PROVIDER PAYMENT REFORMS FOR IMPROVED PRIMARY HEALTH CARE IN ROMANIA DISCUSSION PAPER August 2021 Adanna Chukwuma Radu Comsa Dorothee Chen Estelle Gong PROVIDER PAYMENT REFORMS FOR IMPROVED PRIMARY HEALTH CARE IN ROMANIA Adanna Chukwuma, Radu Comsa, Dorothee Chen, Estelle Gong August 2021 i Health, Nutrition and Population (HNP) Discussion Paper This series is produced by the Health, Nutrition, and Population Global Practice of the World Bank. The papers in this series aim to provide a vehicle for publishing preliminary results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. For information regarding the HNP Discussion Paper Series, please contact the Editor, Jo Hindriks at jhindriks@worldbank.org or Erika Yanick at eyanick@worldbank.org. RIGHTS AND PERMISSIONS The material in this work is subject to copyright. Because the World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. © 2021 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. ii Health, Nutrition and Population (HNP) Discussion Paper Provider Payment Reforms for Improved Primary Health Care in Romania Adanna Chukwumaa, Radu Comsaa, Dorothee Chena, Estelle Gongb a Health Nutrition and Population, World Bank, Washington DC, USA b Mount Sinai Health System, New York, USA This paper was prepared as part of the technical support for provider payment reform for primary health care access and quality in Romania. Abstract: Romania faces high levels of amenable mortality reflecting, in part, the relatively low utilization rates of high-quality primary health care (PHC), particularly for non- communicable disease (NCD) prevention and treatment. Provider payment mechanisms do not reward the high-quality care provision and may incentivize bypassing of PHC for hospitals, exacerbating challenges presented by physical, financial, and social barriers to accessing essential care. This paper assesses provider payment mechanisms at the PHC level, by examining their design features and implementation arrangements, and exploring their implications for PHC performance in terms of access and quality of care. We conclude with policy recommendations to address the constraints identified. To increase the supply of preventative care and case management, we recommend that volume thresholds for fee-for-service payments reflect both the number of enrollees and physicians in a practice; laboratory tests required for case management be reduced in scope and their costs be reimbursed; and the law on health care reform be amended to enable the introduction of new payment mechanisms, such as performance-based payments. To expand the scope of PHC and strengthen care coordination with hospitals, periodic reviews by physician commissions should aim to expand the scope of PHC care in line with provisions in other European Union (EU) countries for ambulatory-care sensitive conditions; capitation payments should be adjusted for gender and historical service use to reduce incentive for over-referrals; and payment mechanisms that reward coordination of care, including bundled payments, should be introduced. To establish an enabling environment for provider payment reforms, health information systems should be strengthened by unifying diagnosis coding, establishing quality standards, and ensuring referral module functionality; payment reforms should be informed by extensive consultations with providers at all service delivery levels; and PHC spending should be increased to support higher reimbursement levels for providers and match expenditure levels in high-performing EU health systems. Keywords: provider payment, universal health care, care coordination, primary health care Disclaimer: The findings, interpretations and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the World Bank, its Executive Directors, or the countries they represent. Correspondence Details: Adanna Chukwuma, 1818 H Street, NW Washington, DC 20433, USA, telephone: 202-212-9000, e-mail: achukwuma@wordbank.org, website: www.worldbank.org iii Table of Contents ACKNOWLEDGEMENTS .............................................................................................. V PREFACE ..................................................................................................................... VI ACRONYMS .................................................................................................................VII CHAPTER 1: BACKGROUND ........................................................................................ 8 1.1 POLITICAL AND ECONOMIC CONTEXT ......................................................... 8 1.2 HEALTH SYSTEMS CONTEXT ...................................................................... 10 1.3 THE ROMANIA HEALTH PROGRAM-FOR-RESULTS AND PROVIDER PAYMENT REFORM ................................................................................................. 14 CHAPTER 2: PROVIDER PAYMENT IN PRIMARY HEALTH CARE ........................... 