Your health insurance claim can be denied for this reason
What's the story
When it comes to health insurance, many policyholders assume that their insurer will cover all hospital expenses after they are admitted. However, most health insurance policies have a "reasonable and customary" clause. This provision allows insurers to only cover costs they deem fair and standard. It acts as a filter for assessing the necessity of treatment, cost, and duration of hospital stay.
Claim denials
How does this clause work?
While most claims are approved without any issues, some are rejected due to this clause. It is the second-most common reason for claim denials, right after pre-existing health conditions. The clause is particularly relevant in cases where the insurer believes that treatment could have been done without hospitalization or if the costs incurred were too high compared to standard rates.
Case studies
Examples of claims being rejected
In one case, a driver suffering from gastroenteritis was admitted to an ICU of a panel hospital. His bill of ₹25,000 was rejected by the insurer who said he could have been treated without hospitalization. In another instance, a surgeon charged ₹15 lakh for coronary artery surgery at a well-known Mumbai hospital while the same procedure costs around ₹5 lakh elsewhere. Many claims were rejected but were ruled payable in full by the Ombudsman as he was a skilled specialist.
Stay duration
How it affects the length of stay
The clause also challenges the length of stay in hospitals. In allopathic hospitals, disagreements are usually about one or two days. But Ayurvedic hospitals often treat low-severity chronic conditions for over a week. This is because patients can come for wellness treatments disguised as medical necessity, leading to higher scrutiny during hospital stays.
Pre-treatment precautions
What can policyholders do?
To minimize the risk of claim rejection, thorough due diligence before treatment is essential. This includes watching out for red flags like hospitals hiking prices or changing treatment protocols when you mention insurance. Asking questions, seeking second opinions, and knowing the expected length of stay are crucial steps. Following an experienced medical professional's advice is also important as courts have consistently ruled in favor of their recommendations.
Insurer responsibilities
What can insurers do?
Insurers also need to improve their claim processes. They could provide a list of empaneled hospitals where claims are paid without dispute, given the absence of regulated hospital pricing or protocols in India. Hospitals and insurers can also agree on package costs instead of day-based billing, which would eliminate incentives for unnecessary extensions. This would make the process more transparent and fair for policyholders.