Gupta, however, sought a second opinion. Another doctor quoted ₹50,000 for the same treatment, with just two days of hospitalization and regular physiotherapy thereafter. Gupta went ahead, paid the charges and filed for reimbursement. That’s when his struggles began. “Star Health rejected my claim over a document discrepancy. I had a road traffic accident, but the insurer assumed it was renal tubular acidosis, a kidney disease. I tried reasoning with them, but to no avail. I have written to the insurance ombudsman now,” said Gupta.
Such rejections are not uncommon with some insurers. Shishir Bhatnagar, 42, of Noida is paralyzed and has been battling IFFCO-Tokio for the last 12 years over his claim. “I have been paralyzed ever since I fell in a swimming pool during a wedding. The insurance company, however, claimed that I was under the influence of alcohol when I fell. This is absolutely preposterous and the doctor’s statement at the time of admission clearly rules out any alcohol or drug use,” said Bhatnagar. He filed a case against IFFCO-Tokio and it was upheld by district and state consumer forums in Uttar Pradesh. However, the insurer has now moved the national consumer forum.
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The promise of health insurance is proving to be a mirage for policyholders like Gupta and Bhatnagar. Many pay high premiums and buy these policies believing that in the event they need healthcare, they will be fully covered. However, that cover is proving to be non-existent for some, with even pre-authorized cashless claims being rejected in certain cases. All of this has led to a growing perception that certain insurers always find reasons to deny or delay claims. Indeed, data from public disclosures shows that Star Health, the market leader, has poor claims settlement ratio—the ratio has fallen drastically for key products (see chart).
In another case, Vishal Bhardwaj, a New Delhi-based entrepreneur, got his daughter admitted in the emergency ward at Sir Ganga Ram Hospital, New Delhi, where an emergency surgery was performed on her to fix an abdominal perforation. Bhardwaj, who had a policy from Care Health, applied for pre-authorization of cashless treatment. However, the insurer refused, declaring that it was a pre-existing disease. “They did not approve it even after the doctor’s statement in my favour,” Bhardwaj said in a LinkedIn post. It was only after the case spread on social media that Care Insurance approved the cashless claim.
An email sent to Care Health on its claims complaints data did not elicit any response. Emails sent to IFFCO-Tokio on the paralyzed Bhatnagar’s case also did not elicit any response.
Mint reached out to Star Health seeking details on why Pawan Gupta’s claim had been rejected. Responding to our queries via email, a spokesperson for the insurer said, “Our medical officers who process claims may sometimes ask additional information on previous treatment records and line of treatment, etc., to arrive at an appropriate decision. The claim is also adjudicated based on system alerts, past history and policy conditions.” The spokesperson added, “In the case of Pawan Gupta, we received two versions of the medical document. In one set of documents it was mentioned that this was a case where Pawan fell from the stairs at his residence. In another set of documents, the case was attributed to a Road Traffic Accident. However, we raised concerns as there were no records like police records, etc. In view of this contradiction in medical documents, the claim was rejected.”
Earlier this month, a frustrated medical association’s issues with Star Health made their way into the public domain. The Ahmedabad Hospitals and Nursing Homes Association had written to the insurer seeking an urgent meeting to address issues, including claims rejections and delisting of network hospitals. The letter was widely circulated on social media, and saw many irate users sharing stories about their claims being rejected by Star Health and other insurers.
“We deal with multiple insurers but my team that handles claims tells me it is very difficult to get cashless approvals from Star Health and Care Health, especially for bariatric surgeries,” said Dr Vikram Lotwala, who runs a nursing home in Surat. Bariatric surgeries help obese people lose weight and improve their health.
In response to the Ahmedabad association’s allegations, a spokesperson for Star Health said, “We highlighted multiple deficiencies from some member hospitals in Ahmedabad, due to which we had to remove them from our cashless network. A follow-up meeting is tentatively scheduled for the first week of October.”
To be sure, some hospitals are known to charge exorbitantly for cashless treatments since the insurer picks up the tab. This, however, ultimately impacts policyholders, as insurers become suspicious of even genuine claims. Indeed, when insurers and hospitals are at loggerheads, policyholders are the ones who suffer.
