After four government-owned insurance companies opted out of the Preferred Provider Network (PPN) programme, private insurance companies too are getting testy about the cashless scheme.

And in a latest move by Government, patients now have to feel the heat -- a service tax of 10.3% on every claim made using the cashless facility.

The introduction of the preferred provider network (PPN) by the public sector insurance companies made cashless transactions to a virtual standstill as the service tax move had gone practically unnoticed.

The patients who claim cashless facility will have to pay the service tax. However, the patients who go in for reimbursement won't have to pay extra.

The service charge component won't be visible to consumers and will be paid by TPAs to hospitals after every cashless transaction.

The whole process can really be scary for the consumers. Just think, if a patient with a cover of Rs 1 lakh has been allowed a claim of the full sum, how much he/she would really get back? TPA has to pay 10.3% of the claim as a service tax and 90% of the original claim plus 10% as service tax. It means the consumer's policy could shrink by 10.3% to accommodate the service tax charges.

Even insurance companies categorically told TPAs that the service tax has to come from the claim sum. Of course, if a patient seeks reimbursement from insurance companies, this tax will not be applicable.