India’s National Health Authority (NHA) imposed penalties totalling ₹114.06 crore on 2,842 hospitals during the financial year 2025–26 over alleged irregularities under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY).

According to the authority’s annual report, enforcement action extended beyond monetary penalties. Thousands of hospitals were either suspended or removed from the government-funded health insurance programme following investigations into suspicious claims and possible misuse of public funds.

The NHA said it is increasingly using automated screening, biometric verification and risk-based monitoring to identify fraudulent or medically implausible claims before payments are released.

More Than 2,000 Hospitals De-Empanelled

Investigations conducted by the National Anti-Fraud Unit (NAFU) resulted in:

• 2,003 hospitals being de-empanelled
• 839 hospitals being suspended
• Penalties of ₹114.06 crore being imposed
• Suspicious claim payments worth ₹678.47 crore being blocked

De-empanelled hospitals are removed from the scheme and can no longer provide treatment under AB-PMJAY, while suspended hospitals may remain temporarily barred pending further review or corrective action.

The authority stated that blocking suspicious claims before settlement helped prevent the potential diversion of substantial taxpayer-funded healthcare resources.

Shift From Post-Payment Audits

The NHA has reportedly shifted from relying mainly on post-facto audits to a pre-authorisation screening framework.

Under the earlier approach, questionable claims could be detected only after payment had already been made. The new system examines claims before approval, allowing suspicious transactions to be stopped at an earlier stage.

An automated adjudication engine now reviews claims for unusual or inconsistent patterns, including:

• Mismatches between a patient’s gender and the medical procedure billed
• Repeated claims for procedures that ordinarily occur only once
• Clinically improbable treatment combinations
• Multiple complex procedures attributed to the same doctor at different locations
• Unusual billing volumes or treatment frequencies

Claims involving serious red flags may be blocked automatically, while minor discrepancies are sent for further review.

New Ayushman Cards Screened Within 24 Hours

The authority has also introduced a risk-based mechanism to review newly issued Ayushman cards.

According to the report, every new card is screened within 24 hours to identify possible identity duplication, unusual beneficiary patterns or other indicators of misuse.

This process is intended to detect fraudulent enrolment before a beneficiary card is used to generate hospital claims.

Hospital Vulnerability Index Introduced

The NHA has developed a Hospital Vulnerability Index Dashboard to assess the fraud risk associated with individual healthcare facilities.

Hospitals are reportedly scored on the basis of factors such as claim behaviour, package usage, treatment patterns, previous violations and other risk indicators.

Facilities with higher vulnerability scores may face additional scrutiny, audits or verification requirements.

The system allows the authority to focus monitoring resources on hospitals exhibiting the most unusual claim patterns rather than applying identical checks to every facility.

Biometric Authentication for Every Dialysis Session

Dialysis treatment packages have been identified as particularly vulnerable to repeated or inflated claims.

To strengthen verification, biometric authentication is now mandatory for every dialysis treatment cycle.

Earlier, patients were reportedly required to complete biometric authentication only once a month. The revised system seeks to confirm the beneficiary’s physical presence during each treatment session and reduce the risk of claims being submitted for services not actually delivered.

Scale of Ayushman Bharat Programme

Launched in September 2018, Ayushman Bharat is one of the world’s largest publicly funded health assurance programmes.

According to the NHA, the scheme has so far authorised nearly:

• 119.3 million hospital admissions
• Treatments worth approximately ₹1.78 trillion
• 32.6 million new beneficiary cards during the last financial year
• Healthcare services worth ₹48,828 crore during FY 2025–26

The scale of the programme makes effective fraud prevention particularly important, as even a small percentage of irregular claims could translate into significant losses for the public exchequer.

More Than 100 Fraud-Detection Algorithms

Indu Bhushan, the founding Chief Executive Officer of the NHA, stated that the anti-fraud framework operates through more than 100 continuously refined algorithms.

These systems are designed to identify claims that appear medically impossible or operationally unrealistic.

Examples may include:

• A hysterectomy billed for a male patient
• A procedure inconsistent with the patient’s age or medical profile
• The same doctor shown performing numerous complex surgeries in different cities on the same day
• Repeated admissions for procedures that should not normally recur
• Abnormally high use of specific treatment packages

The algorithms are intended to distinguish serious suspected fraud from ordinary coding or documentation errors.

Private Hospitals Raise Payment Concerns

While supporting action against fraud, private hospitals have raised concerns regarding reimbursement delays under the scheme.

Approximately 16,436 private hospitals are empanelled under AB-PMJAY. Representatives of the healthcare sector have repeatedly argued that delayed payments can place financial pressure on hospitals, particularly smaller facilities with limited working capital.

Public health expert Dr. Rajeev Jayadevan said that a zero-tolerance approach toward fraudulent claims is necessary, but enforcement should remain proportionate and fair.

According to healthcare experts, some hospitals may remain officially empanelled while informally restricting or declining treatment to scheme beneficiaries because of delayed reimbursements.

Need for a Balanced Appeals System

Experts believe technology-driven surveillance has significantly strengthened the government’s capacity to identify suspicious claims.

However, they caution that compliant hospitals may also face hardship if claims are blocked without a transparent and timely appeal mechanism.

Hospitals should be able to:

• Understand why a claim was rejected
• Correct genuine coding or documentation errors
• Submit supporting medical records
• Appeal penalties before an independent authority
• Receive undisputed payments within a predictable timeframe

A credible anti-fraud system must therefore combine strict monitoring with procedural fairness.

Protecting Patients and Public Funds

The purpose of fraud detection is not only to prevent financial loss but also to ensure that legitimate beneficiaries continue receiving treatment.

Excessive fraudulent billing can reduce funds available for genuine patients, while delayed payments to compliant hospitals may discourage facilities from participating in the scheme.

The challenge for the NHA is to maintain strong enforcement without disrupting healthcare access for eligible beneficiaries.

The penalties and administrative actions mentioned in the annual report relate to alleged irregularities identified through investigations and monitoring. Any disputed findings remain subject to the applicable review, appeal and legal processes.

Shunyatax Global Insight

Technology-driven claim monitoring can significantly reduce misuse in large public insurance programmes, but algorithms should support—not replace—fair investigation and human review. Hospitals participating in government schemes must maintain accurate patient records, biometric verification, treatment documentation and package-level billing controls to reduce compliance risk.

At the same time, authorities should ensure timely reimbursements, reasoned claim rejections and an effective appeal mechanism. A successful public healthcare scheme requires both strict fraud prevention and financial certainty for genuine healthcare providers.