Who Gets to Decide What Healthcare You Deserve?

India’s health insurance industry is preparing to introduce evidence-based clinical protocols to govern hospital admissions, treatments, and cashless approvals. The move follows the finance ministry’s recent call for insurers and hospitals to standardise treatment pathways and empanelment norms to make healthcare more affordable and accessible. Hospitals, however, warn that uniform tariffs and protocols ignore rising costs and clinical complexity. Insurers argue that scientific standards, not commercial negotiations, should define coverage.

This may look like a technical dispute over reimbursement frameworks. In reality, it reflects a deeper question: who gets to define medical necessity — doctors, hospitals, insurers, or regulators?

Until now, insurer–hospital conflicts in India have largely centred on tariffs: room rents, procedure packages, implants and consumables. These negotiations have been slow, politicised and unstable, periodically spilling into disruptions in cashless services. Clinical protocols offer insurers something structurally different — not just control over prices, but over utilisation itself. If admissions criteria, length of stay, and intervention thresholds are standardised, costs fall not by squeezing tariffs but by shrinking what qualifies as payable care.

Insurers argue this shift is overdue.

Wide variations in treatment practices, unnecessary admissions, and inconsistent billing patterns have made healthcare costs volatile and insurance pricing difficult. Anchoring decisions in evidence-based medicine, they say, can improve predictability, reduce abuse, and shift the conversation from price bargaining to clinical appropriateness.

Hospitals counter that medicine is not an assembly line — even though many modern corporate hospitals often function like one — as evidenced by employer-sponsored annual medical check-ups. One-size-fits-all pathways risk ignoring patient complexity, co-morbidities, and real-world constraints. They also argue that tariffs often lag behind rising costs, including staff wages, imported devices and compliance investments, and that rigid protocols could compress margins to the point where quality care becomes unsustainable.

Both arguments have merit. Yet both sides also operate under financial incentives that do not always align neatly with patient welfare. Insurers are rewarded for controlling claims costs. Hospitals, particularly large corporate chains, are rewarded for occupancy, throughput, and procedural volumes. When disagreements over care become disputes between two balance sheets, patients risk becoming collateral.

Power Shift
International experience shows how this tension can evolve. In the United States, insurers increasingly act as gatekeepers of care through prior authorisations and coverage protocols. While clinical guidelines are essential, their enforcement by financially exposed payers has often blurred the line between medical judgment and cost containment. India’s insurance market is not structured the same way, but the incentive dynamics are worth noting as protocols gain prominence.

The key risk is not standardisation itself. Modern medicine depends on clinical guidelines. The risk lies in who designs, governs, and enforces them.

If insurers define protocols unilaterally, clinical standards may gradually incorporate actuarial assumptions rather than purely medical evidence. If hospitals resist all standardisation, cost opacity and unnecessary variation persist. Neither outcome serves patients well.

This is where public policy becomes decisive. Clinical pathways should ideally be developed by independent medical bodies, insulated from both insurer and hospital financial incentives, transparently evidence-based, and periodically reviewed. Their role should be to guide care, not ration it, and certainly not to substitute for pricing negotiations by stealth.

Regulatory capacity also matters. IRDAI regulates insurers, health ministries regulate hospitals, and professional councils regulate medical practice, but responsibility for claims algorithms, utilisation management, and protocol enforcement falls between institutional cracks. As claims processing becomes increasingly automated, India will need clear standards on explainability, appeal rights, and clinical accountability, before denial systems become embedded infrastructure rather than policy choices.

Hospitals, too, must face stronger oversight. Insurance expansion without hospital regulation often leads to volume inflation and coding escalation. Standardised billing formats, clinical audits, and outcome reporting are prerequisites for any credible protocol regime. Otherwise, insurers respond to billing excesses with tighter protocols, hospitals respond with more aggressive coding, and patients get trapped in procedural trench warfare.

Finally, public healthcare capacity cannot remain peripheral. Insurance is a financing tool, not healthcare itself. Systems overly dependent on private provision tend to inflate costs and distort clinical priorities. Strengthening public hospitals and outpatient networks is essential if insurance-based access is not to become the sole gateway to medical legitimacy.

India’s move toward evidence-based clinical protocols is, in principle, a step toward rationalisation. Done well, it can improve consistency, reduce waste, and enhance trust between payers, providers, and patients. Done poorly, it risks becoming a technocratic form of rationing — denial dressed in scientific language.

Hospitals are right that medicine cannot be reduced to templates. Insurers are right that price bargaining without clinical discipline is unsustainable. But neither side should be the final arbiter of medical necessity. That role belongs to independent clinical institutions, accountable regulators, and transparent governance frameworks.

This debate, then, is not really about tariffs. It is about who controls clinical truth, and whether India’s expanding insurance system strengthens healthcare delivery or quietly reshapes it around balance sheets rather than patients.

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