says Chhabra.

 

Non-disclosure is another common reason. This means the customer did not disclose an existing medical condition while buying the policy.

 

“A pre-existing condition that still falls within the policy waiting period can also lead to denial,” says Arora.

 

Sometimes, the issue is procedural rather than a hard denial. “Authorisation may remain pending if the insurer needs additional medical records or clarification from the treating doctor,” says Arora.

 

Do not skip cashless for convenience

 

Some customers avoid cashless claims for convenience, especially if the claim is small. This approach is not advisable. “Skipping cashless to save a few hours at discharge can create a bigger problem later,” says Arora.

 

Downsides of reimbursement

 

Cashless settlements are based on package rates already negotiated with the hospital. “If the patient pays out of pocket, the hospital may charge its standard billing rate. This rate is usually higher than the negotiated rate,” says Arora.

 

In reimbursement claims, customers have to pay out of their own pocket. These claims typically involve a non-network hospital, where pre-agreed arrangements with insurers usually do not exist. “The insurer may check every bill line by line and ask for additional medical records. This can stretch the processing time,” says Arora.

 

Insurers may undertake more investigation in reimbursement claims because they lack standardised billing. The insurer has to independently verify that the charges are reasonable. It also has to verify that the treatment was medically necessary. Reimbursement claims, therefore, involve a more detailed review than cashless claims.

 

“Reimbursement claims can lead to partial settlement or repudiation if documentation does not fully support the claim,” says Arora.

 

Documentation burden is higher

 

In cashless claims, the hospital’s insurance desk coordinates with the insurer. The insurer, hospital and TPA desk take on more of the burden. “In reimbursement claims, the customer undertakes more of the effort,” says Chhabra.

 

The document requirement may be the same for reimbursement and cashless claims, but the difference lies in who submits the documents. “In reimbursement claims, the customer has to organise and submit the documents and fill the forms,” says Chhabra.

 

The customer has to gather every bill, prescription, investigation report, discharge summary and payment receipt.

 

Delays can hurt finances

 

Most reimbursement claims do not take much time when documentation is in order. On average, reimbursement turnaround time is usually not more than seven to ten days. The standard timeline for settling a reimbursement claim is 30 days.

 

The settlement window extends when the insurer asks for a missing document. If the insurer raises a medical or policy query, the reimbursement process can drag on. “The policyholder may have to go back and forth between the hospital and the insurer to gather additional information, causing delay,” says Arora.

 

Reimbursement claims also take longer when consumers delay their responses or when an inspection is carried out.

 

Every extra day the claim stays open means the policyholder carries the hospitalisation cost. “The strain becomes serious when money is arranged through a credit card or a personal loan. Credit card dues that are not cleared attract high interest from the next billing cycle. A personal loan adds an equated monthly instalment (EMI) burden on top of regular monthly expenses,” says Arora. If claim settlement gets delayed by weeks, the interest cost keeps accumulating.

 

How to avoid reimbursement

 

Customers should apply for cashless approval well in time. “For planned hospitalisation, they should apply for cashless approval at least a day or two before treatment,” says Kapil Mehta, co-founder, SecureNow Insurance Broker.

 

Some insurers may set a tighter internal intimation window. “Customers should confirm the exact intimation window for their policy,” says Saurabh Vijayvergia, founder and CEO, CoverSure. They should call the insurer as soon as hospitalisation is confirmed. Delayed intimation is one of the top reasons cashless requests get stuck and turn into reimbursement claims.

 

Customers should respond quickly to pre-authorisation queries. A slow response to a routine query can reset the approval clock or cause approval to lapse. “If approval lapses, the customer may have to pay upfront and claim later,” says Vijayvergia.

 

Customers should check the hospital’s cashless status right before admission. “They should not rely on network status checked months earlier because the insurer’s network can change,” says Vijayvergia.

 

The doctor should clearly explain why hospitalisation was necessary in the cashless claim application.

 

“Before discharge, customers should ensure the hospital puts all papers together and sends them on time,” says Mehta. If the insurer is under time pressure, it is more likely to ask the customer to file a reimbursement claim.