Centre to set up escrow account for payments under Ayushman Bharat health insurance scheme

The Union health ministry is considering setting up an escrow account to help quickly settle payments under the Ayushman Bharat health insurance scheme, people aware of the matter said, explaining how the plan will keep funds flowing to hospitals even if central or state government departments, who share the costs, delay in releasing money.

The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) AB-PMJAY is a centrally sponsored scheme providing ₹5 lakh as insurance cover for hospitalisation to poor and vulnerable families. The ratio of contribution towards premium between the Centre and state governments is 60:40 in all states except the northeast and the three Himalayan states, where the ratio is 90:10.

One of the officials said the move is meant to secure a steadier corpus. “This move is under consideration as a measure to attract more hospitals to be a part of the Ayushman Bharat-PMJAY,” a government functionary aware of the matter said, requesting anonymity. “There have been some complaints of delayed payments, which could be because state governments at times take time to release their share of the money.”

An escrow account is where funds are held in trust while two or more parties complete a transaction.

Under the proposal, a designated bank will make payments in a timely manner through the escrow account, even if there is delay in the money being provided from either the central or state governments. The bank could then charge interest on the specified amount from the defaulter, the person said.

In the case of Union Territories, the central contribution of premium is 100% for UTs without a legislature, while the ratio is 60:40 for those with a legislature. The central government is already providing financial support to states that need additional resources to implement the scheme. The annual premium is around ₹1200-1300.

The National Health Authority, the nodal authority to implement the flagship health insurance scheme, has also been thinking about ways to make it a more attractive proposition for hospitals.

Among other things, a green channel for empaneled hospitals with a no-default record is being proposed, allowing 50% of the treatment amount to be reimbursed instantly to such hospitals.

It could take a minimum of two weeks to reimburse the treatment cost to a hospital under the scheme.

Close to 28,000 hospitals currently have been empaneled under the scheme where any of the Ayushman Bharat beneficiaries can avail medical treatment for free.

Bottlenecks like delayed payments need to be dealt with in schemes of this scale, public health experts said.

“It will be a big plus for hospitals if the money is reimbursed on time as this is normally one of the major contentions,” said Dr MC Misra, former director at the All India Institute of Medical Sciences, Delhi.

The National Health Authority has created at least 1,600 packages for speciality and super speciality treatment. These treatment packages are being revised on a regular basis to keep the current demands under consideration and also increase of health care delivery cost, so that hospitals do not face a monetary crunch.

Last year, the authority revised beneficiary packages of around 400 procedures under the scheme to also include surgical treatment for mucormycosis that grew in numbers after the second Covid-19 surge.

In the new health benefit package, rates of some packages were increased by 20% to 40% to meet market standards. The central government is also expanding the ambit of beneficiaries and recently announced addition of members of the transgender community as beneficiaries, and packages have been drafted keeping in mind their needs such as sex reassignment surgery.