Pre-authorisation

Pre-authorisation is the formal approval that a health insurer (through its TPA) gives to a network hospital before treatment begins or shortly after admission, confirming that the proposed treatment will be settled through the cashless mechanism up to a specified amount. The pre-authorisation form, filled by the hospital's insurance desk and the treating doctor, captures the provisional diagnosis, the proposed line of treatment (medical management or surgery, with the procedure name and code), the estimated cost broken down by major heads (room, surgeon, anaesthetist, OT, investigations, medicines, consumables), the expected length of stay, the patient's policy details, and any earlier hospitalisation history. The TPA reviews this against the policy's terms — sum insured, room-rent eligibility, sub-limits, waiting periods, exclusions — and either approves the request, partially approves it with a lower amount, or declines it with reasons.

IRDAI's 2024 'Cashless Everywhere' framework targets pre-authorisation decisions within one hour of receiving a complete request, although the actual turnaround varies across insurers and time of day. Worked example: Meera is admitted for a planned laparoscopic gallbladder removal at a network hospital. The hospital files a pre-authorisation request at admission with an estimated cost of ₹1,80,000 (₹65,000 surgeon and OT, ₹40,000 anaesthesia and ICU, ₹35,000 investigations and medicines, ₹40,000 room for three days).

The TPA approves ₹1,55,000 within four hours, deducting ₹15,000 of estimated non-admissible items and ₹10,000 of room-rent excess (the hospital had quoted a deluxe room while the policy permits a standard single AC). Meera and the hospital proceed with the treatment knowing the cashless ceiling. At discharge, the final bill is ₹1,72,000; the TPA settles ₹1,52,000 directly with the hospital, and Meera pays ₹20,000 of inadmissible items and the room differential.

A common misconception is that 'pre-authorisation guarantees the final claim amount'. It does not. The approved amount at pre-authorisation is provisional, based on the estimate.

The final settlement at discharge can be lower (if actual costs were below the estimate), or higher (if the TPA approves an enhancement during the stay because the treatment escalated), or contested (if the TPA disputes specific line items at discharge). Another common misconception is that 'pre-authorisation is mandatory only for planned admissions'. Emergency admissions also need pre-authorisation, ideally within 24 hours of admission, with the hospital filing as soon as the patient is stabilised.

Failure to file timely pre-authorisation in an emergency can convert what should have been cashless into a reimbursement claim. Related: cashless-claim, tpa, claim-intimation.