PM-JAY: Implementation Model

PM-JAY: The various States have developed their own health insurance/assurance plans utilizing a variety of different approaches. Several of them utilize the services of insurance companies, while others operate the schemes directly in their States.

Due to the fact that States are at diverse levels of preparedness and have varying capacities to run such schemes, PM-JAY allows States to choose their implementation model. They may implement systems using an assurance/trust approach, an insurance model, or a combination of the two.

A. Assurance Model/Trust Model

This is the most often used implementation model by the majority of States. Under this arrangement, the SHA implements the program directly, without the insurance company’s involvement. In this paradigm, the government bears the financial risk associated with administering the scheme. SHA pays health care providers directly. Despite the absence of an insurance provider, the SHA retains the services of an Implementation Support Agency (ISA) to manage claims and related tasks. Due to the absence of an insurance company, the SHA is also responsible for performing specialized activities such as hospital empanelment, beneficiary identification, claims management and audits, and other associated responsibilities.

B. Insurance Model

In the insurance model, the SHA selects an insurance company to manage PM-JAY in the State through a competitive tendering procedure. SHA pays a premium to the insurance company per qualifying family for the policy period based on a market-determined premium, and the insurance company handles claims and reimbursements to the service provider. In this scenario, the insurance company also bears the financial risk associated with administering the scheme. To ensure that the insurance company does not profit excessively, the scheme allows for a method in which insurance companies can receive only a set amount of the premium for-profit and administrative expenditures.

After deducting a fixed proportion for administration charges (including all costs excluding service tax and any relevant cess), and after satisfying all claims, if there is a surplus, the insurer should refund the SHA 100 percent of the remaining surplus within 30 days. The percentage that must be refunded is as follows:

a. In Category A States (administrative cost cannot exceed 20%)

  • i. Administrative cost allowed 10% if claim ratio less than 60%.
  • ii. Administrative cost allowed 15% if claim ratio is between 60 to less than 70%.
  • iii. Administrative cost allowed 20% if claim ratio is between 70 to less than 80%.

b. In Category B States (administrative cost cannot exceed 15%)

  • i. Administrative cost allowed 10% if claim ratio less than 60%.
  • ii. Administrative cost allowed 12% if claim ratio is between 60 to less than 70%.
  • iii. Administrative cost allowed 15% if claim ratio is between 70 to less than 85%.

If the claim settlement ratio reaches 120 percent (115 percent for the Category B States) during any policy period, the excess sum shall initially be paid equally between the insurance carrier and the State Government / Union Territory. Following that, the Central Government shall divide the burden in accordance with the sharing pattern ratio from the excess burden amount carried by the State Government / Union Territory. However, the overall contribution of the Central Government, including the premium share and excess burden amount of the claim, shall not exceed the Central Government’s maximum share ceiling applicable to that state / UT. Any amount in excess of the Central and State Government contributions shall be borne by the insurance company.

C. Mixed Model

The SHA utilizes both the assurance/trust and insurance models stated above in a variety of capacities to increase economic and operational efficiency, flexibility, and convergence with the State system. This concept is typically used by brownfield states that already had plans in place that covered a wider population of beneficiaries.

Financing of The Scheme

PM-JAY is entirely government-funded, with costs divided between the Central and State Governments. The Government of India establishes a national ceiling amount per family, which is utilized to calculate the contribution’s maximum limit. The actual premium discovered through the open tendering process or the maximum ceiling on the estimated premium determined by the Government of India for the implementation of PM-JAY, whichever is less, would be shared between the Central Government and States/UTs in the ratio specified in extant Ministry of Finance directives from time to time. Additionally, administrative costs associated with executing the scheme at the State level are covered by the scheme and divided equally between the Centre and the State.

For States (other than the North-Eastern States and three Himalayan States) and Union Territories with legislatures, the existing sharing system is 60:40. The ratio is 90:10 for the North-Eastern states and three Himalayan states (Jammu & Kashmir, Himachal Pradesh, and Uttarakhand). The Central Government may contribute up to 100% of funding to Union Territories without legislatures on a case-by-case basis.

Payment of Central Share

  • Insurance model – The State Government pays a flat premium per family, regardless of the number of persons covered by PM-JAY in that family, which is then distributed to the insurer based on the number of qualified families.
  • Assurance model – The central share of the contribution is calculated on the basis of actual claim costs or the ceiling, whichever is lower. If the State employs an Implementation Support Agency, the cost of the ISA, which is chosen through a competitive process, is likewise split between the Centre and the State.

