Once again, Indian healthcare is caught in a deadlock. Allegations and counter-allegations are flying back-and-forth like bullets.  

On one side is the Association of Healthcare Providers of India (AHPI), a consortium of around 15,000 private hospitals, which has flagged health insurers’ stagnant reimbursement rates that have failed to keep up with medical inflation. In 2025, medical inflation in India has been around 13% compared to general inflation of 4.2%, according to a recent report by professional-services firm Aon. 

On the other side is the General Insurance Council (GIC), the apex body representing major standalone health insurers, which has called out hospitals for inflated bills and resisting standardisation efforts. 

On 9 October, the two sides are expected to sit down with each other to arrive at an understanding.

In its absence, each side keeps deploying the most deadly weapon in its arsenal—suspension of cashless servicesA feature that allows health insurance policyholders to get treated at hospitals without paying upfront. This essentially translates to health-insurance policyholders paying their medical bills out-of-pocket and seeking reimbursement later, defeating the purpose of insurance.

One of the latest such salvos came from Star Health, the country’s biggest standalone health insurer. In September, it suspended cashless services at some of the biggest hospitals in North India, including the network of Max, Manipal, and Medanta Hospitals. Its complaint: big hospitals were demanding too high a tariff. “Some like Max wanted major rate revisions that exceeded inflation for some treatments,” said a Star Health executive.

Simultaneously, Star Health was pushing smaller hospitals to reduce their rates.

That was the last straw for the AHPI. “That’s unacceptable,” said Girdhar Gyani, director general of AHPI. “Tariffs are supposed to increase with inflation, not decrease.” The body went on to demand that Star Health resume cashless services at these hospitals immediately. 

“It isn’t Star Health alone,” said Gyani. “Hospitals told us that several insurance companies have been cartelising among themselves, and putting pressure on hospitals to reduce tariffs.”

In August and September, Niva Bupa and Tata AIG suspended cashless services at Max Hospitals, a network of 22 healthcare centres across North India. In February, Care Health had halted cashless services at 12 Max Hospitals in Delhi NCR.