The Supreme Court has issued a direction to the Central Government to fix standardized rates for various medical procedures. The court’s direction has created concern among stakeholders in India’s emerging healthcare industry. The order criticized the central government for its failure to enforce the 12-year-old clinical establishment rules. These rules empower the Central Government to notify a standard rate of medical procedures and treatments keeping in mind the standard of living of different regions of the country.
Current status of regulation of medical procedures in India
- In India, care delivery is primarily through private providers, whose prices are determined by the market.
- Health in India is a state subject, the Government of India has enacted the Clinical Establishments (Registration and Regulation) Act, 2010 and notified the Clinical Establishments (Central Government) Rules, 2012 for registration and regulation of clinical establishments.
- Currently, the Act is applicable in the states and union territories of Sikkim, Mizoram, Arunachal Pradesh, Himachal Pradesh, UP, Bihar, Jharkhand and Rajasthan, except Delhi. Other states can also adopt this Act under clause (1) of Article 252 of the Constitution.
- Under the Clinical Establishments (Central Government) Rules 2012, clinical establishments are required to charge rates for each type of procedures and services within the limits of the rates prescribed and issued by the Central Government from time to time in consultation with the State Governments.
- Clinical establishments are required to display in a conspicuous place the rates charged for each type of services provided and facilities available, both in the local language and in English.
- A subcommittee has been constituted under the National Council of Clinical Establishments to define the range of rates for procedures and services.
Supreme court decision
- The Court stated that, pricing discussions should begin with a benchmark for pricing.
- The Court highlighted the problem by using the procedure cost of cataract surgery, which costs only ₹10,000 in a government set-up and between ₹30,000 to ₹1,40,000 in private hospitals.
- Section 2 of Rule 9 of the Clinical Establishments (Registration and Regulation) Act, 2010 states that “Clinical establishments shall, from time to time, within the limits of the rates prescribed and issued by the Central Government in consultation with the State Governments Will charge rates for procedures and services.
- The Supreme Court said that if the Central government failed to find a solution, it would consider the petitioner’s plea seeking implementation of the Central Government Health Scheme (CGHS)-determined (standardized) rates.
- CGHS is a health scheme for current and retired central government employees and their families.
- It provides cashless medical treatment to the beneficiaries. They can get treatment in empaneled private hospitals without any advance payment.
Challenges in standardization of pricing
- Implementation of the decision is likely to be a challenge and may face strong resistance as it is a state list subject and the ecosystem is tilted towards private hospitals.
- The prices of medical services cannot be measured like a product. A neurosurgeon with 20 years of experience and another neurosurgeon with 5 years of experience may not have the same rate per meeting, which will be the main challenge in standardization of pricing.
- Command-and-control rules through economic measures such as price caps can increasingly influence the behavior of participants by making them comply with announcements. But when enforcement mechanisms are weak, these effects are temporary as the overall environment remains unchanged.
- Private healthcare industry political nexus is very strong and it is pervasive in the form of vested interests. Many politicians are directly associated with the medical education and hospital sectors.
- The government’s inability to enforce rules for so many years is proof of this.
Standard treatment guidelines
- Standard treatment guidelines, (STGs), can help to establish relevant clinical needs, the nature and extent of care and the cost of total inputs required.
- STGs can address confounders who are responsible for different levels of care for different hospital processes while ensuring clinical autonomy to respond to individual needs. As a result, it enables the health care resources consumed to be evaluated for the exact cost of multiple procedures.