Understanding Pre-Approval: Peace of Mind During Treatment

Pre-approval signals that an insurer will cover treatment costs within policy limits. It helps patients understand how bills are settled and thus reduces financial uncertainty and stress.

Let us understand how pre-approval works.

Pre-Approval Guides Hospital Bill Payments

“Pre-approval or cashless authorisation is an indication from the insurance company that the treatment being considered or emergency treatment will be paid for according to the terms and the coverage limits of the policy,” says Arun Ramamurthy, co-founder, Staywell.Health.

For the insured, pre-approval gives them a better understanding of how their hospital bills will either be paid directly by the insurer or they will have to pay the bills first and then request reimbursement later. A key point of pre-approval is that it doesn't guarantee the payment of the claim, but it does establish that the insured was eligible to receive payment of the claim at the time of their admission to the hospital, based on the information available about the insured.

Pre-Approval Critical For Complex Surgeries

The pre- approval essentially must be requested by the hospital, either before the hospitalisation in planned cases or within 24 Hours of hospitalisation in emergency cases. A timely preapproval covers the cost of treatment that the hospital has estimated initially. In case the cost goes up basis complexity of treatment, the pre-approval is also extended as an enhancement and takes care of additional costs.

“This becomes even more critical in surgical or complex ailments where the admissions may be prolonged, and costs may go very high.  Additionally, a pre-approval process gives much-needed peace of mind to the customer, who can focus on the treatment knowing that expenses are taken care of,” says  Varsha Gujarathi, Chief Customer Officer, Universal Sompo General Insurance.

Timely Communication Key During Hospitalisation

Delays or denials can create both financial and emotional stress. If pre-approval is delayed, hospitals may ask patients to arrange deposits or shift to reimbursement mode, which can be challenging in high-cost treatments. A denial often arising from non-disclosure, waiting period clauses, exclusions, or documentation gaps can result in unexpected out-of-pocket expenses.

“Importantly, most pre-approval denials are not arbitrary; they are typically linked to policy conditions or incomplete information at the time of request. This underlines the need for policyholders to understand their coverage upfront and for hospitals and insurers to communicate transparently and promptly, especially when patients are at their most vulnerable,” says Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI).