Wednesday, July 5, 2017

Outstanding and Receivables: A Long overdue problem faced by service providers

Doctors are not a happy fraternity today. There are several reasons for this.

  • Practicing doctors live in fear of criminal prosecution or violence.
  • Specialists are unhappy because of the unrealistic targets they are expected to meet.
  • Corporate hospitals are unhappy because they are denied their due reimbursements in time.
  • Service doctors and medical faculty are unhappy because their salaries are not at par and the new 7th Pay Commission has reduced the non- Practicing Allowance (NPA).
  • MBBS doctors are unhappy because they do not have opportunities to get a postgraduate degree.

The medical profession provides services to Central Government Health Scheme (CGHS), Employees Health Scheme (EHS), Public Sector Units (PSUs), Ex-servicemen Contributory Health Scheme (ECHS) and similar organizations at highly subsidized rates. Yet the due reimbursement is delayed for months together and is given without any interest.

This was among the several issues that I had touched upon in my Presidential address. Therein I had said, “The constitutional right “equal pay for equal work” should be implemented in medical profession. All service doctors and resident doctors should get full 7th Pay Commission, obligatory research grants, uniform age of retirement and uniform nationwide pay scales, legitimate leaves, and working hours and conditions.”

Then again, “Uniform service conditions for doctors and faculty” and “Reimbursement of emergency services for private sector” were a part our major demands in the Dilli Chalo movement.

Let’s review here the problems faced by service providers.

  • Service providers empanelled with the above organizations are in a very vulnerable position. Providers cannot deny services to these patients as the number of beneficiaries is large and ceasing services will cause a public disaster.
  • With services being continued, the government has gone into a state of inertia and apathy.
  • The service providers are struggling with operations and continuation of service due to the following main challenges:

o    Delayed reimbursements: The current situation of outstanding is alarming with payments worth hundreds of crores pending. For example, the outstanding amount from CGHS includes up to 75 crores of Max Healthcare, over 20 crores of empanelled hospitals of Fortis in the north, in Bangalore and Maharashtra and about 5 crores of Dr Lal’s Path Labs.

This excessive delay is affecting the very sustainability of the operations for the service providers. As a cascading effect, lab providers face delay in other payments from hospitals as they do not have enough funds to pay the labs because of delay in receiving reimbursements. While the service agreement provides for 70% of payment within 5 days, payments are delayed by months. An intervention from the Finance Ministry is also required to rectify the current problem as delays are also caused due to misalignment between Ministry of Finance, Ministry of Health & Family Welfare and the payment partner- UTI

o    Wrongful Deductions: - Even though service providers are deliver services as per rates given by the Government, illogical deductions are made from the claims with no intimation to the service providers. The quality of service and costs involved are judged by inadequately qualified persons during claim processing.

o    Reconciliation Issues: Several gaps exist in the current system of dispute resolution and arbitration for such cases. There is a need of validation of the system by an independent body, maybe FICCI Indian Council of Arbitration (ICA). Grievance redressal for service providers should be relooked into and streamlined

o    Contract Renewal and Extensions: The agreement, which is valid for 2 years, has been extended up to 4 years by the Government, without citing any rationale for the extension. The current contract due to expire in October 2016 was extended up to end of June 2017 and still there is no sign of new agreement.

o    Terms of Agreement: Agreements should be restructured before upcoming renewals to account for the following:

- Organizations like CGHS should have a mechanism to accommodate inflation like in case of the Pharma Industry where price hike of up to 10% every year is allowed.

- The Andhra Pradesh state Government order has been linked to Consumer Price Index (CPI), these organizations should also have similar considerations.

- The rates of organizations like CGHS should be based on a scientific rationale.

- Experts from the private healthcare sector should also be a part of the rate fixing exercise.

- A unilateral scheme with all specifications in favor of the government is not acceptable to the industry

(Source: FICCI Health meeting held on 13th June chaired by Dr Girdhar Gyani)

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