The Association of Healthcare Providers – India (AHPI) on Friday warned that it would suspend cashless services for policyholders of Star Health Insurance, the country’s largest standalone health insurer, from September 22 unless the company addresses concerns raised by its member hospitals.
Breakdown of the dispute
The hospital body said it had issued a formal communication to Star Health outlining persistent issues, including refusal to revise tariffs despite rising healthcare costs, pressure to further cut already outdated tariffs, arbitrary withdrawal of cashless services, unjustified deductions from hospital bills, and claim rejections even after final approvals.
AHPI, which represents over 15,000 hospitals and healthcare institutions, including large chains such as Max Healthcare and Medanta, said these issues could compromise patient safety and the quality of care at member hospitals.
“AHPI and its member hospitals are left with no choice but to withdraw cashless services for the policyholders of Star Health Insurance, effective from September 22, 2025,” it added.
The warning comes weeks after AHPI had advised suspension of cashless facilities with Bajaj Allianz and Care Health over similar tariff-related disputes. The advisory against Bajaj Allianz was later withdrawn following talks with senior company officials.
In Star Health’s case, AHPI alleged anti-competitive conduct, claiming the insurer, often in concert with peers, engages in collective bargaining practices designed to arbitrarily suppress hospital tariffs. Such practices, it said, distort the market, undermine fair negotiations, and violate competition law principles.
Citing the Insurance Ombudsman’s Annual Report 2023-24, AHPI noted that Star Health topped the list of insurers with over 13,300 complaints in FY24, more than 10,000 of which related to partial or full claim rejections — exceeding the combined complaints against the next four largest health insurers.
Star Health has covered over 200 million lives since its inception and insured more than 20 million lives in FY25 alone.
According to AHPI, repeated complaints from member hospitals highlight Star Health’s practices, such as coercive demands for rate cuts, frivolous queries that undermine doctors’ clinical judgment, unexplained deductions on approved claims, and abrupt withdrawal of cashless services. “Collectively, these actions have caused serious hardship to patients and families,” it said.
“The systemic failure of Star Health Insurance to address legitimate grievances, combined with their unfair practices, leaves us with no choice but to take appropriate action,” Dr. Girdhar Gyani, Director General at AHPI, said in the statement.
He added that in case of suspension, member hospitals would continue to treat Star Health policyholders at self-pay rates, with patients required to seek reimbursement from the insurer after discharge.
“We remain open to constructive engagement and look forward to a positive resolution in the best interests of patients and healthcare providers alike,” Gyani added.
Reassurance and patient impact
Meanwhile, Star Health and Allied Insurance Company has denied that it has received any case of cashless suspension from their network partners. “We have not received any case of cashless suspension from our network partners with whom we have bilateral agreements. AHPI has chosen to issue threats of suspending cashless services in a manner that is arbitrary, lacking clarity or actionable details. AHPI’s abrupt press statement has only prejudiced the interests of policyholders across the country and created unnecessary confusion at a time when the government is promoting healthcare as a basic necessity by exempting GST on health insurance. We reassure our customers that their access to healthcare through Star Health Insurance will not be impacted. Even if this were to happen, we will ensure that customers get their claim payments before paying the hospital.”