A dispute is brewing between hospitals and health insurers in India, with the Delhi Medical Association Nursing Home Forum (DMA NHF) accusing insurers of acting like a cartel. The Forum has written to the Insurance Regulatory and Development Authority of India (IRDAI) to investigate and ensure that hospitals are paid fair treatment charges. The issue centers around “common empanelment,” where all insurance companies agree on prices to pay hospitals for different treatments. However, these prices are often outdated, having not been revised for 15-20 years, and do not reflect the current costs faced by hospitals.
According to Dr. V.K. Monga, Chairman of the DMA NHF, hospital costs have risen rapidly, with inflation adding up to 40% in recent years. Despite this, insurance companies continue to force hospitals to work at artificially low tariffs. This has put small and medium private hospitals under huge financial pressure, as they cannot absorb the losses like large corporate hospitals can. The disparity between small and big hospitals is significant, with smaller hospitals being reimbursed much less for the same treatments.
The impact of this dispute is not just on hospitals but also on patients. Insurers are questioning the necessity of admissions, reducing hospital stays, and compromising patient care. Meanwhile, insurers are making huge profits, with large portions of premiums collected going into commissions and administrative expenses rather than patient care. The incurred claim ratios are often as low as 54%-67%, indicating that insurers prioritize their margins over patient care.
If this practice continues, many small and medium hospitals may not survive, leaving patients with fewer options for affordable care. India already has among the lowest hospital tariffs in the world, and forcing them down further could make healthcare unsustainable in the long run. The Association of Healthcare Providers (AHPI) has stopped cashless services for some insurers due to outdated reimbursement rates, citing that medical inflation in India remains high, driven by rising staff costs, medicines, and overheads. The dispute highlights the need for fair treatment charges and revised reimbursement rates to ensure that hospitals can provide quality patient care without compromising their financial sustainability.