Thousands of policy holders were overcharged by the hospitals as patients were not getting treatment because of the dispute between insurance companies and hospitals.

The public sector insurers and third-party administrators had worked out cashless insurance hospitalisation price package on Wednesday.

According to the package, hospitals have been divided into three categories- A, B and C. The basis of categorisation will be the infrastructure facilities of the hospitals, and each will also have a sub-category.

The Association of Hospitals (AOH) in Mumbai has decided to meet to discuss fixed rates for medical procedures as determined by insurers on Friday.

The government on Tuesday said that the State-run general insurance companies will not withdraw cashless health or accidental insurance products and customers can avail such services from the network of hospitals approved by the insurer.

"The public sector general insurance companies have not withdrawn the facility of cashless treatment," said Minister of State for Finance Namo Narain Meena in a written reply to the Rajya Sabha.

"However, they have started rationalisation of empanelment of hospitals and standardisation of rates and specified procedures followed by the hospitals," Meena said

The minister responded to a notice enquiring if media reports were true that state-run insurers were withdrawing cashless policies in the wake of rampant overcharging by hospitals.

"Due to these high charges, the policyholders were left with smaller amounts of sum assured to be used for any other eventuality during the remaining period of the health policy thereby causing undue hardships to them," said Meena.

A new structure has been implemented by the public sector insurance firms, under which, a preferred provider network has been started by inclusion of names of the hospitals that have agreed to work at reasonable rates from July 1 in Delhi, Mumbai, Bangalore and Chennai.

"In the rest of India the earlier process of rendering cashless facility is still continuing. In selection of the hospitals care has been taken to ensure geographical spread of the hospitals for the convenience of the insured," the minister said.

To minimize inconvenience to the insured, third party administrators have been told that for emergency and trauma cases, cashless facility should be provided not only at hospitals within the approved network but at other hospitals also.

Apart from the cashless facility, the settlement of claims on reimbursement basis continues to be available for all hospitals (including non-network).

The minister also said the public sector insurers had a cost ratio of around 140 percent of the premium received under the health portfolio.

Earlier on August 10, the Delhi High Court ordered the insurance regulator to ensure that cashless facility is not denied to customers due to a dispute between insurance companies and city hospitals.

"The Insurance Regulatory and Development Authority (IRDA) should intervene and ensure that such changes do not affect existing policy holders," said Justice S. Muralidhar.

Earlier, the court pulled up the IRDA and said "you cannot leave patients suffering saying that a meeting will be convened. Patients are not getting treatment because of the dispute between insurance companies and hospitals".

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