Independent industry data paints a consistent picture of slow claims. A 2022 study by insurtech platform SecureNow found that health insurers take an average of 20 to 46 days to settle expense reimbursement claims from the date of intimation, with maternity claims taking between 7 and 108 days, and Caesarean sections taking as long as 9 to 135 days. The same study found that 13-26% of the claimed amount is typically deducted from final approved claims on account of uncovered consumables and administrative charges, a gap that directly affects hospital revenue, not just patient out-of-pocket cost.
Much of this delay traces back to how claims are processed today. In India, unlike many developed markets where over 90% of claims are auto-adjudicated, most claims processing remains manual — hospitals upload documents to insurer- or TPA-specific portals, and a person on the other end authenticates and adjudicates each claim individually. The current system also suffers from a lack of standardisation across claims forms, submission procedures, and adjudication processes, with most data exchanged through PDF or manual methods rather than structured, machine-readable formats.
The National Health Claims Exchange (NHCX), built on top of ABDM’s technical milestones, is designed to close this gap. This guide sets out, for CIOs and CFOs, what needs to be built, registered, and connected and in what sequence, to move a hospital’s claim cycle toward single digits.
What ABDM M3 unlocks
ABDM certification progresses through defined technical milestones, each unlocking a different system capability, as documented in the official FHIR Implementation Guide for ABDM maintained by the National Resource Centre for EHR Standards (NRCeS) under the National Health Authority.
M1 makes a hospital’s system an identity provider, handling ABHA creation, verification, and patient discovery. M2 makes it a Health Information Provider (HIP), sharing FHIR records with patient consent. M3 makes it a Health Information User (HIU), able to fetch records from other ABDM-connected providers with consent. M4 introduces NHCX itself — a standardised, FHIR-based framework built to support the vision of Pradhan Mantri Jan Arogya Yojana (PMJAY), enabling automation of health claim-related information exchange between payers, providers, and beneficiaries through an interoperable, machine-readable, auditable protocol.
M3 is the relevant prerequisite for claims because it establishes the consent-based exchange infrastructure — secure record requests, ABHA-based patient linkage, structured FHIR data — that a claim also depends on to move electronically between hospital, TPA, and insurer, instead of as a scanned document.
The sequencing matters for planning purposes: NHCX-based claims workflows depend on the M1-M3 foundation already being in place. Adding an NHCX connector without ABHA-linked patient records and HIU capability automates an already-broken process rather than fixing it. This is exactly the layer a properly built hospital management system needs to handle natively, rather than as a bolt-on integration attempted after go-live.
What NHCX changes, and what it doesn’t
NHCX is a digital platform developed under the National Health Authority, designed to simplify how health insurance claims are filed, ensure faster processing, and improve interoperability between hospitals, insurers, and TPAs. It was first announced for launch in 2024 to address a fragmented system in which insurance companies each operate separate claims portals, forcing hospitals to work across multiple parallel workflows for the same underlying task.
NHA and IRDAI have been developing the NHCX platform jointly for several years, with IRDAI issuing a circular in June 2023 asking insurers to onboard. At an early stage of rollout, major insurance companies and approximately 5,000 hospitals had already been linked to the platform, according to industry reporting. Adoption has continued to expand since, and hospitals evaluating their own NHCX roadmap should check the current onboarding numbers directly against NHA’s own reporting via the ABDM platform, since third-party figures on hospital and integrator counts vary and are not always independently verifiable.
NHCX brings together every party in the claims process — insurers, TPAs, government-scheme administrators, hospitals, laboratories, and the patient — onto a single interoperable, machine-readable, auditable, and verifiable communication protocol, as documented in NHA’s own published architecture. In its initial version, NHCX is focused on facilitating message exchange for the cashless claims process, covering four core workflows: retrieving provider/payer details, eligibility checks, pre-authorisation requests, and claims requests.
At the insurer’s end today, even where data is digitised, claims are still manually authenticated and adjudicated before a decision is conveyed back to the hospital — a process the same NHA documentation flags as suffering from a lack of authenticated data, non-standardised processes across insurers, TPAs, and providers, and high per-claim processing costs.
