10 Reasons for Disputes in A Health Insurance Claim

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Dhruv, after going through a lot of pains and processes, finally gets himself covered under health insurance. He picks several features and benefits and customises the policy that’s just right for him. He’s confident that he has bought a really good plan, with an adequate cover - so that he doesn’t have to worry in case he gets hospitalised in the future.

Now, a few months after he buys the health plan, Dhruv undergoes hospitalisation for a minor surgery. But he’s not really bothered about the expenses because he thinks his health insurance has got him covered. On the day of discharge, as he approaches the hospital billing desk, to settle any minor payments that might not be covered, Dhruv is slapped with a heavy bill. The insurer did not pay a majority of the hospitalisation expenses. And, he had to foot those expenses out of his pocket.

Insurance often has a negative connotation because of aspects like deductions, incessant paperwork, claim rejection, and delayed claim settlements. Your insurance company will examine your case to the smallest detail to protect itself from shelling out a huge amount. So, to be stress-free when it comes to the claims process and to actually receive your claim amount - you should be aware of the reasons why your claim can be disputed.

In this article, let’s take a look at 10 such reasons - and find out how you can smartly avoid them.

Let’s dive right in!

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10 Reasons For Disputes In Health Insurance Claim

  • Room Rent Capping

    Many health insurance plans with a sum insured of less than Rs. 5 Lakhs come with room rent limits. These room rent limits do not just affect the room’s cost but your entire hospital bill. How?

    First, you need to understand how most hospitals in India do their billing. Hospitals in India use a price discrimination strategy in their tariff system. Here the charges for all expenses (except MRP products) incurred in the hospital vary - based on the room you choose.

    For instance, a hospital can charge Rs. 200 for an X-Ray for a patient admitted in a twin sharing room, and Rs. 400 for another patient admitted in a private room. Similarly doctor visit charges can be say Rs. 100 for the general ward, and Rs. 1000 in the super deluxe room. One can look at this as a form of cross-subsidy between people with different income levels, that ensures everyone can afford to pay hospital bills.

    Here is an example of tariff from a hospital:

    If you see the same surgery in the same hospital, it can cost differently.

Code Surgery : General PR SPR NSB
GES001 APPENDICECTOMY 12000 12000 7200
GES004 GASTRECTOMY 17000 13600 10200
GES006 GASTROJEJNOSTOMY 14000 11200 8400
GES008 GASTROSTOMY 10000 8000 6000
GES012 HEMICOLECTOMY 18000 14400 10800
GES016 SPLENECTOMY 16000 12800 9600
GES020 LYMPH NODE BIOPSY 5000 4000 3000

Let’s say you pick a hospital room beyond the limit specified in your policy. To factor this differential pricing adopted by hospitals, insurers apply proportionate deductions on the claim amount, and pay as per the tariff defined corresponding to your eligibility.

For instance, Kat is covered under a health insurance plan of Rs. 3,00,000. She is eligible for a per-day room rent of Rs. 3000. A few months later, she undergoes one-day hospitalisation for kidney surgery. Let’s say she opts for a room with a rent of Rs. 6000. And, her total hospital bill amounts to Rs. 50,000.

In this case, the insurer will make two deductions:

  • Deduction 1

    Difference in the room rent = Room rent availed - Room rent eligible

    = 6000 - 3000

    = Rs. 3000

  • Deduction 2

    Proportionate deduction for associated medical costs.

    Proportionate deduction = (Room rent eligible / Room rent availed) * 100

    Proportionate deduction = (3000 /6000) * 100

    = 0.5 * 100

    = 50%

    So, the insurer will make two deductions:

    Excess room rent claimed over eligibility of Rs. 3000 X 1 day she was admitted.

    50% proportionate deduction on all associated medical costs

    Let’s assume Kat incurs associated medical expenses of Rs. 40,000.

    So, 50% of Rs. 40,000 = Rs. 20,000

  • Total claim payable = Rs. 27,000

    (Hospital bill Rs. 50,000 - Additional room rent charges Rs. 3000 - Proportionate deduction Rs. 20,000)

    Kat has to bear a huge deduction of Rs. 23,000 from her own pocket on a Rs. 50,000 hospital bill, despite holding a Rs. 3 Lakh cover.

    • What should you do?

Go through the policy wordings or brochure and check if your policy has a room rent limit.

