If you are a customer of these insurers, you may be wondering if you should port your policy to another provider.
Well, the good news is there’s no need to panic.
Mint has learnt that both Bajaj Allianz and Care Health have met AHPI separately to iron out their differences with member hospitals. The suspension of cashless services for Bajaj Allianz, which AHPI announced earlier this week, is expected to be revoked after both insurers address member hospitals’ concerns and share a detailed plan about it with the association. Care Health was only warned about having its cashless services revoked.
Bajaj Allianz CEO Tapan Singhel clarified that no cashless claims have been denied so far since the AHPI’s announcement.
General Insurance Council, a statutory body that represents the interests of general and health insurance companies, also condemned AHPI’s suspension notice and demanded its immediate withdrawal, calling it an anti-consumer move.
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A recurring flashpoint
AHPI’s decision to stop cashless treatment unfairly penalises policyholders, who bear the brunt of the standoff. This is hardly the first time policyholders have been caught in the crossfire. Star Health and Tata AIG previously faced similar action from hospital associations.
Experts said, however, that no such notice has ever affected a policyholder directly as insurers negotiate with associations well before situation turns ugly.
“These are contracts between two parties and glitches may come time to time due to commercial interests but remember both parties are interested in honouring the partnership. Policyholders must know cashless or not, the claims admissibility of the policy stays. Cashless in any case is not insurable deliverable, it’s a service. Always be prepared for reimbursement,” said Prashant Mhatre, all-India president at General Insurance Agents Federation Integrated.
Outdated tariffs vs lack of transparency
Hospitals accuse insurers of delaying claim settlements, demanding excessive paperwork, and coercing them into accepting unviable tariffs. Insurers in turn allege that hospitals inflate bills, pad costs, and exploit loopholes due to lack of standardised treatment protocols and packaged rates in package pricing.
According to AHPI, hospitals stop cashless treatment if they feel the insurer forcing them to accept lower tariffs, which would make their business unviable. But insurers push back on this, saying the lack of standardised treatment protocols and transparency in healthcare inflates bills beyond the agreed upon tariff.
Three prominent issues surfaced in Mint’s conversations with insurers: a lack of standardisation in treatment protocols, separate billing for certain basic services, and that customers don’t benefit from shorter hospital stays due to advances in healthcare.
Dr. Prashant Mishra, based in Mumbai, said, “If a drug with one molecule comes under the Drugs Price Control Act, where MRP is controlled by the government, hospitals or doctors will use another high-MRP and high-margin molecule which does not fall under DPCA. For some molecules, the MRP could be exorbitantly high,” Mishra added.
Another big issues for insurers is that some basic services are charged separately. Mhatre of GIAFI cited an example. “Every hospital is expected to provide basic services such as nursing care and resident medical officer (RMO) services as part of room rent, yet many bill this separately,” he said.
“Every business works for profit, but when it slips into profiteering, it becomes a problem. You charge more, no issue—but it should at least be transparent and fair,” Dr. Mishra added.
Potential solution in limbo
One solution that’s being tried is to have centralised empanelment of hospitals with standardised tariffs that every insurer adheres to. Dr. S. Prakash, a senior health insurance expert and a consultant to Bajaj Allianz Health Insurance, suggested that GIC fast-track its common empanelment programme. “If tariffs are standardised, many of these disputes will vanish,” he said.
However, this idea has also run into troubled waters. Some hospitals remain reluctant to join GIC’s common empanelment programme because they find the proposed rates unacceptable. “We need to categorise hospitals before moving ahead. Categorisation must be meticulous, factoring in location, infrastructure, size and quality of medical services,” said Dr. Girdhar Gyani, director, AHPI. He added that Section 9(2) of the Clinical Establishments (Registration and Regulation) Act empowers governments to fix treatment rates in consultation with states, but lamented that only seven or eight states have implemented the law, and largely only on paper.
The way forward, experts argued, is to grade hospitals and fix rates across insurers. “Insurers fear that full disclosure could affect their business models and pricing. Hospital chains want differential treatment and pricing. These are stumbling blocks. But I believe this change will come sooner than expected, and the current debate will revive the conversation,” said Atul Jerath, former Insurance Ombudsman of Chandigarh.
A major challenge is the lack of a unified voice from hospitals. “India has hundreds of associations. Diversity is good, but on health insurance issues, hospitals and doctors must speak with one voice,” said Dr. Prakash.
Above all, many believe a dedicated healthcare regulator is urgently needed to oversee hospital practices and pricing.
Where does this leave you?
The two industries will take time to align their interests. Meanwhile, another tussle could flare up at any time. So what should you do?
It’s prudent to have a medical emergency fund to fall back on in case of a sudden denial of cashless treatment. Since health insurance is a regulated product, your interests as a policyholder will ultimately remain protected – the only question is how long it will take.
Should you have two insurance policies to mitigate the risk? Experts advised against this. Nikhil Jha, co-founder, Hercules Insurance Advisory, said, “This won’t help because what happened with Bajaj and Care today can happen with any other insurer tomorrow. Such issues are settled in a few days and should never be a reason for you to port or cancel your policy.
“As a precaution, always maintain an emergency fund of around ₹1-5 lakh in case cashless is not available in the hospital you are admitted to. Remember cashless can be denied in individual cases as well. irrespective of such notices to insurers. An emergency fund will give you peace of mind.”
What if you only set up a medical energy fund and ditch health insurance? “This is inadvisable because your emergency fund will probably only last you one hospitalisation. The way medical inflation is rising, you need to have an adequate health coverage,” he said.
