Every health claims team in India now works against two clocks. The first starts when a hospital sends a cashless request: the insurer has one hour to decide it. The second starts when the hospital asks for final discharge authorisation: the insurer has three hours, and the patient is not supposed to wait at the desk while it runs.
These timelines are not aspirations. They come from IRDAI’s Master Circular on Health Insurance Business dated 29 May 2024, and they are repeated in the Master Circular on Protection of Policyholders’ Interests, 2024 dated 5 September 2024. In March 2026 the government restated both timelines in a PIB release on health claim settlement.
This post is for insurers, TPAs, brokers, and POSP networks who handle cashless claims. It sets out what the circulars actually require, who pays when the clock runs out, and how to build a workflow that meets the timelines without cutting corners on admissibility.
What the circulars actually say
The Health Insurance Business master circular (Ref: IRDAI/HLT/CIR/PRO/84/5/2024) puts the core rules in Chapter I.
Cashless authorisation (para 15). The insurer “shall decide on the request for cashless authorization immediately but not more than one hour of receipt of request.” Insurers had to put the necessary systems and procedures in place by 31 July 2024. The same paragraph asks every insurer to strive for 100% cashless settlement, keep reimbursement to “bare minimum” and exceptional cases, offer pre-authorisation to policyholders through digital mode, and optionally run physical help desks at hospitals.
Final authorisation for discharge (para 16). The insurer “shall grant final authorization within three hours of the receipt of discharge authorization request from the hospital. In no case, the policyholder shall be made to wait to be discharged from the Hospital.”
Claim settlement (para 17). No claim can be repudiated without approval of the Product Management Committee or its three-member Claims Review Committee. If a claim is repudiated or partly disallowed, the claimant must get “full details giving reference to the specific terms and conditions of the policy document.” And insurers and TPAs must collect the required documents from the hospital; the policyholder is not required to submit them.
The Protection of Policyholders’ Interests master circular (Ref: IRDAI/PP&GR/CIR/MISC/117/9/2024) adds two points that matter for operations: no claim may be rejected or closed for want of documents or for delayed intimation, and claims other than cashless must be settled within fifteen days of submission.
Who bears the cost of a delay
The circular is explicit. If final authorisation takes longer than three hours, “the additional amount if any charged by the hospital shall be borne by the insurer from shareholder’s fund.” In other words, extra hospital charges caused by the delay are not passed to the policyholder; they come out of the insurer’s shareholders’ funds.
The policyholders’ interests circular adds a second cost: where a claim is not settled within the specified timelines, the claimant is entitled to interest at bank rate plus 2 percent from the date the intimation was received, paid suo motu by the insurer.
TPAs are not named as the payer, but they are not off the hook. Chapter II of the health circular requires insurers to have board-approved criteria for monitoring TPA turnaround times and service levels, and for clawing back TPA remuneration based on customer feedback, with clawed-back amounts passed to the customer. In practice, a TPA that misses the clock costs its insurer money and puts its own fees at risk.
Where the hours actually go
In most cashless desks, the decision itself is not what takes time. The time goes into everything around it:
- Incomplete requests. A pre-authorisation arrives without the provisional diagnosis, the treating doctor’s notes, or a cost estimate, and the clock is already running.
- Serial queries. The desk raises one query, waits, then raises another. Each round trip to the hospital eats into a one-hour window.
- Membership gaps. For group policies, the member list from the employer is out of date. The circular is clear that no claim shall be denied for non-availability of group member details, so the desk has to resolve it fast rather than reject.
- Discharge paperwork that starts too late. The final bill and discharge summary are assembled only when the patient is ready to leave, so every deduction is calculated under pressure.
- Deduction disputes. The hospital or family challenges a disallowance, and nobody can quickly show which clause it rests on.
None of these is fixed by asking people to work faster. They are fixed by changing when work happens and how evidence is presented.
A workflow that fits inside one hour
1. Make intake complete on arrival. Validate the request the moment it lands: policy status, member identity, sum insured available, waiting periods, and the documents a decision needs. If something is missing, send one consolidated query listing every gap, not a trickle of single questions.
