What is the Cashless Everywhere Scheme in Health Insurance Plans?

Imagine a future where you wouldn’t need much cash while paying a hospital bill anywhere in India — whether it's a small local hospital in a remote town or a multi-speciality hospital in a metro city. Sounds great, right?

That’s exactly what the Cashless Everywhere initiative by the IRDAI & GIC promises. This allows you to make a cashless claim at any hospital, not just those tied to your insurer’s network.

Naturally, this has taken the health insurance industry by storm. But while it sounds promising for policyholders, there’s one big problem that could threaten the scheme's success. Let’s break it down.

What is Cashless Everywhere in Health Insurance?

Before looking at Cashless Everywhere, let’s understand how insurance claims work today.

Currently, there are two primary ways to make a claim – cashless & reimbursement. Let’s take a look at this further:

1. Cashless Claims: You visit a network hospital, share your policy details, and the hospital coordinates with the insurer to settle the bill directly. You don’t need to pay upfront or worry about submitting documents; the hospital handles it all.
2. Reimbursement Claims: You pay for the procedure out of pocket, collect and submit all the bills to your insurance company, and wait for reimbursement. This process can take time and cause financial strain.

While cashless claims are far more convenient, they’re only available at hospitals within an insurer’s network. If you go to a non-network hospital, reimbursement is your only option. This has been a significant pain point for customers.

This is why the General Insurance Council is advocating for the Cashless Everywhere scheme. Under this initiative, you can now make a cashless claim at any hospital, even if it’s not part of your insurer’s network. 

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How does Cashless Everywhere Work in Health Insurance Plans?

The Cashless Everywhere initiative simplifies the hospitalisation and claims process, ensuring you don’t have to stress about out-of-pocket expenses — even if the hospital isn’t a part of your insurer’s network. But it does come with a catch. Here’s how it works step-by-step for both planned procedures and emergency treatments:

For Planned Procedures

When you’re scheduling a procedure — such as a C-section delivery, joint replacement surgery, or cataract operation — you can initiate the cashless claim process ahead of time. Here’s how it will be done:

1. Inform the Insurer Early: You need to notify your insurance company at least two days before the hospital admission. This can be done via the insurer’s online portal, mobile app, or by calling their toll-free number. Sharing details such as the treatment type, doctor’s diagnosis, and estimated date of admission and discharge is crucial to start the process.
2. Insurer Coordinates with the Hospital: Once notified, your insurer will directly contact the hospital, even if it’s a non-network facility. They will verify the medical procedure details, agree upon treatment rates, and review the cost estimates provided by the hospital.
3. Pre-Approval for Cashless Claim: If everything checks out, the insurer issues a pre-approval for the cashless treatment. This essentially guarantees the hospital that they will receive payment directly from the insurer.
4. Hassle-Free Admission and Billing: When you’re admitted to the hospital, all billing will be settled directly between the insurer and the hospital. You don’t have to pay upfront, except for any exclusions or consumables outside the policy coverage.

For Emergency Hospitalisations

In emergencies — such as accidents, sudden cardiac issues, or unexpected surgeries — the process is slightly different but still streamlined to ensure quick approvals:

1. Notify the Insurer Within 24 Hours: If you or someone in your family has been admitted to a hospital during an emergency, you must inform the insurer within 24 hours of the admission. 
2. Insurer Coordinates with the Hospital: The insurer will contact the hospital to validate the situation and confirm the treatment.
3. Verification and Approval: The insurer works with the hospital to finalise the rates and treatment protocols. Once approved, the insurer informs the hospital, giving the go-ahead for a cashless claim.
4. Cashless Billing for Critical Treatments: Once approval is granted, you won’t have to pay the hospital bill upfront, except for any policy exclusions or items not covered under the health plan. The insurer directly settles the bill with the hospital.

While it looks great on paper, the success of Cashless Everywhere depends on how efficiently insurers and hospitals coordinate to ensure approvals happen seamlessly. Without that, policyholders might still face delays and upfront payments — defeating the purpose of this breakthrough initiative.

What are the Benefits and Drawbacks of Cashless Everywhere in Health Insurance Policies?