16 2.1 DESIGN FEATURES: CONTRACTING ENTITIES AND INCLUDED SERVICES 17 2.2 DESIGN FEATURES: BASIS FOR PAYMENT, COST ITEMS AND ADJUSTMENT COEFFICIENTS ................................................................................ 21 2.3 IMPLEMENTATION ARRANGEMENTS: INSTITUTIONAL RELATIONSHIPS 26 2.4 IMPLEMENTATION ARRANGEMENTS: QUALITY ASSURANCE .................. 30 2.5 IMPLEMENTATION ARRANGEMENTS: SUPPORTING SYSTEMS ............... 30 2.6 IMPLEMENTATION ARRANGEMENTS: PUBLIC FINANCIAL MANAGEMENT 30 2.7 IMPLEMENTATION ARRANGEMENTS: OTHER REGULATIONS ................. 31 CHAPTER 3: POLICY RECOMMENDATIONS............................................................. 32 APPENDIX.................................................................................................................... 35 A.1 ADJUSTMENT OF CAPITATION PAYMENT FOR LOCATIONS WITH DIFFICULT CONDITIONS ............................................................................................................ 35 REFERENCES.............................................................................................................. 37 iv ACKNOWLEDGEMENTS The authors are grateful to the World Bank for publishing this report as an HNP Discussion Paper. We acknowledge helpful comments received from Ajay Tandon, Catalin Pauna, Cristina Petcu, and Marcelo Bortman. We also acknowledge a background note reviewing provider payment reforms in selected countries, prepared by Robert Dredge. Mihai Preda and Gabriel Francis provided excellent program assistance. The team is grateful for the engagement of national stakeholders that provided data towards the report's completion, including the Ministry of Health, National Health Insurance House, National Institute of Statistics, National Institute for Public Health, and family physicians. All errors and omissions are the authors. v PREFACE This paper was prepared as part of the technical support for provider payment reform for primary health care access and quality in Romania, led by Dorothee Chen (Senior Health Specialist). The activity was supervised by Tatiana A. Proskuryakova (Country Manager, Romania) and Tania Dmytraczenko (Practice Manager, Health, Nutrition, and Population Global Practice, Europe and Central Asia Region). vi ACRONYMS DHIH District Health Insurance House DLI disbursement-linked indicator DLR disbursement-linked result DPHA District Public Health Authority EU European Union GDP gross domestic product GNI gross national income HCI Human Capital Index ICD-10 International Classification of Diseases, Tenth Revision MoH Ministry of Health NCD non-communicable disease NHIF National Health Insurance Fund NHIH National Health Insurance House OECD Organization for Economic Co-Operation and Development PforR Program-for-Results PHC primary health care USD United States Dollar vii CHAPTER 1: BACKGROUND 1.1 POLITICAL AND ECONOMIC CONTEXT Romania is a high-income country in the European Union (EU) with a gross national income (GNI) per capita of US$ 12,630 and a population of 19.4 million in 2019 (World Bank 2020c). 1 Accession to the EU in 2007 facilitated economic prosperity by increasing the movement of labor and capital and linking the Romanian economy to EU economic markets and institutions. The EU is responsible for 70% of export demand for Romania. Between 1995 and 2019, the per-capita gross domestic product (GDP) rose from 30 to 70% of the EU-27 average. 2 The COVID 19 pandemic has had a major impact on the economy: while pre-pandemic estimations for 2020 indicated economic growth of 4.1%, the most recent forecasts anticipate a drop of around 5% year-on-year. As a result, the fiscal position of the public sector has worsened to levels not seen since the previous economic crisis: the projection for the deficit of the general government in 2020 is over 9% of GDP. While healthcare and social protection have remained expenditure priorities throughout 2020, the future adjustments to the fiscal deficit may impose expenditure constraints on those sectors, too. 3 As the Romanian economy grew, the percentage of households living below the upper- middle-income international poverty line of US$ 5.50 (2011 purchasing power parity) a day fell, but the pandemic crisis has reversed this trend. The poverty rate is projected to increase from 10.2% in 2019 to 12.3% in 2020. There are large spatial disparities in socioeconomic outcomes (Figure 1). The urban-rural gap in mean equivalized net income is the second-highest in the EU, and the mean urban income is 50% higher than the mean rural income. 4 Additionally, while the population in Romanian cities enjoys living standards similar to those of any other Central and Eastern European Country, almost half of the rural population faces the risk of poverty or social exclusion, second only to Bulgaria (Figure 2) (Eurostat 2021h). This is a result of the reality of two Romania’s – one urban and prospering through EU linkages, and the other rural, poor and isolated. 