Health insurance claims: decoding settlement letters after deductions

Chennai resident Vijaya Kawar was hospitalised for 61 days at an insurer's network hospital, with a total bill of Rs 2.11 crore. Despite having health cover of Rs 3.25 crore, the insurer approved only Rs 85 lakh. Discrepancies included Rs 1.26 crore in deductions under heads such as MoU discount, reasonable and customary charges, and 'no active line of treatment'. The disputed amount exceeds Rs 50 lakh, barring Kawar from approaching the Insurance Ombudsman; she is now preparing to file a case in consumer court.

Insurance consultants interviewed by Livemint explain that terms like 'reasonable and customary' (R&C) charges allow insurers to cap payouts to what they deem standard for a locality. MoU discounts are contractual reductions between hospital and insurer, which should not be passed to the patient. Deductions for 'no active line of treatment' occur when the insurer argues hospitalisation lacked active medical intervention. Consumers are advised to demand itemised bills, written explanations from insurers, and, if needed, challenge deductions before the Ombudsman or consumer court.