Medical Insurance companies scrap Cashless Hospitalisation: A Very Good Move: Finance Trading Times

Medical Insurance companies scrap Cashless Hospitalisation: A Very Good Move

The recent news has caused a lot of problems for the patients - The news is that several PSU or Public Sector Insurance Companies have discontinued the Cashless Hospitalisation schemes for many of the so called "elite" hospitals. Although it is a nightmare for the patients who had bought these Cashless Hospitalisation policies for medical expenses, but given the way it was hurting the profits of Insurance companies and making it a huge profitable business for the hospitals & doctors, I am of the opinion that it is a very good move.
Everyone in this country is aware how the hospitals and medical system works. It appears that the hospitals are becoming cash generating machines especially for the patients who are having insurance. Now, this is not a one sided view, but let me express a few points here:

1) Over-Charging by the Hospitals:
There have been several cases reported about the hospitals over-charging the patients just because the patients are covered under cashless insurance scheme. This is a typical scenario - go to any good private hospital, after asking your name and ailment, the next question to be asked by the doctor or the hospital staff will be "Are your having Medical Insurance". The moment it is answered yes, the next question might be "How much is the limit". Even if the second question is not asked, the fact is that hospital charges are increased significantly just because the patient is covered under insurance. Cashless Hospitalisation
2) No calrity on Hospital Rates:
It is another known fact - the hospitals do NOT have any standard rate list for hospitalization. That leaves them full freedom to quote and charge anything and everything. No one can verify the standard rates. It has been observed that for the same diseases or surgery, the hospitals are charging different rates to different patients - especially the ones who are having insurance are charged a lot.

3) Other Charges grow in proportion:
If you happen to be covered under the Cashless Insurance scheme, the other charges will also grow proportionately.
If you are admitted to a hospital for some hospitalisation need, the other charges like doctor's visit in the morning and evening will be charged at a higher rate if you are covered under the Cashless Insurance scheme, as compared to other normal patients who are not covered under the Cashless Insurance scheme

4) Patients end up paying over and above the insurnace amount:
Take this example - a lady goes for maternity hospitalization. The same delivery will cost her 25-30K if the amount is paid from her pocket. However, if it is known that she is covered under insurance, the bill might as well excceed 50-60K.
Where do these extra charges come from? They come from the "Extra" Treatment given to these insured patients. There will be 2-3 doctors visitng her throughout the day and each will charge a good amount for their visit. There will be extra treatments given. The room charges will be higher and so on.
What may not be known by the patient is that even though she has a total cover of 4 Lakh, but the amount for maternity claim is restricted to 50K. Hence, if the hospital charges a total of 60K, she will be required to pay that extra 10K from her own pocket.
Who looses in all this - both the insurance company as well as the patient. Who wins - the hospital and the doctors.

But in case this same lady does not reveal that she is having insurance and goes for a normal hospitalization, the charges might be significantly less. It may be covered for as less 25-30K. In this case, she first spends the money from her own pocket and then claims for a reimbursement from insurance. Both of them win.

Although I understand the plight of the patients who are getting affected because of this sudden move by the insurance companies who made this decision all of a sudden without giving any advanced notice to the insured, it will streamline things in the long run. A better approach by the insurance companies to ban this cashless hospitalization could have been giving a 1 month advance notice to the insured, as now the patients who are affected by this have to arrange for hospital charges on their own.
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1 Comment: Post your Comments

Unknown said...(on 7 December 2010 at 17:10 )  

Hi, Thanks for the nice article...
Although I support the move by insurance companies regarding the removal of certain hospitals (it has been sorted out more or less now), but I've been at the receiving end of the other side as well. My kid was admitted in a hospital for an ailment. he was in the hospital for nearly 4 days. Total bill - 5500.
As the hospital was not covered in cashless scheme, I had to claim for reimbursement.
The insurance company made me run in circles for over two weeks... get this doc... get that doc... they made me go back and forth three or four times. only when I shouted at the officers sitting there, that my claim was processed.
It was a nightmare to say the least.

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