Pre-authorisation in health insurance

When the insurer has agreed to accept the claim in advance, this stage in cashless claims process is called pre-authorisation

The time taken to settle an insurance claim is an important factor for people buying health insurance. But claims settlement is a layered process. So when an insurer promises a quick turnaround on claims approval, it may not really mean that you will be able to walk out of the hospital, with all your bills paid by the insurer. It simply means a quick turnaround on whether the insurer has agreed to accept the claim. In health insurance, this stage in cashless claims process is called pre-authorisation.

Pre-authorisation
The pre-authorisation stage of claims approval is more like a provisional authorisation, where the insurer only communicates to the hospital whether the claim is admissible or not. You start this process by filling out a pre-authorisation form with the help of your treating doctor and the hospital. The form is forwarded to the insurer along with related documents and cost details.

The insurer reviews these to authorise the claim. Depending on different insurers' advertised turnaround time, this could take a whole day to just an hour. The actual time taken also depend on insurers' review process. After this step, the policyholder is admitted and treatment begins.

In some cases, hospitals may demand a deposit at this stage. This can happen for unplanned events, where admission cannot wait for the insurer to pre-authorise the payment. The hospital can later refund the deposit.

The discharge
The final stage in claims approval is the discharge. A discharge summary, along with hospital bills, is sent to the insurer. The insurer scrutinises the bills and settles them directly with the hospital.

But this may not be as simple as it sounds. Typically, the final claim undergoes several levels of scrutiny. The insurer may ask for additional documents to ensure that billing was done properly. All this can delay the discharge process.

It important to keep in mind that pre-authorisation of claims is not a final acceptance or rejection by the insurer. As the treatment commences, the diagnosis could change, which may have a bearing on the approval. This means the claim could also get rejected if more facts come to light. So, while it's nice to see insurers are pre-authorising in a jiffy, it is not a guarantee of final claims settlement.

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