An association of private hospitals and the centre will have to respond to the Supreme Court within two weeks on whether they can charge a much less fee from patients under the government's affordable insurance scheme Ayushman Bharat, announced by Prime Minister Narendra Modi in 2017.
Petitioner and advocate Sachin Jain asked the Supreme Court to direct the government to regulate the cost of coronavirus treatment in private hospitals built on land given for free.
Mr Jain said private hospitals should be made to charge on the actual cost of treatment or on a no-profit, no-loss basis to stop them from potentially exploiting patients who have no money or belong to poor families.
India has been reporting a high number of coronavirus cases in the last few days. It reported 9,851 cases and 273 deaths in the last 24 hours, the most in one-day, government data shows.
The government, the industry group Healthcare Federation of India and private hospitals have been asked to respond to Mr Jain's petition in two weeks.
"I just want to know if hospitals are ready to charge at Ayushman (Bharat) rates," Chief Justice of India SA Bobde said.
Senior advocate Harish Salve, who represented the healthcare group, said the earnings of private hospitals have fallen by up to 70 per cent as people have not been coming to hospitals.
"That is all right. You are making a sacrifice for a good cause… Are you agreeable to charge Ayushman (Bharat) rates from patients?" the Chief Justice asked the private hospitals.
The coronavirus outbreak has necessitated hospitals to focus on fighting the pandemic and people have been avoiding hospitals to check for routine illness - unless it's absolutely necessary to see a doctor - to avoid hospital-acquired infection.
Senior advocate Mukul Rohatgi, appearing in the top court for private hospitals, said it would be difficult for them to take patients who can afford treatment. He said private hospitals cannot charge the much lower Ayushman Bharat rates from those who are not covered by the policy.
The centre said the health insurance scheme has been made in such a way that all those who cannot afford treatment are covered by the policy.