Hospitals, insurers face off: GI Council cautions against cashless care disruption

The GI Council, which represents non-life insurers in India, strongly opposed AHPI’s stand. “Such arbitrary action prejudices the interests of policyholders and risks undermining trust in the health insurance ecosystem,” it said, adding that it fully supports Star Health in this dispute.

This is not the first time AHPI has flexed its muscles. Just last month, it had issued similar warnings against Bajaj Allianz General Insurance, Care Health Insurance, and Niva Bupa Health Insurance. At the core of the conflict are charges of claim rejections and payment disputes. As the tug-of-war continues, one fact is clear: patients are caught in the middle. Without compromise between insurers and hospitals, trust in India’s health insurance system risks being permanently damaged.

According to the Council of Insurance Ombudsman’s annual report, Star Health & Allied Insurance topped the list of complaints in FY2023-24, with 13,308 cases filed against it. Of these, an overwhelming 10,196 complaints related specifically to partial or complete rejection of policyholders’ claims.

AHPI has accused Star Health of repeatedly squeezing hospitals on tariffs, demanding lower rates at the cost of patient care. It also alleged that the insurer makes unexplained deductions on already approved claims and at times withdraws cashless services from hospitals without prior notice. “Such practices have caused severe hardship to patients and their families,” the association said.

On the other side, insurers argue that hospitals are inflating bills and pushing up treatment costs indiscriminately. They claim that many hospitals are unwilling to justify their pricing, leaving insurers to bear mounting costs.

The GI Council said it had already attempted to mediate. A meeting was scheduled with AHPI on September 2 to resolve issues. However, AHPI postponed the talks to a later date, with the new date yet to be fixed. “Despite this, AHPI has proceeded with its unilateral action, signalling a preference for disruption over collaboration to improve customer service and protect patient interests,” the council said.

The larger problem lies in the widening gap between rising medical costs and insurance payouts. Hospitals point out that prices of medical consumables, equipment, and staff salaries have surged in recent years. Yet, insurers have not revised their approved treatment rates in line with inflation. Hospitals also complain of abrupt rejection or reduction of claims, which leaves them in a financial bind and patients stuck with unexpected bills.

The council, however, insists that such disputes must not affect patients. “Tariff negotiations and billing practices are regular business activities between hospitals and insurers and should never be used to compromise patient care,” it said. Star Health policyholders will continue to enjoy full coverage and uninterrupted access to treatment, the council said.

The council also warned that suspending cashless services would force families to make hefty advance payments during hospitalisation, exposing them to financial distress, particularly in medical emergencies.