analyzing future of cashless mediclaim in India


Last 3-4 days, we have been seeing a lot of news in various media about cashless network hospital list being brought down to fewer in numbers & this list does not have big hospitals where the treatment cost is high & hence, have a greater need for their presence in list. We fear that these news items have created confusion in our members’ mind & hence, here is small explanatory note from our team.

Genesis of the thought process

Insurance companies have been witnessing inflated, fraudulent & unwarranted hospitalisations claims when the patient had declared that he/she has insurance cover & wishes to go for cashless treatment. Also, an analysis of cashless claims brought out pointer that 80% hospitalisations (by amount) happen in only 25-30% hospitals. The advantages of curtailed list are envisaged as follows:

1). Limited hospital list (around 450 all over India) would offer better administrative control.

2). TPAs can drive more business to small number of hospitals & hence, can demand volume discounts.

3). With better administrative control, all bad claims (fraudulent, inflated & unwarranted) can be reduced to a greater extent.

Methodology adopted

New India Assurance Company (it’s the largest, has major Health Insurance exposure and their current CMD has good rapport with other PSU Insurers’ CMDs) had taken the lead & appointed four of its empanelled TPAs as nodal TPAs (one for each region i.e. East, West, South & North) & asked them to draw a list of around 100-125 hospitals in each region. Only these PPN (Preferred Provider Network) hospitals would qualify for cashless treatment. PPN is a very common concept in west & helps insurer have better control over claims without compromising the quality of care.

 How it impacts you?

1). Currently, this does not impact corporate members as this arrangement is meant for only retail / individual policy holders.

2). However, looking at the success of this arrangement, soon, this may get extended to corporate policy-holders too.  

3). Currently, only New India, Oriental Insurance & United India have agreed for following this network. National Insurance has their own ideas about how to implement this & hence, declined to be part of this network as of now (see news mentioned above).

What are the shortcomings of this system?

1). Cashless treatment becomes very useful when the treatment is costly. With no tertiary care hospitals in major cities being part of this Preferred Provider Network, members would be forced to raise the funds for cost of treatment before the treatment starts.

2). Cashless treatment has been one of the major attractions which has helped increased Mediclaim penetration in Urban & Semi-Urban India. With these kind of restrictions, the new policy sales may suffer an impact which is detrimental to overall claims experience. (New policies sale brings in premium without any claims in its initial years which help insurance companies improve their claims ratio.)

3). There is no proper methodology adopted for selection of these hospitals & many network hospitals are in dark about this change. Without any bench-marking, the quality of care may deteriorate & just for want of cashless, members may have to face inefficient service levels.

What should be done to implement this better manner?

  1. 1). A right mix of Tertiary, Secondary & Primary care hospitals should be ensured while finalising the city-wise Preferred Provider Network.

  2. 2). A stringent & transparent criterion should be adopted for selection of hospitals which should broadly look at following features:

    a). No. of Beds
    b). Infrastructure & Manpower quality
    c). Certifications & Statutory Compliances like minimum wages, PF etc.
    d). Published rates for various treatment & acceptance of Insurance Tariffs
  3. 3). A formal Third party annual audit & review methodology should be decided by the insurance company for these PPN hospitals.
  4. 4). In case of occurrence of fraudulent practices, the hospital should be banned for a period of three years and even reimbursement at such hospitals should not be allowed.



Though the initiative taken up by insurers has shaken up the hospital industry & made the consumers anxious, we have reasons to believe that this is a start of much needed changes in the Health Insurance industry. What we expect is well thought-out strategy derived out of data available with the insurers & then an efficient implementation of the same in phased manner to ensure that the consumer is not hassled unnecessarily. 

In case you have any queries, please feel free to connect with me at sudhir [at]

About Medimanage:

Medimanage is India’s first boutique health insurance broker, with an integrated service model which provides Unbiased Health Insurance Advisory, Technology based delivery and Professional Claims Assistance. To know more contact purandar [at]


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