CIC Condemns ESIC For Inaction Against Private Hospitals Fleecing Consumers [Read Order]

The Central Information Commission, in the case of Pawan Saraswat v PIO, ESIC HQ Office, severely condemned the ESIC for not taking an action against private empanelled hospitals involved in overcharging the patients by selling them cardiac devices at inflated prices.

In the instant case, Pawan, concerned about the inflated prices of cardiac devices, sought information regarding the price of implantation of these devices by empanelled private hospitals in cases where the patients were referred from ESIC Health Centres. However, he got no response from the PIO.

It was contended before the Commission that CGHS rates are generally followed for determining costs in private empanelled hospitals. Where these rates are unavailable, the treatment rates of AIIMS are followed. If those too are unavailable then ESI rates are followed. If those too are unavailable, then a 15% discount is provided at the hospital rates.

Further, as per a Notification of the National Pharmaceutical Pricing Authority, the prices of bare metal stents were fixed at Rs. 7,250 and the prices of drug emulating stents were fixed at Rs. 29,600. Though these prices account for the manufacturing cost as well as profits of the manufacturer, the same haven’t been implemented.

It was further contended that the issue at hand involved a substantial question of public interest since ESIC refers lakhs of patients to private empanelled hospitals, which instead of offering a discount at the hospital rates, charge almost 2.5 times the actual price.

“15.     Thus Commission suspects that there is a serious regulatory lapse, there is nobody to check the stent coming in the box without complete information for consumers like maximum retail price, batch number, name of the manufacturer etc. and the poor patient has no mechanism to check the quality of the devices. The private hospitals are exploiting from this ambiguity, which is sustained by vested commercial corporate medical industry, unethical doctors and deliberate silence by the regulators. This could be mass violation of consumer rights making ESIC a conduit. The government/ESIC reimburses the inflated costs of the implants/devices as and when the empanelled private hospitals are referred by ESIC. This is what the concern expressed by the complainant.”

The Commission noted that such a malpractice also violates the principle of uberrimae fides based on which the insurance companies, which may have to pay for such devices, operate. It further noted that a mere cap on the prices of these products won’t serve the purpose until the entire operation, diagnosis, process and post implantation consequences are also regulated. The ESIC also has a duty to ensure transparency regarding the pricing and regularly update the prices online.

The Commission also highlighted the need for the Department of Consumer Affairs to incorporate speedy remedial measures to stop exorbitant pricing and unjust draining of public resources. Further, the Commission also recommended that the Ministry of Health take strict actions against the hospitals, distributors, doctors and medical personnel involved in inflated pricing manipulations.

The Commission also directed the concerned CPIOs to provide information to the complainant and also submit a detailed note regarding the steps taken by to stop this unethical manipulative practice.

Read the Order here.