When Suresh Agarwal, 64, a resident of Nagpur, collapsed at home all of a sudden in November last year, it was a bolt from the blue for his family, as he was perfectly healthy. He had to be rushed to the nearest hospital as his legs had turned immobile. “I was admitted to the ICU and the doctor’s diagnosis was that it was a minor stroke. The discharge summary noted that it was a transient ischemic attack (TIA),” says Agarwal.

He had to stay in the hospital for just two days before being discharged, much to his relief. However, this respite was short-lived as his insurer rejected his hospitalisation claim of Rs 57,000.

“They said that hospitalisation was not necessary,” says Agarwal. The company’s contention was he could have been treated on an outpatient department (OPD) basis. “This, despite the fact that the doctors recommended hospitalisation, given the severity of my condition at that point in time,” say Agarwal.

He has now registered his grievance with the company and also through the Insurance Regulatory and Development Authority of India’s (IRDAI) grievance redressal portal (igms.irda.gov.in). “It was an acute episode and a serious, life-threatening condition that could not have been ignored. It’s the treating doctor’s call, as per General Insurance Council’s guidelines,” says Shilpa Arora, Chief Operating Officer, InsuranceSamadhan, a private firm engaged in assisting customers with complaint resolution.

Was hospitalisation necessary? Your insurer may ask

Agarwal’s case is not an isolated one. “Sometimes, claims related to hospitalisation due to food poisoning or fever are rejected on the grounds that hospitalisation was not necessary,” says Hari Radhakrishnan, Regional Director, First Policy Insurance Brokers.

Insurance companies, on their part, say some hospitals tend to admit patients merely for investigations even though their health conditions do not warrant hospitalisation. “First of all, this clause is very rarely applied. Some hospitals seem to think that if the patient stays in the hospital for 24 hours, irrespective of the patient’s condition and treatment required, the claim will be paid. We have seen cases where patients who only had to undergo endoscopies (an invasive investigation of the gastrointestinal tract) being admitted for 24 hours,” says Bhabatosh Mishra, Director, Underwriting, Products and Claims, Niva Bupa Health Insurance. However, claims for mere investigations are not payable. Even in case of fever, insurers take the patient’s condition, reports and other health parameters, too, into account.

Treatment at non-network hospitals

Health insurance companies enter into cashless agreements with hospitals where the charges of common treatment procedures are agreed upon. Such hospitals become part of the insurer’s cashless network, where insurers directly settle the bills without the patient-policyholders having to pay out of their pockets. If you seek treatment in hospitals outside this network, you will have to first clear the bill and then claim a reimbursement from your insurer.

Claim rejection on the grounds of treatment at non-network hospitals attracted a lot of attention recently, after Moneycontrol highlighted such cases. For instance, citing a clause in its group health insurance contracts, Star Health and Allied Insurance rejected is reported to have rejected some claims of its group health insurance customers who sought treatment at non-cashless network hospitals. The insurer, on its part, points to this clause – not part of individual health policies – in its corporate insurance contract. “The clause is part of the contract, we only decided to enforce it now. However, do note that for emergency and accident-linked hospitalisation, claims at non-network hospitals are being paid,” says Anand Roy, Managing Director, Star Health and Allied Insurance.

The customary and reasonable charges hurdle

Apart from outright claim rejections, some policyholders have also suffered due to the ‘customary and reasonable charges’ clause in health covers. Put simply, this means that while settling the claim, your insurer has the right to ascertain whether the hospital’s charges were reasonable or not. This, despite the hospitals and doctors certifying the charges.

Take, for instance, the case of a Pune-based security agency head Swanand Deodhar (name changed). He entered into a group health insurance contract with a leading standalone health insurer to cover his employees. “There have been cases where the company has arbitrarily made deductions from legitimate claim amounts. In one case, the doctor’s consultation fee in the hospitalisation bill amounted to Rs 1.2 lakh, but the company deducted Rs 50,000. If the doctor, a professional, has given me the bill, how can I question him? However, the company felt that the charges were too high,” says Deodhar.

Industry-watchers attribute disputes over reasonable charges to lack of standardised treatment protocols and also a health regulator in the country. “There are no uniform billing practices. What is a reasonable charge is subjective. There can be different rates for the same procedure in the same geography,” says Anuj Jindal, Co-founder and CEO, Sureclaim, a claims management firm.

Typically, insurers take into account claim trends and data from the location to arrive at what is ‘reasonable’. “Even globally, this is a common clause in policies. Usually, we look at past claim trends for a disease of the same severity, same room category in the same hospital. For instance, suppose the bypass surgery cost at a hospital in Delhi has been in the range of Rs 5-10 lakh on an average over the last 5-10 years. If suddenly, we receive a claim of Rs 30 lakh, it will raise be a red flag,” explains Mishra. Even in such cases, insurers do not straightaway reject claims, he says. “We enquire with hospitals. In some cases, they come with valid explanations on the complications, infection and co-morbidities associated with the patient that pushed up the cost. If the reasons seem appropriate, insurers do settle such (outlier) claims too,” he says.

Insurance companies might have their reasons to reject such claims, but that does not make it any easier for policyholders who are unaware of the trends or data. “The benchmark that insurers use is not known to the public. From the customers’ perspective, this arbitrariness is the cause for heartburn,” says Jindal.

Repudiation due to clerical errors in documents

Delhi-based Deepak Tripathi, 37, who met with an accident last year and had to be hospitalised due to a head injury, is currently dealing with a peculiar case of claim rejection. “In the medico-legal report, the doctor in the emergency room had mentioned an erroneous date, which was later corrected manually in the same form. However, the insurer rejected my claim,” he says.

In spite of other supporting documents attesting his treatment and date of accident, the insurer refused to budge. “Despite the FIR, discharge summary and other documents clearly indicating the correct date, the insurer chose to focus only on the over-writing in the medico-legal certificate,” says Arora. Garg and Arora have escalated this case through the IRDAI’s grievance redressal platform.

The way out

As a policyholder, you must first write to the insurer’s grievance redressal officer. If you do not receive a satisfactory response or the company does not respond within 30 days, you can directly approach the insurance ombudsman’s offices. The ombudsman’s order will be binding on the insurance company. If, as a policyholder, you are not satisfied with the order or the amount of compensation given, you can approach the consumer courts.