“Major private corporate hospital chains are not fully participating in Ayushman Bharat, primarily due to its inadequate pricing structure. The reimbursements fail to cover the actual costs incurred by large hospitals, and these rates have not been adjusted for inflation,” said a senior executive from a leading private hospital chain in the country, on condition of anonymity.
Delhi was one of a handful of non-BJP-ruled states that did not join the Ayushman Bharat scheme when it was launched in 2018.
The scheme—officially known as the Pradhan Mantri Jan Arogya Yojana (PM-JAY)—provides free health coverage of up to Rs 5 lakh per family per year for economically disadvantaged groups.
It covers a range of medical expenses—including hospital stays, surgeries and diagnostic tests—at both government and empanelled private hospitals.
The Delhi government will provide an additional top-up of Rs 5 lakh as a part of the scheme.
Unsustainable model
Some hospitals have raised concerns that the reimbursement rates under Ayushman Bharat are too low to sustain certain treatments, leading to financial losses. While the scheme may work for smaller nursing homes, larger hospitals—which invest heavily in infrastructure and advanced facilities and medical technology—find it an “unsustainable model”.
The executive director of a private hospital chain in Delhi told ThePrint the scheme does not make “financial sense” for private hospitals. While patients might receive treatment, he warned that the quality of care would suffer significantly.
“How can you expect a private hospital to treat a patient for Rs 1,800 per day for any disease? It doesn’t make sense,” he said.
Citing typhoid as an example, he noted that the amount covered under the scheme includes all expenses—doctor’s fees, surgeon’s charges, medicines, bed charges, nursing, food, radiology, pathology, and even an X-ray.
“Just Rs 1,800 for typhoid? That’s unrealistic,” he said.
He added that the incentive rate was too low to sustain quality care. “If you want a physician to see a patient twice a day, they themselves charge around Rs 500 per visit. Then there are bed charges, nursing, food—so many factors involved in patient care.”
As a possible solution, he suggested separating the costs of tests and medicines from the package. “If diagnostics and medications are kept separate, the scheme might still work. The quality of care won’t be compromised, and more hospitals will be willing to participate in Ayushman Bharat, making healthcare more accessible,” he said.
Max Healthcare, CK Birla, Sir Ganga Ram hospital and Moolchand declined to comment, while Apollo and Manipal did not respond to ThePrint’s queries.
Girdhar J. Gyani, Director-General of the Association of Healthcare Providers of India—which represents around 15,000 private hospitals, including Fortis, Max Healthcare, Manipal, Medanta, and Apollo—told ThePrint that large hospitals are unlikely to join Ayushman Bharat due to two key reasons: unviable rates and delayed payments.
“The rates fixed under Ayushman Bharat are illogical or unviable,” he said. However, he added that more than pricing, the real issue is delayed payments.
When the scheme was originally designed, it included a clause mandating payment within one month, with a 1 percent interest penalty for delays, a provision that states have quietly removed, he said.
Gyani said that if the government reinstated the clause, many mid-sized hospitals with 100 to 150 beds were likely to join. He explained that even if package rates were low, hospitals would still benefit from regular cash flow.
“Hospitals could make the model sustainable by cross-subsidising and treating 30 percent of patients under Ayushman Bharat while 70 percent pay through cash or private insurance. This way, hospitals can ensure full bed occupancy and remain financially stable,” he added.
Gyani emphasised that the government needs the private sector to make Ayushman Bharat truly effective. “This is a perfect example of a public-private partnership because the government does not have enough hospitals,” he said.
Ideally, he explained, the government could continue the scheme by cutting capital expenditure in other sectors while encouraging private players to establish more hospitals, utilise them, and ensure timely payments.
However, he noted that even the Central Government Health Scheme (CGHS), which offers “better rates” than Ayushman Bharat, is not accepted by many major hospitals. “If big hospitals are unwilling to take CGHS patients, how can we expect them to accept Ayushman Bharat at even lower rates?” he asked.
Gyani also noted the government’s struggle to find tertiary care hospitals.
“The government has plenty of primary and secondary healthcare facilities, but tertiary care beds are mostly in private hospitals. Patients need Ayushman Bharat for these specialised treatments, and the only way to make it work is by addressing these issues.”
Until the rates are revised, he suggested at least implementing a structured payment clause to attract more private hospitals.
How the reimbursement model works
Under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), private hospitals are paid based on fixed package rates set by the National Health Authority (NHA).
Each treatment or procedure covered under the scheme falls under predefined Health Benefit Packages (HBPs) at standardised rates, which include expenses such as doctor’s consultation, surgery, hospital stay, medicines, diagnostics and post-treatment care.
The reimbursement process follows a cashless and paperless model, where empanelled hospitals provide treatment without charging patients upfront. Once the treatment is completed, hospitals submit claims online through the scheme’s portal, which are then reviewed by the respective State Health Agency (SHA). If approved, payments are typically processed within 15-30 days, but delays are common, leading to financial strain on hospitals.
In April 2019, the NHA reviewed concerns and feedback on the Ayushman Bharat scheme during its first Governing Board meeting and initiated a rationalisation of HBPs to address pricing anomalies.
To guide this process, 24 specialist committees were formed, and NHA collaborated with Tata Memorial Hospital (TMH) for oncology package reviews, while the Department of Health Research provided cost analysis data from public hospitals.
Based on these inputs, the NHA approved several key changes, including increasing prices for 270 packages, reducing prices for 57, retaining 469 at their original rates, introducing 237 new packages and restructuring 43 existing ones.
Additionally, 554 packages were discontinued, including tubectomy and vasectomy (already covered under the National Family Welfare Programme). Cataract treatment was retained due to its public health importance. To ensure financial sustainability, the approved price hikes for 270 packages were moderated by 10 percent.
States with their own health insurance schemes can set their own rates but must follow the 1,391 mandatory packages under PM-JAY. They can also add packages from their existing schemes that are not part of the national list.
Vaska said that Ayushman Bharat has evolved through five versions of HBP. The latest HBP 2022 version includes increased package rates and a tier-based pricing system, where hospitals in tier-1 cities—which include most corporate hospitals—receive a 10 percent higher reimbursement rate.
Additionally, hospitals accredited by the National Accreditation Board for Hospitals & Healthcare Providers receive a 15 percent incentive, which, when combined with tier-based adjustments, can increase package rates by 25-30 percent, said Vaska.
“For instance, a package originally priced at Rs 20,000 could go up to Rs 26,000 in Delhi. These adjustments aim to make participation in the scheme more financially viable for private hospitals,” he added.
The tier-based system was already in place, and Delhi’s implementation will depend on decisions made by local authorities, Vaska told ThePrint.
(Edited by Sugita Katyal)
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