Claims and counterclaims
Most policyholders prefer hassle-free, cashless treatment. But insurers have been sniffing a scam in the hefty bills generated by hospitals. Vivek Rege, founder and CEO, VR Wealth Advisors, said claims are being rejected even in pre-authorized cashless cases, as happened with his employee, an office assistant, whose 24-year-old son had been hospitalized. The insurer in this case, too, was Star Health.
“Star Health had approved the claim at the time of admission but rejected it when the final bill was presented. The insurer said the patient was not a dependent though the policy clearly stated that children up to the age of 30 years could be covered as dependents, provided they were not employed,” said Rege. The claim had been rejected on the premise that the patient was employed, he added, noting that Star Health had arrived at this decision based on the admission form, which Rege claims had been wrongly filled by someone at the hospital.
After the claim was rejected, the hospital refused to discharge the patient till its dues were cleared. With each passing day, the bill kept shooting up. “Finally, my company had to foot the hospital bill. I have contested the rejection with the grievance team,” said Rege.
In its response, Star Health said, “In the case of Vivek Rege, there was a mismatch in the insured name mentioned in the policy document and the patient’s name. The policyholder also did not disclose the name of his employer. The Hospital records indicated that he was employed at the time of admission.” It added, “After due investigation, when we approached the company to verify if the patient was a dependent covered under the company insurance, the employer denied it. Requests to Vivek Rege for additional information went unanswered. As a result, it was not possible to process the claim.”
The claims ratio
One way to look at an insurer’s record on clearing policyholders’ expenses is to examine its claims settlement ratio. This metric can be used to check the number of claims settled in a given period. The lower the ratio, the worse it is from a customer’s point of view, and the better it is from the insurer’s viewpoint, because of the lower payout.
However, actual claims settlement data is not readily available in public disclosures, said Aayush Dubey, co-founder and head of Research, Beshak.org, an independent insurance research platform. Moreover, the ratio only factors in the number of claims, not the claimed amount. “It does not reveal anything about how good the insurer is at handling claims or the speed at which it processes them,” said Dubey.
Star Health has disclosed the claims settlement data for each of its products separately in its public disclosures. The ratio has fallen drastically for products such as Family Health Optima Insurance Plan, Star Comprehensive Insurance Policy and Young Star Insurance Policy between 2021-22 and 2022-23.
The number of complaints about claims is another metric to analyse the record of insurers. Data compiled by Beshak.org shows that Star Health registered the highest number (49) of complaints for every 10,000 claims registered among standalone health insurers in 2022-23, followed by Niva Bupa (46), Care Health (40), Manipal Cigna (19) and Aditya Birla Capital (18). Among general insurers, Navi General Insurance (99), SBI General Insurance (24) and Shriram General Insurance (23) topped in the number of complaints received last fiscal year.
However, a like-to-like comparison between standalone health insurers and general insurers is not possible, given that the latter do not publish health insurance data separately (their data also includes, motor insurance, theft, fire, flood claims, etc). In general, however, the health business receives more complaints than other products such as motor insurance.
Market leader
While Star Health tops in the number of complaints, it should be noted that the company is also the biggest standalone health insurer in the retail segment, in terms of business. Data from Nuvama Institutional Equities, a broking firm, shows that the company’s market share surged 21 percentage points to 33.7% between 2014-15 and 2022-23. The market share is more than three times that of the second-largest player, HDFC Ergo (9.7%).
After incurring losses of about ₹1,000 crore in 2020-21 and 2021-22, the company reported a net profit of ₹619 crore in last fiscal year, according to its annual report.
Star Health has outpaced industry growth in terms of sales, backed by a strong agent network (most LIC agents sell Star policies) and competitive premium pricing.
Founded in 2006 by V. Jagannathan, Star Health is India’s first standalone health insurance provider. The Rakesh Jhunjhunwala family owns a 17.31% stake in the company. Jagannathan resigned from the Board in June, a month after he relinquished his position as the chief executive officer (CEO). Anand Roy, the company’s managing director, has replaced him as CEO.
