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Hospitals flag concern about new CGHS rates for patient admissions

Hospitals asked to give 20% discount on MRP of medicines, say term is unviable for them

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Central government health scheme | healthcare | Health crisis

Sohini Das  |  Mumbai 



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Private hospitals say patient admissions under new rates set for the (CGHS) will become unviable, reacting after getting a circular from the health ministry this week.

The circular set rates at which hospitals empanelled under the CGHS can charge for patient admissions. There are some 4.1 million beneficiaries registered under CGHS, which caters to serving and retired Central government employees. Around 2,000 hospitals and diagnostic centres are empanelled for CGHS across India.

The circular asked hospitals to provide a flat discount of 20 per cent on maximum retail price of medicines, charge only 60 per cent of the MRP in case of implants not included in the CGHS, and pay a 2 per cent bill-processing charge for each patient.

“The major problem with this new circular that has come is that it still mentions the 2014 rates. We have been asking for revised rates given the inflation. If one considers inflation, there is at least 40 per cent rise in our costs in these 8 years.

This is a serious concern among the industry,” said Alok Roy, chairman of Medica Group of Hospitals.

Asking hospitals to provide a 20 percent on MRP “is not viable as the margins in some medicines are only 10 per cent,” Roy said.

Zahabiya Khorakiwala, managing director of Wockhardt Hospitals, said: “We have not got any operational guidelines on how to procure the medicines etc, but what we have been told is that we have to offer a certain discount to the beneficiaries and they cannot be charged more than the amount what we can claim as reimbursements under the CGHS rates.”

She referred to another issue: patients can buy drugs from hospitals for oncology treatment or procure from the CGHS. “If the patients get the drug from the itself, then the bill itself could be rejected entirely for reimbursement.”

In case of medical implants, hospitals can charge only 60 per cent of the MRP (for implants not specified in CGHS).

“For every patient, we have to give a 20 percent discount on medicines MRP, then bear 40 percent cost of the implants, and also pay bill processing fees. We cannot charge the patient, so this makes admissions under the CGHS unviable,” Roy said.

Delay in CGHS payments is another issue, Khorakiwala said. In a meeting with the health ministry in May, private hospitals said there were outstanding dues worth Rs 500 crore.

"We will now request them [the government] to do a scientific costing and come up with a revised rate-card,” said K Hari Prasad, president, hospitals division, Apollo Hospitals Enterprises.

“For advanced care, tertiary care where the consumables and medicine cost is high; there is a challenge to work with the CGHS rates. The tariffs are not built on a scientific costing basis. Medicines have variable margins, so giving a flat 20 percent discount is not realistic,” he said.

Industry group NATHEALTH is likely to take its concerns about the circular with the government. “When we speak about CGHS rates, they are deflated for over 8 years since the last package revision where average CPI inflation has hovered anywhere between 10-15 percent annually. In addition, the additional discounts and payment gateway tariffs being imposed will make the program further unviable,” said Shravan Subramanyam, president of NATHEALTH and managing director, Wipro GE .

It is important to engage in a dialogue to address the challenges in the scheme and make the supply pool grow, he said.

“CGHS needs to be a win-win for all the stakeholders for it to work efficiently,” Prasad said.

Key points from the circular

  • 20% discount on MRP of medicines, including chemotherapy
  • Hospitals can charge only 60% of MRP of implants (not specified in CGHS)
  • If patient buys oncology medicines from hospitals, bill to be rejected entirely for reimbursement
  • Hospitals have to pay 2% bill processing fees to bill clearing agency

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First Published: Fri, September 23 2022. 12:58 IST

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