What is Claim Rejection and Claim Repudiation in Health Insurance?

Medical claim repudiated signifies a situation where:

Step 1: You submit a claim to request reimbursement or coverage for medical expenses.

Step 2: Your trusted health insurance provider carefully reviews the claim to verify its accuracy and validity.

Step 3: After a thorough review, the insurer concludes that the treatment is not covered under your specific health insurance plan. As a result, they are not required to provide coverage for it (the reasons for this decision are detailed below).

In cases of health insurance claim repudiation, especially when the reasons are serious, insurers may take legal action against the policyholder. This could happen if there is significant evidence of fraud or non-compliance.

Why Health Insurance Claims are Repudiated

Health insurance claim repudiations often involve significant legal consequences. Given the severity of the situation, such rejection occurs only in the most extreme circumstances:**

-Fraudulent Activities

If you, as the policyholder or your healthcare provider, take part in dishonest activities, like making up personal or medical records, your health insurer may refuse your claim. Giving fake proof of medical procedures can also lead to a claim denial.

For example, turning in changed medical reports or bills is considered dishonest. Lying about the nature or seriousness of your medical condition is another example of fraud. Such actions can result in your claim being denied and may lead to serious legal consequences, including fines and criminal charges.

-Policy Exclusions

If you file a claim for a treatment that is clearly excluded from your health insurance policy, your claim will likely be rejected. Permanent exclusions are specific medical conditions or treatments that your policy does not cover under any circumstances.

For instance, treatments for pre-existing conditions, cosmetic procedures or experimental therapies may fall under these exclusions. Submitting a claim for such treatments means the insurer is not required to pay the costs. This results in claim denial. Therefore, you need to carefully review your policy's exclusions to avoid unexpected denials.

-Non-Disclosure of Relevant Information or Material Misinterpretation

If you do not disclose your past medical history, pre-existing conditions or previous treatments when buying health insurance, it can have serious effects. The insurer needs accurate and complete information to assess risk and decide on coverage.

If they find out you hid or gave wrong information, they might reject any claims you make. This process, called claim repudiation, means the insurer does not have to pay for your treatment. To avoid this, it is important to be honest. Always provide detailed information about your medical history.

-Policy Violations

You may face serious consequences if you break the rules outlined in your health insurance policy. Suppose you submit a claim for treatments after your health insurance plan has expired; in that case, your claim will probably be denied. The same applies if your policy has been cancelled.

Insurance coverage is only active during the policy period. Once the policy expires or is cancelled, the insurer is not required to cover any medical costs. Filing a claim after this time will not work. Keeping your policy active is key to avoiding these problems.

-Policy Limits Exhausted

Health insurance experts often recommend choosing unlimited restoration perks in your policy. This feature is crucial if you have low coverage limits or a chronic condition that requires frequent hospitalisations throughout the year.

Without this restoration benefit, you risk exhausting your sum insured, which means your coverage limit will be used up. Once this limit is reached, your insurer will reject any additional claims.

TATA AIG's restoration benefit is a valuable add-on that restores your sum insured and any accumulated cumulative bonus if it is depleted during the policy period. This particular feature may come at an extra charge, which may increase your medical insurance premium to some extent; however, it is especially beneficial if you face frequent health challenges, hold a family floater plan or have a lower sum insured.

You can go through this link to learn more about TATA AIG’s Restore Benefits Add-on in Health Insurance.

If you are wondering, “What is rejection in medical billing?” Let us clear it up for you.

Well, health insurance claim rejection can occur before the policyholder submits any claims. This denial can be due to various reasons, such as age, inaccurate information regarding a pre-existing condition, nature of employment, etc. It differs from claim repudiation, as in claim rejection, it does not meet the specific requirements of the policy.

When an insurance claim is rejected, the policyholder is informed of the specific reason. Policyholders should verify that all provided information is accurate and that medical procedures and diagnoses meet policy requirements.

It is also important to ensure that claims adhere to policy exclusions and limitations. However, if necessary, the claim may be resubmitted with revised information and additional details.

-Why Health Insurance Claims Are Rejected

Reasons for health insurance claim rejections include:

Delayed Claim Filing

With top-tier health insurance plans and partner providers, there are rules about when claims must be filed. This timeframe can differ between insurers and is also affected by whether the claim is cashless or for reimbursement.

If you miss the specified timeframe for filing a claim, your health insurance claim will almost certainly be rejected. Thus, it is important to be aware of these timelines to ensure that your claim is filed promptly and in accordance with your insurer’s requirements to avoid rejection.