If it does, you must plan to port to a policy without any limit - two months before your policy is up for renewal.

  • Medically Necessary Hospitalisation

    Health insurance will only cover you for those hospitalisation expenses that are ‘medically necessary’. A hospitalisation or treatment is said to be medically necessary if it passes the following 4 tests

    Is required for the medical management of the illness or injury suffered.

    Includes the level of care necessary to provide safe, adequate, appropriate medical care in scope, duration, and intensity.

    Has been recommended by a medical practitioner, who is unrelated to you.

    Conforms to the professional standards widely accepted in international medical practice or by the medical community in India.

If the above conditions are not fulfilled, the insurer may reject your claim on the grounds that the hospitalisation is not ‘medically necessary’.

For instance, if Manvi is suddenly feeling restless and uneasy, and visits the hospital. Now, let’s say all required medical tests and checks are carried out by the medical professionals in the hospital, and there is nothing wrong observed. Doctors ask Manvi to go home, take the day off and rest. However, Manvi's family requests the doctors at the hospital that she be admitted for one day, just for observation and rest. If Manvi is admitted without any medical protocols requiring her admission - the hospital bill or any other expenses will not be covered under health insurance.

  • What should you do?

Ensure that the hospitalisation or treatment is recommended by your treating doctor in writing, before you take admission.

Be aware that if you are getting hospitalised outside medical protocols, the expenses for the treatment may not be covered under health insurance.

  • No Active Treatment

    If you undergo hospitalisation only for diagnostic or monitoring purposes, it will not be covered by health insurance. So, if you get hospitalised, and there is no ‘active treatment’ carried out, the insurance company won’t pay for the hospitalisation expenses.

    Say, 89 year old Mr. Khan is admitted to the hospital for chest pain. After several tests conducted over a span of several days, there is an unfortunate detection of lung cancer. However, given the age, the doctors at the hospital do not suggest Mr. Khan to undergo any treatment, as his body may not be able to bear the impact of chemotherapy or similar treatment.

    Doctors recommend that Mr. Khan rest at home, with some basic medication. In this scenario, the hospital may raise a large bill for the medical tests and admission carried out at the hospital. However, the insurer in all probability will reject any claim for this hospitalisation, given that there was no active treatment carried out while the insured person was hospitalised - only admission and medical tests.

    • What should you do?

Always know what you’re getting admitted for, and whether the treatment can be carried out at home. For instance, treatment that requires only observation and oral medication.

If you are worried about a medical condition and are hospitalised just for monitoring purposes, you should be aware that you may have to pay for the admission yourself.

  • Overcharging By The Hospitals

    In India, hospitals are not regulated for their billing practices - they are known to charge differently for the same treatment, from different people - sometimes beyond the tariff or accepted practices.

    Insurers can protect themselves from unreasonable hospital billing with the help of the Reasonable and Customary Clause.

    Basically, insurers look at the normal or acceptable range of payment for a specific treatment that all the similar-grade hospitals in a given area are charging. They then decide the reasonable and customary charges for that treatment.

    So, if you get admitted to a hospital that charges more than what other hospitals in that same geographical area are charging, the insurer will only reimburse for charges that are reasonable and customary.

    Say Mr. Fonseca undergoes gall bladder surgery at a premium hospital in South Delhi. The hospital decides to charge Rs. 1 Lakh for the treatment. Now, similar grade premium hospitals in South Delhi are known to charge only Rs. 60,000 for a gallbladder surgery with the same complexity. In this case, insurers may apply the Reasonable and Customary Charges clause, and pay out Rs. 60,000 instead of Rs. 1 Lakh charged by the hospital and claimed by you.

  • What should you do?

In case of a planned treatment, get an estimate from the hospital beforehand - and compare the costs with a similar grade hospital in the area. If you find out that the hospital is overcharging, you can -

Search for an alternate hospital that charges reasonably and get treated there.

If you get treated in that hospital then be aware that you will need to pay the excessive billing from your pocket.

  • Specific Disease Waiting Period

You might know that insurers apply a waiting period of 2 to 4 years for pre-existing diseases. What you might not be aware of, however, is that insurers also apply a waiting period for specific diseases or treatments. This waiting period is applied even if you don’t have those diseases while buying the policy.

