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With rising healthcare costs and growing concerns, health insurance has become essential. The Central Government Health Scheme (CGHS), established in 1954, serves over one crore beneficiaries, including 46.87 lakh active employees and 67.95 lakh retirees.
It provides a wide range of healthcare services, ensuring timely and affordable treatment through cashless transactions at empanelled government and private hospitals, offering a seamless healthcare experience for its users.
Operational Challenges Threatening Effectiveness
CGHS, despite its noble intentions, is grappling with several operational issues. These include delayed payments to hospitals, outdated reimbursement rates, and disparities in regional healthcare availability. These problems not only impact healthcare providers but also compromise the quality and accessibility of care, especially for retired beneficiaries who depend heavily on the scheme.
One of the most significant problems under CGHS is the outdated rate structure for medical procedures, diagnostics, and treatments.
Although healthcare costs have increased due to inflation, CGHS reimbursement rates haven’t been updated since 2014. This gap makes it financially unfeasible for many private hospitals to remain part of the CGHS network, causing several high-end facilities to opt-out. In February 2024, a Parliamentary Standing Committee report emphasized the urgent need to revise these rates to retain hospitals within the scheme.
Another pressing issue is the delay in settling hospital bills, with hospitals facing long waits for payments from the bill clearing agency (BCA), UTI Infrastructure Technology and Services Limited. The BCA has been criticized for poor management, and a 2017 CAG audit revealed cases where funds meant for hospitals were withheld, worsening their financial strain.
Consequently, some hospitals demand upfront payments from beneficiaries, especially pensioners, forcing them to seek reimbursement later undermining the scheme’s cashless service promise.
From the beneficiary’s perspective, cumbersome referral procedures complicate access to private hospital treatments. The need for prior approval from CGHS often leads to delays, especially during emergencies. Simplifying the referral process and increasing the number of empanelled hospitals, as recommended by the Parliamentary Committee, are crucial steps in addressing this issue.
Geographical disparities in CGHS coverage further exacerbate the situation. While CGHS operates in 80 cities with 340 wellness centres, many remote areas, such as Arunachal Pradesh, Lakshadweep, and Ladakh, remain uncovered.
This forces beneficiaries in these regions to travel long distances for medical care, a significant burden for elderly pensioners with chronic health conditions requiring regular attention. The 2024 Parliamentary Committee report also underscored the need to expand CGHS coverage to underserved regions to reduce waiting times and improve service quality.
Challenges in PMJAY Participation
The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY), similar to CGHS, faces its own challenges in ensuring sustainable participation from private hospitals.
A study by the National Health Authority (NHA) highlights delayed payments from state governments, low reimbursement rates, and administrative bottlenecks as key barriers. Many hospitals struggle with cash flow disruptions due to states failing to meet their 40% funding obligation, particularly when merging their health schemes with PMJAY. This creates financial strain on hospitals, making it difficult for them to continue participating in the scheme.
Additionally, private hospitals under PMJAY frequently experience arbitrary deductions from claims without clear explanations, eroding their trust in the system. These issues, combined with a lack of prompt grievance redressal mechanisms, leave hospitals with limited options to recover lost revenue, further complicating their participation in the scheme.
Efforts to Revitalise the CGHS
To address the growing dissatisfaction among CGHS beneficiaries, the Ministry of Health & Family Welfare (MoHFW) partnered with the Quality Council of India (QCI) in early 2024 to reform the CGHS framework.
This partnership aims to improve the scheme’s infrastructure and streamline operations, thereby enhancing the healthcare experience for employees and pensioners alike. The planned reforms focus on resolving long-standing issues like inefficient management, delayed payments, and subpar service quality.
The Parliamentary Standing Committee has made several key recommendations for improving CGHS. Regularly updating CGHS rates to reflect current market prices is critical to ensuring high-quality care and retaining private hospitals within the network. Additionally, streamlining the bill settlement process by automating low-value transactions and prioritizing high-value claims can ease financial pressure on hospitals and reduce payment delays.
Expanding CGHS coverage to underserved regions like Arunachal Pradesh and Ladakh is also essential to provide all beneficiaries access to healthcare services. Simplifying the referral process will further help beneficiaries receive timely medical care without unnecessary delays.
A Call for Urgent Reform
While CGHS is a well-designed healthcare scheme, it faces operational challenges that demand urgent action. The government must address these issues to ensure its long-term viability. With over 1.15 crore beneficiaries depending on CGHS, reforming it is both a policy necessity and a moral responsibility. Government employees, after years of service, deserve a healthcare system that effectively meets their needs.
(The author is Adjunct Professor at IIHMR University & Senior Associate at Johns Hopkins Bloomberg School of Public Health, USA; Views are personal)