Lack of Proper Documentation

When you file a cashless or reimbursement claim, you must provide a complete set of documents. This typically includes personal identification, your policy number, detailed medical records, hospital invoices and any other required paperwork.

If you fail to include any required documents or submit incorrect ones with your claim, your health insurance provider may reject it. Accurate and complete documentation is crucial for claim approval and processing, so ensure everything is correct and submitted on time.

Claim Outside Policy Coverage Terms

Each health insurance policy has a list of exclusions specifying what is not covered. Some exclusions can be waived with additional riders or add-ons, while others are permanent and cannot be changed. If your claim falls under these permanent exclusions, your health insurance provider will automatically reject it.

Therefore, after purchasing a health insurance plan, it is essential to review the listed exclusions carefully. Make a note of these exclusions to understand what is not covered. Being aware of these details will help you avoid claim rejections and ensure you make informed decisions about your health insurance coverage.

Omitting Prior Medical Conditions

Suppose you had a pre-existing medical condition that was treated and resolved a year ago. If you choose not to disclose this to your health insurer, but the condition reoccurs in a related form after obtaining the plan, it could cause issues.

Your insurance provider will undoubtedly deny the claim now that they know about your medical history and how you concealed the information. As a result, you will end up paying a significant amount out-of-pocket despite having one of the best health insurance plans available.

Neglecting Pre-Authorisation Requests

Some treatments need prior authorisation from your health insurance provider. Failing to obtain this clearance before undergoing treatment can result in your claim being denied or rejected.

If you miss obtaining prior authorisation for a medical procedure, your claim will likely be rejected even if your policy covers the treatment. The insurance provider requires this authorisation to ensure the procedure is covered under your plan.

The Claim was Submitted During the Waiting Period

Medical insurance policies include waiting periods for various conditions. These can apply to the initial 30 days after purchase, specific illnesses, pre-existing conditions, maternity-related expenses and chronic diseases. Claims for these conditions within the waiting period will be rejected.

During this waiting period, insurance providers do not provide coverage for any relevant ailments that you may need treatment for. If you submit any claims during this time, they will be completely rejected.

A rejected or repudiated claim signals the possibility of severe legal consequences that could significantly impact your financial history.

Given the vital role of health insurance policies in protecting your finances during medical emergencies, you undoubtedly want to avoid this outcome. Preventing your claim from being rejected or repudiated is the first step:

• Ensure all details submitted during your health insurance application and claims process are accurate and complete. Double-check personal information, medical records and supporting documents to avoid errors.

• Review your policy document carefully to understand its terms and conditions. Avoid submitting claims for treatments or conditions listed as exclusions to prevent rejection or repudiation.

• Ensure all health conditions are fully disclosed to avoid issues with your insurance claim approval.

• Review your policy for specific disease sub-limits or waiting periods. Ensure your claim is filed within these constraints and adheres to the coverage limits for proper approval.

• Choose an unlimited restoration perk or Top-Up plan in addition to your base health insurance, be it your critical illness insurance plans, individual health insurance coverage, family floater or senior citizen health insurance policies. These options help replenish your sum insured and provide extra coverage, reducing the risk of claim rejection.

If your claim has already been denied, follow these steps:

• First, determine the reason for the rejection or repudiation.

• If you need help determining the reason for the claim rejection, contact your insurance provider or Third Party Administrator (TPA). Ask them for a detailed explanation of why your claim was rejected or repudiated.

• Contact your insurer if you identify any issues with your documents or details. Provide the correct supporting documents and request a correction to update the information.

• You can escalate the issue to an Ombudsman forum if your insurance claim remains denied. Provide the correct supporting documents and request a correction to update the information.

• File a formal complaint and follow the prescribed procedure, which may include gathering supporting documents and seeking legal advice. This step can help resolve disputes and ensure a thorough review of your case.

The difference between health insurance claim rejection and repudiation is subtle. The primary difference lies in the reason and the resulting consequences. Nonetheless, for both instances, you, the policyholder, ultimately incur a significant financial burden because despite having the financial support to assist you during medical emergencies, you end up paying for the treatments out of your own pocket.

The most effective approach would be to carefully review the policy documents, supporting documents and medical insurance plans you select. If you encounter a rejection or repudiation, you can consult a health insurance specialist for guidance on the next steps.

If you encounter any issues or need assistance with your health insurance, feel free to contact TATA AIG. Our knowledgeable customer service team is here to help with all aspects, including policy purchases, renewals and claim settlements.

We are committed to providing the support and guidance you need to navigate your insurance effectively and resolve any concerns promptly.