Price cap on essential procedures, diagnostics- Parliamentary panel calls for healthcare cost reforms

New Delhi: In its 176th report, a Department-related Parliamentary Committee on Health and Family Welfare has recommended that the central government establish a national statutory body to determine and implement a rigid cap on essential procedures and diagnostics.

In a report on 'Affordability and Accessibility of Healthcare Facilities in Public and Private Sector' tabled in the parliament on August 7, 2026, the Committee said the wide disparity in healthcare costs between public and private hospitals places a heavy financial burden on patients, particularly those from low- and middle-income groups.

It recommended introducing standardised, evidence-based treatment protocols across all secondary and tertiary care hospitals to reduce variations in treatment costs.

The Committee also called for all healthcare facilities to publicly display a unified and transparent Schedule of Charges on their platforms based on the model followed by Tata Memorial Centre (TMC) in Mumbai to prevent arbitrary pricing and unwarranted clinical investigations.

"The Committee believes that the stark disparity in healthcare costs between public and private institutions severely compromises patient welfare. Without a unified framework, out-of-pocket expenditure remains unsustainably high for low- and middleincome demographics. The Committee, therefore, recommends the urgent formulation of a standardized, evidence-based treatment protocol mandate across all secondary and tertiary care hospitals. The Ministry of Health and Family Welfare must establish a national statutory body to determine and implement a rigid cap on essential procedures and diagnostics. To ensure compliance, the government must mandate all healthcare facilities to publish a unified, transparent 'Schedule of Charges' on their respective platforms, mirroring the TMC model, to prevent arbitrary pricing and unwarranted clinical investigations," the report stated. 

The recommendations came after the committee examined healthcare affordability and accessibility and heard evidence from health regulators, hospital accreditation bodies, the National Pharmaceutical Pricing Authority and the country’s drug regulator.

Fixed, unified package rates

The Committee recommended that the Government should strictly mandate all private and public healthcare institutions to formulate and publicly display fixed, unified package rates for all standard surgical and medical procedures. Such mandatory packages must comprehensively include surgeon fees, diagnostic investigations, consumables, and standard post-operative care. It said this would improve transparency, eliminate hidden and differential charges, and help prevent arbitrary billing.

"The Committee is of the view that the prevailing practice of variable, demand-based, or urgency-based pricing in many private hospitals severely compromises healthcare affordability and leads to financial distress for patients. The Committee believes that absolute transparency is the first step toward effective cost rationalizing. The Committee, therefore, recommends that the Government should strictly mandate all private and public healthcare institutions to formulate and publicly display fixed, unified package rates for all standard surgical and medical procedures. Such mandatory packages must comprehensively include surgeon fees, diagnostic investigations, consumables, and standard post-operative care. The Committee believes that such measures would lead to self-regulating and rationalization of treatment cost by the hospital. The Committee further believes that by measure of legally eliminating hidden charges and differential pricing, would act as a de-facto capping of treatment cost and would also ensure that patients can precisely plan their medical expenses without fear of arbitrary billing inflation," the committee report said. 

Hospitalisation rates

The latest National Statistical Office (NSO) survey has highlighted the wide gap in healthcare costs between government and private hospitals in India. According to the 80th round of the National Sample Survey conducted from January to December 2025, the average cost of hospitalisation is around Rs 6,631 in government hospitals, compared with Rs 50,508 in private hospitals, and the average cost of inpatient treatment for an illness in India is about Rs 37,858, while out-of-pocket expenditure is about Rs 34,064

The Committee noted with deep concern that treatment in private hospitals can therefore cost five to ten times more than in government facilities, with childbirth and serious illnesses like cancer, heart disease, and kidney failure.

The Committee also noted that hospitalisation costs are highest in several southern and more developed states. The total cost of hospitalisation is around Rs 55,000 in Telangana and Rs 52,000 in Tamil Nadu, Rs 40,000 and Rs 45,000 in Kerala and Karnataka. Expenditure is also high in states such as West Bengal and Maharashtra, where total spending is recorded at or above Rs 40,000. Uttar Pradesh and Haryana cost around Rs 45,000.

"The Committee would like to highlight that, as per the 80th round of the National Sample Survey January-December 2025 conducted by National Statistics Office on Household Social Consumption: Health, state-wise data shows that healthcare costs are not uniform across India, but vary significantly. Treatment costs are higher in the south and in some more developed states. In Telangana, the total cost of hospitalisation reaches about Rs 55,000, while in Tamil Nadu it is around Rs 52,000. In Kerala and Karnataka, the cost ranges between Rs 40,000 and Rs 45,000. Expenditure is also high in states such as West Bengal and Maharashtra, where total spending is recorded at or above Rs 40,000. In Uttar Pradesh and Haryana, the level also reaches about Rs 45,000. By contrast, spending in the north-east and some less developed states is relatively low. In Odisha, it is around Rs 22,000, while in Mizoram and Meghalaya it is about Rs 25,000. In areas such as Ladakh, spending is recorded at only about Rs 8,000. However, lower spending does not necessarily mean better conditions. It may also point to limited access to healthcare, lower use of services, or people being restricted to cheaper options. The state-wise data also shows that where government health services are stronger, public spending on treatment remains lower. But where the private sector has expanded, spending rises rapidly. For example, in southern Indian states, the role of private hospitals is greater, and spending is also higher. In contrast, in the north-eastern states, there is greater reliance on government services, resulting in relatively lower expenditure," the report stated. 

