Why 95 Per Cent Of Health Insurance Complaints Concern Claim Rejections

Health insurance is said to be the cushion for any medical emergency. However, most policyholders end up in distress when the claims are partially or fully rejected. The report of the Council for Insurance Ombudsmen 2023-24 states that 95 per cent of health insurance complaints dealt with claims rejections. It shows one of the major issues the sector addresses and this call for better comprehension and communication by insurers towards the consumers.

As reported, some of the most common reasons that lead to a denial of claims for health insurance include the following:

Failure to Disclose Pre-Existing Conditions

Failure by the policy holders to declare their pre-existing medical conditions while buying their respective policies leads to many denied claims. Insurance companies argue that it is a breach of contract due to omission; hence the claim is denied.

Reasonability and Customary Clause

This clause allows the insurers to reject costs when either of the conditions, namely being too high or not customary, is fulfilled. For example, if a hospital charges a patient an amount more than what is taken by any other hospital for that particular procedure, the insurer can refuse to make a full payment for that service.

Policy Exclusions

Most policies usually carry a list of exclusions meaning that items are not covered. Some examples might include cosmetic surgeries, experimental treatments, or alternative therapies. This often generates the kind of disagreement from which claim rejections often flow as being caused by misunderstandings and overlooked information from the policy.

Poor Documentation

In other instances, claims will be rejected in case some document is left at the hospital or even the diagnostic report hasn't been filed. 

The only way a consumer can minimize the chances of having claims rejected is by being an active and informed consumer. The following are key steps toward that:

1. Disclose All Relevant Information:

While enrolling into health insurance, disclose all your pre-existing medical conditions. Do not fail to declare even the smallest conditions to avoid future disputes.

2. Understand Your Policy

Read the terms and conditions of the policy carefully, Look for the fine print. Read exclusions, waiting periods, and the range of coverage under different treatments.

3. Choose the Right Hospital

Choose a hospital in your insurer's network for cashless treatment, and avoid wrangles over the bill. Second, ensure charges are market standard to avoid a fight over the reasonability clause.

4. Document Properly

All medical bills, prescriptions, and records are to be presented in order with all documents. Delayed submission or missing documents often result in rejections of a claim.

5. Clarify

If you still have doubts about any matter mentioned in your policy, you would do well to clarify them through your insurer or agent. 

Role of Insurance Ombudsman

The insurance Ombudsman is far more important for resolving disputes between the insurance holder and the insurer. The report shows that the most powerful mediation was potent enough to take up complaints in 42 per cent of cases. These Ombudsman centres operating in Delhi, Chandigarh and Bengaluru were efficient in managing the mediation for the settlement of more than half of the complaints in those centres.

For rejected claims, the insurer's decision pursuant to the conditions of the contract and regulatory mandates will be under scrutiny by the Ombudsman. On the grounds that would be considered frivolous, an Ombudsman may either recommend or give a settlement directly on behalf of the complaint.

The need for industry reform

Consumers need to be prepared to act in case of rejection. But insurers also have to increase transparency and customer education. If the policy documents were made simpler and what "Reasonability and Customary" is explained, most rejections would be avoided. In tandem, technology-based solutions will also be a huge enabler, especially in AI assessment for claims and real-time updates.