FinMin eyes control of National Health Exchange to rein in inflated hospital claims; IRDAI likely to be new regulator

While IRDAI currently oversees insurers, it does not regulate hospital billing.

The finance ministry is working to bring the proposed National Health Exchange — currently under the health ministry — under its ambit, with the Insurance Regulatory and Development Authority of India (IRDAI) as the likely regulator, a senior government source said.

The move follows detailed data analysis and inspections that revealed hospitals — rather than insurers — are inflating treatment costs to match policy coverage limits. The Finance Ministry believes that placing the exchange under IRDAI’s supervision will help improve oversight, ensure cohesive policymaking, and curb persistent inefficiencies in the health insurance sector.

“It has been found that hospitals are inflating the bills as per the insurance limits,” the official said. “The Finance Ministry has studied insurance data and found that it is not the insurance companies that are misusing the system, but the hospitals.”

IRDAI, which currently regulates health insurers, has conducted multiple inspections of insurance companies. “The data clearly shows that hospitals are overcharging for procedures when they know the coverage limit,” the official added. “The exchange will provide a single platform for insurance companies and health providers. This should resolve the issues in the health insurance sector.”

The initiative is expected to bring greater accountability in India’s health insurance ecosystem, with the aim of curbing fraud and improving cost efficiency.

National Health Exchange

The National Health Exchange (NHE) was originally conceptualised by the government under the Ayushman Bharat Digital Mission (ABDM), overseen by the Ministry of Health and Family Welfare. It is envisioned as a digital transaction layer that facilitates seamless claim settlement, data exchange, and service verification between insurers, TPAs (Third Party Administrators), and hospitals — similar to how stock exchanges enable standardised and transparent trading.

While IRDAI currently oversees insurers, it does not regulate hospital billing. With rising concerns over claim inflation and misuse, the Finance Ministry is looking at a more integrated mechanism involving policy regulation, pricing standardisation, and digital monitoring — responsibilities that could be better coordinated under IRDAI.

Health insurance fraud
A key driver behind the proposal is the practice of overbilling, where hospitals align treatment costs with the maximum coverage limit of insurance policies. This distorts real treatment costs, affects premium sustainability, and threatens the long-term viability of the sector.

Bringing the exchange under IRDAI is expected to ensure tighter fraud detection, integration with insurer systems, and a more accountable insurance ecosystem.