Cashless vs. Reimbursement Claims: What’s the Difference and which should we opt?

Health insurance is an important instrument to alleviate the economic burden of medical expenses. But how does an insurance company actually settle the hospital bills? Essentially, there are two main claims processes that policyholders usually come across when looking to use their insurance, that is cashless claims or reimbursement claims. Knowing the differences between these approaches is important both in order to make informed decisions when emergencies arise. Here is a short summary of both the claims settlement methods, their advantages and drawbacks. 

Cashless Claims: In the cashless claim settlement process, policyholders get hospital treatment from the network of the approved hospital of the insurer without making direct out-of-pocket payments. Based on the terms of the policy, the insurance company pays the hospital directly for the medical expenses. To provide this facility, policyholders need to:

1. Network Hospital: Treatment needs to be done in a hospital which is a part of the insurer’s network.
2. Pre-Authorization: Get insurer approval before treatment, ideally within 72 hours of the appointment for planned treatment. In emergencies, notify the insurer within 24 hours of admission.
3. Documentation: Show the health insurance card and valid identification around the hospital’s insurance desk. Seniority persons compulsorily have to avail cashless process, so Hospital will perform the coordination with insurer.

Benefits of cashless claims:

1. Immediate Financial Relief: No need to pay upfront, hence less financial burden during emergencies.
2. Less substantive roadblocks: Reduces a lot of paperwork for the policyholder because the hospital and insurance company take care of processing most of it.
3. Network Restrictions: Treatments must be done at network hospitals; going outside the network requires filing for reimbursement.
4. Pre-Authorization requirements: incomplete pre-approval may cause claim denial or delays.

Reimbursement Claims

Reimbursement claims are more flexible, as policyholders can avail treatment at any hospital, and not necessarily a network one. With this method, the policyholder settles medical bills first and later files for reimbursement with the insurance company. The steps involved include:

1. Out-of-Pocket Payment: This method involves paying for all medical bills directly to the hospital at discharge.
2. Document collection: Collect all relevant documents such as original bills, discharge summary, prescriptions, and diagnostic reports.
3. Claims submission: Submit a claim form along with the requested documents to the insurer within the time limit (generally within 30 days of discharge).
4. 30-45 days Insurer Review: The insurer goes through the documents submitted and verifies the reimbursement (if applicable) as per the policy terms.

Benefits of Reimbursement Claims:

1. Hospital Choice Flexibility: Receive treatment at any hospital and have access to preferred or specialized healthcare providers.
2. Network Flexibility: Helpful in emergencies where the nearest hospital may be outside of your insurer’s network.

The limitation of reimbursement claims are:

1. Includes New Indemnity plans that make the policyholder pay medical fees upfront.
2. Reimbursement claims require detailed record-keeping and submission of all pertinent medical documentation to obtain claim approval.
3. Reimbursement takes longer to process as compared to cashless claims, which may impact cash flow.

Whether to opt for cashless or reimbursement claims depends upon several factors:

1. Hospital Availability: In the event that a network hospital is available, a cashless claim is usually a hassle-free option. In locales that do not have a network of hospitals, reimbursement may be the only alternative.
2. Financial Factors: Policyholders should decide between opting for cashless claims for which they must have limited funds available in the bank.
3. Natural Disasters: During natural disasters, access to care can become more challenging, especially in emergency situations where treatment will take place at the nearest facility, regardless of whether it’s in network, and results in a reimbursement claim.
4. Policy Terms: Concerning the claim process, it is essential to understand specific policy terms such as co-payment clauses, sub-limits, and exclusions.

Cashless as well as reimbursement claim process is meant to help you financially during medical emergencies. In cashless claims, the hospital bills are settled by the insurance provider directly with the hospital, which offers convenience and instant financial relief, but they can be availed only at network hospitals and require prior approval. Reimbursement claims are more flexible and give users the option to choose their healthcare provider, but require upfront payment and are a more complex, time-consuming process.

Summary of Cashless vs Reimbursement claims