CHENNAI: More than 15,200 hospitals across India have decided to suspend cashless treatment facilities for Bajaj Allianz health insurance policyholders starting September 1, 2025. The move, led by the Association of Healthcare Providers India (AHPI), comes after long-standing disagreements over reimbursement practices and tariff structures.
While the AHPI move marks a serious setback for Bajaj Allianz policyholders, who will now have to fall back on reimbursements, it reflects a broader industry problem -- striking a fair balance between hospitals, insurers, and patients in India’s evolving healthcare ecosystem.
Reports quoted hospitals as saying that the reimbursement rates offered by Bajaj Allianz have not been updated for years, even though medical costs rise by 7–8% annually due to inflation in staff salaries, medicines, and other expenses. Instead of revising tariffs upwards, they allege that the insurer has pushed for further rate cuts under expired contracts.
In addition, hospitals have flagged arbitrary deductions on claims, delays in payments, and slow approvals for admission and discharge. They argue that these practices strain hospital finances and, if continued, could ultimately compromise patient care.
From September, Bajaj Allianz policyholders will not be able to avail of cashless hospitalisation at many leading private hospitals, including Max Healthcare, Medanta, and PSRI. Instead, patients will need to pay upfront for treatment and later claim reimbursement. Bajaj Allianz has said it is surprised by the decision and is in talks with hospitals to resolve the issue, assuring customers that it remains committed to smooth claim settlement.
The Larger Industry Picture
The dispute highlights a growing strain between insurers and hospitals in India over cashless health coverage. Cashless treatment is considered a key feature of health insurance, as it spares patients from the stress of arranging large sums during medical emergencies. However, disagreements over tariffs and settlement practices have become common. Hospitals argue that insurers often prioritize cost-cutting over fair compensation, while insurers point to the need to control fraudulent claims and keep premiums affordable.
Government-backed schemes like Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY) face similar challenges. While the scheme has expanded access to millions of poor families, hospitals frequently complain that package rates are too low to cover actual costs. Many large private hospitals either limit participation or treat only a small number of patients under Ayushman Bharat, citing financial unviability. This tension between affordability for patients, viability for hospitals, and sustainability for insurers remains one of the biggest challenges for India’s healthcare financing system.