Standardisation of CGHS rates will kill hospital industry: AHPI#39;s Girdhar Gyani

1 month ago

AHPI, insurance

AHPI's Girdhar Gyani feels determining a range of treatment rates is the way forward

Hospitals are not opposed to the Supreme Court’s February 27 order to implement the provisions of the Clinical Establishments Act, 2010, which requires the central and state governments to determine treatment rates for hospitals across the country, depending on locations, facilities, specialties and so on.

However, what is needed is a scientific costing study, which has never been done in India. Central Government Health Scheme (CGHS) rates are determined by a bidding process and hence cannot be considered scientific, says Girdhar Gyani, Director General, Association of Healthcare Providers (India), or AHPI.

Besides the burning issue of standardisation of rates, Gyani also addressed concerns around overcharging by hospitals, their perceived reluctance to co-operate with non-life insurance companies on the rollout of the ‘Cashless everywhere’ facility, and the lengthy, agonising discharge process that patient-policyholders have to often deal with. Edited excerpts follow:

What is AHPI’s stand on the Supreme Court’s order on standardisation of treatment rates at hospitals across India?

The Supreme Court (SC) is citing the rules of the Clinical Establishment Act, which mandates hospitals to display the current treatment rates and requires the Central and state governments to determine the range of treatment rates.

We do not have any objection to implementing these provisions. The governments should get a costing study done on a scientific basis using an activity-based costing formula. This has never been done in our country. Even the CGHS rates have not been fixed on the basis of any scientific study but on the basis of quotations, with the lowest bidder emerging as the winner.

Now, the Supreme Court has indicated that if the central government fails to determine rates, then CGHS rates will be applied across the country. We feel this will be detrimental to the healthcare sector.

CGHS rates, in most cases, do not cover even the operational costs. In the case of most hospitals, CGHS accounts for about 30 percent of the business, with the rest coming through private insurers and direct cash payments. So, there is an element of cross-subsidy here.

Hospitals are signing up for CGHS empanelment because being on the CGHS panel helps them get empanelled with public sector companies. Many big, private companies also onboard hospitals only if they are CGHS-empanelled. This apart, hospitals also wish to fulfil their obligations—serving central government employees and pensioners.

However, if you want to treat 100 percent of the patients on the basis of CGHS rates, many hospitals, particularly the bigger ones, will simply not survive.

Also read: SC order | Standardisation of treatment rates will reduce undue charges, premium hikes: Bajaj Allianz CEO

What will be your next course of action?

We have written to the Union health secretary to say that we have no issues if the provisions of the Act are implemented. However, the Act clearly states that there ought to be a range. So, rates should be determined as per the location (tier-1, tier-2 cities etc), as well as whether the hospital is a primary, secondary, tertiary or specialist facility and so on. Accordingly, rates will be different.

Carrying out costing on a scientific basis is not an easy exercise. So, until it is completed, the present arrangement should continue.

Non-life insurance companies allege that hospitals are not co-operating in the rollout of their ‘Cashless everywhere’ initiative, which essentially allows policyholders to access cashless facilities even at hospitals that are not part of their insurers’ networks. Why are some hospitals resisting this move, which could benefit lakhs of patient-policyholders?

This is only partly true. Overall, it is a good arrangement. However, suppose hospital A is on the insurer’s panel, while hospital B is not. Now, the patient-policyholder, for some reason, decides to go to hospital B to seek treatment. Let’s say, the rate charged by hospital A for the procedure was Rs 100, while it is Rs 130 at hospital B.

The rate that the insurer might have negotiated with hospital A is lower. Negotiated rates vary as per the cashless agreement between the insurer and the hospital. However, insurers and policyholders could insist on the same rate being offered by hospital B, which does not have an agreement with the insurer (and might have a valid reason for charging higher rates).

Also read: ‘Cashless everywhere’ insurance: The many challenges it faces and how the General Insurance Council aims to overcome them

But insurers say that even in cases where they have no cashless arrangement with the hospital, they will commence negotiations and sign an MoU (memorandum of understanding) with the hospital within 48 hours of claim intimation. In case there is no consensus, cashless will not be offered…

The initial impression given to hospitals is that the rates prevalent in a cashless agreement with one hospital in the area will be applicable to non-network hospitals in the same vicinity. If insurers and such non-network hospitals were to get into fresh negotiations, then there will be no issues.

Often, insurers also allege that hospitals overcharge for treatment procedures, especially when it comes to insured patients. How would you respond to this allegation?

Hospitals, at times, adopt a defensive approach since they do not want to take any chances (and face charges of medical negligence later) and ask patients to undergo a reasonable number of tests, which some patients and insurers may feel are unnecessary. Hospitals naturally feel slightly more comfortable while prescribing such tests and procedures if the patient is insured. On the other hand, if the patient is making a direct payment, we take cognisance of the possibility that there could be financial constraints but still will have to do optimum tests. The intention is to play safe, not to overcharge.

Is there a solution to this long-standing problem?

As a member of the Quality Council of India, I had recommended that all big insurance companies and hospitals consent to prescription audits. The process will determine whether a prescription for a particular patient was appropriate or not.

Some NABH-accredited hospitals have already adopted this approach. (NABH or the Accreditation Board for Hospitals and Healthcare Providers is an independent body that grants accreditation for compliance on quality and patient safety). In the United States, insurance companies engage independent agencies to rate clinical outcomes at hospitals. If there is a drop in the clinical outcomes index, say, by 10 percentage points, the reimbursement will come down to 90 percent.

This is known as the ‘pay-for-performance model’, which even monitors patient satisfaction during the treatment, post treatment and at home after discharge. However, this will not be easy to implement in India, as at present we are struggling with a shortage of healthcare facilities.

Another pain point for patient-policyholders is the discharge process. It is well-known that those who make direct payments get a quicker discharge compared to those who are insured. The delays are a huge cause of concern…

Both hospitals and insurers have to be blamed for such situations. Hospitals have to ensure that the pre-authorisation (insurers’ in-principle, initial approval for the estimated cost of treatment) is obtained carefully—there should not be a big difference between this estimate and the final bill. If the difference is substantial, then the insurer's TPA (third-party administrator) will take a longer time to approve the final claim.

Hospitals ought to prepare the pre-authorisation request with the necessary justification for the course of treatment and costs. On their part, insurers should approve the settlement in case of minor differences. In any case, at discharge, we obtain an undertaking from the patient, which makes it clear that they will be liable to make good the shortfall, if any, even after going home.

Read Full Article at Source