The clause that can derail health insurance claims
Health insurance policy documents often include a reasonable and customary clause, which allows insurers to pay only for costs that they consider fair and standard. What should patients to minimize rejections?
Most insurance policyholders believe that once they are admitted to a hospital, the insurer will pay the bills. However, health insurance policy documents often include a “reasonable and customary" clause, which allows insurers to pay only for costs that they consider fair and standard.
Insurers can assess whether a treatment, its cost and the number of days spent in hospital were actually necessary.
Most claims pass smoothly through these filters, but for those that are rejected, the clause proves to be a primary reason, second only to declines due to pre-existing health conditions.
Patient's pain
Take the case of this driver living in a tier-two town who had gastroenteritis. The local hospital, which was on the insurer’s panel, admitted him to the intensive care unit (ICU). He was kept for over a day, and administered antibiotics and other medicines intravenously. The insurer rejected his bill for ₹25,000, saying the patient could have been treated without hospitalisation. The insurer was probably right.
Doctors agree it could have been treated without hospitalisation. Yet, when you are in acute pain and told to get admitted, you rarely argue. Leaving “against medical advice" is also frightening. In this difference of opinion, it is the patient who bears the brunt of an unpaid claim.
In another case, a surgeon at a well-known hospital in Mumbai charged ₹15 lakhs for a coronary artery surgery, while the same would have cost about ₹5 lakhs in other hospitals. Many rejected claims of this surgeon reached the Ombudsman, which ruled that the claim was payable in full by the insurer because the surgeon was a skilled specialist.
Ideally, these costs, incurred in a panel hospital, should not have been questioned. If the insurer felt that surgical costs were high, they could have excluded that hospital from their panel.
The length of stay in a hospital is another point challenged under the clause. In allopathic hospitals, the disagreement is often about one or two days, and every extra day adds cost. But, patients rarely choose to linger in a hospital unless advised.
Ayurvedic hospitals are different, though. Here, hospitalisation is for low-severity chronic conditions and can often last over a week. Patients can come for wellness and feel-good treatments disguised as medical necessity; therefore, scrutiny during hospital stays is considerably higher and justified.
Due diligence
You can reduce the risk of rejection by conducting thorough due diligence before undergoing treatment. The red flags to watch for are a hospital increasing prices or modifying treatment protocols when you share that you have insurance. Ask questions, get second opinions and find out the expected length of stay. Most importantly, follow the advice of an experienced medical professional. The courts have consistently taken the view that the medical professional’s recommendation is to be followed.
Insurers must also step up. With no regulated hospital pricing or protocols in India, insurers could offer a list of empanelled hospitals where claims are paid without dispute. Hospitals and insurers can jointly agree to package costs rather than billing linked to number of days in the hospital, removing incentives for unnecessary extensions.
Doctors can also help by ensuring that discharge summaries and medical justifications are clear and accurate. Often, this justification is left to an administrative person with little medical experience.
I am still dealing with a case where a discharge summary by a junior doctor said the patient had consumed alcohol, despite the hospital’s own test showing none. The ₹30 lakh claim is now in the courts due to a poorly written discharge note.
In an ideal world, there would be no subjectivity in applying this clause because hospital protocols and costs would be transparent and regulated. Until that utopia is achieved, the next best thing is to ask yourself: would I still opt for this treatment if I were paying the bill? That question alone can keep your care within the boundaries of what insurers call reasonable.
Kapil Mehta is co-founder, SecureNow Insurance Broker. Views are personal.
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