Provisions in the new MoA could be counter-productive to the government’s intentions, thus both sides must come to a more balanced agreement, that is a win-win for all sides
A consortia of healthcare industry associations, namely IMA, FICCI, ASSOCHAM, NATHEALTH and AHPI have expressed serious reservations about some of the new provisions in the revised Memorandum of Agreement (MoA) on the continued empanelment of private hospitals in the Central Government Health Schemes (CGHS).
The CGHS is a welfare scheme introduced by Government of India under Ministry of Health and Family Welfare which covers all government employees. While representing a huge patient population, the low rates of reimbursement and the delay in receiving dues from the government have long been a bone of contention between private hospitals and the Health Ministry.
The new MoA was supposed to come into force from October 1 but thanks to the efforts of the consortia and member hospitals, the last date for submission of the acceptance letter related to the new MOA has been extended to October 15. Officials from the associations indicated that efforts to get the contentious clauses dropped in the new MOA will continue, with the ultimate goal of getting a revision of the CGHS package rates which have not been revised since 2014.
Representatives from key hospitals groups, including Medanta, Max Hospitals, Fortis Healthcare, Narayana Health, Yashoda Hospitals, among others, who participated in the discussions, reiterated concerns raised in a letter to the Health Secretary Shri Rajesh Bhushan IAS dated September 26, that the proposed change in the clauses, will have ‘detrimental effects on the functioning of the hospital’ and ‘delivery of seamless service to CGHS beneficiaries without impacting the quality of healthcare’ ultimately affecting the sustainability of the hospitals.
The letter which has also copied Health Minister Shri Mansukh L Mandaviya covers six major concerns, the topmost being the non-revision of CGHS package rates for procedures for the past eight years. The letter points out that in these past eight years, hospitals have continued to pay annual increments to doctors and nurses, deal with rampant increase in medicines and consumables, and pay more for all operating overheads. Their contention is that is impossible for hospitals to maintain acceptable standards of clinical quality at these rates.
The second concern is that medical specialists have indicated that they wouldn’t be interested in seeing patients at CGHS consultation rates, which are reimbursed at Rs 150 for OPD and casualty treatment while most doctors charge between Rs 300 and Rs 1000 for consultations in the OPD and ER.
The third concern is that the MoA suggests that unlisted implants have to be charged at 60 per cent of MRP inclusive of GST and a minimum discount of 20 per cent has to be given on the MRP of medicines and consumables. The letter states that many smaller hospitals indicated that they do not get large discounts from distributors and these suggested discounts would cause them to lose money. Even charging for implants and medicines at cost price comes at a loss to all hospitals because there are real costs involved in storage, logistics, medicine delivery, and working capital, as per the letter.
On the suggestion to allow chemotherapy drugs to be procured directly by CGHS beneficiaries, the letter claims that most doctors were against this policy because they would not have control over the quality and efficacy of medicines that are being delivered to patients under their care.
The fifth concern is that while the CGHS has a very large list of procedures, there are hundreds of procedures that aren’t coded in the rate list. The mentioned rates are too little to be able to conduct safe surgeries, according to the letter from the health care associations.
The sixth concern, is that while the MoA has very detailed clauses on what is expected of hospitals which sign up for CGHS, ranging from the terms of operation, termination, penalty, performance clauses, Bank Guarantees, etc. it fails to mention any terms or conditions that are placed upon CGHS for fulfillment of their services.
The earlier contract used to pay hospitals 75 per cent on bill submission and the rest on verification, which has now been removed. Given that CGHS reportedly takes nine months to a year to clear their bills, the delay places working capital stress on hospitals as they are bound to pay salaries on a monthly basis and their vendors in 45 days. There is also no clause that allows hospitals to contest arbitrary deductions or denials.
The letter indicated that there are more contentious terms in the new MoA that will discourage private hospitals from continuing the scheme. While conveying their interest to continue working with the Government in PM’s mission of providing healthcare for all, the signatories were clear that these and other concerns needed to be addressed.
While the government might be hoping that the resurgence in hospital bed occupancy rates and a slow return to profitability, justifies extracting more for CGHS beneficiaries, the fact is that it is the corporate chain hospitals which might be able to sustain these cuts. But most mid-sized hospitals, especially the standalone ones in smaller cities, might slip further into debt if they continue with the CGHS. If they are closed down or sold out, this might create accessibility issues for CGHS beneficiaries, which would be counter-productive to the government’s intentions. Thus, the hope is that both sides can come to a more balanced agreement, that is a win-win for all sides.
VIVEKA ROYCHOWDHURY Editor
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