Suspension of cashless treatment: Hospitals cry foul, accuse insurers’ body of ‘cartelisation’

DMA NHF, which represents nursing homes, small- and mid-sized private hospitals, and healthcare providers, asked the regulator to investigate the role of the GI Council in what it called “cartelisation” and to direct corrective steps. It demanded fair and inflation-linked hospital tariffs, protection of patients’ rights by ensuring uninterrupted cashless services, and involvement of the Serious Fraud Investigation Office (SFIO) to probe whether insurers’ conduct was against public interest.

The Forum stated the GI Council has introduced a so-called “common empanelment” framework under which all insurers collectively dictate hospital tariffs and commercial terms. This framework has no legal standing and amounts to illegal combined bargaining, according to DMA NHF.

“With private insurers controlling over 50 per cent of India’s health insurance market, the insurers are misusing their dominant position to impose unilateral tariffs. This so-called common empanelment strips hospitals of their right to negotiate independently, artificially suppresses tariffs, and threatens the sustainability of quality healthcare services,” said Dr V K Monga, chairman, DMA NHF. “Instead of promoting competition and protecting patient interests, insurers are hiding behind Irdai circulars to justify bargaining as a group. This misuse of regulatory directives undermines the Competition Act and IRDAI’s very own mandate,” he said.

The GI Council had criticised AHPI’s move, calling it a sudden and unilateral action that has caused widespread confusion and concern among citizens. “Instead of enabling dialogue and resolution, a press statement was abruptly issued, prejudicing the interests of policyholders across the country,” the Council said, warning that such actions risk undermining public trust in the health insurance ecosystem.

AHPI apparently decided to stop cashless service due to the non-revision of various treatment costs. “Medical inflation in India remains in the 7-8 per cent range every year, driven by rising staff costs, medicines, consumables, utilities, and overheads. While hospitals strive to enhance efficiency, it is not viable to operate at outdated reimbursement rates, much less lower ones. Continuing under such terms risks compromising patient care, which AHPI and its members cannot allow,” AHPI said in a press statement.

DMA NHF said that hospitals are being forced to continue cashless services under expired contracts at old and unviable tariffs, a practice that will inevitably lead to compromises in the quality of care. India already has among the lowest hospital tariffs globally, with patients from the poorest parts of the world traveling to get high-end care at affordable costs. Further tariff suppression would make healthcare delivery unsustainable and discourage investment in infrastructure and modernisation, it cautioned.

The Forum also flagged insurers’ disproportionate spending patterns, noting that large portions of collected premiums are directed towards commissions and administrative costs rather than patient care. For FY25, incurred claims ratios (ICRs) of major standalone health insurers stood as low as 54-67 per cent of total income, suggesting significant inefficiency.

“This suppression is not in the interest of policyholders. Insurers are prioritising their bottom lines over the patients whom health insurance is meant to protect. We are raising this issue in the larger interest of hospitals, nursing homes, healthcare providers, and, most importantly, patients,” Monga said. “Anti-competitive collusion under the GI Council threatens not just providers and patients but the future of India’s healthcare ecosystem. We urge Irdai to act swiftly to restore fair play, ensure sustainability for providers, and protect patient rights.”

The Irdai had asked insurance companies to go for cashless settlement of health insurance claims from August 1, 2024, making hospital bill settlement for policyholders smoother and faster. It said necessary systems and procedures should be put in place by the insurer immediately and not later than July 31, 2024. Every insurer should strive to achieve 100 per cent cashless claim settlement in a time-bound manner, the Irdai said. The insurers should endeavour to ensure that instances of claims being settled through reimbursement are at a bare minimum and only in exceptional circumstances, it said.

AHPI’s move comes at a time when the insurance regulator, the Irdai, is pushing for 100 per cent cashless treatment nationwide. However, while insurers are tightly regulated by the Irdai, hospitals operate without any regulatory oversight, leaving the Irdai powerless to rein in their actions. Over the past three years, healthcare costs have skyrocketed, with hospitals relentlessly hiking treatment charges across the board, pushing quality medical care out of reach for a large section of the population.

AHPI asks insurers to restore cashless service

Association of Healthcare Providers of India (AHPI) on Thursday held a meeting with Bajaj Allianz General Insurance Company to discuss the growing concerns of its member hospitals following its recent advisory to suspend cashless services for Bajaj Allianz policyholders.

The association said that insurance companies should immediately restore cashless services at the AHPI member hospitals as this is causing undue suffering to patients and the hospitals are facing irate patients who are unable to access cashless services at hospitals of their choice, AHPI said.