The Insurance Regulatory and Development Authority of India (IRDAI) is set to roll out a 100 per cent cashless health insurance claim settlement system nationwide. IRDAI Chairman Debasish Panda emphasised the regulator’s commitment to this effort during the global fintech festival in September 2023. Currently, insurers deduct a certain percentage from the total billing for consumables and other charges, so it is not a 100 per cent cashless system.
Applauding IRDAI’s efforts to promote seamless healthcare access for people, Anand Pejawar, whole-time director of SBI General Insurance, says, “This move will boost health insurance penetration in India and increase confidence in purchasing a policy. It offers much-needed flexibility to consumers and significantly reduces the financial burden of policyholders.”
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Cashless System: Current Practice & What Will Change?
Regarding settling health insurance claims, there are two methods: cashless and reimbursement. In cashless settlement, the insurance company directly pays the hospital, eliminating the need for the insured to pay upfront. However, this option is available only in specific network hospitals having agreements with insurers.
Each health insurance company currently partners with various hospitals to offer cashless claim settlements. These network hospitals are listed on the insurance company's website, and policyholders need to ensure that their preferred healthcare facilities are part of the network. This applies to both planned and emergency hospitalizations.
While most network hospitals are in major cities and metropolitan areas, tier II and rural regions have comparatively less cashless arrangements. When opting for a cashless policy, potential policyholders should verify whether the healthcare facilities nearby are part of a specific insurer's network before purchasing a policy. So, IRDAI is also working closely with the Insurance Council and the National Health Authority to onboard more hospitals onto the National Health Exchange for this, Panda said during the event.
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Further, insurers deduct a certain percentage from the total billing for consumables and other charges, so the system is not 100 per cent cashless.
While the IRDAI chairman did not specify a timeline for its implementation, an Economic Times report said the General Insurance Council's secretary-general, Inderjeet Singh, has urged the committee on “Common Empanelment Process of Hospitals and 100% Cashless” to provide weekly updates so that nationwide cashless settlement can be implemented by the end of October.
