Under Ayushman Bharat, Poor Patients Are Not Going Cashless but With Less Cash

Representative image. Photo: cotton/Pexels.

This article is based on our current research, for which my peers and I engaged with patients receiving treatment under publicly financed health insurance schemes (PFHIs). The focus of my work is on understanding patients’ satisfaction levels with health care services in hospitals empaneled under the ‘Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana’ (AB-PMJAY) scheme.

The Indian healthcare system has often drawn criticism for its low per-capita public health spending, lack of public health infrastructure and low-quality public healthcare. As a result, the deficient public health system gave way to privatisation, especially for specialised services, and the system itself shifted from supply-side health financing to demand-side financing.

The Narendra Modi government in particular has been promoting demand-side financing for tertiary care and supply-side financing – through creation of health and wellness centres – for primary care. The debate surrounding this model, over which model is better, seems to be never-ending.

Given India’s lower per-capita spending on public healthcare, perhaps relying on private hospitals for tertiary and secondary care seems justified. But the subsequent shortage of specialists in public healthcare forces poor people to seek care in private-sector hospitals, and they end up coughing up a huge amount of money. As a result, these patients are caught in a ‘poverty trap’ from which they seldom escape.

In 2008, towards implementing universal health coverage (UHC), India launched a government-sponsored health insurance scheme called the Rashtriya Swasthya Bima Yojana (RSBY). The scheme was designed along Andhra Pradesh’s Aarogyasri scheme. It targeted poor families and covered secondary and tertiary treatment for up to Rs 30,000. In subsequent years, many state governments launched their own state-specific health schemes, and most of them expanded coverage to include those below the poverty line as well as hiked the coverage amount.

However, the RSBY scheme has been criticised for its low coverage amount relative to the costs of healthcare.

In 2018, the Modi government replaced RSBY with AB-PMJAY. This scheme covers more than 1,000 procedures and therapies for which treatment can be availed in empaneled public and private hospitals. It also adopts a prospective payment mechanism: the upper ceiling of the treatment cost is predetermined and fixed.

In turn, hospitals under the scheme have to ensure cashless treatment for the scheme’s beneficiaries. Once the beneficiary is admitted, she is registered under the scheme with the assistance of an ‘Aarogyamitra’. Then, based on the diagnosis and the planned procedure, the hospital seeks approval from the society managing AB-PMJAY. Once the patient is discharged, the hospital has to apply for reimbursements not exceeding the predetermined ‘package’ cost.

When the scheme was first launched, private hospitals were reluctant to enrol themselves due to the lower package prices. Some private hospitals agreed to be part of the scheme after the government revised some costs.


Also read: Despite Ayushman Bharat Cards, Free Medical Service Still a Pipe Dream for Many in UP


Unrealistic expectations

AB-PMJAY is a flagship scheme of the Modi government, and the government has marketed it with hoardings, newspaper and radio advertisements and on the social media. And based on the people’s awareness, it’s safe to say this marketing strategy has been highly effective.

However, our in-depth interviews with many of the scheme’s beneficiaries found that they were disgruntled with the scheme being touted as cashless. One of them told us, “Modi says this is ‘free, free’, but where is it free? If it’s not going to be free, he shouldn’t say so. The government makes fools out of poor people” (translated from Hindi). Most of our interviews shared this sentiment.

We found that the source of this discontentment is a confusion regarding the package system. For example, one beneficiary had undergone a septoplasty , and so his treating physician obtained approval for a septoplasty. However, the hospital charged the beneficiary Rs 13,000 while AB-PMJAY approved only Rs 5,000.

Without any other options the patient paid the remaining Rs 8,000 out of his pocket – but not before he got into a fight with the doctors, administration and billing staff. As he recalled, he kept arguing that he was a beneficiary of AB-PMJAY and was entitled to free treatment.

Members of the hospital staff spent a considerable amount of time with this beneficiary explaining the package system under PFHI schemes. He recalled their words: “For your specified surgery, the government has fixed only 5,000 rupees. The extra charges that you are asked to pay are because of your extended stay in the hospital and additional services due to your comorbidities. The package amount – amount payable to the hospital by the government – is fixed based on predetermined criteria that don’t factor in your comorbidities.”

Are these additional charges legal? And who is to blame for such situations – the hospital, the government or the patient?

After a discussion with doctors and administrative staff at the hospital, we found that such issues are common under PFHIs. Healthcare is unpredictable; once you start treating the patient or start operating – only then do you realise a need for additional procedures. However, AB-PMJAY – which operates based on fixed packages – doesn’t have the flexibility to accommodate such demands.

The doctors feel that such issues further expand the mistrust between doctors and patients, and that the scheme is often the source of dissatisfaction. This is important: dissatisfied patient means poorer treatment outcomes. We can meet the goal of providing good-quality care through an insurance-based model only when all stakeholders are satisfied.

Moreover, as with private hospitals, patient satisfaction also helps with word-of-mouth advertising. And if patients exiting hospitals where they have had a bad experience due to AB-PMJAY are not happy, they will discourage others from being admitted at the same hospital as well and push them towards private healthcare.

The perception of satisfaction is guided by the difference between pre-service expectations and the actual experience of the service. AB-PMJAY’s marketing strategies work by promising customers what they have always expected; the tagline on many promotional materials is “free quality treatment for up to Rs 5 lakh”. However, poor people at hospitals expect cashless treatment for surgical procedures that cost Rs 13,000 – only to leave the building with 8,000 rupees less.

Patient literacy also matters. Many of AB-PMJAY’s beneficiaries are unlikely to have received higher education, and could struggle to understand why their treatment can’t be free when the government has promised up to Rs 5 lakh.


Also read: In Rajasthan, Registration Quagmire Leads to Zero Beneficiaries of Ayushman Bharat


In the final analysis, we need to ask ourselves if we can have a cashless treatment facility given the scheme is inflexible vis-à-vis its packages. If the answer is ‘yes’, then we need to ask who will pay the additional amount. Can we expect private hospitals to run into losses while promoting AB-PMJAY? Or should we expect AB-PMJAY to change, with the risk of making the system more confusing, and prone to manipulation?

If we don’t answer these questions, we risk having private hospitals compromising the quality of care for patients by implementing only what package is available instead of being guided by the patient’s needs.

Either way, the government can begin by explaining how exactly the scheme works in its advertisements. The empanelled hospitals, through the Aarogyamitra stationed there, should be encouraged to discuss the specific finances of each patient, going through what will be covered under the scheme and what won’t.

Vanita Singh is a PhD scholar at IIM Ahmedabad.

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