India’s flagship health insurance scheme, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), seems to be losing favour among private hospitals. Since its launch in 2018, over 600 private hospitals have opted out, with Gujarat leading the exit tally at 233, followed by Kerala at 146 and Maharashtra at 83, according to data shared in Rajya Sabha by Minister of State for Health, Prataprao Jadhav.
The total number of empanelled hospitals under the scheme stands at 31,805, out of which 14,394 are private.
The scheme offers a ₹5 lakh health cover per family annually. On paper, it’s one of the largest government-backed insurance schemes globally. But private players are stepping away citing reasons that boil down to financial sustainability.
Sources from the healthcare industry and associations like the Association of Healthcare Providers of India (AHPI) say low reimbursement rates, delays in payments, and deduction in claimed amounts are key hurdles.
According to AHPI Director General Girdhar Gyani, many hospitals—particularly those offering tertiary care—are struggling to break even due to payment delays and package rates that don’t match real-world costs.
An administrator at a Gurugram hospital claimed they’re receiving only 10–15 percent of their billed amounts under PMJAY. Another hospital in Kurukshetra echoed the same, saying such discrepancies slash 15–16 percent of profit margins.
The concern isn’t new. In February, the Haryana unit of the Indian Medical Association (IMA) called for suspension of PMJAY services, alleging that ₹400 crore in reimbursements were still pending. Similar protests cropped up in Punjab and Jammu & Kashmir, with associations demanding payment clarity.
The scheme has expanded significantly since launch. Initially covering 107.4 million poor and vulnerable families, the reach grew to 123.4 million families (or about 550 million people) by 2022. More recently, ASHAs, anganwadi workers, and senior citizens aged 70 and above were also brought under its umbrella.
But as the scheme grew, operational challenges multiplied.
An industry insider noted that earlier only 30 per cent of patients were PMJAY beneficiaries, with the rest being cash or insurance clients. That mix helped create a cross-subsidy model that supported hospitals financially. But now, that ratio has reportedly flipped, with PMJAY patients making up 70 per cent of the load—adding pressure on already thin margins.
Smaller hospitals are particularly feeling the heat. They often lack the scale to absorb delays or cost overruns. For them, this shift is proving to be a tipping point.
In states like Chhattisgarh and Gujarat, certain treatment packages are reserved only for public hospitals, and private hospitals say they aren’t even allowed referrals. That’s another reason why many facilities find the scheme impractical to participate in.
Minister Jadhav told Rajya Sabha that the National Health Authority (NHA) has clear guidelines for claim payments—15 days for intra-state hospitals and 30 days for inter-state (portability) cases. But private hospitals say reality often looks different.
In March 2024, the Centre set up a high-level committee headed by VK Paul from NITI Aayog to assess how to improve the scheme and bring more private players on board. The committee has reportedly discussed allowing recovery of fixed and variable costs, more timely payments, and even a 1 per cent interest clause for delayed reimbursements. But nothing has been finalised yet.
Private hospitals are watching closely, waiting for what comes next.