Why India Must Revise Its Health Scheme Package Rates
The Urgent Call for Periodic Rate Revisions
The Indian healthcare landscape demands sustainable public-private partnerships to deliver accessible clinical services. However, centrally funded schemes face major challenges regarding viability. Speaking at FICCI Heal, Fortis Healthcare Managing Director Ashutosh Raghuvanshi urged policymakers to update health insurance package rates. Furthermore, he noted that CGHS and PMJAY tariffs must mirror rising clinical expenses and medical advances. Consequently, dynamic rate mechanisms are vital to sustain modern hospital infrastructure.
Why Updating Health Insurance Package Rates Matters for Quality Care
Outdated reimbursement rates discourage premier healthcare providers from participating in government programs. For example, prominent tertiary hospital chains like Fortis, Max, and Apollo currently do not participate in Ayushman Bharat. Therefore, the lack of viable urban pricing prevents these centers from enrolling. Moreover, operating costs in metropolitan tertiary centers outpace static government reimbursement schedules. When tariffs remain stagnant for decades, private healthcare facilities face severe margin compression. In addition, hospitals require predictable claim settlements to preserve working capital and clinical standards. Thus, establishing an objective, index-linked tariff structure ensures fair remuneration while safeguarding patient safety.
Tax Rationalisation and Input Tax Credit Challenges
Beyond package tariffs, the domestic hospital sector confronts structural tax inefficiencies. Specifically, healthcare services remain exempt from the Goods and Services Tax (GST). As a result, healthcare institutions cannot claim an input tax credit on operational inputs. Consequently, this creates embedded costs on medical consumables, devices, and capital infrastructure. Dr. Raghuvanshi pointed out that these hidden tax burdens directly erode hospital investment capacity. Similarly, industry bodies such as NATHEALTH advocate benchmarking scheme packages to the Consumer Price Index. Ultimately, comprehensive tax rationalisation will alleviate financial stress and expand affordable clinical care.
Frequently Asked Questions
Q1: Why are major private hospital chains reluctant to join PMJAY?
Major corporate chains find existing reimbursement rates insufficient to cover high operating costs in metropolitan centers. Therefore, they require economically sustainable tariffs before committing extensive bed capacity.
Q2: How does the lack of GST input tax credit impact hospitals?
Because healthcare services are GST-exempt, hospitals cannot claim input tax credit on purchased equipment and medical supplies. Consequently, these taxes become embedded operational expenses that limit capital reinvestment.
Q3: What reforms do healthcare leaders propose for centrally sponsored health insurance?
Leaders propose regular package rate revisions linked to the Consumer Price Index, faster claim disbursements, and revised tax policies.
References
- Centrally sponsored insurance must be periodically revised: Fortis MD - ETHealthworld
- Ministry of Health and Family Welfare, Government of India. Central Government Health Scheme (CGHS) Package Rates Revision Guidelines.
- NATHEALTH - Healthcare Federation of India. Recommendations on Health Insurance Tariffs and Healthcare Tax Frameworks.
