‘Rate contract’ succour for insurance patients

Kolkata: The West Bengal Clinical Establishments Regulatory Commission’s (WBCERC) advisory on Friday asking private hospitals to revert to their pre-April bed charges for patients who pay by cash will not lead to any immediate financial benefit or burden for the rest who are covered by insurance. Private hospitals across the city pointed out that insurance patients or those under various corporate and government schemes, too, will continue to pay the pre-April bed charge since hospitals were bound by ‘rate contracts’ with insurance companies that have not been altered to include the enhanced bed charges. Those paying their bills in cash, however, will now be enjoying a 10% and 20% discount on medicines and consumables respectively.

Private hospitals enter into a rate contract with insurance companies for 2-3 years, during which the latter don’t recognize charge revisions. “Even though hospitals hike their bed charges almost every April to offset inflation, it is recognized by the insurance firms only at the end of the existing contract period. In 2020, no new contract was done so the old rates prevail across hospitals,” said Peerless Hospital CEO Sudipto Mitra.

While rate contract periods vary between hospitals and their agreements with various insurance companies, most have their renewals at the end of 2020 or at the beginning of 2021. “So, even though we have raised the bed charge, it will be applicable to a vast majority of patients later,” said Association of Hospitals of Eastern India (AHEI) president Rupak Barua, who is also the CEO OF AMRI Hospitals.

Around 80% of private hospital patients are either covered by insurance or various government and group insurance schemes. “Cash-paying patients are a small minority and their number has gone down further post-Covid. With non-Covid admissions coming down to a trickle, their number has reduced even more,” said Barua.

Some like Medica Superspecialty Hospital desisted from hiking charges this year. “It was not a conducive situation for a rate hike so we held it back. In any case, it hasn’t made any difference for any hospital,” said chairperson Alok Roy. Hospitals, however, are worried about the 10% discount on medicines allowed to cash-paying patients. “There’s hardly a 10% margin on most drugs that makes it entirely unfeasible. We are relieved that the commission has decided to talk to pharmaceutical companies and explore the possibility of a price reduction,” said Barua.

The WBCERC had last week announced that private hospitals must revert to their March bed rates and allow discounts on medicines and consumables. It led to a sharp reaction from hospitals who argued that they were already under a financial stress due to the Rs 1,000 daily cap on consumables and were not in a state to allow further concessions.