Hospital group urges creation of regulator as insurance disputes hit patients

The Association of Healthcare Providers, India (AHPI) has been in the news for issuing warning letters to insurers over health insurance practices.

Bajaj General Insurance Co. Ltd received a suspension notice recently, while Care Health Insurance Co. Ltd and Star Health Insurance Co. Ltd were sent warnings.

AHPI has threatened to suspend cashless facilities at its member hospitals if its concerns are not addressed–a move aimed more at pushing insurers to the negotiating table. In Bajaj’s case, the suspension threat was dropped after the insurer and AHPI began discussions.

AHPI’s concerns include insurers refusing to revise tariffs despite rising healthcare costs, pressing for further cuts, arbitrarily withdrawing cashless services, making unjustified deductions from hospital bills, and rejecting claims even after final approval.

The insurers have assured policyholders that services remain unaffected and denied receiving such complaints from their partner hospitals. The General Insurance Council, representing both general and standalone health insurers, has criticized AHPI’s warnings, calling them arbitrary and unwarranted.

Against this backdrop, Dr. Girdhar J. Gyani, director general of AHPI, speaks with Mint about the strains in hospital-insurer relations and the association’s stance.

AHPI’s warning to Star Health Insurance is the third such public warning. Why? Are dialogues not working with the insurers? Insurers are calling it arbitrary and one-sided, with no such suspension warning issued by their partner hospitals.

The insurers at times try to cartelize with the sole aim of reducing rates at our member hospitals. We tell them that to compensate for medical inflation, hospitals would also like to revise tariffs every two to three years. But it cannot be that rates fixed in 2017 or 2019 are still continuing.

To put pressure, their tactics include suspending cashless facilities or refusing to empanel bonafide new hospitals, thereby forcing our member hospitals to accept lower rates.

Private insurers often target member hospitals collectively. They also raise minor or frivolous issues to abruptly stop cashless services. Ultimately, patients vent their frustration at the hospital premises, directed at our doctors and staff.

Our precondition for dialogue is simply that cashless facilities suspended by Star Health at our member hospitals be restored, and bonafide hospitals be empanelled in a transparent manner.

At the same time, we remain open to dialogue on other issues. Ultimately, we must work together to ensure patients are not inconvenienced.

Isn’t AHPI then following the same playbook: threatening to revoke cashless services to force insurers on the negotiating table?

Tariff negotiations have been going on for years. But, of late, hospitals are feeling the pinch due to various government and other schemes. Schemes like Ayushman Bharat, CGHS (Central Government Health Scheme), and ECHS (Ex-Servicemen Contributory Health Scheme) have very low rates.

The only relief has been customers who come directly or through private insurance, where rates are negotiated between providers and payors, so that provides a bit of cross subsidy. But now, as the share of patients from various schemes rises, hospitals are under more pressure. That is why we are asking insurers to revise rates at least once every three years.

But insurers have denied such claims, calling them arbitrary and one-sided.

I had a discussion with the senior leadership of Star Health. We found out from the list of hospitals that they had suspended there were hospitals from Care group, Max group, and Manipal group. So even large hospital groups were among those suspended by Star, which cited issues of bill exaggeration.

My point is: if such issues have been addressed, insurers must move forward. Don’t get stuck and use this as a tool to pressurize hospitals into reducing rates.

Insurers argue that inflated costs are a key concern, saying they often end up paying above-tariff rates due to the absence of packaged rates, standard billing formats, and uniform treatment guidelines.

I do understand these issues and I agree with you that billing structures do vary across hospitals. Recently, the government asked the Bureau of Indian Standards to come out with a template to standardize billing formats. The actual bill amounts may differ, but the heads under which charges are listed should be uniform across hospitals. That will happen in time.

As for treatment protocols, many leading hospital chains already follow international standards. Clinical quality teams in these hospitals monitor and audit care processes. The problem is that insurers want hospitals to follow protocols set by their own panels of doctors-people who are far removed from the clinical judgment of the treating physician.

But what about different charges being applied to different patients for the same doctor, procedure, and room in the same hospital? A walk-in customer pays one rate, an insured customer another, and the same customer through a different insurer yet another.

I have raised this point with providers. The answer I received was that hospitals negotiate different rates with insurers based on volumes, applying basic demand-and-supply principles. I do believe the variation will not be very high.

So to bring more uniformity, what is your take on common empanelment? Wouldn’t that help avoid multiple rates?

This has two parts. First, if a hospital is empanelled with one insurer, it automatically gets empanelled with all. We welcome that. The second part relates to tariffs. Uniformity is not possible here, since different hospitals have different cost structures.

The government, in consultation with states, can set a range of rates. Categorization of hospitals will also be needed. Recently, the Quality Council of India introduced hospital grading. Once that comes into play, categorization can be aligned with tariffs.

But can hospitals at least agree on uniform rates across all insurers?

I think it is possible and acceptable, but we need to discuss it with providers. That is why we had planned a meeting with the General Insurance Council (GIC) on September 2. We want to push the case for common empanelment. However, I’ve also been told that GIC has no mandate to negotiate tariffs with individual hospitals.

Common empanelment should not mean pegging all tariffs at the lowest level. Rather, it should mean working out a process or a common framework that allows hospitals to be empanelled faster, avoiding the long, repetitive negotiations over different clauses with each insurer.

Do you think the time is ripe for a health sector regulator?

Presently, there is Clinical Establishment Act under which hospitals are supposed to be regulated. But this is hardly implemented.

I strongly recommend having a professional regulator for hospitals like we have Irdai (Insurance Regulatory and Development Authority of India) for insurers. This can settle issues like costing and other aspects based on scientific grounds. We have suggested this to Niti Ayog. It is time that we make a formal proposal to the government.