Central Government Health Scheme: How New Rates Will Impact 4.6 Million Employees & Pensioners

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Central Government has announced a major revision of the Central Government Health Scheme (CGHS) rates , the biggest in over a decade , offering much-needed relief to more than 4.6 million employees and pensioners.The new rates, which take effect from October 13, are determined by a hospital’s accreditation, city category, type, and ward entitlement, marking a structural shift in how reimbursements are calculated.What’s Changing in the CGHS StructureAccording to the Health Ministry, the revised rates have been designed to make CGHS “fair and sustainable” for both patients and hospitals.

• Hospital accreditation: Non-NABH/NABL hospitals will get 15% lower rates than accredited ones.
• Hospital type: Super-specialty hospitals will receive 15% higher rates than general ones.
• City category: Y cities (Tier-II) to get 10% lower rates than X cities; Z cities (Tier-III) to get 20% lower.
• Ward type: General ward rates 5% lower; private ward rates 5% higher.

Northeastern states, Jammu & Kashmir, and Ladakh will be treated as Y-category cities for rate calculation.Cashless Treatment to Get EasierFor years, CGHS patients complained that hospitals often denied cashless treatment, forcing them to pay upfront and wait months for reimbursement.Hospitals, on the other hand, said old rates (last comprehensively revised in 2014) were too low to cover rising costs.The new structure aims to resolve these issues by aligning rates closer to market levels, encouraging hospitals to resume cashless services.“This reform was long overdue. The revised structure should restore trust between empaneled hospitals and CGHS beneficiaries,” said a senior official from the Ministry of Health.Hospitals must confirm acceptance of the new rates by October 13 or face de-empanelment from the CGHS list.Impact on Hospitals and the Stock MarketAccording to DAM Capital, the new rates represent a 25–30% average increase, which will likely boost hospital revenue and margins.If 10% of revenues come from government schemes with 20% EBITDA margins, this revision could result in a 2.5% revenue uplift and 10% EBITDA growth.“This is a win-win , hospitals get viable rates, and patients get faster, cashless care,” noted DAM Capital’s healthcare research team.Following the announcement, shares of Fortis, Apollo Hospitals, Max Healthcare, and Narayana Health rose up to 6% on October 6.A Relief for Millions of BeneficiariesThe National Federation of Central Government Employees’ Unions had earlier urged the government to address the hardships caused by non-cashless treatments, especially during emergencies.This revision directly addresses those concerns, providing financial and medical relief to millions of families.Currently, the CGHS serves around 46 lakh beneficiaries in 80 cities across India, covering expenses such as room charges, doctor’s fees, medicines, diagnostics, surgeries, ICU, and physiotherapy.A Reform That Balances Both SidesThe overhaul brings CGHS reimbursement rates closer to private sector levels, ensuring hospitals are not underpaid while beneficiaries receive timely, cashless treatment.Hospitals must also sign a new Memorandum of Agreement (MoA) within 90 days, replacing those expiring on October 13.“This step brings long-term stability to the CGHS ecosystem,” said a senior CGHS administrator, calling it a “balanced reform benefiting both sides.”After over 10 years, the CGHS revamp is set to reshape India’s largest public health insurance framework , bridging the long-standing gap between government affordability and private hospital viability.