In a big relief for private hospitals and central government staff, the Centre has revised rates for over 2,000 medical procedures – a long-pending demand from the healthcare sector as well as beneficiaries.
The revised CGHS rates, to be applicable from October 13, will vary depending on the type of hospital, ward and city category. For example, the rates for CGHS-empanelled private hospitals in Tier-2 and Tier-3 cities will be 10% and 20% lower, respectively, than the rates in Tier-1 cities.
Accredited hospitals meeting National Accreditation Board for Hospitals and Healthcare Providers (NABH) or National Accreditation Board for Testing and Calibration Laboratories (NABL) standards will be paid full rates. Non-accredited hospitals will be paid 15% less. Super-speciality hospitals will receive 15% more. So, treatment cost reimbursements are aligned with area, hospital and ward standards.
As regards ward charges, general ward admission will see 5% lower rates than semi-private. Standard rate will be paid to the semi-private ward, while private ward charges will be 5% higher than the base rates.
What are NABH and NABL?
NABH is an accreditation body for hospitals and healthcare providers, focusing on patient safety, quality of care, and ethical practices. NABL is a separate accreditation body for testing, calibration, and medical laboratories, ensuring technical competence and quality in laboratory testing and diagnostic services. Both bodies come under the Quality Council of India (QCI).
Although the Centre has kept revising the rates under the CGHS schemes for years, this revision is the biggest not only in terms of rates but also in the volume of tests and procedures it covers. CGHS patients kept complaining that hospitals often denied them services, citing various reasons. As a result, patients had to pay out of their pockets to receive refunds only months later. Many CGHS-empanelled hospitals argued that the rates offered for treatments and tests for many critical illnesses were not sufficient to recover even the costs.
Industry and experts hail govt move to revise CGHS rates
“This is a welcome development for the sector, in our view, amidst the bed expansion phase and the ongoing dispute with private insurers. While it is applicable to CGHS, other schemes can follow suit. The median price revision is 100%-plus and super-specialty hospitals can charge a 15% premium on base rates. Considering government mix and location, we reckon Max Healthcare, Fortis, Narayana and Yatharth can benefit most, 4–8% on revenue/150–400 bp on margins possibly,” says a report from domestic brokerage Nuvama.
Super-specialty hospitals in tier I cities to be key beneficiaries
According to the brokerage, super-specialty hospitals such as Max, Apollo and Fortis have 50–60% of their beds in tier I cities currently, and are projected to maintain this even on expanded beds. Max and Fortis have 20% revenue share from government patients while APHS derives 10%.
“The share for CGHS stands at 10% for Max in our view, and 5–6% for Apollo and Fortis. We highlight that price hikes for some procedures such as heart transplant, pregnancy procedures and certain neurology procedures are 3–6x; on a blended basis, most listed hospitals are likely to see a 30–50% hike in their CGHS portfolio in our view. However, certain procedures in ‘tier III’ cities will witness marginal cuts in pricing. In our view, schemes such as ECHS may also follow suit w.r.t. rate revisions,” it added.
While revised rates are still lower than private rates, the revision is rather welcome, particularly at a time when hospitals are undergoing massive bed expansion and amid the ongoing dispute between private insurers and hospitals, Nuvama said. “Within our coverage, we believe Max is likely to be the biggest beneficiary (5–8% benefit on revenue) followed by Fortis and Apollo”.
Old agreement will be terminated by 13th October 2025 and hospitals must submit an undertaking by that date and then sign fresh agreements within 90 days to remain empanelled.
“Based on the past experience, we believe that other central schemes should follow suit, particularly ECHS (Ex-Servicemen Contributory Health Scheme),” the report said.
ECHS beneficiaries include ex-servicemen (Army, Navy, Air Force), their dependents, and the next of kin of deceased pensioners drawing family pensions.