Did you know that nearly 10 crore Indians are pushed into poverty every year due to high out-of-pocket healthcare expenses? Understanding the components of medical bills is more important than ever in a country where healthcare costs are steadily rising at 14% every year. Whether it’s hospital charges, doctor fees, or insurance-related costs like copays and deductibles, getting a clear understanding of medical bills can be overwhelming at first. In this article, we’ll break down these costs and provide you with the clarity needed to make informed financial decisions when it comes to your health.
Common Healthcare Cost Components
Medical bills you see merely do not represent hospital charges and doctor fees. There are a lot of other expenses involved like copays, deductibles, coinsurance, etc. Let’s have a quick look.
- Hospital Charges:
- This is the total cost billed by the hospital for the services rendered.
- It includes costs related to hospital stays, surgeries, medical tests, and procedures.
- These charges are standardised but vary with the type of accommodation you are choosing (AC/Non-AC, private/semi-private, etc.) You can check them on the hospital’s comprehensive list of billable items and services
- Treatment Fees:
- These are the costs associated with any professional services provided by doctors, surgeons, or specialists.
- It also includes fees towards the use of hospital modalities such as, operating rooms, labs, and equipment.
- Co-pay
- A copay is a fixed amount you pay for a specific healthcare service at the time of the visit. For instance, you might pay Rs 300 for a doctor’s visit or Rs 100 for a prescription.
- Copays are often reflected in medical bills for routine services and medications, and they do not count towards your deductibles.
- Deductibles
- This is the amount you pay out of pocket before your insurance provider starts to cover a large portion of the costs.
- For instance, if your deductible is Rs 1000, you need to pay Rs 1000 for your medical expenses before your insurance provider begins to pay its share.
- Coinsurance
- Coinsurance is the percentage of the cost of a covered healthcare service you bear and the rest is paid by your insurance company.
- For instance, if your coinsurance is 20% for a covered healthcare service, you pay 20% of your bill and the rest will be covered by the insurance company.
How Does the Medical Billing Cycle Work?
Let’s understand how medical billing works in a simple manner.
Step 1: Patient Account Creation
New patients are registered with a healthcare provider, creating an official account where their demographic details (name, date of birth, address, gender, etc.) are stored along with a copy of their insurance card. Existing patients update their records during each new service request. For old patients, this information gets updated in their respective accounts each time they request a new service.
Step 2: Pre-authorisation Process
Healthcare staff confirm the validity of a patient’s insurance by contacting the insurer to check:
- Active status of the insurance
- Coverage for the requested services
- Details of co-pay, co-insurance, and deductibles
Step 3: Pre-auth Form
During consultations, doctors gather patient information, diagnose, and recommend treatments. Finally, this information is combined to create a pre-auth form. When submitting a pre-auth form for hospitalisation, you need to attach the following supporting documents:
- Discharge summary and hospital bills
- Cash memos
- Test reports and receipts
- Surgeon’s Certificate stating the nature of the operation performed
- Surgeon’s bill and receipt
- Certificate of recovery from the attending medical practitioner/surgeon
Step 4: Charge entry
Healthcare providers verify services rendered to ensure doctors get accurate compensation.
Step 5: Claim form submission
Hospitals submit claim forms to insurance companies electronically or via paper to claim reimbursement.
Here are some examples of how your claim submission form will look like:
Step 6: Denial Management
Not all claims are accepted on the first submission. Insurers may deny claims due to errors, omissions, or eligibility issues. This step involves managing and rectifying such denials. Insurance agents can help patients understand the denial reason and submit the appeal. But to rectify denials, the patient or policyholder is solely responsible for providing accurate information and necessary documents. Healthcare providers assist by gathering medical records and correcting any documentation errors. The insurance company then reviews the appeal and reassesses the claim.
Step 7: Payment Posting
The insurer updates the payment status in their system and notifies both the hospital and the policyholder, detailing any withholdings or denials and providing reasons for them, allowing for prompt resolution.
