Patients bear the brunt as mandatory COVID-19 charges inflate hospital bills but insurers shy away

Jitesh Upadhyay, a 36-year-old software professional was slapped with a Rs 7.8 lakh bill at a private hospital in Kolkata for just a nine-day stay. But what was more shocking was that the final bill included ‘COVID-19 charges’ even though he was admitted for a kidney ailment.

Upadhyay is one among many patients saddled with lakhs in bills at hospitals that are unable to manage additional costs incurred due to COVID-19.

“When I checked with the hospital, I was told by the head doctor that the institution incurs almost Rs 9,000 per day, per patient, for COVID-19 related equipment like masks and personal protective equipment. It seems since the hospital has no other means to recover these costs, this is being added to the patient bill,” said Upadhyay.

His bill included Rs 6,000 per day as COVID-19 charges. While Upadhyay had an insurance policy, the insurer refused to pay the full COVID-19 charges incurred and capped it at Rs 1,000 daily.

The COVID-19 pandemic has multiplied the anxiety of patients in private hospitals in India. While on the one hand, they risk contracting secondary infections like coronavirus, on the other, they are losing sleep over hefty bills.

Why the hefty bills?

Analysts estimate the COVID-19-related infection control measures such as testing in patients and staff, protective gears or PPE for health staff, social distancing protocols and human resources costs is resulting in bills getting inflated by 15-20 percent over and above the regular charges.

Hospitals pointed out that insurance companies do not cover the additional costs, forcing patients to pay out of pocket.

Abhay Soi, Chairman of Max Healthcare and Radiant Life Sciences said, “We are sitting in a peculiar situation. Our finances are stretched and input costs are ramping up. This ramp-up has to be done when there is a huge disruption of the supply chain. The cost of personal protection equipment (PPE) that wasn't there earlier, is coming. Personnel cost has more than doubled.”

The cost of personnel in these hospitals has gone up because, in COVID-19 hospitals, people work for 14 days and are then quarantined for 14 days. Soi said within this category some people are likely to get infected.

Also read: Insurers to negotiate new package rates for COVID-19

“When they are infected, we have to pay for their quarantine and also their salaries. Imagine what is happening to our cost structure. Our occupancies have dropped down to 35 percent. We have stopped doing elective surgeries. Our revenues plummeted, so have our cash flows and EBITDA,” he added.

Max Healthcare has dedicated 340 beds in Mumbai from around 900 beds and 320 beds in Delhi out of approximately 2,400 beds in its flagship hospitals for COVID treatment.

What are the bill amounts?

Since the COVID-19 outbreak, complaints of overcharging in hospitals have surged across India.

On average, patients in metro cities are charged about Rs 1 lakh to 2.5 lakh per day depending on the ailment.

This includes daily charges of Rs 4,500-9,000 for COVID-19 expenses such as on additional sanitisation including use of gloves, masks and personal protective equipment.

The more serious and older the patient, the higher are the charges.

Also read: Live updates from Coronavirus pandemic in India

Parag Khanna who recently got his 68-year-old father admitted to a Delhi hospital for asthma-related problems said the institution charged Rs 6,000 per day stating that PPE charges are high and that he is ‘high-risk’.

“We don’t even have an insurance cover and requested the hospital to waive it off because my father had no COVID-19 symptoms and had even tested negative. But we were told hospital is incurring high charges because his room is being disinfected multiple times and there is a higher use of masks and gloves,” he added.

With the absence of a healthcare regulator, there is no cap on the maximum amount that can be charged by hospitals for medical procedures. Nor is there any set guideline to be followed during a pandemic.

Why doesn't insurance cover it?

Insurance and hospitals work through a pre-agreed set of terms and conditions every year. So, the previous terms continue even if there are new developments like a pandemic in this case.

For example, if there is a heart surgery at a private hospital in Mumbai, a fixed rate of Rs 5-7 lakh could be set. For another private hospital in a smaller city like Indore, the fixed-rate could be lower. Here, once an insured patient is admitted with a heart ailment, the insurance company pays out the amount as per the agreed package.

Also read: Hospitals feel the pinch amidst COVID-19

However, there are limits to room rents and what is covered under the hospitalisation expenses. Frills like television, food/beverage for attendants, nutritional supplements, antiseptic creams and external implants are typically not covered by the insurance policy.

With costs spilling over in a bid to prevent infections, hospitals are now passing it on to the end-user.

Hospitals had sought intervention from insurers seeking a higher package rate than those for regular ailments since infection-prevention costs like protective gear, ventilators and specialised treatment push up COVID-19 hospitalisation costs by at least 30 percent. But this is still under negotiation.

Sol explained that for private hospitals 60-70 percent business comes from insured patients and added all of these need to be reworked because the actual cost of healthcare moved up.

Insurance officials told Moneycontrol that some expenses will have to be borne by the patients/kin until package rates are revised.

“We are also facing a similar high claims scenario. Rates cannot be suddenly changed when it was already pre-agreed upon. Hence, we are trying to see how best the costs can be shared. Going forward, insurers will increase the co-pay ailment as a buffer against infection control measures by hospitals,” said the chief executive officer of a private general insurer.

Co-pay means the policyholder shares a portion of the medical costs with the insurance company as part of the terms and conditions of a health insurance product. It is usually agreed in percentage terms and could be 10-40 percent of the claim.

Till the time COVID-19 is not contained, the infection-control costs will stay high.

For patients, the tough times may continue a little longer.