The Central Pay Commission (Part- VII)

The Central Pay Commission ( part- VII)

By Lokanath Mishra, the Chief Adviser, the all India pensioners association of CBIC and the all India CGHS beneficiaries association of CBIC :

Should Medical Benefits (CGHS and other schemes) be Core to Pension Policy?

Short answer: Absolutely. Medical costs are the single largest and most unpredictable expense for retirees. Health protection must be an integral, indexed, and enforceable component of pension policy — not an ad-hoc or secondary allowance. This aligns with judicial pronouncements, parliamentary findings, CGHS policy, and international norms on social protection and healthy ageing. 

Why medical benefits must be core to pension policy
1. Elderly face high and rising out-of-pocket health expenditure. Studies and global agencies show ageing populations increase demand for chronic care, diagnostics and frequent outpatient services; without secure health cover, pensions quickly evaporate into medical bills. WHO and ILO guidance position health protection as central to social protection for older persons. 
2. CGHS already recognizes pensioners as a core beneficiary group, but gaps remain. CGHS provides cashless treatment in empanelled hospitals, dispensary services and investigative facilities, but implementation limitations (portability, OPD limits, package rates, and access in non-CGHS cities) constrain effective coverage for retirees. The official CGHS Handbook confirms cashless empanelment and benefits, but parliamentary reports have urged simplification and better access for aged pensioners. 
3. Judicial jurisprudence supports reasonable medical entitlements for retirees. Indian courts have repeatedly held that denial of appropriate medical relief where government schemes apply may be contrary to rights and reasonable expectation (for example, reimbursement/entitlement disputes decided in favour of pensioners where treatment necessity was established). 
4. Fiscal prudence argues for integrated, preventive, and indexed medical cover rather than ad-hoc reimbursement. Providing predictable, cashless OPD, diagnostics and medicines reduces catastrophic spending and downstream welfare burdens — and is often less costly than unmanaged medical reimbursements and late tertiary care. WHO/ILO policy frameworks support integrating health into pension/social protection design. 

Key weaknesses to fix (evidence & current status)

• Limited portability/uneven empanelment: CGHS empanelment is city/zone based; many pensioners, especially in smaller towns, cannot access facilities easily. Parliamentary committee reports have asked the Ministry to review and extend direct consultation and simplify referral systems for beneficiaries aged 60+.
• Inadequate OPD/diagnostic cover: CGHS historically emphasized inpatient care and empanelled procedures; outpatient cover and diagnostics for chronic conditions need strengthening. The CGHS Handbook notes procedures and empanelment but many pensioners still rely on reimbursement routes with delays.
• Low Fixed Medical Allowance (FMA) for non-CGHS pensioners: FMA rules have been revised over time; recent government communication indicates FMA increases (e.g. Rs 1,000 FMA for some categories as of 2025) but this remains far below typical monthly medicine/OPD costs for elderly households.
• Fragmented schemes and cumbersome referral/reimbursement: Multiple schemes (CGHS, state schemes, departmental rules) lead to overlap and administrative barriers that increase delay and complaint volumes; Parliamentary oversight has recommended simplification.

Detailed recommendations for the 8th Pay Commission (with rationale & implementation notes)

Below are operational recommendations — many drawn from CGHS best practice, parliamentary suggestions and international standards — which the 8th CPC should treat as central to pension policy.

1) Treat medical entitlement as a distinct, indexed pension component
• Action: Create a “Medical Entitlement” line in pension statements — an indexed monthly payment or voucher equivalent (for those not in CGHS) tied to CPI-Senior Citizens (CPI-SC) or a medical cost index.
• Rationale: Indexation preserves purchasing power of pensions against medical inflation (drugs, diagnostics). WHO/ILO advise linking social protection to cost indices. 

2) Increase Fixed Medical Allowance (FMA) substantially for non-CGHS pensioners (recommend ₹10,000/month as target) and phase implementation
• Action: Immediate interim increase (e.g., to ₹3,000–₹5,000) while phasing a target of ₹10,000 within 2–3 years for those not covered by CGHS; periodically review. DoPT/Finance should budget FMA as a separate recurring head. (Current FMA is far lower — DoPT circulars show recent FMA arrangements). 
• Rationale: Elderly households face recurring OPD and drug costs monthly; a higher FMA (or equivalent cashless OPD access) prevents catastrophic spending and reduces delays in care seeking.

3) Make CGHS / empanelment portable across India for pensioners and dependants
• Action: Amend CGHS policy to formally guarantee nationwide portability of CGHS benefits (allow registration and cashless access at any empanelled CGHS dispensary/hospital across India), with a simple online credentialing or identity token for retirees. Ensure online list of empanelled hospitals is kept current. 
• Rationale: Pensioners frequently move or travel; portability eliminates locality-based exclusion and reduces need for reimbursements and referrals. Parliamentary committee recommended simplification for those aged 60+. 

4) Expand cashless OPD, diagnostics and specialist access — not just IPD packages
• Action: Extend cashless coverage for routine OPD consultations (GPs and specialists), essential diagnostics and chronic disease monitoring (e.g., diabetes, hypertension), with annual caps or co-payment tiers as appropriate. Include empanelled diagnostic centres under cashless arrangements. 
• Rationale: Prevents escalation of chronic disease, reduces need for expensive inpatient episodes, and improves quality of life.