1. For Hospitals:
   1. Benefits: 
      1. Access to Any Hospital: You don’t need to worry about whether a hospital is part of the insurer’s network. With Cashless Everywhere, they can receive treatment at any hospital across India without paying upfront.
      2. Eliminates Out-of-Pocket Expenses: Unlike reimbursement claims, where you need to pay the hospital bill upfront, Cashless Everywhere allows insurers to settle the bill directly with hospitals, significantly reducing financial stress.
      3. Reduces the Wait Time for Claims: The coordination happens directly between the insurer and the hospital, which eliminates the hassle of lengthy paperwork and waiting weeks for reimbursement.
   2. Drawbacks:
      1. Approval Delays: In non-network hospitals, insurers may face challenges negotiating treatment costs or validating claims, which could cause delays in pre-approval.
      2. Possibility of Denials: If treatment costs exceed the insurer’s pre-set “reasonable and customary charges,” approvals might be delayed, or partial claims might be rejected.
2. For Insurers:
   1. Benefits
      1. Increased Customer Satisfaction: Allowing Cashless Everywhere ensures policyholders can access hassle-free treatment, building trust and enhancing customer retention.
      2. Better Claim Transparency: Direct coordination with hospitals can improve the transparency of medical costs and reduce fraudulent claims.
   2. Drawbacks:
      1. Higher Claim Costs: Hospitals may inflate bills for non-network cashless claims, increasing the insurer’s liability and impacting overall claim ratios.
      2. Operational Complexity: Coordinating claims at non-network hospitals requires additional resources, which could increase administrative costs for insurers.
3. For Policyholders:
   1. Benefits:
      1. Increased Patient Volume: Non-network hospitals can attract more patients as they now offer cashless facilities, making healthcare accessible to a broader audience.
      2. Streamlined Payments: Hospitals will receive payment directly from insurers, reducing their dependency on patients for settlement.
      3. Wider Reach: Smaller hospitals in rural or semi-urban areas can benefit from increased trust and access to insured patients.
   2. Drawbacks:
      1. Rate Negotiations: Hospitals may face pressure from insurers to agree to pre-negotiated rates during claims, which may lower their profit margins.
      2. Documentation Burden: Hospitals will need to comply with insurers’ stringent documentation processes to validate treatments and costs.
      3. Delayed Payments: If insurers face delays in approving claims, hospitals might encounter cash flow issues.

When Will Cashless Everywhere Be Implemented?

The Cashless Everywhere scheme is still in its early stages. Full-scale implementation depends on how successfully insurers, hospitals, and policyholders adapt to this new framework. While industry leaders are pushing for widespread rollout, challenges such as cost negotiations, technology upgrades, and documentation processes must be resolved before the scheme becomes mainstream.

Apart from this, they have pushed back strongly against the scheme. The Indian Medical Association & Hospital Board of India has even issued an advisory urging hospitals not to accept Cashless Everywhere claims in their current format. Why? It boils down to negotiated rates. Let’s take a look at this further.

Here’s how cashless claims work at network hospitals today:

• Insurers negotiate discounted “package rates” with hospitals to settle bills. For example, if a hospital charges ₹1.5 lakh for a knee replacement, the insurer might settle for a ₹1 lakh package.
• In return, hospitals get better patient footfall because they’re included in the insurer’s network.

However, with Cashless Everywhere, insurers are required to offer the lowest negotiated rate across the board. For instance, if public sector insurers negotiate a 30% discount, every insurer — including smaller private ones — will expect hospitals to honour that same discounted rate.

Hospitals argue that this is unsustainable. While they can offer deep discounts to major insurers that bring significant footfall, they cannot extend the same to every insurer, especially lesser-known ones. Hospitals worry that accepting such low rates universally could drive them out of business.

Cashless Everywhere vs Cashless vs Reimbursement in Health Insurance Plans

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Conclusion

The Cashless Everywhere scheme is an ambitious step forward for the health insurance industry, promising convenience and flexibility for policyholders. By allowing cashless claims at any hospital it eliminates network restrictions and simplifies the claims process, making quality healthcare more accessible.

However, its success hinges on resolving challenges such as delayed approvals, inflated hospital bills, and operational complexities. Thus, we normally recommend and prefer that you opt for the safer option and approach a network hospital to avail of the cashless benefit since this mitigates the risk of reimbursement settlement to a minimum or to 0.