In a significant development for health insurance policyholders, over 15,000 hospitals across northern India will withdraw cashless treatment facilities for customers of Bajaj Allianz General Insurance from September 1, 2025. The decision was announced by the Association of Healthcare Providers–India (AHPI), which represents a wide network of hospitals including major names such as Max Healthcare, Medanta and PSRI.
The AHPI said that despite repeated requests, Bajaj Allianz had failed to revise reimbursement rates in line with rising medical inflation. Hospitals have also raised concerns about arbitrary payment deductions, delays in settlements, and lengthy pre-authorisation procedures, which they claim are compromising patient care.
Why hospitals have taken the step?
According to the AHPI, the reimbursement tariffs currently in force were agreed years ago and are now outdated. With medical inflation in India running at an estimated 7–8 per cent annually, hospitals argue that continuing under old rates or worse, accepting further tariff reductions is unsustainable.
“In addition, member hospitals complained that Bajaj Allianz has refused to revise hospital reimbursement rates in line with rising medical costs, pressuring hospitals to further reduce tariffs that were agreed upon years ago under now expired contracts,” the body said in its statement.
Girdhar Gyani, Director General of AHPI, underscored the unsustainability of the current arrangement. “While we continuously strive to improve efficiency and control costs, continuing at outdated rates, let alone lowering them, is unsustainable and risks compromising patient care, something AHPI and its members will not accept,” he said, as quoted by Business Standard.
Patient impact
While cashless treatment will be unavailable at AHPI-affiliated hospitals for Bajaj Allianz policyholders, patients will still be able to access treatment at self-pay rates. In such cases, they would need to settle hospital bills out of pocket and subsequently seek reimbursement from the insurer.
The AHPI clarified that this move is a temporary suspension, not a permanent severance. It stressed that services could be restored once fair and sustainable tariff agreements are reached.
At present, the organisation represents around 15,200 member and affiliate hospitals, the majority of which are expected to implement the suspension.
Warning to other insurers
The AHPI also disclosed that it had issued a similar notice to Care Health Insurance, demanding a response by August 31. Should Care Health Insurance fail to respond satisfactorily, member hospitals are prepared to withdraw cashless treatment for its policyholders as well.
The body has consistently proposed that tariffs be reviewed every two years in order to keep pace with inflation and maintain quality of care. It said Bajaj Allianz had not only dismissed such proposals but also pressed for further rate reductions.
Speaking on the matter, Manish Dodeja, Chief Operating Officer, Care Health Insurance, said, “We are surprised to see this reportage as we are in receipt of a mail from AHPI only August 22 evening. The said communication is generic and does not carry any details such as, names of affected providers, tariff or claim deduction challenges etc. We have had a sustained, progressive association with AHPI, and even today connected with the forum to get specific information in this regard. However, they were unable to provide any specific details. We have also reached out to hospitals ( Members of AHPI) who haven’t mentioned any challenges with our services. We are confident of amicably resolving any issues with the said forum, provided our customers’ interests remain the sole objective for any productive outcome.”
Insurer’s response
Reacting to the announcement, Bhaskar Nerurkar, Head of the Health Administration Team at Bajaj Allianz General Insurance, expressed surprise.
“We are surprised by this announcement. At Bajaj Allianz, we have always believed that policyholders should receive the best possible hospitalisation experience with fair rates, seamless claims and quality service. Also, we proactively engage with all hospitals to settle any queries or dues from our side. We are confident of working amicably with AHPI and its member hospitals to arrive at a solution that is in the best interests of our customers,” he said as quoted by Business Standard.
Meanwhile, hospitals argue that without tariff revisions, rising costs of medicines, consumables, staffing, and utilities will force them to compromise standards of treatment, something they insist they will not do.
For now, Bajaj Allianz policyholders face an uncertain period, where accessing treatment at some of the country’s largest private hospitals will require upfront payments.