It further added, "The Committee is of the view that while the public healthcare system remains the crucial backbone for rural and low-income populations, with severe infrastructure deficiencies, workforce shortages, and extreme overcrowding that, in fact, erodes public trust and driving patients toward unaffordable private care. The Committee, however, notes with concern that excessive patient loads in government hospitals directly compromise consultation times and service efficiency. The Committee, nevertheless, believes that improving the perceived and actual quality of public healthcare is the most sustainable method to reduce the national burden of out-ofpocket expenditure (OOPE). The Committee, therefore, recommends for an accelerated capacity-building initiative focused on expanding bed capacity and recruiting specialized medical personnel in public facilities, particularly in high-demand metropolitan centers. Furthermore, the Ministry must strictly enforce Indian Public Health Standards (IPHS) to ensure that the availability of essential medicines, diagnostics, and modern amenities in government hospitals matches the responsiveness and patient satisfaction levels currently available exclusively to the private sector."

The Committee observed with concern the widening cost disparity between public and private healthcare, where the recent 80thNSO survey (2025) reveals private hospitalization averages Rs. 50,508 (as compared to Rs. 6,631 in public facilities.)

"Such huge disparity has triggered a deepening affordability crisis. The Committee believes that the rampant commercialization of private healthcare, characterized by grievances of excessive billing, unnecessary diagnostics, and soaring costs for routine procedures like childbirth (average out-of-pocket medical expenditure of Rs. 37,630 in private as compared to Rs. 2,299 in public), is directly pushing vulnerable households into catastrophic debt and distress causing asset sales," it said. 

Therefore, the Committee recommends the existing regulatory framework for immediate formulation of a mechanism to standardize and cap the costs of essential treatments, diagnostics, and routine procedures across all private hospitals and that the government must mandate absolute price transparency prior to admission and establish a unified, fast-track grievance redressal ombudsman specifically designed to audit excessive billing and resolve insurance claim disputes in the private sector.

The Committee also linked higher healthcare spending to the growing role of private hospitals. It noted that private facilities account for nearly 60 per cent of hospitalisations and 70 per cent of outpatient services. According to the Committee, the heavy dependence on private healthcare allows high and largely unregulated charges for diagnostics, medicines, consumables and intensive care to continue, increasing the risk of patients falling into debt.

Following this, the Committee recommended that the Government institute stringent regulatory mechanisms to standardize and cap pricing across private healthcare facilities, including retail pharmacies.

"The Committee believes that the heavy reliance on the private sector, which currently delivers nearly 60 per cent of hospitalisations and 70 per cent of outpatient services, creates an environment where unregulated costs for diagnostics, consumables, medicines, and intensive care persistently push vulnerable households into indebtedness. The Committee further notes that outpatient treatment, being predominantly composed of consultation and medicine costs, remains the segment least protected by existing insurance architecture, which is overwhelmingly weighted towards hospitalization. Consequently, the Committee is of the view that existing health insurance schemes inadequately address the immense financial burden of outpatient treatment, particularly the recurring cost of medicines. The Committee therefore, recommends that the Government institute stringent regulatory mechanisms to standardize and cap pricing across private healthcare facilities, including retail pharmacies. Concurrently, it is imperative that the scope of existing public health insurance frameworks, such as PMJAY, be broadened to comprehensively encompass outpatient consultations, diagnostic evaluations, medicine costs, and post-hospitalization care," the report noted. 

Upfront Cost Estimates

Noting that while the public display of standard package rates is necessary, the Committee said that the management of complex, multi-stage diseases like cancer requires highly individualized treatment plans, making total cost anticipation difficult for the average citizen.

It believes that patients must be insulated from financial unpredictability and mid-treatment billing shocks and therefore recommended that the government institute a statutory mandate requiring all tertiary care hospitals to provide a comprehensive, legally binding upfront cost estimate to the patient prior to the initiation of any complex or prolonged medical intervention.

To help patients plan their finances, hospitals should also appoint dedicated Financial Navigators, specialised counsellors who can help patients understand treatment estimates, insurance limits and available philanthropic support.