For a smooth processing of the entire process, it’s your responsibility to keep your medical records up to date and complete all required paperwork necessary to help both the hospital management and your insurance provider. The medical records you should have include:
- Discharge Summaries
- Medical Reports
- Test Results
- Prescriptions
- Billing Statements and Receipts
- Doctor’s Notes
- Insurance Policy Documents
Reimbursement Claims Vs Cashless Claims
In the cashless claim process, if you seek treatment at a network hospital that has a tie-up with your health insurer, the hospital bills are directly settled by the insurance company. You don’t need to pay the bills upfront; instead, the insurer handles the payments directly with the hospital after verifying your coverage and the treatment details.
On the other hand, a reimbursement claim applies when you get treated at a hospital that is not part of your insurer’s network or when you choose to pay upfront for various reasons. Here, you would need to pay the hospital bills first, collect all necessary documents like detailed bills, medical reports, and discharge summaries, and then submit these to your insurance company for reimbursement.
Here’s a checklist for filing a reimbursement claim for your quick reference:
- Insurance Claim Form: Fill out and submit the insurance claim form provided by your insurer.
- Cancelled Cheque and ID Proof: Provide a copy of a cancelled cheque and the patient’s ID proof.
- Discharge Summary: Submit the original discharge summary with complete details of the treatment and diagnosis.
- Hospital Bill: Include the original hospital bill with a detailed breakdown of charges.
- Receipts: Attach all original receipts for payments made.
- Lab Reports: Provide the original lab investigation reports along with the doctor’s prescription.
- Diagnosis Proof: Submit documents that prove the diagnosis.
- Accident Case: If the claim is due to an accident, include the MLC (Medico-Legal Case) report or FIR (First Information Report).
- Implant Details: If applicable, provide stickers and invoices for any implants used in surgeries.
- Prescriptions: Include prescriptions for all medicines purchased and investigations done before and after hospitalisation.
- Hospital Registration Certificate: This is mandatory for non-network hospitals. Hospital Tariff Chart: Provide the hospital’s tariff chart.
- Indoor Case Papers (ICP): For high-value claims, submit the ICP from the hospital.
What is Covered by Health Insurance
Let’s take a look at typical medical expenses covered by most health insurance policies.
- In-patient hospitalisation coverage
- Pre- and post-hospitalisation expenses
- Critical illness
- Road ambulance charges
- Domiciliary hospitalisation
- Daycare procedures
What is not Covered by Health Insurance
It’s also important to know what your health insurance doesn’t cover to avoid unexpected expenses. Let’s take a look at some common exclusions.
Medical exclusions
- Plastic or cosmetic surgery unless necessary for reconstruction following an accident, cancer, or burns, as certified by a Medical Practitioner.
- Treatments involving long-term nursing, treatments in a sanatorium, rehabilitation, private nursing, respite care, or care for daily living needs
- Preventive care, vaccinations, and immunisations (except post-bite treatment and explicitly covered vaccines).
- Hospitalisation purely for enteral feedings and other nutritional supplements, unless required by a Medical Practitioner as a direct consequence of a covered claim.
- Experimental and unproven treatments, including RFQMR, ECP, EECP, chelation therapy, and hyperbaric oxygen therapy.
Non-medical exclusions
- Charges incurred for diagnostic, X-ray, or laboratory examinations not related to the diagnosis and treatment of an illness or injury requiring hospital confinement
- Personal comfort and convenience items like television (if charged separately), telephone access, internet, food (except patient’s diet), cosmetics, hygiene articles, body care products, bath additives, barber or beauty services, and guest services.
- Treatment rendered by a Medical Practitioner outside their discipline.
- Doctor’s fees charged by a Medical Practitioner who lives with the insured person or is an immediate family member.
A clear understanding of the different cost components of a medical bill will help you choose the right health insurance for your needs. It’s wise to look for policies that cover a wide range of medical expenses, have a broad network of partnered hospitals for cashless treatment, offer affordable premiums, reasonable copayment and deductibles, and a track record of higher claim settlement ratio.
