Hospitals resist standard rates for covid treatment

With the aim to lower disputes between insurance companies and healthcare providers, the General Insurance Council (GIC) on Monday published a schedule of rates for the treatment of covid-19, a respiratory disease caused by the novel coronavirus. The rates are based on suggestions made by a Niti Aayog panel. However, hospitals do not seem to agree with the rates saying they are too low and won’t cover the treatment cost.

Covid treatment rates

The scheduled rates shall be applicable to both cashless and reimbursement claims in all states where government authorities have not prescribed standard charges for covid-19 treatment. GIC has proposed different rates per day for NABH-accredited hospitals and non-NABH-accredited hospitals based on the severity of the case. NABH stands for National Accreditation Board for Hospitals & Healthcare Providers.

For moderate sickness which requires isolation beds, including supportive care and oxygen, hospitals have been asked to charge ₹10,000 per day in a NABH-accredited hospital and ₹8,000 in a non-NABH-accredited hospital. The rates include cost of personal protection equipment (PPE) at ₹1,200.

For severe sickness which requires admission in an intensive care unit (ICU) without ventilator, hospitals can charge ₹15,000 and ₹13,000 (including ₹2,000 for PPE costs), for NABH-accredited and non-NABH-accredited hospitals, respectively. Finally, in the case of very severe sickness where the patient requires ICU with ventilator care, hospitals can charge ₹18,000 (NABH-accredited) and ₹15,000 (non-NABH-accredited).

These rates include the cost of consultation, nursing charges, room stay, and meals, covid-19 testing, monitoring and investigations, imaging, physiotherapy, PPEs, drugs and medical consumables, biochemical waste management, bedside procedures like Ryle’s tube insertion and urinary tract catheterization.

However, interventional procedures such as central line insertion, chemoport insertion and bronchoscopic procedures, and high-end drugs such as immunoglobulins and meropenem are not included in the prescribed rates. Such items shall be charged at MRP by the hospital. Further, high-end investigations such as MRI and PET scan will also not be included.

Hospitals in non-metro state capitals shall charge 90% of the prescribed rates which are applicable in metro cities, while all other cities and towns shall charge 75% of the rates. According to the circular, metro cities include Delhi NCR, Mumbai Metropolitan Region, Kolkata Metropolitan Region and Chennai Metropolitan Region.

Hospitals’ view

Most hospitals, however, are not in agreement with the council. Viren Shetty, executive director and group chief operating officer, Narayana Health, said the package rates are extremely low and won’t cover the cost of treatment. “Several state governments fixed the per day cost of covid treatment for below poverty line (BPL) patients which are also very low. Hospitals weren’t given a choice to refuse and were told to make up for the losses from cash and insured patients.”

Hospitals, we spoke with are not in agreement with the rates suggested by GIC. “Hospitals aren’t in agreement with the rates because they are trying to piggyback on the government enforced rates to pad up their profit margins,” said Shetty. Healthcare providers feel that GIC should’ve consulted them before fixing the rates and that the scheduled rates can only be managed in general wards with basic level of care, general medicines and minimal staff.

“They (GIC) should’ve discussed this with all stakeholders. All of this could have been solved if they sat with the hospitals and agreed on a joint solution before unilaterally deciding that insured patients also get BPL rates,” said Shetty.

Dr Raajiv Singhal, group CEO, Care Hospitals, said various bodies are trying to fix rates for the hospitals without understanding the cost of delivery of healthcare under the current circumstances.

“Insurers must find a different way to deal with this. Each patient is different and requires a different degree of treatment. Fixing certain costs such as bed and ventilator charges is okay but the rest can’t be pre-decided,” said Singhal.

According to Dr Girdhar Gyani, director general, Association of Healthcare Providers (India), the rates are not sustainable. “The rates are similar to capped rates proposed by the Delhi government which are very low and not sustainable for healthcare providers. Keeping in view the difficult times, we are managing. But if insurance companies also pay the same rate, hospitals will not sustain. Almost 16-20% of the footfall is insured and, typically, such patients ask for a private ward, therefore, subsidized rates won’t work,” said Gyani.

The association has roped in experts from IIM Bengaluru and Indian Institute for Social and Economic Change to study the rates proposed by it and GIC to come up with a viable solution. For the treatment in general ward with oxygen, the association has quoted ₹20,041 in medium-sized hospitals and ₹24,075 in tertiary care hospitals.

Insurers’ take

Insurers said attempts to standardize treatment costs have been made in the past for various procedures but it’s only on paper. Even for covid-19, a few states such as Maharashtra prescribed standard rates but insurers are not seeing any change in billing.

“We are seeing stories of people being asked to pay a huge sum as deposit. While fixing rates is a good starting point and is sending out a message that regulation is required, there’s a long way to go,” said the chief underwriting officer of a general insurance company, who didn’t want to be named.

In the absence of a regulator for healthcare providers, insurers aren’t very optimistic about hospitals adopting the standard rates.

If hospitals don’t agree with the prescribed rates, policyholders could lose as insurers will want to pay according to the package rates and hospitals may continue to bill as per their discretion, said the expert quoted above. This would mean an out-of-pocket expense even for insured customers.

Joydeep K Roy, partner and leader insurance, PwC India, said as a body of insurers, it’s GIC’s prerogative to decide how much they want to pay. “Normally in a health policy, consumables such as PPE kits are not covered but now the council is asking insurers to pay for this. Therefore, policyholders stand to gain even if the PPEs are billed over ₹1,200. A lot of items that were excluded earlier are included in these rates,” said Roy.

Insurers said standardizing costs for mild to moderate cases is fair and since there’s no data for covid-19, some hospitals are going overboard with the pricing. Fixing rates, however, could push more hospitals to deny cashless claims which require insurer’s pre-approval. Policyholders may then have to check with the hospitals before admission.

GIC said it shall review the charges every month to ensure it does not cause any hardship to the policyholders. How the standardization will pan out and whether hospitals will abide by these rates remains to be seen.