2. Run admissibility checks in parallel. Policy terms, exclusions, sub-limits, room-rent eligibility, and network tariff checks can run at the same time rather than one after another. The adjudicator should see a single summary with each check linked to the clause and document behind it.
3. Show the clock to everyone. Each request should carry a visible timer from the moment of receipt, with escalation well before the hour is up. If a request is heading towards breach, a senior adjudicator should see it while there is still time to act.
4. Decide, then explain. Approvals, partial approvals, and queries should go back to the hospital with the reasons stated against the policy wording, so the hospital desk can act without phoning back.
A workflow that fits inside three hours
The three-hour discharge window is only achievable if most of the work is done before the request arrives.
- Track the stay, not just the start. Pull interim bills during the admission and process enhancement requests as they come, so the final bill holds few surprises.
- Pre-compute deductions. Apply sub-limits, room-rent proportionality, consumables, and non-payable items to the running bill, so the final authorisation is a reconciliation, not a fresh review.
- Agree the discharge pack in advance. Hospitals that know exactly what the desk needs send it once, complete.
Document checklist
Pre-authorisation: request form from the hospital, policy or e-card details and member ID, treating doctor’s notes with provisional diagnosis and line of treatment, relevant investigation reports, and a cost estimate.
Final discharge authorisation: discharge summary, final itemised bill with pharmacy and consumables breakdown, investigation reports, and implant invoices where applicable.
Remember that, under the circulars, collecting these from the hospital is the insurer’s and TPA’s job, not the policyholder’s.
Clause-level explanation of deductions
The March 2026 PIB release lists common reasons for claim disallowance or repudiation: exceeding the sum insured, co-payment clauses, sub-limits, deductibles in top-up policies, room-rent capping, proportionate charges, and non-medical expenses. Every one of these is a policy clause. The circular already requires partial disallowances to reference the specific terms and conditions, so the practical question is how quickly and clearly a team can do that.
A good deduction note does three things for every line:
- Names the item and amount disallowed.
- Cites the exact clause in the policy wording, with the page or section reference.
- Explains it in plain language the family, the hospital desk, or a POSP can understand, ideally in the language they asked in.
When deductions are explained this way at discharge, fewer turn into calls, grievances, or ombudsman complaints, and brokers and POSPs can answer their customers without escalating every case.
Where AI fits: AI You Can Accept
AI can take real work out of both clocks: reading pre-authorisation documents, flagging missing items in the first minutes, running policy checks in parallel, and drafting the clause-by-clause deduction note for the adjudicator to approve.
What it should not do is make decisions nobody can explain. That is the idea behind AI You Can Accept: every suggestion shows the clause and the document it came from, an adjudicator stays accountable for the decision, and repudiations go to the Claims Review Committee, exactly as the circular requires. The aim is a desk that meets its timelines with an evidence trail for every call, not a black box that is fast but impossible to defend.
Where to start
- Measure the clocks. Record receipt and decision timestamps for every cashless and discharge request, and look at where requests spend their time.
- Fix intake first. One consolidated query per request removes the most avoidable delay.
- Standardise the deduction note. Item, amount, clause, plain-language reason, every time.
- Bring the TPA into the same view. Shared timers and shared evidence make the board-approved TPA monitoring criteria something you can actually report on.
If you want a structured way to map your own cashless flow, the Claims Automation Workbook walks your team through intake, triage, status, and handoffs, and shows where automation removes work without removing judgment.
Sources
- IRDAI, Master Circular on Health Insurance Business, Ref IRDAI/HLT/CIR/PRO/84/5/2024, 29 May 2024 (Chapter I paras 15–17; Chapter II A and B).
- IRDAI, Master Circular on Protection of Policyholders’ Interests, 2024, Ref IRDAI/PP&GR/CIR/MISC/117/9/2024, 5 September 2024 (Part B: claim processing and settlement under health insurance).
- IRDAI, Press release: Reforms in Health Insurance, 29 May 2024.
- Press Information Bureau, Prescribed timelines and regulatory measures aim to ensure efficiency and fairness in health insurance claim settlements, 26 March 2026.
— Team Aketud
