Cashless and pre-authorisation meaning What IRDAI's health master circular requires of insurers on cashless requests, and why it rarely touches a small OPD clinic.

Cashless treatment is the health insurance route in which the insurer, directly or through its TPA, approves a policyholder's treatment in advance at a network hospital and settles the approved amount with the hospital, instead of the patient paying first and claiming it back; pre-authorisation is that advance approval. The other route is reimbursement: the patient pays the bill, then files a claim with the bills and reports. IRDAI's policyholder master circular requires a health policy to state the action to be taken on a claim "for cashless and reimbursement options separately".

What is cashless treatment and pre-authorisation?

Two steps of the same process. A request for cashless authorisation goes to the insurer or its TPA, which decides it against the policy terms. At discharge the hospital sends a discharge authorisation request, and the insurer grants final authorisation of the bill. IRDAI's TPA regulations define a network provider as a "hospital enlisted by an insurer, a TPA or jointly by an insurer and a TPA to provide medical services to an insured by a cashless facility". Until 2019 the same regulations also defined the cashless facility itself, as a facility where payment for treatment "is directly made to the network provider by the insurer to the extent of approved pre-authorization"; that definition was omitted by the 2019 amendment.

Where do the cashless rules come from?

From IRDAI's Master Circular on Health Insurance Business, Ref IRDAI/HLT/CIR/PRO/84/5/2024 dated 29 May 2024, issued under the IRDAI (Insurance Products) Regulations 2024. Paragraph 15 says:

Every insurer shall strive to achieve 100% cashless claim settlement in a time bound manner. ... Insurer shall decide on the request for cashless authorization immediately but not more than one hour of receipt of request.

• Insurers may set up help desks at the hospital for cashless requests, and must offer pre-authorisation to the policyholder in digital mode (para 15(c) and (d)).
• Final authorisation for discharge within three hours of the hospital's request; if it takes longer, any additional amount charged by the hospital is borne by the insurer from its shareholders' fund (para 16).
• After a claim is intimated, insurers and TPAs collect the required documents from the hospitals; the policyholder is not required to submit them (para 17(c)).
• Claims other than cashless are to be settled within fifteen days of submission, per the Master Circular on Protection of Policyholders' Interests of 5 Sep 2024.

What it means for a small clinic

Very little, day to day. Every rule above speaks of hospitals, admission and discharge. A consultation-only OPD clinic is not usually a network provider, so its insured patients pay at the counter and use the reimbursement route if their policy covers OPD treatment. IRDAI does ask insurers to make products available for OPD treatment, and some policies cover consultations, but whether a given policy pays cashless at a given clinic is set by that insurer's network, not by the regulator.

Take Sunrise Clinic, a sample single-doctor clinic. A patient asks whether the visit is cashless. The honest answer is that the clinic is not on any insurer's network, so the patient pays now and claims later with the clinic's bill. The desk prints an itemised bill with the doctor's name and registration number, and the patient files it with the insurer. Our post on the OPD bill for health insurance reimbursement lists what the bill should show.

Should a small clinic try to offer cashless?

That is the clinic's choice, and for most consultation practices the answer is no. Becoming a network provider means an agreement with each insurer or TPA, their tariffs, and a desk to raise and chase pre-authorisations. A clinic that adds day-care procedures or beds may find it worth doing. Government schemes run their own cashless networks with separate empanelment rules; see PM-JAY, CGHS and ESIC empanelment for private clinics.