"The Committee is of the considered view that while the public display of standard package rates is necessary, the management of complex, multi-stage diseases like cancer requires highly individualized treatment plans, making total cost anticipation difficult for the average citizen. The Committee believes that patients must be insulated from financial unpredictability and mid-treatment billing shocks. The Committee, therefore, recommends that the government institute a statutory mandate requiring all tertiary care hospitals to provide a comprehensive, legally binding upfront cost estimate to the patient prior to the initiation of any complex or prolonged medical intervention. Furthermore, hospitals must be mandated to deploy dedicated 'Financial Navigators', specialised counsellors who guide patients and their families through these estimates, available philanthropic support, and health assurance limits, thereby enabling fully informed financial planning," the panel noted. 

Continuum-of-care packages

The Committee further recommended introducing “Continuum of Care” packages covering the entire course of a disease, rather than limiting cost controls to surgeries or acute treatments. Such packages should include preventive screening, diagnosis, treatment, rehabilitation and palliative care under a single capped cost, helping economically weaker patients avoid unexpected expenses and continue treatment through all stages of care.

"The Committee firmly believes that the current ecosystem often limits financial capping to acute interventions or surgical procedures, leaving patients highly vulnerable to unregulated out-of-pocket expenses during extended follow-ups, rehabilitation, or end-of-life care. The Committee is of the view that true affordability must encompass the entire lifecycle of disease management. The Committee, therefore, recommends the formulation and regulatory enforcement of 'Continuum of Care' packages. These advanced packages must comprehensively bundle preventive screening, diagnostic, curative, and palliative services under a single, capped financial umbrella, ensuring that economically disadvantaged patients are not forced to abandon care during the critical palliative or supportive phases," the committee mentioned in the report. 

Room tariff

Observing that some private hospitals levy or charge large amounts for hospital stays, especially in metropolitan cities, the Committee recommended that the room charges for a hospital should not exceed the average room tariffs prevailing in three-star hotels in the peripheral area or vicinity of the hospital.

The Committee recommended making this benchmark mandatory for all private hospitals in large metropolitan cities. The resident doctor cost, Nursing cost, disposable costs of consumables, meal charges, and laundry charges can be added to the basic room tariff so that the entire cost is rationalised. 

"The Committee is of the considered opinion that some private hospitals levy or charge large amounts for hospital stays, especially in metropolitan cities. Having analysed the break up of the hospital billing structure, the Committee believes that rationalizing of room charges needs to be done on an emergent basis. The Committee understands that hospital room charges are not uniform and vary across geographic regions and even among hospitals within the same area due to differences in infrastructure, service levels and operating costs. The Committee hence recommends that the room charges for a hospital should not exceed the average room tariffs prevailing in three-star hotels in the peripheral area or vicinity of the hospital." the report added. 

Medicines and Billing

The panel further observed that unregulated prices of medicines, medical consumables and medical equipment contribute significantly to the rising cost of healthcare. It recommended setting up a centralised digital procurement system for critical-care medicines and high-end medical equipment. Public and private hospitals should use transparent tendering processes to negotiate lower prices, it said.

"Private and public hospitals must be directed to utilize transparent tendering mechanisms to negotiate prices substantially lower than prevailing market rates. It should be made legally binding for practitioners across both sectors to prioritize the prescription and dispensation of high-quality generic medicines wherever clinically appropriate, thereby instantly driving down out-of-pocket expenditures for patients," it said.

The Committee noted that complex billing procedures and the deliberate obfuscation of health insurance benefits actively deter patients from seeking timely secondary or tertiary care.

Therefore, the committee recommended that all secondary and tertiary healthcare facilities install a fully integrated Hospital Information System linked directly to their approved Schedule of Charges to automatically generate non-manipulable bills.

"Every private hospital above a specified bed capacity must be mandated to establish a dedicated claims management cell to facilitate cashless treatment under government schemes such as Ayushman Bharat– Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). Strict penal provisions should be introduced for hospitals that deny admission to patients eligible under these central or state-sponsored health assurance initiatives," the report noted. 

Ayushman Bharat claims

The report also recommended the immediate overhaul and automation of the reimbursement architecture. It said that the government must institute a strict, statutory timeframe for the processing and clearing of hospital dues under all state and central health schemes. 

"The Committee believes that the long-term sustainability of affordable healthcare delivery, particularly by private and not-for-profit hospitals, is heavily reliant on the efficiency of government health assurance schemes like Ayushman Bharat. The Committee is of the view that chronic administrative delays and inconsistencies in claim settlements actively discourages private institutions from dedicating beds to economically weaker sections. The Committee, therefore, recommends the immediate overhaul and automation of the reimbursement architecture. The government must institute a strict, statutory timeframe for the processing and clearing of hospital dues under all state and central health schemes. The Committee firmly believes that the process of making Ayushman Bharat cards and process of settlement of claims by the hospitals needs to be simplified for better interest of needy patients as well as operational proficiency of the treating hospital. Furthermore, a provision for penal interest on delayed payments must be introduced to ensure mutual trust, accountability, and the uninterrupted participation of private providers in subsidized healthcare initiatives.

Also read- Hospital room charges should not exceed average 3-star hotel tariffs: Parliamentary panel