Policyholders Often Fail to Realize Value of In-Principle Approval from Insurers, Leaving Them Vulnerable to Unexpected Claim Shocks.

Health Insurance Pre-Approval: A Crucial Step to Minimize Out-of-Pocket Expenses

Policyholders who fail to obtain pre-approval from their health insurance providers may end up paying more than expected for medical procedures. A recent case study highlights the importance of obtaining pre-approval before undergoing a knee replacement surgery.

Key Figures:

• Rs 5 lakh: The health insurance cover
• Rs 3.5 lakh: The hospital bill for the knee replacement surgery
• Rs 70,000: The out-of-pocket expense incurred by the policyholder without pre-approval

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Pre-Approval: A Game-Changer

Obtaining pre-approval from the insurer can significantly reduce out-of-pocket expenses. In the case of the knee replacement surgery, with pre-approval, the insurer settled Rs 3,35,000 cashless at discharge, leaving the policyholder to pay only Rs 15,000. Without pre-approval, the policyholder had to pay the full Rs 3.5 lakh upfront and incurred additional costs after discharge.

The Role of "Reasonable and Customary Charges"

The main issue lies in the clause "reasonable and customary charges," which is commonly included in most health insurance policies. This clause prevents hospitals from overcharging and stops collusion between patients and insurers. However, the same party that determines what is reasonable and customary is the one paying the claim, which is the insurer.

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In-Principle Hospitalisation: A Smoother Cashless Admission

In-principle hospitalisation is a conditional benefit that provides peace of mind before hospital admission. By reviewing the policyholder's case, the insurer confirms coverage eligibility and enables a smoother, stress-free cashless admission.

Steps to Obtain In-Principle Approval

1. Submit a pre-authorised request to the TPA, including the doctor's advice, investigation reports, and proposed treatment plan, at least 72 hours before admission.
2. The TPA reviews coverage, sub-limits, room entitlement, and waiting periods, then issues an approval letter with an authorised amount.
3. The hospital settles this amount directly with the insurer at the time of the patient's discharge.

Mistakes to Avoid

1. Getting treated at a hospital that is not part of the insurer's network.
2. Failing to inform the insurer prior to a planned hospitalisation.
3. Being unaware of the waiting period, especially in cases of pre-existing conditions.
4. Incomplete documents, such as reports and prescriptions.
5. Ignorance of room rent limits, which may result in additional expenses.