5) Strengthen empanelment coverage and cashless guarantees (private hospitals included)
• Action: Mandate empanelment outreach so that all reasonably accredited private hospitals (subject to accreditation standards) may apply for CGHS empanelment within a prescribed timeline. Ensure standardised, transparent package rates and a cashless mechanism for pensioners. Revise package rates periodically to reflect treatment cost shifts. Recent government action to revise CGHS package rates shows recognition of this need. 
• Rationale: In many cities private hospitals are the only accessible providers; compulsory empanelment (where feasible) and cashless access will broaden real access for pensioners.

6) Pharmacy provisioning at wellness centres / dispensaries — same-day issue and brand integrity
• Action: Ensure CGHS wellness centres/dispensaries stock commonly prescribed chronic medicines; permit same-day issue of medicines upon prescription (including the exact brand/composition prescribed by specialists unless clinically contraindicated). Where medicines are out of stock, allow immediate cashless e-prescription or reimbursement for purchase at empanelled pharmacies. 
• Rationale: Timely access to medicines prevents complications and repeated visits; honoring the specialist’s prescription supports clinical continuity.

7) Commutation, insurance for non-entitlement medicines & foreign treatment for bona fide cases
• Action:
• Provide insurance top-up schemes for non-entitlement or high-cost medicines (through negotiated group policies).
• Create a structured mechanism for pre-authorised foreign treatment in exceptional cases (similar to protocols for diplomats/officials), or allow access to travel medical insurance bought/arranged by government for necessary treatment abroad — with clear eligibility and oversight.
• Rationale: Some specialized treatments may not be available locally; structured support reduces ad-hoc claims and prevents exploitation. (Any foreign treatment scheme should be carefully regulated to prevent misuse.) 

8) Simplify referral/reimbursement process; allow self-referral for elderly to empanelled hospitals/diagnostics
• Action: For pensioners above a certain age threshold (e.g., 60/75), permit direct access to empanelled specialists and diagnostics without multiple dispensary referrals. Streamline online pre-authorisation and fast reimbursement where cashless access is unavailable. Parliamentary committee urged similar simplifications for those aged 60+. 
• Rationale: Mobility, multiple visits and paperwork are major deterrents; direct access reduces delays and improves outcomes.

9) Ensure family coverage & rationalize fragmented schemes
• Action: Merge overlapping medical schemes (CGHS, departmental schemes, state schemes where applicable) operationally for pensioners to avoid duplication and reduce paperwork; ensure spouse and dependent coverage rules are clear and portable. Establish a central beneficiary database to avoid overlap and fraud. 

10) Expand wellness centres to tourist/pilgrimage locations and improve outreach
• Action: Set up CGHS wellness/dispensary kiosks at major pilgrimage/tourist hubs, and ensure roaming medical help for pensioners during pilgrimages (tie up with local empanelled hospitals). 

11) Transparency & grievance redress — publish CGHS package rates, empanelment lists and grievance statistics publicly
• Action: Mandate quarterly publication of: empanelled hospitals list, package rates, claim turnaround times, denial reasons and grievance resolution metrics. Parliamentary reports have asked for greater transparency. 

Implementation considerations & costing

• Phased approach: Some measures (FMA increase, indexation, policy change to allow OPD cashless) can be implemented administratively and budgeted in the short term. Larger measures (nationwide empanelment roll-out, foreign treatment protocols) require phased pilot programs and actuarial costing.
• Budgetary impact vs. savings: Upfront costs of expanded preventive OPD and medicine access are likely to be offset by reduced tertiary/IPD burden and fewer catastrophic reimbursements. WHO/ILO note integrating health into social protection can improve cost-effectiveness of elderly care.
• Legal & administrative safeguards: Any expansion (e.g., foreign treatment, mandatory empanelment) must include clear eligibility, pre-authorisation, audit controls and anti-fraud checks to avoid misuse.

Country comparators (brief)

• United Kingdom (NHS) — Universal coverage model emphasises free primary & outpatient care; while not directly comparable, the UK model shows that strong primary/OPD networks reduce downstream inpatient costs. (WHO/UHC commentaries.)
• Australia / Canada — Both integrate pensioner health with national or provincial health services and supplement by pensioner-targeted concessions rather than fragmented reimbursements; they emphasise primary care and medicines access to limit catastrophic costs.
• State innovations in India — Several states (e.g., Gujarat’s Karmayogi Health Security Scheme, Rajasthan’s RGHS relaxations reported recently) are piloting wider cashless cover for pensioners, demonstrating feasibility of broader, state-level coverage models that can be integrated nationally.

Conclusion (short)

Medical benefits are central to the dignity and financial security of pensioners. The 8th Pay Commission should therefore:
1. Treat medical entitlement as an indexed, core component of pension policy;
2. Significantly raise and index FMA for non-CGHS pensioners (target ₹10,000/month phased);
3. Make CGHS/empanelled services portable and cashless for pensioners nationwide;
4. Expand cashless OPD, diagnostics and medicine access; and
5. Improve transparency, empanelment, grievance redress and pilot foreign-treatment protocols.

These measures are legally defensible, economically prudent and aligned with WHO/ILO calls to include health within social protection for older persons. ( to be continued)

8th Pay Commission: A Step Toward Economic Balance and Pensioner Welfare

Central Pay Commission: Persistent Inequality Across Pay Commissions (Part-1)

The Central Pay Commission (Part II)

The Central Pay Commission (Part III)

The Central Pay Commission (Part- V )

The Central Pay Commission (Part- VI )