1 GNI per capita calculated with the Atlas method uses the Atlas conversion factor: the average of a country’s exchange rate for that year and its exchange rates for the two preceding years, adjusted for the difference between the rate of inflation in the country and international inflation. 2 EU-27 consists of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden 3 At the time of writing this report, the government has not made any budgetary projection for 2020 and beyond. 4 The mean equivalized net income is the mean total income of all households after deductions (including tax), that is available for spending or saving, divided by the number of household members converted into equivalized adults by weighting according to their age, using an equivalence scale. 8 Figure 1: Spatial disparities in poverty rates Source: World Bank Figure 2: Risk of poverty or social exclusion by area of residence in selected Central and Eastern European Countries (% of total population, 2019) 60 50 40 30 20 10 0 EU27 Bulgaria Czechia Estonia Croatia Lithuania Hungary Poland Romania Slovenia Cities Towns and suburbs Rural Source: Eurostat Spatial disparities in access to social services and markets have also contributed to inequalities in human capital. In 2020, the Human Capital Index (HCI) value for Romania was estimated to be 0.58 and fell slightly from a value of 0.60 in 2010. While the probability of survival to age 5, a component of the HCI, was on par with the average of 0.99 in Europe and Central Asia, the survival rate from age 15 to 60 was 0.88 and below the regional average of 0.90. Expected years of school fell further from the full 14 years of schooling, decreasing from 12.7 to 11.8 between 2010 and 2020, with the number of out-of-school children ages 6-10 doubling from 43,000 to 98,000 between 2009 and 2018. (World Bank 2020b). HCI is also negatively correlated with the level or urbanization, where the region with the most urban development had an HCI value of 0.68 and the area with the least urban development had a value of 0.57 (World Bank 2020a). The current mix of fiscal 9 policies have failed to address the high levels of socioeconomic inequality in Romania. This is in part due to political instability, including the frequent turnover of executive leaders, impeding policy continuity. The Romania Government has developed the 2015-2020 Strategy on Social Inclusion and Poverty Reduction, aiming to address disparities in income and human capital outcomes, including through improved financing and coordination across sectors. The strategy identifies vulnerable groups that require targeted interventions to increase their economic participation, improve health and learning outcomes, and reduce social disparities. These groups include the poor, children, youth deprived of parental support, lone elderly people, Roma, and people living in marginalized communities. In 2013, these categories included an estimated 1.85 million Roma, over 725,000 people aged above 80 years, 1.4 million poor children under 17 years, 62,000 children living in placement centers or family-type care, 687,000 children and adults with disabilities living in households, and 16,800 children and adults with disabilities living in institutions. 1.2 HEALTH SYSTEMS CONTEXT Romania performs below the EU average on several measures of population health. Life expectancy at birth is 75.3 years, below the EU average of 81.0 years in 2018. However, life expectancy has improved by a 1.6 years in the last decade, greater than the average EU 28 advance of 1.2 years (Eurostat 2021g). Infant mortality has similarly improved in the past decade: compared to the EU average of 3.6 deaths per 1,000 live births in 2016, Romania fared worse at 6.8 deaths per 1,000 live births, but has improved from 9.4 deaths per 1,000 live births in 2011 (Eurostat 2021a). Unlike other indicators which showed improvements, healthy life expectancy has been worsening for the Romanian population and has decreased from 60.7 years in 2009 to 59.4 years in 2018, while the EU healthy life expectancy has grown to 63.6 years. Romania also performs worse compared to other Central and Eastern European countries such as Bulgaria (65.8 healthy life years), Poland (62.4 healthy life years), Hungary (61.1 healthy life years) and Czech Republic (62.7 healthy life years) (Eurostat 2021g). There are subnational disparities in health outcomes in Romania, with higher mortality rates in rural than urban areas, at 15.4 versus 11.7 deaths per 1,000 population (Romania National Institute of Statistics 2015). The main drivers of disability and death are non-communicable diseases (NCDs) (Figure 3). In 2017, the most common causes of death were ischemic heart disease, stroke, Alzheimer’s disease, and hypertensive heart disease; while the most common causes of disability were low back pain, falls, headache disorders, and diabetes mellitus (Institute for Health Metrics and Evaluation 2017). The number of years lived in disability, attributable to diabetes, increased by 10.4% between 2007 and 2017, more than for any other disease. The burden of NCDs may continue to rise as the population aged greater than 65 years will double from 11 to 20% between 2017 and 2050 (United Nations Department of Economic and Social Affairs Population Division 2017). 