Expansion of Coverage By States Under PM-JAY, Convergence, and Flexibility to The States


Over the last couple of decades, different states have implemented their own health insurance/assurance programs. The majority of these plans cover only tertiary care issues. Except for a few minor states that have impaneled a few hospitals outside of their borders, these schemes provide benefits primarily within their borders. Only a few States had merged their schemes with the defunct RSBY program, and the majority of them continued to operate separately. This was owing to the RSBY’s lack of flexibility in design, which originally aided in rapid scale-up but became a challenge over time and provided the States with limited flexibility.

Even though these programs targeted the poor and disadvantaged, eligibility requirements and databases varied significantly between states. Few states made use of the food subsidy database, while others established their own for their welfare programs.

PM-key JAY’s objectives were to assure comprehensive coverage for catastrophic illnesses, reduce catastrophic out-of-pocket expenses, increase access to inpatient treatment, reduce unmet needs, and consolidate diverse health insurance systems across the States. Additionally, PM-JAY would set national standards for a health assurance system and will facilitate care portability across borders.

In the spirit of cooperative federalism and in consideration of regional variances, the PM-JAY design incorporates a great deal of flexibility. As a result, PM-JAY affords States considerable freedom in terms of scheme design and implementation.

States have been provided the flexibility in terms of the following parameters:

  • Mode of implementation – States have the option of implementing the plan through a trust, an insurance firm, or a mixed model.
  • Usage of beneficiary data – PM-JAY targets beneficiaries using SECC data; however, states have been given leeway to choose the dataset for this purpose if they cover more beneficiaries than the SECC-defined numbers. However, the state must verify that all beneficiaries who are qualified based on SECC data are covered.
  • Co-branding – States may co-brand their existing health insurance/assurance programs with PM-JAY in accordance with the scheme’s co-branding requirements.
  • Expansion of coverage to more people – States may encompass additional families than those specified by SECC data. The States will be responsible for the whole expense of these new families.
  • Increasing benefit cover to higher value – If the State so wants, they may even increase the annual benefits cap to ‘5 lakh per family. However, in this instance, the State must bear the entire expense of additional coverage.
  • Revision in package numbers and pricing – PM-JAY insures approximately 1300 packages at NHA-set rates. However, in light of the varied illness profiles and cost of services between States, States have been given the flexibility to expand the number of packages and, within certain limits, to alter package costs.
  • Reservation of packages for public hospitals – To ensure that such services, which are capable of being delivered well by government health facilities, are not abused by private providers, the NHA has developed a set of standards that apply only to public health care institutions. States have the authority to alter the list of such ailments reserved for public hospitals.
  • IT Systems – Prior to the implementation of PM-JAY, some states operated their own health insurance programs and maintained their own information technology infrastructure. PM-JAY offers states the freedom to continue using their own IT systems while sharing data with NHA in the defined format in real-time.
  • Payment to public hospitals – States have also been given the option of deducting a percentage of the amount of the claim paid to public hospitals.

Hospital Empanelment

To deliver the advantages under PM-JAY, the supply of health care services must be ensured by pre-selected, well-equipped, and well-prepared facilities. In addition, hospitals must be dispersed sufficiently enough across the country to provide optimal accessibility to eligible families.

To meet the increased demand under PM-JAY while also ensuring high-quality care for the beneficiaries, it is critical to maintain and expand a network of hospitals that meet quality standards and requirements. This necessitates the pre-empanelment of hospitals so that beneficiaries can be assured that their rights will be honored in the most convenient, cashless, and high-quality manner possible.

Hospital Empanelment under PM-JAY

Empanelment Criteria

Two types of empanelment criteria have been developed based on supply-side characteristics (almost 71% of hospitals operate as sole proprietorship enterprises with fewer than 25 beds capacity and provide non-specialized general clinical care). These criteria were developed based on previous experience with other government-funded health insurance plans, state-specific quality-of-care standards, and the Clinical Establishment Act of 2011.

The detailed criteria for empanelment are available on

  • General criteria – For hospitals that provide non-specialized general medical and surgical care with or without ICU and emergency services.
  • Special Criteria (for clinical specialties) – A set of criteria has been established for each specialty. A hospital is not allowed to choose the risk under PM-JAY, which means it cannot apply for specific specialties and must agree to provide all specializations to PM-JAY beneficiaries. However, in order to provide a specialized clinical service, the hospital must have the appropriate infrastructure and human resources in place, as outlined in the PM-JAY special criteria.

