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What is Blacklisting of Hospitals in the Insurance Industry?
Blacklisting is placing a hospital in a position where there would be no further dealing with it in any case. Once blacklisted, Insurers do not empanel or engage with such hospitals. Customers should consult their insurance companies before making a claim.
They should ensure their preferred hospital is not on the list of blacklisted hospitals.
Blacklisting can not only happen in the case of network hospitals but also in the case of non-network hospitals. Insurance companies in non-network hospitals would share information.
They would also keep these hospitals on a blacklist. This would prevent them from engaging with these hospitals in the future. It also helps insurance companies identify hospitals blacklisted by other insurers and carry out their due diligence.
Network Hospitals in India:
Network hospitals are tied up with insurance companies to provide cashless claims settlement services to the customers of an insurance company. Hospitals and insurance companies come to an agreement.
They offer cashless claim settlement services to customers. This includes a pre-fixed package or rate for each treatment. Hospitals generally fix the packages depending on their relationship with the insurance companies.
It is purely a concept of the demand-supply model. Insurance companies with a high number of customers in an area create more demand for hospitals. Hospitals that offer good packages to those insurance companies.
For example, consider two insurance companies, A and B, in the Hyderabad region. Company A has a health insurance customer base of 1 lakh. Company B’s customer base is 2 lakh. Now, insurer B has more customers and a higher chance of claim when compared to Insurer A. So, insurer B has created more demand for hospitals in Hyderabad than Insurer A, an edge for insurance company B to negotiate with the hospitals in that area. In return, hospitals could provide better packages with cheap rates to Hospital B and slightly higher rates to Hospital A.
The customers of both companies will not be affected by these rates. The insurance company will settle the final claim to the hospitals if cashless claim settlement service is provided.
Suppose a customer wants to go for a reimbursement facility. These packages may not be suitable. Therefore, the insurance company would only pay the general hospital rates. This would result in increased claim outgo.
It is the reason why insurance companies prefer to go for cashless hospitalization. Cashless hospitalization is advantageous for customers. No money is required for medical treatment, making it beneficial for both parties.
Why are Hospitals Black Listed?
Hospitals are blacklisted due to various reasons, which are discussed in detail below:
Fraud/Fake Claims:
One of the major reasons for blacklisting a hospital is if it engages in fraud or fake claims. Sometimes, a hospital colludes with the insured and raises claims without conducting treatments.
This would drive the hospitals’ claim settlement ratio high and would increase health insurance premiums. Ultimately, premium-paying health insurance customers would be affected if this is not arrested at the early stages. This would come under fraud or fake claims and result in the blacklisting of the hospital ultimately.
The insurance companies’ investigation department identifies fake claims over time, and the hospitals are blacklisted. The insurance company will investigate a heavy influx of claims from a particular hospital over a certain period of time. This is to verify the validity of the claims.
Afterwards, the company will decide whether to blacklist the hospital. The health insurance customers involved in fake claims would face criminal charges, cancellation of their health insurance plan, and permanent blocking from taking a health insurance plan in the future.
Inflating Medical Bills:
The other reason for placing a hospital on blacklisting could be when the hospital is found to inflate the medical bills above a considerable amount. Insurance companies take inflation of 5-20% in hospital bills yearly. Anything above this would be a cause for concern for the insurer. Insurers would investigate the reasons for such high inflation in medical bills.
If the hospital is found to inflate the medical bills artificially, then it would be placed on the blacklist. Insurance companies do not consider inflation to a certain degree. However, if it is as high as 50%, it could be a result of medical bill inflation.
Medical bills may be inflated if customers are seeking reimbursement. This is because hospitals can charge customers directly, without needing insurance companies.
The Government provides hospitals under the Ayushman Bharat scheme. There will be a common blacklist for these hospitals. Additionally, private and public sector insurance companies will have an issuer-specific blacklist.
Charging Extra From Patients:
The other reason for blacklisting could be overcharging from the patients in case of cashless claim settlement. When a policyholder has a cashless claim at a hospital, they should not be charged for the treatment.
Exclusions may apply. Hospitals often charge extra amounts from their customers. These amounts are then claimed from insurance companies, leaving customers feeling powerless.
