Claim Enhancement & Negotiation — Working with TPA

What an enhancement is

A cashless claim begins with an estimate: the insurer authorises an amount for the treatment proposed at admission.

A claim enhancement is a request to raise the amount already authorised, made when treatment is costing more than first estimated, for example after complications or a longer stay. It is part of the same claim, not a new one. The hospital's insurance desk sends the request, with the medical reasons, to the insurer or its TPA, which checks it against the policy terms such as the sum insured and any sub-limits.

The TPA and the insurer

A third-party administrator (TPA) processes claims on the insurer's behalf. It is an administrator, not the party that issued the policy.

The insurer remains responsible for every claim decision. A policyholder who is unhappy with what the TPA has done can therefore take the matter directly to the insurance company. IRDAI's Master Circular on Health Insurance Business (29 May 2024) also says a TPA's remuneration may not be linked to the claim ratio or to reducing claims.

The time limits

The same circular requires the insurer to decide a cashless authorisation request within one hour and to give final discharge authorisation within three hours of the hospital's discharge request.

When part of the claim is cut

A deduction has to be explained. When a claim is disallowed in part, the reasons must be given in writing with reference to the policy terms. A policyholder shown only a label such as charges above reasonable levels, with no basis for the figure, is entitled to ask for those reasons.

Whether a reasonable and customary deduction stands depends on the policy wording and the facts. The same is true of implants and similar items: payment follows the wording, the sum insured and any sub-limits. Where a policy places no restriction or sub-limit on implants, the surgeon's medical reasons support the claim for the implant actually used, and the policy does not by itself limit payment to the cheapest alternative.

Escalating a disagreement

The first step is a complaint to the insurer, which must resolve it within 14 days. The complaint can also be registered on IRDAI's Bima Bharosa portal, formerly called IGMS.

If the insurer rejects the complaint, does not reply within one month or gives an unsatisfactory reply, the policyholder may approach the Insurance Ombudsman within one year. The Ombudsman charges no fee and can make an award of up to ₹50 lakh. A consumer commission is the alternative route.

Rules at a glance

Key points

• An enhancement request asks for the cashless amount already authorised to be raised because treatment is costing more than estimated.
• The TPA administers the claim; the insurer is ultimately responsible for the decision.
• A deduction must come with written reasons that refer to the policy terms.
• Without an implant restriction or sub-limit in the policy, the implant used is payable under the policy terms within the sum insured.
• A complaint goes to the insurer first, and then to the Insurance Ombudsman within one year or to a consumer commission.

Common misunderstandings

• The TPA's decision is not the last word: the insurer is ultimately responsible and can be approached directly.
• An enhancement is not a second claim: it raises the amount already authorised on the same cashless claim.
• A deduction described only as above reasonable levels is not self-explanatory: the policyholder is entitled to written reasons tied to the policy terms.

Questions people ask