Mumbai: India’s healthcare sector is seeing a new trend where hospitals are introducing charges from disinfection fees to “peak charges” for operation theatre time that works like surge pricing in ride hailing apps, leading the patients and insurers to bear bloated costs. Insurers, once able to offer comprehensive packages with predictable costs, are now facing an unbundling of services, say insurance executives.
“Medical inflation has been growing at higher than general inflation at 14%, and new billing practices are adding around 20% to the overall rise,” said a head of health insurance underwriting at an insurance company. “Even routine procedures, such as laparoscopies or hysterectomies, are now being subjected to inflated pricing structures.”
Take angioplasty, for example. Historically, hospitals offered it as a comprehensive package, bundling angiograms and stenting into a single price. Now, many hospitals are charging separately for ad-hoc procedures like stenting done immediately after detecting a blockage.
Insurers say hospitals are looking for opportunities to increase prices by adding fees for steps that were once part of a standard package. The industry, with the help of the General Insurance Council, is working with the hospitals and hospitals associations to standardise the cost.
A General Insurance Council spokesperson declined to comment as the negotiations are on with the hospitals. This unbundling of services is now spread across several medical treatments, with hospitals separating charges that previously went unnoticed. From disinfection fees to additional procedure surcharges, patients and insurers are often blindsided by unexpected costs.
“We have worked hard to maintain price predictability, but hospitals are now unbundling costs at will, pushing medical inflation higher,” said an insurance executive.
Complicating matters further is the introduction of “peak charges.” Much like surge pricing used by ride-hailing services, some hospitals have begun charging extra for high-demand operating room (OT) time.
“In some cases, hospitals are charging patients for priority access to OTs, where essential medical services are now changing into premium offerings and convenience coming at a steep price,” said another source.
Medical inflation in India has grown at higher than general inflation, but this new wave of arbitrary billing practices is adding around 20% to the overall rise. Even routine procedures, such as laparoscopies or hysterectomies, are now being subjected to inflated pricing structures.
“While hospitals justify these new charges under the guise of improving care or operational efficiency, insurers and patients are left wondering how to keep up,” said a health insurance executive.
The Insurance Regulatory and Development Authority of India (Irdai) attempted to address this issue with a circular in 2020 that mandated standard billing formats. It laid out clear guidelines for room rent charges, which were to include fees for nursing, doctors, and other services. However, many hospitals have found ways to bypass these guidelines, tacking on new charges under different names.
For instance, what should be covered under room rent such as nursing and upkeep, has been broken down into separate line items like medical history assessment, recovery fees, and injection administration charges. These services are already included in the original package.
Insurance companies are left scrambling to manage these erratic bills.
“This puts patients in a difficult position, which is to either cover the disallowed costs out of pocket or engage in a lengthy dispute with their insurer,” said another private sector insurance executive.
One insurer, on account of anonymity, recounted a case where a patient undergoing angioplasty was billed separately for stent implantation, which is an integral part of the procedure already included in the package. “The whole point of a package is to bundle costs, but now hospitals are slicing and dicing every step,” the insurer explained.
While the disagreements between hospitals and insurers are not new, efforts to standardise billing practices have so far fallen short, as hospitals continue to operate with their own pricing structures. “With bills resembling long restaurant checks, separating every minor service at an added cost and insurers absorbing these higher claims, consumers could soon see the impact in rising premiums,” said a standalone health insurance company.
