UHC Forward: Towards Universal Health Coverage

While the Jamkesmas benefit package is standardized at the national level, districts are able to set the reimbursement rates for various services based on local conditions. Though the scheme initially utilized a fee-for-service reimbursement mechanism Jamkesmas began transitioning to a DRG provider payment system in 2009. All hospitals are being incorporated into the DRG payment process by the end of 2010.

Jamkesmas has “verificators” in every network hospital. These verificators have been put in place to assure reimbursements are made only for documentable claims with a full medical record. Verificators process claims and send them electronically to the MoH. Verificators have standard review procedures which they follow to document every case. These standards were developed by the MoH. Once the MoH receives the claim, it begins the reimbursement process to providers.

While there has been broad experience with contracting public and private providers through the publically-funded schemes, the contract mechanisms have not used reimbursement or payment policies strategically to drive improvements in quality or efficiency. There are examples in maternal health where the current reimbursement system by Jamkesmas has created the wrong incentives for providers, such as not reimbursing midwives for pre-delivery care if there is post-partum hemorrhage. In addition, once a patient is referred to the hospital, the hospital receives a full reimbursement for delivery, while the midwife receives no fee, thereby discouraging midwives from referring patients to hospitals for complications as they would lose income.

Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI.

The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Initially, NHI providers were paid on a fee-for-service basis, however providers were able to make sizable profits by overprescribing medications and ordering unnecessary procedures, leading to quickly rising per person expenditures. Hospitals in Taiwan reward their staff physicians individually for bringing in revenue, known as a “professional fee,” further encouraging physician-induced over-prescription. The Bureau of National Health Insurance (BNHI) estimates that overuse and misuse of health care may constitute up to a third of BNHI’s expenditures.

Facing the need for cost containment, BNHI introduced a reasonable volume standard for outpatient visits coupled with a sliding fee schedule for visits above the volume standard, which discouraged supply-induced demand and reduced the number of visits per person. BNHI also reduced the high profit margin that clinics and hospitals can obtain from dispensing drugs by reducing the reimbursement rates for drugs, using reference pricing, and encouraging the use of generic drugs. The NHI experimented with different payment systems, such as diagnosis-related groups (DRGs) for hospitals, primary care capitation for certain population groups, and even performance-based payments. DRGs were phased in for the 50 most common diseases and treatments, which effectively reduced the average length-of-stay in hospitals.

The ultimate cost control measure, however, has been the imposition of global budgets for hospital outpatient and inpatient services in 2002. This remains highly controversial because global budgeting incorporates an aggregate fixed sum budget imposed on all hospitals in Taiwan collectively, creating a zero-sum game in which the players cannot effectively police one another. Reimbursement contracts are negotiated with health care providers on a fee-for-service basis with a uniform pay schedule. A deflation mechanism engages once a service quota is reached, resulting in declining reimbursement rates. Under the global budget payment system, the NHI Medical Expenditure Negotiation Committee convenes and negotiates overall caps on total medical payments based on a set of equations and indicators prior to the beginning of a fiscal year.

Along with the implementation of global budgets, the NHI took several measures to control the demand for selected types of health care, such as increasing copayments for high users of drugs and outpatient services. The global budget payment system with these measures has been successful in containing the annual growth in the health insurance system's expenditures with spending growth leveling out at below 5% a year since it was fully implemented in July 2002.

In 2004, a memorandum of understanding regarding the services covered and prices charged was signed by the NHIC and service provider representatives. Claims are filed by the health facilities and the district schemes pay providers on a DRG basis. Typically, a reimbursement check comes 6 months after a claim is submitted.

This memorandum now forms the basis of all contracts between the health schemes and providers. Claims processing is a manual process, with some automation in enrollment verifications and claims documentation.

The amount of the reimbursement is often less than 100%, with some schemes, for example, paying 70% (e.g., Ossu Kottery – urban scheme in higher income area of Accra), others paying as low as 40% (e.g., Dodowah, rural area outside Accra). The balance is supposed to be paid at later date.

The interventions included in the CAUSES are paid for by capitation. Meanwhile, the interventions carried out under the FPGC are paid for on a per-case basis. The payment mechanism for contracts with private providers is vague. The reform stated that health services should be provided by state health secretariats in accordance with the state of residence of the insured family or by other public health institutions that have contracted with the state health secretariats. After the passage of the law, however, the executive branch issued a by-law that introduced the option of contracting with the private sector. The problem with this by-law is that it does not specify the form that payments to private sector will take. Thus, such payments take place on an ad-hoc, non-systematic basis.