Insurers and Hospitals Clash, Patients Caught in Cashless Crunch

As of November 10th, 2025, India's hospitalization insurance system is grappling with a complex web of challenges involving insurers, Third Party Administrators (TPAs), and hospitals. TPAs, which were introduced in 2001 to handle claims management on behalf of insurers, have faced early difficulties in navigating both insurance and healthcare processes. Customers have complained of arbitrary claim reductions and outright rejections by TPAs.

Another issue has been the "float" problem, where insurers advance funds to TPAs for approved claims, but some TPAs delay payments to hospitals to earn interest on the idle funds, leading to disputes and tighter regulation.

Meanwhile, hospitals have realized the benefits of the insurance system, with even government hospitals preferring insured patients as a source of income. However, as medical costs have soared, insurers have created closed networks of hospitals with negotiated package rates, often leaving policyholders caught in the middle as hospitals charge one rate and insurers reimburse another.

Tensions have escalated in recent months, with insurers and hospitals blacklisting each other and patients bearing the brunt. Experts argue that a measure of standardization in hospital tariffs, along with expanded and upgraded public healthcare facilities, is essential to bring much-needed transparency and accountability to the system.