Regulatory pressure is reinforcing this shift toward structured, digital claims. IRDAI’s Master Circular on Health Insurance Products, released 29 May 2024, mandates that every insurer strive toward 100% cashless claim settlement in a time-bound manner, requires insurers to decide on cashless pre-authorisation requests within 1 hour, and grant final discharge authorisation within 3 hours of the hospital’s request. If an insurer misses the 3-hour window, any additional hospital charges caused by the delay must be borne by the insurer from its shareholder’s fund. These timelines are structurally difficult to meet on manual, portal-based workflows and are realistic mainly when claim data is already structured and machine-readable at the point of generation.
Where the delay in a typical claim cycle actually occurs
Two structural issues account for much of the delay in the current model.
Non-standardised submission and adjudication. With claims forms, submission procedures, and adjudication processes differing by insurer and TPA, and most data still exchanged through PDF or manual methods, hospitals lack a single consistent way to submit a clean claim the first time. Structured FHIR-based claims, exchanged through a common protocol, are intended to remove the discrepancies that arise from these differing insurer-specific requirements.
Manual authentication and adjudication. Even in cases where the underlying data is already digitised, the claim still typically passes through manual authentication and adjudication before a decision reaches the hospital, extending the time between claim submission and settlement. A standardised, machine-readable exchange is designed to reduce this manual handling at the insurer and TPA end, not just at the hospital end.
The implementation sequence
For CIOs and CFOs, the work breaks into five sequential layers. Each depends on the one before it.
- Facility and identity registration. A facility needs a verified identity in the Health Facility Registry (HFR), and the hospital’s software needs to have cleared NHA milestone certification, before NHCX integration can meaningfully proceed. These are prerequisites, not parallel workstreams, and are commonly underestimated in project timelines.
- ABHA capture at registration. Since NHCX claims are designed to link to a patient’s ABHA-based identity as part of the exchange protocol, ABHA capture should happen at registration rather than being retrofitted at discharge.
- Structured digital billing. This step is frequently skipped, and it determines whether NHCX integration actually improves the process or simply exposes gaps already present in it. Patient demographics need to match the insurance policy exactly, since mismatches are a common and avoidable source of claim rejection. This is where a genuine revenue cycle management software layer matters, since structured billing is a data-capture discipline, not a claims-submission feature bolted on at the end.
- M1 through M4 certification, in sequence. Confirm the HMS vendor has cleared identity (M1), record-sharing as a Health Information Provider (M2), and record-fetching as a Health Information User (M3), before assessing NHCX (M4) readiness — following the milestone structure documented in NHA’s own FHIR implementation guide.
- NHCX connector go-live, with reconciliation built in. Once claims move through the NHCX exchange, covering eligibility checks, pre-authorisation, and claims requests, finance teams need a claim-level reconciliation process in place, a batch settlement from a TPA still needs to be matched back to individual patient accounts.
The financial and technical case
For hospitals and providers, the direction of regulatory travel — 100% cashless targets, 1-hour and 3-hour processing mandates, and a push toward standardised digital exchange — points toward materially shorter claim cycles than the 20-46 day averages recorded in earlier industry studies. For a hospital carrying significant TPA receivables, even a modest reduction in Days Sales Outstanding has a direct effect on working capital. This is the same discipline that RCM in medical billing is built around: catching the gap between the clinical event and the claim before it becomes a receivable problem.
Technically, NHCX operates on the same ABDM/FHIR foundation used for clinical data exchange under M1-M3 — same regulator, same underlying standards, different data domain. This means ABDM integration work already completed for clinical interoperability provides a head start on NHCX rather than requiring a wholly separate build. When evaluating vendors, the more useful question is not simply whether NHCX is “supported,” but what the vendor’s current M1-M3 certification actually enables today, and what its specific M4/NHCX roadmap and timeline looks like.
Where Lifetrenz fits into this roadmap
This is the layer Lifetrenz’s HIS and RCM modules are built to operate at. ABHA capture, structured billing, and FHIR-based record and claims exchange are designed to function as part of the clinical and billing workflow rather than as a separate integration layered on afterward. For hospitals planning their M3/M4 and NHCX roadmap, this distinction — compliance built into the workflow versus compliance added on top of it — generally determines whether a slow claim cycle becomes a genuinely faster process, or simply a faster version of the same manual one.
Conclusion
ABDM’s milestone structure and NHCX represent infrastructure that NHA has been actively building out since 2023, with clear regulatory direction from IRDAI reinforcing faster, more standardised claims processing. Hospitals ahead on this transition are treating HFR registration, ABHA capture, and structured billing as immediate priorities, with NHCX connectivity as the resulting capability, rather than waiting for a formal mandate before acting.