This act would draw the attention of insurance companies. Customers would complain about the lack of service, which could damage the company’s reputation. Insurance companies placed hospitals on a blacklist. They informed customers to protect themselves from overpaying.
For example, when a health insurance policy holder gets admitted to the hospital for treatment on a cashless basis, the hospital should take cashless approval from the insurance company. It should not charge the customer if the treatment limit exceeds the sum insured limit. Some hospitals charge extra from customers, citing various reasons. This is a way of taking money from both the customer and their insurance provider. The loss would be to the consumer, the insurer, and the insurance company. So the insurance companies would identify all such cases, thoroughly investigate, and blacklist the hospitals.
Not Meeting Standards:
There are certain conditions to be met by the hospital to be empanelled as a network hospital.
The rules for hospitals that insurance firms endorse are set out by India’s insurance regulatory and development authority. According to the IRDA guidelines, the definition of a hospital is a facility that is designed for inpatient treatment and daycare treatment for injuries or illness and that is recognized as a hospital by local authorities by the Clinical Establishments (Registration and Regulation) Act, 2010 or as required by the regulations specified in the Schedule of Section 56 (1) of the Act OR meets the minimal criteria set out in:
- A qualified medical doctor as well as a nursing assistant on all hours.
- At least 10 inpatient beds are required in cities with an average population of 10 Lakh. Additionally, a minimum of 15 beds must be provided within cities with more than 10 Lakh inhabitants.
- It has a fully-equipped operation theatre that can be used for surgeries.
- The facility can maintain daily records of all patients. These records can be made available to the insurance company upon request.
If these standards aren’t followed, then insurance companies cannot sign a contract with the hospitals.
Hospitals not following the guidelines will be put on a blacklist. Insurance companies will advise customers to avoid these hospitals for treatments. Third-party administrators (TPA) are responsible for forming a tie-up with hospitals. If there is no TPA, then the insurance company will take on this task.
What Happens if You Get Treated in a Blacklisted Hospital?
It is not surprising that the insurance company would reject your claim if you were treated at a blacklisted hospital. But there are certain exceptions to this which are mentioned below:
- In case of emergency, one can get treated in a blacklisted hospital. Life-threatening diseases are also covered. The insurance company is bound to settle the claim. For example, suppose a health insurance policy holder has suffered a massive heart attack and was admitted to a nearby hospital for treatment which was later found to be blacklisted. In that case, the onus of settling the claim lies with the insurance company, as it would be difficult for customers to check everything and get admitted to a hospital in an emergency.
- In case of accidents, one can get treated in a network hospital which would be eligible for a claim settlement. Accidents can occur anywhere. It is essential to take the patient to a hospital for treatment right away. This means one cannot check if the hospital is blacklisted before admission.
But if you are planning to undergo treatment at some point in the future, then you must check for the authenticity of the hospital before admission.
List of Blacklisted Hospitals:
The list of all blacklisted hospitals can be found on the respective insurance companies’ respective websites along with the network hospitals. It would not be difficult to understand and identify the blacklisted hospitals.
Customers will get regular notifications about changes to the list of hospitals their insurance company blacklists. These hospitals are part of their health insurance plan. This way, customers can prevent going to the blacklisted hospitals in their area for planned treatments.
Network hospitals are those which offer a cashless claim settlement facility to their customers and these hospitals and non-network hospitals could be placed on the blacklist if they do not follow the norms such as satisfying adequate requirements, engaging in fraudulent claims, artificially inflating medical bills, charging extra amount from patients other than the prescribed amount etc.
One can claim benefits even if they get treated in a blacklisted hospital only in case of emergencies such as accidents and life-threatening diseases. However, planned treatments in blacklisted hospitals would not be eligible for claim settlement.
Insurance policyholders are requested to check with the insurance company on the network hospitals in their area as well as the blacklisted hospitals. Customers can enquire with the insurance company if a particular hospital is blacklisted or not so that they can decide on availing treatment in that hospital. The list of blacklisted hospitals would be shared regularly with the health insurance policy holders of the insurance company.
