The conflict between private hospitals and health insurers has deepened, with the General Insurance Council (GI Council) urging the Association of Healthcare Providers (India) (AHPI) to step back from its threat to suspend cashless services for Star Health Insurance customers. The council called on AHPI to resume negotiations and work toward a settlement that safeguards patients’ access to treatment.
AHPI, which represents more than 15,000 hospitals, warned earlier this week that unless Star Health resolved pending grievances by September 22, 2025, its members would halt cashless treatment for the insurer’s policyholders. Cashless care allows patients to undergo treatment without paying upfront, with the insurer settling bills directly with the hospital. Losing this facility would hit lakhs of Star Health customers hard.
The GI Council, which represents all non-life insurers, slammed AHPI’s move as unfair and harmful to patients. “Such unilateral actions erode trust in the health insurance system and compromise policyholders’ interests,” it said, reaffirming its support for Star Health.
This is not AHPI’s first standoff. Just last month, it had threatened similar action against Bajaj Allianz, Care Health, and Niva Bupa. The recurring disputes centre on issues of claim denials, payment cuts, and tariff disagreements. While hospitals accuse insurers of arbitrary claim deductions and forcing unsustainable tariff rates, insurers argue that hospitals inflate bills and refuse to provide cost justification.
According to the Council of Insurance Ombudsman’s latest report, Star Health recorded the highest number of policyholder complaints in FY2023–24, with 13,308 cases, of which over 10,000 related to claim rejections or deductions.
AHPI has further alleged that Star Health often withdraws cashless tie-ups without warning and makes unexplained deductions even on pre-approved claims, leaving patients and hospitals in distress. Insurers counter that unchecked billing practices are driving up healthcare costs, putting additional pressure on premiums.
The GI Council said it had already attempted mediation, scheduling a meeting with AHPI on September 2. But AHPI postponed the talks and has yet to set a new date. “Despite this, AHPI is pressing ahead with disruptive measures instead of constructive dialogue to resolve issues and protect patients,” the council said.
The underlying challenge is the mismatch between soaring healthcare costs and stagnant insurer-approved tariffs. Hospitals cite rising expenses for staff, equipment, and consumables, arguing that reimbursements have not kept pace with inflation. Insurers, however, insist that such commercial negotiations must not spill over to patient care.
The council reiterated that Star Health customers would continue to have uninterrupted coverage, warning that any disruption of cashless services would force families to make large advance payments during emergencies, exposing them to severe financial stress.