Why is there a row over Ayushman Bharat rates?

Why are hospitals displeased?

  • Ayushman Bharat, the world’s largest health insurance scheme aimed at covering 50 crore Indians, is facing teething troubles. In May, the government published the rates that insurance companies would pay hospitals for the 1,350 procedures covered under the scheme.
  • These rates have become a sticking point for hospitals, which have criticised them as arbitrary and low. For example, the price of Caesarean section, at ₹9,000 for five days of hospital stay, food and consultation, is “laughable.
  • Even government hospitals incur ₹7,000 a day just to maintain a bed, he adds. Doctors have also criticised the clustering of medical conditions in the rate list. For example, treatment for tuberculosis and HIV with complications will be reimbursed at the same rate of ₹2,000 a day.
  • “HIV complications can be pretty serious. Cryptococcal meningitis requires costly anti-fungals,” he points out.
  • This means both illnesses must be compensated differently, he says. The fundamental problem, according to doctors and hospitals, is that the reimbursement rates were not calculated in a scientific manner.

What is the government stand?

  • For now, the government is committed to the launch date of August 15. But officials have acknowledged that the rates will be revised. Ayushman Bharat has asked the AHPI to submit a list of 100 key procedures, for which a detailed cost study will be done. 

Aren’t there costing studies?

  • In 2016, the Karnataka Knowledge Commission, a body under the State government, did a small study comparing the costs of 20 frequent medical procedures with reimbursement rates under the Vajpayee Arogyashree, Yeshaswini and CGHS insurance schemes. The study found rates to be lower than costs for almost all procedures under all schemes. For example, if a surgery to repair an atrial septal defect (a hole in the wall between heart chambers) cost hospitals ₹1,59,438, they received between 29% and 34% of this amount under the CGHS.
  • The problem was that this study covered only four private hospitals in Bengaluru, and was not representative of Indian variations. But it showed that hospitals could be subsidising medical procedures greatly.
  • One reason reimbursement rates are low under the CGHS is that they are decided through a tender system, which picks the lower quotes from hospitals. Further, even these rates are not paid on time. A 2010 paper from the Indian Council for Research on International Economic Relations calculated that the average delay in paying hospitals under the CGHS was four months. Furthermore, the AHPI claims the CGHS still owes hospitals ₹400 crore in back payments.


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