Process of hospital empanelment in PM-JAY

For all aspects of the procedure, PM-JAY recommends a two-tier approach to hospital empanelment that is online, transparent, efficient, and fully free. States are in charge of the entire hospital empanelment procedure, and they have final decision-making authority in this respect. A State Empanelment Committee (SEC) has been established under the State Health Agency at the state level. A District Empanelment Committee (DEC) has been established at the district level.

Each impaneled hospital must establish a dedicated support desk for beneficiaries, which will be staffed by a dedicated team of employees designated by the Empanelled Health Care Provider (EHCP). These help desk employees are known as Pradhan Mantri Arogya Mitras (PMAMs), and their job is to make it easier for beneficiaries to receive care at hospitals. Every impaneled hospital is likewise assigned a unique ID.

  • Hospitals must submit an application online, which is free of charge. The application’s progress can also be tracked online.
  • The online applications are scrutinized by the DEC and physical verification of the hospitals is carried out.
  • Following this verification, the DEC makes a recommendation to the SEC on whether or not to approve or reject the hospital. The SEC is the one who makes the final judgment on empanelment.

Continuous quality improvement and other incentives to impaneled hospitals

PM-JAY encourages impaneled hospitals to strive for improved quality standards on an ongoing basis. These incentives will undoubtedly motivate hospitals to meet the stated quality criteria. Over and above the package rates, hospitals are eligible for the following incentives under PM-JAY.

  • A hospital does not have to be NABH accredited at the time of empanelment, but if it achieves entry-level NABH certification during its relationship with PM-JAY, it will be paid 10% more in package rates. Similarly, a hospital that receives complete accreditation is paid 15% more.
  • Hospitals attached to teaching institutions (medical, PG, and DNB courses) are entitled to 10 percent higher packages.
  • In order to encourage hospitals to extend out to beneficiaries in underserved areas, PM-JAY has set a 10% higher package fee for hospitals located in aspirational districts.

National Health Care Providers (NHCP)

Despite the fact that states are responsible for hospital empanelment, there are several outstanding tertiary and specialized care hospitals that function as independent institutions of excellence under the Ministry of Health and Family Welfare (MoHFW) or another department. AIIMS, Safdarjang Hospital, JIPMER, PGI Chandigarh, and others are some of the most well-known instances of such hospitals.

The National Health Authority (NHA) has directly appointed these hospitals by signing a Memorandum of Understanding with each of them. To expand the network of service providers, NHA has directly impaneled all NABH-recognized private hospitals in the National Capital Region (NCR). Empanelment of government hospitals other than those controlled by the Ministry of Health and Family Welfare is also a significant step toward expanding the hospital network.

Packages and Rates

Impaneled health care providers (EHCP) are paid based on set package rates to ensure that hospitals do not overcharge and rates do not fluctuate among hospitals. All expenditures involved with the treatment, including pre-hospitalization and post-hospitalization fees, are included in a package.

The indicated surgical packages are paid as bundled care (described below), in which the insurer/SHA makes a single all-inclusive payment to the EHCP. Medical packages, on the other hand, are paid to the EHCP on a per-day basis based on the admittance unit (regular ward, HDU, ICU), with some pre-determined add-ons paid separately. Day-care packages are paid in the same way as surgery packages are. The treatment packages are extensive, covering roughly 24 disciplines, including super-specialty care such as oncology, neurosurgery, cardiothoracic and cardiovascular surgery, and so on. The package rate (in case of surgical or defined day-care benefits) includes:

  • Registration charges
  • Bed charges (General Ward)
  • Nursing and Boarding charges
  • Surgeons, Anaesthetists, Medical Practitioners, Consultants’ fees, etc.
  • Anesthesia, Blood Transfusion, Oxygen, O.T. Charges, Cost of Surgical Appliances, etc.
  • Medicines and Drugs
  • Cost of Prosthetic Devices, implants (unless payable separately)
  • Pathology and radiology tests: radiology to include but not be limited to X-ray, MRI, CT Scan, etc. (as applicable)
  • Food to patient
  • Pre and Post Hospitalisation expenses: Expenses incurred for consultation, diagnostic tests, and medicines before the admission of the patient in the same hospital, and up to 15 days of the discharge from the hospital for the same ailment/ surgery
  • Any other expenses related to the treatment of the patient in the EHCP

Hospitals can be paid a larger amount based on a few factors, as indicated in the previous section. Before giving treatment up to the amount of INR 1,00,000, an EHCP will need to obtain approval and fix the rate from the insurer/SHA for such surgical conditions that are not specified in the package list.

