AHPI has directed its hospitals to suspend cashless treatment for Bajaj Allianz from September 1, 2025, raising legal and regulatory questions under IRDAI norms. CARE Health may also face suspension if it fails to respond by August 31.
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NEW DELHI: The Association of Healthcare Providers-India (AHPI), which represents more than 20,000 hospitals across the country including Max Super Speciality and Fortis Escorts, has instructed its member hospitals in North India to stop cashless treatment facilities for Bajaj Allianz General Insurance from September 1, 2025.
In addition, a similar notice has been served to CARE Health Insurance. AHPI has demanded a reply by August 31, 2025, and failure to respond may also lead to suspension of cashless treatment for CARE Health policyholders.
If this decision is implemented, policyholders of Bajaj Allianz and CARE Health will have to bear medical expenses upfront and later seek reimbursement from their insurance companies.
Why the suspension?
Explaining the reason, Dr. Girdhar Gyani, Director General, AHPI, said:
“Medical inflation in India remains in the 7-8% range every year, driven by rising staff costs, medicines, consumables, utilities, and overheads. While hospitals strive to enhance efficiency, it is not viable to operate at outdated reimbursement rates, much less lower ones. Continuing under such terms risks compromising patient care, which AHPI and its members cannot allow.”
AHPI has alleged that Bajaj Allianz rejected their proposal for tariff reviews every two years to match inflation, and instead pushed for tariff cuts. Member hospitals have also raised concerns of claim settlement delays and slow discharge approvals.
In response, Bhaskar Nerurkar, Head-Health Administration Team, Bajaj Allianz General Insurance, said:
“We are confident of working amicably with AHPI and member hospitals to solve this issue.”
At present, AHPI has around 615 hospitals in Delhi-NCR, 511 in Punjab, 242 in Uttarakhand, and about 1,220 in Uttar Pradesh. Negotiation meetings are planned this week between AHPI, Bajaj Allianz, and CARE Health officials.
CARE Health’s response
CARE Health Insurance also expressed surprise at the notice. Manish Dodeja, Chief Operating Officer, Care Health Insurance, said:
“We have also reached out to hospitals (Members of AHPI) who haven’t mentioned any challenges with our services.”
He further explained that CARE only received a generic email on August 22, 2025, without any specific details of tariff disputes, deductions, or affected hospitals.
Legal and Regulatory Angle
This issue raises important legal questions under insurance and consumer protection laws in India.
- As per the Insurance Regulatory and Development Authority of India (IRDAI) regulations, insurers are required to maintain adequate hospital networks to provide cashless services. If a large-scale suspension like this occurs, insurers may face regulatory scrutiny for failure to provide promised benefits.
- Policyholders may also explore remedies under the Consumer Protection Act, 2019, if denial of cashless service is seen as a deficiency of service. Since health insurance contracts promise cashless facilities in empanelled hospitals, sudden withdrawal could be challenged legally.
- Hospitals, on the other hand, argue that outdated tariffs and delayed settlements amount to unfair trade practices by insurers, giving them legal grounds to renegotiate or suspend contracts.
- Courts in past cases have held that insurance contracts must balance the interests of policyholders, insurers, and healthcare providers, which means prolonged disputes could lead to public interest litigation (PILs) if lakhs of patients are affected.
Industry track record
According to IRDAI’s Handbook on India’s Insurance Statistics 2023-24, Bajaj Allianz had a claim settlement ratio of 95.99%, while CARE Health was lower at 92.77%. This ratio indicates how many claims are paid out of every 100 received.
CARE Health has faced similar issues earlier. In April 2025, the Ahmedabad Hospital and Nursing Home Association (AHNA) had suspended cashless services for Tata AIG, Star Health, and CARE Health. Services were later restored for CARE and Star Health, but not Tata AIG.
CARE Health also withdrew cashless services from Max Hospitals in Delhi-NCR on February 17, 2025. The suspension continues as of August 25, 2025, covering 8 super-speciality hospitals, 2 multi-speciality centres, one hospital in Gurgaon, and one cancer care centre in Lajpat Nagar, Delhi.
On its website, the insurer has stated:
“We are committed to providing access to quality healthcare at affordable premiums. With immediate effect, we have ceased cashless claim services at all Max Hospitals-NCR due to unsustainable demands from a customer’s perspective.”
Explanatory Legal Table (Laws + Sections Related)
| Law / Regulation | Relevant Section / Provision | How It Applies in This Case |
|---|---|---|
| Insurance Act, 1938 | Section 14 (Powers of IRDAI) | Gives IRDAI authority to regulate insurers, ensuring fair practices in claim settlement and network hospital tie-ups. Suspension of cashless services may trigger IRDAI intervention. |
| IRDAI (Health Insurance) Regulations, 2016 | Regulation 31 (Network Providers) | Insurers must maintain a robust hospital network for cashless treatment. Large-scale suspension by AHPI can amount to violation of this regulation. |
| Consumer Protection Act, 2019 | Section 2(11) – Deficiency in Service | Policyholders denied cashless facility (promised in policy terms) may claim this as a deficiency in service against insurers. |
| Consumer Protection Act, 2019 | Section 17 – Consumer Disputes Redressal Commissions | Gives policyholders the right to approach State/District Commissions for compensation if insurers fail to provide promised cashless facilities. |
| Indian Contract Act, 1872 | Section 73 – Compensation for Breach of Contract | If hospitals prove that outdated tariffs and delayed settlements breach contractual obligations by insurers, they can claim damages. |
| Competition Act, 2002 | Section 4 – Abuse of Dominant Position | If insurers are found to impose unfair or discriminatory tariffs on hospitals, AHPI can raise this under competition law. |
| Constitution of India | Article 21 – Right to Life & Health | Courts have repeatedly interpreted the Right to Life as including the Right to Health. Withdrawal of cashless services may attract PILs claiming violation of this fundamental right. |
| Clinical Establishments (Registration and Regulation) Act, 2010 | Section 12 – Obligation to Follow Standard Treatment & Charges | Hospitals must maintain standard charges, but insurers pressuring for tariff cuts may indirectly force violation, raising legal conflict. |
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