In the absence of official guidelines on the quality and price of stents, different hospitals are charging different amounts for these critical implants
Some prominent hospitals in Mumbai are over-charging patients for stents, which they procure privately, as most patients are uninformed about the cost and quality of these tiny mesh tubes that are used to prop up open heart arteries.
Medical professionals are disturbed that there are no official standards to check the manufacture, sale and use of this critical device, which could endanger the patients undergoing the medical procedure.
"The stents do not have an MRP (maximum retail price) so hospitals charge according to their own discretion," said a senior doctor at one of these hospitals, requesting anonymity. "The Food and Drugs Administration (FDA) does not have guidelines regarding the cost of stents. And it does not have any guidelines on the import of these implants,"
When Moneylife inquired at some hospitals in Mumbai, we found they charged anything from Rs1 lakh to Rs2.5 lakh for drug-coated stents. But hospital staff refused to give any other details about the device-whether it is about the companies making the implant or on the advice given to patients.
Kokilaben Dhirubhai Ambani Hospital, in suburban Andheri, charged the most. Patients had to pay Rs2 lakh for a medicated stent. Lilavati Hospital, in suburban Bandra, said it charged Rs1.30 lakh-Rs1.50 lakh, whereas Hiranandani Hospital in Thane mentioned about Rs1 lakh-Rs1.20 lakh for a stent.
The difference in rates between hospitals is attributed to each hospital purchasing stents at different rates on negotiations with the supplier. Also, hospitals say they add on charges for handling and storage of the items. Clearly, they are taking advantage of the absence of guidelines to charge patients at their own rates.
Stents are tiny devices made of metal or fibre which are inserted through blood vessels to keep arteries open in the heart. They are also placed in the neck, the legs and other parts of the body to prevent conditions such as stroke. But research in recent years has suggested that stents are overused by doctors and that drugs may be a cheaper, safer and more effective way for many patients to avoid heart attacks or strokes.
"The stent is delivered by the distributor to the hospital and he gives them a price range, which means that the price is negotiable," a source at one of the hospitals said. Further, the hospitals usually get a lower rate as they purchase the items in bulk, but they do not pass this discount to patients.
The doctor usually has no say on what the hospital charges, the source explained. Sometimes, however, concerned about the financial position of the patient, a doctor may direct him to a particular hospital where the charges for the stent and the procedure are more reasonable.
Interestingly, medical insurance companies that are particular about verification of medical expenditure to be reimbursed, have been found to be lenient about the cost of stents and are known to have cleared the cost of the device even without corresponding evidence of its purchase. In fact, while mediclaim lays the parameters for bed charges, there are no guidelines on the cost of the stent.
Insurance rules commonly stipulate that the bed charges should not be more than 1% of the sum assured. So patients are known to register for a lower-cost room category to be able to claim a higher amount on cost of the implant. The cost of the stent does not change with the class in which the patient is admitted.
According to Shreeraj Deshpande, head-health, Future Generali India Insurance Co, "Hospitals do a bulk purchase of consumables, but do not transfer the differential benefit to the insurance company or the patient. Prices vary across the importer/marketing agencies and the batch/year of import, which further adds to the difference in costing. We do not ask for the stent invoice if it is mentioned in the consolidated bill and the amount is not unexpectedly high."
Rajagopal Gopalan, operations & claims head, Bharti AXA General Insurance, has a different approach. "We have found price discrepancy between stents of the same company for bills coming from different hospitals. We check the invoice price. Only the invoice price is paid and handling charges, if any, are not paid," Mr Gopalan says. "We do case management with the help of TPA (third party administrator) to find out the exact price of the stent of that particular make. Most often, hospitals buy them in bulk, hence they would not have individual invoices. We request for invoices or the box. Most of the time price is not printed on the stent box. With the help of the TPA, we determine the exact price of the stent."
"Most of the time the hospitals buy stents from one or two companies in bulk, so that patient doesn't have much of a choice. They are forced to use what the hospital provides," said the senior doctor.
