Patients have been dragged into a dispute between Bupa and hospital group BMI Healthcare.
Bupa has instructed its lawyers after private hospital group BMI Healthcare sent a letter Bupa described as "misleading, defamatory and false" to patients currently under treatment.
Bupa plans to cut ties to individual hospitals within hospital groups and to assess the value of private hospitals on an individual basis, refusing business to some in high capacity areas or with high pricing models.
In retaliation BMI has sent a letter to patients using the 12 of its hospitals Bupa has targeted as too expensive, saying the move was: "Part of an on going Bupa initiative to direct patients to healthcare facilities who charge the lowest price, rather than offering patients the best quality hospitals and consultants".
The letter continued: "It is entirely possible that Bupa will seek to direct you to an alternative hospital and consultant," adding that if Bupa has not paid by the end of the year that the patient is "ultimately liable" for costs.
BMI offered a helpline to discuss "options" and highlighted its good relationships with other insurers.
Dr Natalie Jane Macdonald, managing director of Bupa Health and wellbeing, pointed out that the version of the letter shown to COVER was sent to a cancer patient in mid treatment.
She said: "The letter is shocking, we are in the process of negotiating with BMI and to draw our members into this when they are sick and to make misleading, defamatory and false statements in the letter is callous and cynical. Our lawyers have written to BMI.
"It is not true that Bupa's intention is to direct members to the cheapest providers. Other hospitals we are supporting are not the cheapest, what they are is better value, with better pricing for comparable quality."
She added: "Patients will also not be liable for charges that Bupa will not pay, that's not true. We have made arrangements for continuity for all members, there is protection for continuity of care.
"But the suggestion that BMI have good relationships with other health insurers patients could ring is just dangerous. Somebody who is ill cannot be insured.
"To suggest this is ignorant, dangerous and breaches contract.
"BMI would do better to spend its time talking to us and making decent proposals."
Bupa said it had notified its advisers about the letter.
