There are many who believe that cashless hospitalization facility available with medical insurance policies can be misused by hospitals and that it is better to pay cash and the reimburse it via the policy later. A discussion on should I use cashless hospitalization facility or pay and then reimburse?
What does misuse mean? Attempting to exhaust the sum insured limit without any need for it. Recommending more tests than necessary, an extended in an ICU, recommending an expensive room etc. Someone else maybe paying the charges, but the hardship is on the patient and those who take care of them.
I have personally witnessed this happen and have heard stories from hospital staff – I have spent several days (weeks actually) in a hospital (mostly as a patient attender) so the staff gets friendly with a familiar face.
Such practices can occur with any insurance policy, not just corporate group cover. However, the treating doctor is still the boss when it comes to determining hospitalization expenses and insurers in general, do not mistrust them too much – from my experience of course (have seen claims which would normally fall under policy exclusions honoured because of the way in which it was reported by the treating doctor). If there is a significant difference between the insurer’s estimate for a treatment and the actual bill, there will be trouble during the claim process. This is the reason that one should try and get admission in a preferred network hospital (GIPSA network for PSU insurers).
For a young earner, there is no choice. They may not have enough net worth to cover a foreseen/unforeseen hospitalization expense and therefore will have to opt for the cashless facility. This discussion applies only to those who do not mind spending anywhere between 50K to 1-2 Lakhs for a hospitalization and the claim it via reimbursement.
If I have a liquid net worth of 10 lakhs, on the face of it does not look difficult to pay the above amount and claim it later. However, cashless offers some conveniences (as well as drawbacks) which one could consider.
I have processed two cashless and one reimbursement claims so far and if I can control certain aspects of the hospitalization, would prefer cashless.
In the case of emergencies, we do not have control over the two elements – the hospital admitted to and the treating doctor. If these two are unknowns then it is better to pay and then claim later (if possible).
One of the key lessons from interacting with the medical community is the importance of having a family physician. She/he could refer us to a specialist in the case of planned hospitalization. A referral reduces the chances of cashless misuse. It is always better to request the family physician to call on us each day in the hospital. Even if this is not covered by the policy, it can possibly prevent unnecessary tests. Naturally, all this is possible only a hospital that is eligible for cashless.
Pros of cashless
All we need while getting admitted is the policy number. The insurance dept of the hospital will take the trouble of getting consent forms signed by the treating doctor and inform the insurer within the prescribed time.
Once the cashless application is accepted, the onus of arranging continuous cash for treatment disappears. We still need cash to pay for non-medical expenses (10-15% of total bill) while getting discharged.
There is no need to run around for medicines at ungodly hours. The nurses will arrange for medicines from the pharmacy and we need not/should not get them, unlike a reimbursement claim. This is a big help. Especially if the attender is not worldly wise. Also, an employed person can safely leave a paid attender to tend to the patient during office hours.
Cons of Cashless
Getting discharged can be a pain. The discharge summary should be sent to the insurer and they will have to approve it. This can cause delays and there maybe trouble in getting the full amount approved. Again the preferred network matters here.
Pros of reimbursement Claims
Getting admitted is easy! All you need is cash!
You can witness first hand your money going down the drain! (is that a pro or a con?!)
Can have some control over the situation in the case of unknown doctors/hospital.
Cons of reimbursement claims
One must be aware of reimbursement rules! The hospital must be intimated upon admission and there is a time limit (~15 days) within which the claim documents with bills have to be sent.
The paperwork for extended hospital stays can be a pain. If you are someone who will not visit a CAMs or AMC office for in-person verification because it is too much work, stick to cashless.
Note: Cashless is a privilege and not a right. A cashless application can be denied at any time. So a robust emergency fund which is liquid and much fatter than the usual six months expenses worth is essential.