The journey from HBP 1.0 to HBP 2.0

Soon after the launch, NHA began receiving input on various areas of AB PM-JAY, including HBP 1.0, from stakeholders and external sources. The majority of the feedback received on HBP could be broadly clubbed under the following heads:

  • Package rates offered for many packages were inadequate to cover the cost of procedures
  • Duplication of packages was observed both within a single specialty and across specialties
  • The terminology used for the nomenclature of packages was inconsistent
  • Few of the procedures were overlapping with the ongoing National Health Programs
  • Some of the high-end procedures/investigations/drugs are not covered in HBP 1.0
  • Due to the non-availability of certain treatments, a lot of procedures were being booked under Unspecified packages

Development of packages and rates under HBP 2.0

All of the issues and feedback on various areas of AB PM-JAY received from stakeholders and other sources were discussed at NHA’s inaugural Governing Board meeting in April 2019. NHA was given the mandate to rationalize HBP in order to overcome the major inconsistencies.

24 Specialist Committees were formed for this purpose. NHA and Tata Memorial Hospital (TMH) signed a Memorandum of Understanding for the assessment of oncology packages. The data collected from public sector hospitals for eight specialties had been completed for the Department of Health Research’s (DHR) research “Costing of Health Services in India” (CHSI). DHR agreed to share these preliminary findings with the NHA.

These findings were shared with the specialist committees as part of their deliberations on HBP pricing optimization (Please see Annex 1: Inputs provided to the specialist committee and decisions sought). The first phases in the exercise of rationalizing the Health Benefits Package (HBP) were completed utilizing three separate methods, as shown in the flow chart titled “Process for rationalization of HBP.”

Following the due procedure, the recommendations were presented to the Governing Board of NHA. The Governing Board of NHA approved the following changes:

  • Increase in price of 270 packages
  • Decrease in price of 57 packages
  • Retain the price of 469 packages at the original level
  • Introduction of 237 new packages
  • Stratification of 43 existing packages
  • Discontinuation of 554 existing packages
  • To discontinue the packages of Tubectomy and Vasectomy as the services are provided under National Family Welfare Program.
  • The packages for Cataract were decided to be continued taking into account the existing disease burden and the country’s commitment to reducing the prevalence of Cataract blindness
  • It was decided by the Governing Board that the increase in package rates of 270 packages will be moderated by 10%.

Flexibility to States on packages

States that have a state-run healthcare system can set their own rates for all of the packages. They are, however, expected to conform to the PM-JAY list’s requisite 1,391 packages. Additional packages from their own scheme that were not included in the national package master can be added to the list.

States that do not have a health-care plan other than PM-JAY can use the national package master with context-specific changes such as price revisions of up to 10%, procedures reserved for public hospitalization, and additional packages subject to required pre-authorization, among other things. States have the ability to add packages or change pricing to meet their needs; they also have the flexibility to change pre-authorization terms and modify the list of public hospital-only packages, which was created to avoid abuse.

Advantages of HBP 2.0

  • HBP 2.0 includes features that allow for expanded coverage of previously covered disease conditions and procedures while maintaining a low package count. Stratification, cross-specialty packages, numerous operations in a package, and other features facilitate this expanded coverage. This should make it easier for PMAMs to choose packages without sacrificing the amount of data available for analysis.
  • In contrast to the premise of 50% reimbursement for the second package in HBP 1.0, some packages can now be booked with a primary package at a 100 percent reimbursement. Furthermore, several packages have been designated as Stand-Alone Packages, meaning they cannot be combined with any other product.
  • Some operations necessitate more than the 15-day follow-up period included in the package. Follow–up packages have been incorporated for such procedures to guarantee care continuity.
  • In HBP 2.0, some measures have been added to reduce the risk of fraud and misuse. In some circumstances, a time interval for booking successive packages has been established, a maximum number of implants has been established, and a maximum number of times a package can be booked in an individual has been established. Other features, such as the detection of stand-alone packages and fee consistency across specialties, are intended to reduce upcoding incentives even more.
  • For easier and more accurate package booking, the HBP 2.0 has a three-layered IT customization. This enables better package usage and monitoring analytics and dashboards. The scientific nomenclature and coding help HBP 2.0 achieve greater uniformity and adoption across the country.