As hospital representatives and healthinsurance providers prepare to address differences that led to an ugly stand-off between the two, over cashless health insurance services – here’s a look at why this happened and where it leaves the policy-holder.

Why did insurance companies and healthcare establishments clash over cashless health insurance services?

The Association of Healthcare Providers of India (AHPI), on August 22^nd, said it had issued an advisory to its member hospitals to suspend cashless healthcare insurance services provided by Bajaj Allianz, from September 1.

This followed complaints from members involving multiple issues including “abrupt stoppage” of cashless services at some hospitals “on frivolous grounds”, delays in empanelment to the General Insurance Council (GIC) -led panel, payment disputes with hospitals on new technologies/ medicines, and questioning of clinical decisions made by a doctor, in an effort by insurance companies to push low-cost / cheaper drugs or implants, the AHPI alleged. Further they claimed that insurance companies had not revised treatment rates for years, in line with medical inflation. Besides, companies presented similar rates, and used “collective bargaining” to pressurize hospitals to comply, the AHPI said.

The GIC responded calling out AHPI’s “sudden unilateral action” as creating confusion among policy-holders, besides denting trust in the health insurance ecosystem. Insurers alleged, hospitals were attempting to hinder the common empanelment of healthcare providers. 

After a meeting with Bajaj Allianz and follow-up steps taken by them, AHPI withdrew its advisory on suspending cashless services of this provider.

What are the hospitals’ concerns on cashless insurance?

During cashless authorisation, for example, items like implants are left open, says AHPI. And at payment time, when bills are presented even for implants from reputed manufacturers, “the cost is disputed, and deductions made for the differential cost,” it added. Delayed payments and disputes over clinical decisions are at the core of these stand-offs – that are not entirely new between these two industry segments.  

But health insurance companies are unhappy with hospitals too, why is that?

 The GIC points to initiatives like “cashless everywhere”, for example, as efforts to ensure patients get treated without the financial stress of upfront payments, for example, while admitting a patient. Health insurance providers say, there is no apex body for them to lodge complaints of higher charges or unreasonable treatments by hospitals. They have been calling for a strong healthcare regulator - for standardisation of treatment protocols and rates across hospitals to ensure transparency and fairness in the healthcare ecosystem. Insurers say standardisation of rates across treatments at hospitals under all insurance companies could eliminate overcharging at hospitals and bring down medical inflation (pegged at 12-14 percent). High medical costs lead to upward revisions of insurance premiums.

Just as insurance companies are answerable to the IRDAI (Insurance Regulatory and Development Authority of India), a healthcare regulator would help set standard treatment rates.

Besides Bajaj Allianz, did AHPI send a similar notice to any other health insurance provider?

Yes, AHPI raised similar issues with Care Health Insurance, as well. They are in discussions to resolve the issue, an AHPI representative said.

Could this escalate to more hospitals not accepting cashless insurance?

That is a worry – as contentious issues raised by both are quite company agnostic. Internal discussions are underway for a possible meeting between AHPI and GIC – with the expectation it comes out with a workable mechanism to resolve outstanding issues. Health insurers expect hospitals would agree to come under common empanelment to provide cashless treatment to patients.  

And what of policy-holders - will they be treated at hospitals, covered by insurance companies?

Patient trust in hospitals and healthcare insurance has suffered – as they worry about making hefty upfront payments to admit a patient, despite having paid high health insurance premiums – if the cashless facility is suspended, even for a few days. Hospitals will still treat patients and insurance companies will still reimburse payments made by policy-holders – but the patient will have to bear the brunt of making the initial out-of-pocket payment, despite having an insurance, for no transgression on their part.

Published on August 31, 2025