Hospitals versus insurers
While their claims settlement ratio is a cause for concern, insurers have been quick to point out that they have been victims of insurance fraud, which has shot up in recent times. While there is no publicly available consolidated data, industry experts say fraud claims could easily make up 10-15% of overall claims paid in a year. If that is true, the total amount paid out by India’s five standalone health insurers and 24 general health insurers to settle such claims would be in the region of ₹7,000-10,000 crore. That’s more or less a billion dollars a year lost to fraudulent claims.
Insurers have even identified clusters from where fraud claims frequently originate—Surat and Ahmedabad in Gujarat; Faridabad, Gurugram and Palwal in Haryana; Meerut, Kanpur, Lucknow and Unnao in Uttar Pradesh; Pune, Nashik, and Ahmednagar in Maharashtra; and Bengaluru in Karnataka.
The surge in scamming has pushed insurers to leverage artificial intelligence tools, which issue an alert on finding a pattern in potentially fraudulent claims. However, genuine cases also get caught up in this net.
Vikas Mittal, a pharma sales manager based in Meerut, said his claim was rejected by Star Health, which accused him of conniving with the hospital to file a fraudulent claim. “The company did not take any action on my repeated mails and in-person visits for three months. Thereafter, a surveyor visited my home and the hospital where I was treated and found merit in my claim,” he said. Despite this, the company continued to reject his claim. “The staff also misbehaved with me whenever I visited the branch. Finally, I approached Insurance Samadhan and got my claim settled,” said Mittal.
Insurance Samadhan is a grievance redressal platform that helps aggrieved policyholders fight their cases with insurers, for a fee.
In response to queries about this case, Star Health said, “In the case of Vikas Mittal, there were multiple claims raised and we approved ₹2.5 lakh in cashless claims. A few claims of the policyholder were flagged due to concerns like non-submission of discharge summary. Hospital invoices for both insured (husband and wife) were identical and (there were) serious discrepancies in numbering of the receipts, which pointed to possible claims fraud. We had also received suspicious claims from the treating hospital in the past and our fraud detection systems had advised caution.”
Separately, insurers are frustrated by what they term ‘soft fraud’ in the form of inflated medical bills. They claim that such rip-offs by hospitals involve unwanted medical procedures. But that is no reason for them to reject genuine claims, said Mumbai-based cardiac surgeon Dr Prashant Mishra. “I don’t deny that such frauds exist, but insurance companies, especially Star Health, are taking extreme measures. While renewing their contract, they pester smaller hospitals and nursing homes to accept even lower charges even though medical inflation itself has risen to 14%,” he said. “These hospitals do not want to lose out to the competition, so they accept it, but it is not sustainable. Experienced doctors at these hospitals are now refusing to treat patients covered under Star Health and Care Insurance policies.”
Dr Lotwala from Surat said insurance companies demand treatment packages that are on par with the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PMJAY), which has very low rates. “Not many private hospitals have opted for it (AB PMJAY). Ironically, for similar procedures, insurers settle large claims from big hospitals despite the additional charges but refuse much smaller claims from hospitals located in tier II and tier III cities,” he said.
The way forward
Industry experts say that the need of the hour is for all the stakeholders to have a constructive dialogue for justified, pre-negotiated tariff packages in line with what the General Insurance Public Sector Association, a group of four state-owned general insurers, offers network hospitals.
Experts also point out that policyholders cannot wait for the industry to find a solution. Policyholders have to make a full disclosure while buying a policy and have to be cautious while filing claims, and insurers, too, need to match that by becoming transparent in their dealings, they said.
From the policyholder’s perspective, some experts believe it is better to choose a reliable intermediary who can help with claims settlement. “When customers approach insurers directly, they talk emotionally or aggressively,” said Sanjay Aggarwal, co-founder and legal head of Insurance Samadhan. “Insurers do not entertain emotions. You need to speak to them in legal language to make your point.”