Two years of PMJAY: Treatment worth Rs 15,579 crore provided, but insurers, hospitals seek better rates

Pradhan Mantri Jan Arogya Yojana (PMJAY),  the government's flagship health insurance scheme that completed two years on September 25, has seen treatments worth Rs 15,579 crore being provided to eligible Indians. A total of 12 million hospital treatments have been given under the scheme, with an average claim amount of Rs 12,917.

While the National Health Authority (NHA) that manages PMJAY has said that this scheme helped in medical savings of Rs 30,000 crore to beneficiaries over two years, insurers and hospitals are hoping for better rates.

Insurers want pricing (annual premium) of PMJAY scheme to become sustainable while hospitals want the package rates for medical treatments to be revised upwards.

What is the PMJAY scheme?

Ayushman Bharat PMJAY is the largest health assurance scheme in the world, aiming to provide a health cover of Rs 5 lakh per family per year for secondary and tertiary care hospitalization to over 107.5 million poor and vulnerable families (approximately 500 million beneficiaries) that form the bottom 40 percent of the Indian population.

The households included are based on the deprivation and occupational criteria of Socio-Economic Caste Census 2011 (SECC 2011) for rural and urban areas respectively. PMJAY was known as the National Health Protection Scheme (NHPS), before being rechristened. It subsumed the then existing Rashtriya Swasthya Bima Yojana (RSBY) which had been launched in 2008.

For each medical procedure, there is a fixed rate that is prescribed by the NHA. Hospitals who are part of this scheme have to follow these rates for PMJAY patients.

The scheme is fully financed by the government, with the centre and state bearing 60 and 40 percent of the costs approximately. It covers up to three days of pre-hospitalization and 15 days post-hospitalization expenses such as diagnostics and medicines.

What is its track rate?

In a two-year period, PMJAY has issued 125.5 million e-cards to eligible beneficiaries. A total of 23,364 hospitals have been empanelled. Of these, 12,003 are public hospitals, 825 are government of India hospitals (belonging to various ministries) while 10,465  are private hospitals.

Here, 12,003 are public hospitals, 825 government of India hospitals (belonging to various ministries) and 10,465 private hospitals.

In the PMJAY Annual Report, Dr Indu Bhushan, CEO of NHA, said that much of the scheme’s success can be attributed to a strong, indigenously developed state-of-the-art information technology system that has seamlessly enhanced access of millions of citizens to free secondary and tertiary healthcare for a range of serious illnesses, non-communicable diseases and critical injuries.

Compared to Rs 7,490 crore worth of treatment being covered in the first year, the treatment amount paid rose by 108 percent on a year-on-year basis to Rs 15,579 crore as of September 6.

Here, 1,592 procedures covering 24 specialities are covered. This is an improvement from the 1,393 procedures in the year-ago period.

Thirty-two states and union territories have implemented the scheme. Of these, seven states are implementing it in the insurance mode, 20 in the trust mode and five in the mixed mode (insurance plus trust).

In the insurance mode, the insurance company bids for a state and quotes a premium. This premium is divided between centre and state and the claims are managed by the insurer. In the trust mode, a trust-like structure is set up and this entity handles the insurance premium and claims payout. In the mixed model, some parts of a state use insurance company services for claims while the premium is handled by the trust.

Are there any challenges?

While several million beneficiaries have availed of free treatment across hospitals in the country, insurers and hospitals are seeking an improvement in rates.

Rajendra Patankar, CEO of Pune-based Jupiter Hospital, admitted that the PMJAY scheme is a good scheme and it did help to provide healthcare to people living in rural areas, who were otherwise relying on quacks.

However, he added that from a private hospital point of view, especially based in urban areas, the package rates offered are unsustainable.

“They (rates) don't even cover our costs. So, most of the hospitals have stayed away from the scheme. For private hospitals to empanel in the scheme in a big way, they have to revisit the package rates,” he added.

The private hospitals that have joined the scheme so far are from rural and semi-urban areas where costs are low, and some hospitals may be backed by CSR funding, Patankar said.

Insurance companies, though only part of the scheme in 12 states/union territories, have felt that the premiums quoted are low.

“For a Rs 5 lakh health insurance, the market premium is Rs 5,000-6,000 per annum. However, in PMJAY the premium is as low as Rs 700 per annum which is not sustainable considering the costs involved,” said the head of underwriting at a mid-sized general insurer.

Another insurance official added that even in empanelled hospitals, there have been cases where the entities have sought a higher rate for the procedures.

“As an insurer, our duty is to pay the claim. But especially in metro cities, we have found that the hospitals are not satisfied and hike the rates. As per the guidelines, we aren’t allowed to pay a higher amount,” he added.

Frauds are also not uncommon. A total of 40 hospitals were de-empanelled as a result of audits undertaken and total penalties worth approximately Rs. 2.2 crores were levied on the errant entities from October 2019 to September 2020.

Bhushan said in the annual report that in the past year, NHA has two innovations. The first is the Fraud Analytics Control and Tracking System (FACTS) to detect fraud proactively, develop algorithms that can use big data to identify suspect transactions, entities and e-cards. The second is the Risk Assessment, Detection and Analytical Reporting (RADAR) system which focuses on monitoring utilisation of the Scheme across States/Districts by drilling down to procedure at hospital level.