Many health insurance policyholders mistakenly believe that hospital admission guarantees full bill coverage. However, a critical provision in most health insurance policies—the “reasonable and customary” clause—allows insurers to limit payments to costs deemed fair and standard for a given treatment and region. This clause is a major factor in claim rejections, second only to denials based on pre-existing conditions.
Patient’s Predicament
Insurers utilize this clause to scrutinize medical claims, evaluating whether the treatment, its cost, and the duration of the hospital stay were medically necessary. While most claims are processed smoothly, rejected claims often leave the patient bearing the financial burden.
Case Examples Illustrating Patient Pain:
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Unnecessary Hospitalization: A driver with gastroenteritis was admitted to the Intensive Care Unit (ICU) of a panel hospital for over a day. Despite being in acute pain, the insurer rejected the ₹25,000 bill, arguing the condition could have been managed without hospitalization. Doctors concurred, yet patients rarely challenge a doctor’s admission order, fearing the consequences of leaving “against medical advice.”
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Excessive Cost: In Mumbai, a surgeon charged an exorbitant ₹15 lakhs for a coronary artery surgery, compared to an estimated ₹5 lakhs at other hospitals. While many of this surgeon’s claims were initially rejected, the Ombudsman ultimately ruled in favor of the patient, mandating the insurer pay in full because the surgeon was a highly skilled specialist.
Ideally, costs incurred at a hospital explicitly on the insurer’s panel should not be questioned. If an insurer finds certain surgical costs consistently excessive, they should consider removing that provider from their network.
Scrutiny of Hospital Stay Duration
The length of stay is another common point of contention under the “reasonable and customary” clause.
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Allopathic Hospitals: Disagreements usually revolve around an extra day or two, and patients rarely choose to remain hospitalized without medical advice.
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Ayurvedic Hospitals: Scrutiny is significantly higher and often justified. These facilities frequently cater to low-severity chronic conditions or offer wellness treatments disguised as medical necessities, leading to stays that can last over a week.
Strategies for Due Diligence and Risk Reduction 🛡️
Policyholders can significantly reduce the risk of claim rejection by undertaking thorough due diligence before treatment:
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Watch for Red Flags: Be cautious if a hospital increases prices or modifies treatment protocols upon learning you have insurance.
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Seek Multiple Opinions: Ask probing questions, get second opinions, and confirm the expected length of stay.
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Follow Medical Advice: Crucially, adhere to the recommendations of an experienced medical professional. Courts have consistently prioritized the medical professional’s judgment.
Insurer and Provider Responsibilities for Clarity
To minimize disputes in the absence of regulated hospital pricing or protocols in India, insurers and providers must collaborate:
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Insurer Action: Insurers could provide a comprehensive list of empanelled hospitals where claims will be paid without dispute. They can also jointly agree with hospitals on package costs for procedures, moving away from day-rate billing that incentivizes unnecessary extensions.
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Doctor and Hospital Role: Doctors must ensure that discharge summaries and medical justifications are clear and accurate. Poorly written or inaccurate notes, often left to administrative staff, can lead to claim rejections and prolonged legal battles. One case cited involves a ₹30 lakh claim tied up in court due to a junior doctor’s incorrect mention of alcohol consumption on a discharge note.
Ultimately, while an ideal scenario would involve complete transparency and regulation in hospital costs, policyholders should apply a simple self-check: “Would I still opt for this treatment if I were paying the bill myself?” This mindset helps keep medical choices within the boundaries of what is considered reasonable and customary by insurers.
Kapil Mehta is co-founder, SecureNow Insurance Broker. Views are personal.