Abbot Laboratories, Boston Scientific Corp and Johnson & Johnson are among the prominent stent manufacturers globally. In the past fortnight, New Jersey-based J&J announced that it would stop selling drug-coated heart stents by the end of the year, apparently over safety concerns and competition from rival products.
In the United States, the practise is that the price is marked on such implant items by the FDA. "They put an MRP at which price it can be sold. In the US there are guidelines, but here the FDA doesn't have any guidelines on implants that are imported and used in India," the senior doctor said. "There is a discrepancy in the amount and the government needs to put an MRP on the stent."
Once the government lays down guidelines it will be a race among hospitals to charge less for stents to attract patients.
Claim-paying ability of the insurers is one of the factors that needs to considered
Insurance companies are supposed to be experts in managing risk but many in the US and Europe did a poor job of it in 2007-08. In India, the insurance regulator enforces a solvency margin to be set aside towards potential claims liability, in case the insurer goes bust. This solvency margin has to be declared every year to IRDA. While comparing insurers, you should consider the company which can be gauged by its solvency margin. (Solvency margin is the surplus of liquid assets that all life insurance companies must stash away and hold to meet any policy claims that may arise). If there is a really adverse claims ratio due to unrealistic premiums, it is possible that an insurance company may go bankrupt. There are lower chances of adverse claims ratio across products, so policyholders have less to worry about. The solution to protect the insured is for IRDA to formulate a detailed plan of action and set up a policyholder protection fund to which every insurer should contribute every year from the premiums received, and this fund should be independently managed by the trustees appointed by IRDA.
IRDA has given leeway to term products by reducing the solvency margin to improve term life insurance penetration in India. How it will impact the financial status of insurers is yet to be seen. The overall solvency margin specified by IRDA for life insurers is the higher of 150% of liquid assets or Rs50 crore. This implies that the capital and value of the assets of insurance companies has to be at least 1.5 times more than the insured liabilities. According to Mr Viswanand, “Some of the new entrants have solvency margin requirements within the absolute Rs50-crore limit which also enables them to price more competitively.” If true, this is something of a concern.
“World over, GST rates are typically between 16% and 20%. In India it is likely to be the same,” CBEC chairman Sumit D Majumdar said, adding that although rates would come down, tax collection would go up due to increased buoyancy
Kolkata: The Central Board of Excise and Customs (CBEC) today said that tax rates under the proposed Goods and Services Tax (GST) regime is likely to be between 16% and 20%, reports PTI.
“World over, GST rates are typically between 16% and 20%. In India it is likely to be the same,” CBEC chairman Sumit D Majumdar told reporters here.
He said tax rates under the proposed GST would come down sharply and the number of assessees would rise by 5-6 times.
Although rates would come down, tax collection would go up due to increased buoyancy, he said on the sidelines of a session organised by the Bharat Chamber of Commerce.
A Constitutional Amendment Bill on GST was introduced in the Lok Sabha in the last Budget Session.
The GST would subsume most of the indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies.
The implementation of GST, considered to be a major tax reform, has been stuck for years due to differences between the Centre and some states over the new structure.
Mr Majumdar said a dispute settlement authority would be set up to resolve conflicts between the Centre and states.
The CBEC chief said that the GST would be introduced any time during the next financial year.
“Since it is a transaction-based tax unlike direct tax, it is not necessary to be implemented from 1st April 2012,” he said.
He said a special purpose vehicle has been set up by states, Centre and NSDL to develop a software to implement GST. The software is now being tested in 11 states.
Earlier, finance minister Pranab Mukherjee had said that GST would come into effect from 1 April 2012.
Initially, petroleum products and alcohol would be kept out of the purview of GST, he said.
While customs duty would be out of GST net, countervailing duty would be covered by it, Mr Majumdar said.
Mr Majumdar said a taskforce has been set up to frame the GST legislation. “The mandate given to the body is to keep the legislation as simple as possible.”