Star Health’s Cashless Services Under Threat
Star Health and Allied Insurance is currently facing significant pressure from the Association of Healthcare Providers, India (AHPI), which represents over 15,000 hospitals nationwide. AHPI has accused Star Health of enforcing outdated tariff rates, despite rising healthcare costs, and engaging in unfair practices such as denying cashless approvals arbitrarily and imposing unjustified deductions on hospital bills. Due to these unresolved grievances, AHPI has warned that hospitals may suspend cashless services to Star Health policyholders starting September 22, 2025.
Failure to address these concerns could drastically affect many policyholders who rely on cashless treatment facilities, forcing them to pay upfront and later seek reimbursement.
What Are the Hospital Grievances?
Outdated Tariff Rates and Pressure on Providers
Hospitals affiliated with AHPI claim Star Health has maintained stagnant tariff rates despite the ongoing inflation in healthcare service costs. Some providers even allege the insurer pressured them to accept tariffs lower than these outdated rates, putting financial strain on hospitals and risking patient care quality.
Claim Rejections and Arbitrary Deductions
Complaints also mention arbitrary denials of cashless approvals, rejection of claims even after prior approval, and unexplained deductions from hospital bills. These actions complicate cash flow for hospitals and cause uncertainty for patients during critical treatment periods.
Anti-Competitive Practices
AHPI accuses Star Health of adopting anti-competitive collective bargaining tactics, often working collectively with other insurers to suppress tariff negotiations and restrict fair dialogue with healthcare providers.
Star Health’s Response to Allegations
In response, Star Health stated that AHPI’s warnings are “arbitrary, lacking clarity or actionable details,” and expressed concern that these threats cause confusion and panic among policyholders. The insurer reassured customers that their access to healthcare would remain uninterrupted and emphasized its long-standing partnership with over 14,000 hospitals.
Star Health highlighted ongoing tariff negotiations as normal industry practices and stressed the importance of maintaining patient care without disruption. However, the company did not clarify if formal discussions had begun with AHPI or address concerns raised in the Insurance Ombudsman’s 2023-24 report.
Regulatory and Customer Concerns
Star Health has faced scrutiny in the past for its claims handling. The Insurance Ombudsman’s recent annual report revealed over 13,300 complaints against Star Health in 2023-24, of which more than 10,000 related to claim rejections—a notably higher number than the combined complaints for the next four largest insurers.
Broader Industry Context
This is not the first insurer to face AHPI’s displeasure. Earlier in August 2025, Bajaj Allianz General Insurance, Care Health Insurance, and Niva Bupa Health Insurance were also warned about similar issues. Bajaj Allianz faced a temporary suspension on cashless services before resolving its disputes. The outcomes for Care and Niva Bupa remain unclear.
India’s private healthcare sector has long wrestled with tariff stagnation despite rising costs, often leading to clashes between hospitals and insurers. These disputes underline the challenge of balancing affordable insurance premiums with fair compensation for healthcare providers.
Impact on Policyholders
Should the suspension take effect, Star Health policyholders will have to pay hospitals upfront and claim reimbursements afterward—potentially increasing the hassle and financial burden on patients and families. AHPI has urged its members to assist affected patients by facilitating alternate payment and reimbursement arrangements, while calling for renewed negotiations for a constructive resolution.