For instance, some insurers may apply a 2-year waiting period for treatments for slipped discs, piles, sinusitis, etc. And, a 4-year waiting period for knee replacement surgery, etc.

  • When can your claim get rejected?

If your health insurance policy has not completed the waiting period specified, then, the insurer will not pay the claim for such diseases/treatments.

In case you upgrade your health plan, the upgrade amount will not cover these specified diseases/treatments for the waiting period.

  • What should you do?

Go to the insurer’s website and download the policy wordings of the health insurance product you’re planning to buy.

Look for ‘Specified disease/procedure waiting period - Code- Excl02’ and understand the terms laid down in the policy wordings.

  • Changes In Policy Conditions

    Insurance companies can change policy benefits, conditions, and pricing subject to the IRDAI’s approval. They can also stop your health insurance plan & migrate you to another plan which has different conditions.

    Every insurance company is required to notify you of any changes in the policy terms three months before the changes take effect.

  • When can your claim get rejected?

To make sure you are aware of all such changes, you should -

Always update your email and postal addresses with the insurer.

Keep track of any emails you get from them.

  • Filling The Proposal Form Wrong

    When you buy a health insurance policy, the insurer agrees to take the risk of a lifetime of hospitalisation expenses. They issue you the policy on the basis of the information you give in the proposal form.

    So, if you provide incorrect details or intentionally hide anything - and the insurer finds out about it later, that could result in unnecessary chaos. They can reject your claim - and even cancel your health insurance policy.

  • When can your claim get rejected?

Fill out the proposal form yourself - even if you’re buying the policy through an agent or a financial advisor.

Do your homework well and give accurate details to the insurer about every disease, surgery, or any major injury that you’ve had in the past.

Provide all details honestly on the proposal form. Do not intentionally try to hide anything.

If you missed informing the insurer about anything, inform them in writing - as soon as you realise this.

  • Details Not Added By The Employer

    In case you’re covered under your company’s health insurance policy, your employer or the HR team may miss adding your family's details on the insurance portal. This can create a lot of difficulties at the time of claim.

  • When can your claim get rejected?

Follow up with your employer until you receive the TPA card for each family member. Once you get them, you can be sure that they are added to the policy.

Verify if all details mentioned on the card such as name, age, contact details, coverage, etc. are correct.

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  • Providing Incorrect Details To The Doctor

    At the time of hospitalisation, the doctor will ask for the patient’s past medical history, medication, allergies, etc. Make sure all these details are provided diligently to the doctor. Because a slight miss or negligence in giving the details can jeopardise the health insurance claim.

    A case paper recording is prepared by the doctors where details related to the patient's past medical history medication, allergies, etc. are included. Additionally, the year since these diseases have been diagnosed is included in the case paper recording too. The hospital will then share these case papers with the insurance company. So, make sure all information is provided carefully after looking at the records.

    Say Mr. Raj is admitted to the hospital to get treated for gastroenteritis. While he was providing the details about his medical history, he forgot to inform the doctor that he has diabetes and that he takes medicines for the same.

    According to the details provided by Mr. Raj, the doctor generates the case papers and prescribes endoscopy. He asks Mr. Raj to undergo some medical tests prior to the procedure. In the reports, it is noticed that Mr. Raj has had diabetes for the past few years. All the hospital documents including the reports and case papers are shared with the insurance company by the hospital. Now, since Mr. Raj has not declared about his being diabetic to the doctor and the insurer, his claim might get rejected.

  • Missing Trail Of Documents

When you’re applying for a health insurance claim, you’ll have to submit several documents to support each expense you are claiming for. These documents will include -

  1. Doctor's prescription
  2. Diagnostic report (wherever applicable)
  3. Invoice
  4. Proof of payment/Receipt

Even if one of the above documents is missing for a specific expense, the insurer will deduct that expense and then pay the claim amount.

  • When can your claim get rejected?

Keep all your bills, receipts, and other documents in a single folder - to avoid any hassles later on.

Make sure all invoices and receipts you get from the hospital/doctor are pre-numbered. Because the insurer will not pay for the expenses unless the invoice or receipt is pre-numbered.

So, these were the 10 most common but little-known reasons why your health insurance claim can see major deductions or even denial by the insurer. It is important to be aware of these so that there are no hassles when you apply for a claim under your health insurance policy.