Standard Treatment Workflows: Can NMC’s New Directive End the Hospital-Insurer Stalemate and Ease India’s Health Insurance Pain?

India’s complex battle between hospitals and insurers has reached new urgency with the National Medical Commission’s (NMC) recent circular on Standard Treatment Workflows (STWs). Issued on September 15, 2025, amid a series of cashless service suspensions and rising patient complaints, the directive promises to reshape how medical claims are assessed and settled. But will this move finally ease the pain for health insurance policyholders? Here’s a comprehensive look at what this means for patients, healthcare professionals, and the broader Indian health system.

Key Findings: The Promise and Reality of Standard Treatment Workflows

The NMC circular reemphasizes India’s commitment to healthcare standardization through the nationwide adoption of 157 Standard Treatment Workflows (STWs), meticulously developed by the Indian Council of Medical Research (ICMR) in collaboration with the National Health Authority (NHA) and World Health Organization (WHO). These one-page, evidence-based protocols span 28 specialties and are designed to guide doctors in the rational use of diagnostics, medications, and referral pathways at every level of care.

According to Anand Roy, MD & CEO of Star Health and Allied Insurance, the STWs “provide step-by-step algorithms for outpatient and inpatient management,” ensuring that doctors follow best practice guidelines and helping curb unwarranted or excessive medical interventions. The Ministry of Health and Family Welfare, with the ICMR, is charged with monitoring adoption where the NMC lacks direct jurisdiction (primarily outside medical colleges).

Yet, implementation is far from straightforward. The NMC’s authority is limited to medical colleges and professional standards for doctors, not hospitals themselves. Broader adoption hinges on state acceptance and the robustness of regulatory frameworks, many of which remain weak due to public health being a state subject and patchy adoption of key legislation such as the Clinical Establishments Act, 2010.

Context: A Healthcare System Under Strain

The introduction of the STWs comes against a backdrop of escalating tensions between private hospitals and insurers, whose disputes have left patients stranded—most notably by the selective suspension of popular cashless services. In the year leading up to September 2025, health insurance complaints rose more than 20% as disputes over tariffs, claims rejection, and non-renewal of contracts intensified. Star Health alone reported over 13,000 complaints in FY24, more than 10,000 related to claims.

Multiple large hospital chains, organized under the Association of Healthcare Providers of India (AHPI), have accused insurers of using outdated tariffs and making arbitrary deductions, while insurers charge hospitals with non-standardized billing and treatment inflation. This regulatory vacuum clouds claim settlements, undermines trust, and directly impacts patient care.

Expert Commentary: What Do Stakeholders Say?

Industry leaders see the move as a critical step towards long-overdue healthcare regulation in India.

• “Combined with initiatives like NHCX, common empanelment, and greater transparency, it lays the foundation for a dedicated health regulator,” asserts Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance.

• “STWs are expected to moderate medical costs and give insurers greater ability to negotiate reasonable rates,” says Roy. This could help revert the upward march of “health inflation,” currently running nearly triple the overall inflation rate, by discouraging unwarranted procedures and encouraging use of essential, generic drugs.

• Girdhar Gyani, Director General of AHPI, cautions against premature optimism, however: “Nobody will touch the pricing right now because it can be taken to court… the government regulatory framework is not too strong.”

Unsurprisingly, most hospitals and insurers have declined to directly comment, reflecting the high stakes of ongoing negotiations and the legal ambiguity surrounding actual enforcement.

Implications for Public Health and Policyholders

For policyholders, proper implementation of STWs promises a range of potential benefits:

• More predictable hospital bills due to standardized protocols.

• Faster, fairer claim settlements and fewer disputes surrounding “medically unnecessary” care.

• Lower out-of-pocket expenses, as rationalized medication and diagnostics become the default.

In practical terms, doctors will need to meticulously document adherence to these protocols for every insurance claim, creating greater transparency for insurers and regulators. While there’s hope that this may ultimately tame rising treatment costs, experts highlight that the transition may also bring temporary price spikes for certain advanced interventions newly incorporated into protocols.

Limitations and Counterarguments

Despite its promise, the circular’s immediate impact remains muted. Its jurisdiction does not extend to all hospitals, and most state governments are slow to adopt uniform clinical protocols due to regulatory, political, and resource constraints. The entrenched hospital lobby resists pricing standardization without government incentives or enforceable mandates.

Moreover, the fragmentation of India’s public-private health infrastructure—where state rather than central authorities often control regulation—means that potential benefits for patients could be delayed or unevenly distributed. As a result, hopes largely rest on continued negotiation and voluntary collaboration between hospitals, insurers, and the government.

Practical Takeaways for Policyholders

• For now, expect claims to require stricter documentation and adherence to prescribed protocols.

• Patients should remain vigilant about the billing process and proactively seek clarification on claim rejections, especially in states slow to adopt national guidelines.

• The best approach is to stay informed about insurer network changes, policy updates, and rights as a policyholder under new national regulations.

Medical Disclaimer: This article is for informational purposes only and should not be considered medical advice. Always consult with qualified healthcare professionals before making any health-related decisions or changes to your treatment plan. The information presented here is based on current research and expert opinions, which may evolve as new evidence emerges.

References

1. ET Bureau. “Hospital-insurer conflict: Will latest circular by NMC help in reducing the pain of health insurance policyholders?” The Economic Times – Health, Sept 28, 2025.