Govt may junk move to seek 20% discount on drugs, 40% on consumables from CGHS empanelled hospitals

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The government is considering to drop a contentious new agreement for the empanelment of private hospitals under the Central Group Health Scheme that mandated hospitals offer a 20 percent discount on medicines and a 40 percent discount on consumables following tough resistance from healthcare facilities.

The Union health ministry had asked hospitals on board the scheme to sign a revised Memorandum of Agreement (MoA) by December 31 containing the new provisions but the private facilities say it will increase their financial stress.

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The Centre, however, has now hinted that the provisions in the draft MoA that hospitals have objected to, would be stricken off.

CGHS covers all current and retired central government employees and their families and its user base is estimated to be around 42 lakh. As part of the scheme, beneficiaries can avail out-patient and in-patient services in designated hospitals at rates that are much lesser than the rates otherwise charged from patients.

Nearly 21,000 hospitals, including a majority of corporate, medium and small hospitals, are empanelled under the scheme.

“The empanelled hospitals shall agree to a minimum discount of 20 percent on the price of medicines including chemotherapeutic medicines,” says the draft MoA that all hospitals, wishing to continue the empanelment, would have needed to sign.

Financial concerns

“If implemented, the new clauses will push our balance sheet in the negative, more so as the CGHS rates under present circumstances do not meet our operating expenses,” said Girdhar J Gyani, director general of the Association of Healthcare Providers of India, the largest network of private hospitals.

Gyani was among the industry representatives who met senior functionaries in the ministry on December 27 to discuss the new MoA.

“We hope that by December 31, the government will bring out a new circular which will be in line with our concerns,” he said.

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Meanwhile, the revised MoA also says that in case of any natural disaster or epidemic, the empanelled healthcare organisations will cooperate with the government and convey and reveal all the required information, apart from providing treatment.

Many private hospitals in India, mainly the smaller ones, were criticised in the first wave of the COVID-19 pandemic in 2020 for shutting operations altogether.

CGHS woes for hospitals

The majority of private hospitals are peeved that the CGHS rates have not been revised since 2014. On top of it, the government was not clearing bills related to CGHS and other similar schemes, pushing the majority of the hospitals to the brink.

It was only after the outstanding dues piled up over Rs 1,000 crore earlier this year and many corporate hospitals threatened to stop treating CGHS patients that the government started clearing the dues.

Over the last few weeks, the flow of payment has been good and the outstanding dues are being cleared on a regular basis, sources said.