Pvt Hospitals Oppose Insurers' Common Empanelment Proposal: How it Helps Policyholders, Why the Resistance?

Private hospitals in the country, including some big ones are opposing a move by insurers and the General Insurance Council (GIC) to roll out a common empanelment process. The hospitals are of the opinion that the proposed framework does not address the concerns on claim settlement and pricing, Economic Times reported.

According to the Federation of Private Hospitals and Nursing Homes Associations of India, which represents around 150,000 hospitals across 12 states, the framework was drafted without adequate consultation. Additionally, the group flagged clauses on operational terms, charges, and package rates calling it impractical. Insurers are expecting that around 20,000 hospitals will join the panel but the large ones are giving it a miss.

What are the Key Issues?

The major concerns under this framework include lack of clarity on tariffs and absence of a redressal mechanism for short payments. Addressing the issue, HM Prasanna, president of the FPHNHAI told ET, “We have been told that the lowest tariff signed with any one insurer will be applied across all 14 companies. Most rates have not been revised since 2017, despite medical inflation.”

The association is not opposing the concept of a common empanelment but it has advised members to refrain from signing the agreement until revisions are made. "We just want it implemented in a healthy way after deliberations on several issues including claims settlement," Prasanna said.

Issues over claim rejections and deductions has been a matter of dispute in places like Ahmedabad, where hospitals accused insurers including Star Health, Care, and Tata AIG of arbitrary denials and delisting without notice, leading to threats on suspending cashless facilities.

GI Council’s Push on Cashless Settlements

General and health insurers settled 26.9 million claims worth ₹83,493 crore in FY2024 and around two-thirds have been processed through cashless mode. Almost two years back, the GI Council initiated process for increasing cashless claim settlements under health policies, common empanelment of all hospitals under one platform and negotiations with hospitals on charging reasonable rates.

As per Segar Sampathkumar, director, health General Insurance Council, "We have had many meetings with provider bodies, and we have instituted a dispute resolution forum for hospitals which have not been paid even after a cashless authorization."

What is Common Empanelment Process?

The Insurance Regulatory and Development Authority of India (IRDAI) introduced a common empanelment system in January this year, asking all general insurers to jointly onboard hospitals with standardised terms and rates, same as those under PMJAY. This process aimed to expand cashless treatment across a wider network.

At the moment, around 30,000 hospitals are empanelled under the government's Ayushman Bharat Yojana. But most of these are government hospitals. Including the private sector, India has over 70,000 hospitals.

Under this common empanelment, hospitals will no longer need separate agreements with each insurer. Instead of having separate agreements with multiple insurance companies, one agreement with the common network would be enough.

How Does it Impact Policyholders?

A wider network will basically mean that the customer could have cashless access at more hospitals. With the help of a unified network, switching insurers won't affect access to cashless facilities. In a similar way, top-up policies from different insurers can be used more seamlessly.

If a hospital is empanelled with insurance companies, policyholders can get treated and can also avoid paying upfront. In this case, insurers will settle the bill directly, ensuring cashless treatment.

The main aim of this process is to reduce prices for policyholders. This is because standardisation of packages and billing practices could reduce treatment costs. Additionally, if hospitals agree to fixed rates, insurers can better control claim payouts.

Lower claims automatically refer to lower costs for insurers and that could eventually lead to more affordable premiums for policyholders. So, right now your health insurance premium may not fall, but there is a possibility if this experiment works.

Why Are Hospitals Opposing?

Some hospitals are supportive of this move but larger multispecialty chains are against this standardised pricing, as they fear it could hurt their profitability since their cost structure is high. They are concerned about delayed reimbursements.

In addition to that, some empanelled hospitals have raised concerns about friction with insurers over claim rejections and unexplained deductions.