The Association of Medical Insurance Intermediaries (AMII) has called revelations of NHS Trusts using cost cutting tactics that result in patients dying or force them into private treatment as "a cynical approach" and "regrettable".
The NHS Co-operation & Competition Panel (CCP) has raised concerns over the tactics employed by some NHS Primary Care Trusts in delaying operations to save money.
This approach was condemned by AMII but the organisation also acknowledged that it may result in more people being driven to seek private medical insurance (PMI).
Andrew Tripp, chairman of AMII, said: "The medical and insurance communities need and do work together but the suggestion that such a cynical approach - for example, imposing 15 week minimum waiting times - is being employed by cash strapped Trusts to save money will not help relations.
"It may help medical insurance sales as PMI can avoid long waiting times, but the driver in this case is a regrettable one."
The report has led to an argument between government and PCTs about the role of commissioning in the NHS.
Andrew Lansley MP, the Health Secretary used the report as a reason to support the government's much criticised health reforms focusing on GP-led commissioning of NHS services.
"This is exactly why we need to put patients' interests first," he said.
"Too many PCTs have been operating in a cynical environment where they can game the system - and in which political targets, particularly the maximum 18 week waiting time target, are used to actually delay treatment.
"When GPs, specialist doctors and nurses are making the decisions, as they will under our plans, they will plan care on the basis of the clinical needs of patients and their right to access the best service, including the least possible waiting time," he added.
However, PCTs have hit back at the claims, noting that the root cause of many of these decisions was lack of funds and GP or other commissioner groups would be faced with the same problems.
David Stout, director of the Primary Care Trust Network, said: "Patient choice is an important part of the modern NHS and commissioners have a duty to promote choice for secondary care.
"But commissioners will still be left to decide the right course of action when faced with trade-offs between patient choice and value for money.
"The suggestion that many current PCT decisions are not justifiable on these grounds is largely unsubstantiated by the detail in the report as the CCP has not investigated specific cases in detail.
"It also highlights a number of Department of Health policies such as the market forces factor and the original independent sector treatment centre contracts which have made the trade-off between value for money and patient choice more difficult. We agree these should be resolved as a matter of urgency."
Stout continued: "There are other policies that need to be put right if any qualified provider is to progress, such as the implementation of an effective failure regime for providers which does not pass costs on to commissioners, and a pricing policy that avoids the risk of cherry picking.
"Until these issues are addressed, commissioners will continue to make decisions on occasions which to some extent restrict patient choice."
