Opening: A Breaking Point in Haryana
Yesterday, more than 600 hospitals in Haryana announced they would no longer accept patients under the Ayushman Bharat PM-JAY scheme. Their reason was blunt — payment delays stretching months had pushed their hospital finance operations to the brink. For many of these hospitals, especially smaller and mid-sized facilities, treating patients without timely reimbursements was no longer financially sustainable.
This news is alarming but not surprising. I’ve seen the same structural challenge before. Years ago, I worked with a mid-sized multi-speciality hospital facing a similar cash crunch, not from a government scheme, but from corporate insurance accounts receivable that had ballooned past 120 days. We put in revenue cycle management dashboards, trained billing staff to pre-empt insurer queries, and enforced escalation protocols. Within six months, their average Days Sales Outstanding (DSO) dropped below 75 days, freeing up significant cash flow.
Ayushman Bharat’s payment bottlenecks are the same hospital receivables problem, just magnified across an entire public health ecosystem.
Ayushman Bharat: A National Accounts Receivable Problem
Under PM-JAY, hospitals treat patients cashless and submit claims for reimbursement to the state health agency or its insurer/TPA. While the promise is universal healthcare, the operational reality is that claim settlement cycles can range from 30 days to over 180 days, depending on the state.
Why delays happen:
- Incomplete or mismatched documentation
- Multi-level verification (hospital, state)
- Budget release cycles within the government
- High rejection rates and slow appeals
For hospitals, these healthcare reimbursements are “assets” on paper, but cash they can’t use — locking up working capital needed for salaries, medicines, and expansion.
How the US Does It
The US healthcare system — while far from perfect — enforces tighter payment cycles for both public (Medicare, Medicaid) and private insurers through legislation and standardised processes.
| Factor | India – Ayushman Bharat & Corporate Insurance | US – Medicare & Private Insurance |
|---|---|---|
| Average DSO | 60–180 days (often >6 months in some states) | Medicare: 14–30 days, Private: 30–45 days |
| Standardization | Fragmented by state/insurer | Uniform claim forms (CMS-1500, UB-04), EDI-based |
| Claim Rejection Rate | 10–20% | 5–10% |
| Regulatory Timelines | Weak enforcement | Federal & state “prompt pay” laws |
| Cash Flow Impact | High, especially for smaller hospitals | Moderate, more predictable |
In the US, Medicare is bound by law to pay clean claims within 14 days electronically or 30 days on paper. Private insurers face state-level “prompt pay” rules with penalties for delays, ensuring healthcare finance timelines remain predictable.
Lessons for India
- Pre-Authorisation Accuracy – Match clinical documentation to approvals to avoid disputes.
- Full Digitisation – End-to-end EDI submission and validation for faster hospital receivables processing.
- Escalation Protocols – Named contacts and time-bound follow-ups for stuck claims.
- Weekly Ageing Reviews – Focus on the oldest receivables to accelerate claim settlement.
- Policy Push – National prompt-pay laws with interest penalties for overdue healthcare reimbursements.
Conclusion
The Haryana development is a warning sign. If receivable timelines remain uncontrolled, more hospitals may opt out of Ayushman Bharat, hurting access for millions. This is not just a public health policy problem; it is fundamentally an accounts receivable and cash flow management problem.
Hospitals that treat receivables as a strategic function — with KPIs, dashboards, and relentless follow-up — can protect their hospital finance health and remain resilient. For Ayushman Bharat to truly work, its revenue cycle management must be as efficient as its patient outreach.
