PremiumMUMBAI : Private hospitals have approached the government to re-consider its order on capping prices of medical procedures during the covid-19 pandemic citing potential losses and impact on the salaries of healthcare workers.
On 1 May, the Maharashtra state government had issued an order to cap the prices of a host of medical procedures in private and charitable hospitals in the state to prevent healthcare providers from hiking their charges during the covid-19 pandemic.
However, the government’s move left private hospitals peeved as the caps on medical procedures were a fraction of the prices private hospitals would otherwise charge.
“We have taken up the matter with the covid-19 task force headed by the BMC commissioner, which also has officials from the state government as members. So far, the discussions have been very positive and a decision will come out in a day or two," Dr Sujit Chatterjee, Chief Executive Officer, Dr L H Hiranandani Hospital and Chairperson (Maharashtra and Goa Chapter), Association of Healthcare Providers (India), told Mint over a phone call.
“We have discussed how the order in its current form will result in losses for hospitals and that would also affect the salaries of doctors. We are trying to find a middle ground on fixing reasonable charges for patients during the covid-19 period, while ensuring that private hospitals do not profiteer from procedures during the time of crisis but are also able to charge fixed costs without suffering any losses. Once the decision is finalized, a revised notification will be sent to the hospitals," he added.
The government directive, issued by Dr Pradeep Vyas, Principal Secretary to the state government, said that healthcare providers in Mumbai, Pune, Navi Mumbai, Panvel and Thane who are members of GIPSA-PPN are prohibited from charging rates higher than those applicable to the lowest bed category, irrespective of the bed category the patient is admitted in.
While the discussion between the private hospitals and government is yet to reach a final decision, the order has still not been implemented by the private hospitals due to lack of clarity on the package rates and the duration for its implementation.
“We have not yet implemented the new order on fixed costs as we are awaiting clarity and further directions from the government on the same. The members of AHPI have voiced our concerns to the government and are talking to the authorities on how to go about the order," said Dr V Ravishankar, chief executive officer (CEO), of Lilavati Hospital.
“As it is, 20% of the beds are reserved for economically weaker sections of the society, of which 10% are provided completely free of cost in all the charitable hospitals in Mumbai. In the case of most hospitals, lower charges for common and economy beds are cross-subsidized by charging higher rates to patients who opt for special, executive or super deluxe beds. We have asked the authorities to allow us to continue with the existing rates for special beds," he added.
The new pricing schedule is linked to GIPSA-PPN, whether private hospitals are part of the network or not. The General Insurance Public Sector Association (GIPSA) is a group of four public-sector general insurance companies— New India Assurance Company, United India Insurance Company, Oriental Insurance Company and National Insurance Company, which have restricted their cashless service only to hospitals that accept standardised price bands for over 100 specified procedures and therefore agreed to join what they termed as their PPN (preferred provider network).
Healthcare providers that are not part of the GIPSA-PPN network shall not charge more than the government’s schedule. Healthcare providers who have agreements with more than one third party administrator at different package rates cannot charge more than the lowest package rate in the network. Prices of items/services and consumables (such as intraocular lenses, pacemakers, stents, medical implants), which are not part of standard package rates cannot be more than a 10% markup on the net procurement cost.
The reduction in prices for private healthcare providers comes at a time when they are dealing with lower hospital occupancy rates, as patients opt to postpone planned medical procedures for after the pandemic, and increased expenses in providing personal protective equipment for all doctors. Hence, hospitals are unhappy with the government directive, which will directly affect their revenue.
“The government's prices are in some cases 40-50% lower than our standard rates. Because of the lockdown, we're not doing too many procedures, only whatever comes to the emergency department. So we haven't had to implement the new schedule yet. We are still examining the implications of this notification for us," said Vandana Pakle, chief financial officer at Nanavati Super Specialty Hospital in Mumbai.
While hospitals are miffed with the pricing cap on medical procedures, it may be a boon to insurers as claim sizes would reduce considerably if the order was to be implemented in its current form.
"For insurance companies, it's still very unclear. We don't know if the new rates will be offered to all insurers. If it does come to us, it'll definitely lower claim size which will benefit us," said Sanjay Datta, chief-underwriting, claims and reinsurance, ICICI Lombard General Insurance.
“The question now is whether they will bill it to us or not. The government has prescribed rates for hospitals which are not part of GIPSA-PPN network but we will have to see how they bill us going forward. Proof of pudding is in eating," he added.
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