10 Figure 3: Top causes of death in 2017 and percentage change, 2007-2017 Source: Institute for Health Metrics and Evaluation A significant proportion of deaths and disability from NCDs can be prevented through access to high-quality healthcare (Box 1) and effective public health prevention efforts. The age-standardized treatable and preventable mortality, which uses a standardized age distribution to account for differences in use by age group and region, allows for comparability between countries over time. In Romania, age-standardized treatable and preventable mortality was the third highest in the EU in 2016 at 518 deaths per 100,000 population compared to the EU average of 255 deaths per 100,000 population, although improvements were made in the last 7 years. Nonetheless, the 2016 amenable mortality rate in Romania was worse than the rate of 348 deaths per 100,000 in Poland, 427 deaths per 100,000 in Bulgaria, and 371 deaths per 100,000 in Croatia (Eurostat 2021i). High amenable mortality reflects the relatively low levels of essential healthcare use in Romania, including preventive care and case management for NCDs, as well as low coverage of public health interventions, including tobacco control and reductions of harmful levels of alcohol consumption. In 2013, the number of outpatient contacts, including for PHC, per person per year in Romania was 4.8, below the EU average of 6.9 (World Health Organization 2018). Furthermore, in 2016, 4.22 million individuals between 40 and 54 years were eligible to receive preventive checks by family physicians, of which less than 122,000 consultations were claimed (National Health Insurance House 2016). Regarding exposure to risk factors such as alcohol and tobacco use, the percentage of people aged 15 and older who had an episode of heavy drinking at least once a week was 10.6% in Romania, nearly double the EU average of 5.5% in 2014 (Eurostat 2021d). The percentage of daily smokers in Romania in 2014 was estimated to be 19.8%, slightly higher than the EU average of 18.4% (Eurostat 2021b). 11 Box 1: Overview of the Romanian Health Care System The organization of the Romanian health care system reflects administrative structure of the country. The national level is responsible for setting general objectives, and the county level is responsible for service provision. The Ministry of Health (MoH) is the steward of the system and the main regulatory body. District Public Health Authorities (DPHAs) represent the MoH at the district level. A key actor at the central level is the National Health Insurance House (NHIH), which administers and regulates the social health insurance system. The NHIH is represented at county level by District Health Insurance Houses (DHIHs). Health care is provided in Romania through various channels, including primary care, specialized outpatient care, inpatient care, day care, emergency care, home care, palliative care, and recovery care. Reimbursed medicines are included in a national list approved by the Government. Health care in Romania relies mostly on public financing. Overall health care expenditure has increased from 4.5 to 6% of GDP over the last 10 years, of which approximately 80% is from public sources. Of spending on health, the National Health Insurance Fund (NHIF) accounts for 64%, the MoH and other government sources account for 16%, and private payments including out-of-pocket payments and voluntary health insurance account for the remaining 20% (estimated at 20%) (Eurostat 2021c). In 2019, half of the EUR 9 billion expenditure of the NHIF was allotted to hospitals (49%) and a third to reimbursed medicines (30%). Outpatient care accounted for only 15% of expenditures, of which 40% was designated to family medicine. The capacity of Romania’s social health insurance to fund expenditure needs is severely limited by its revenue base. As of December 2019, out of the 17.5 million covered by the social health insurance system, around 6 million were paying health contributions, while 11.5 million were exempt and included 5.5 million pensioners and a half million construction employees (Ministry of Finance 2020). The latter alone incurs the NHIF a loss of EUR 500 million a year. Access to healthcare is constrained by the distribution of health resources. In primary health care (PHC), the density of family physicians is similar across counties but varies significantly between urban and rural areas. In 2016, the density ranged from 0.40 to 0.71 family physicians per 1,000 inhabitants, but the average number of family physicians per 1,000 inhabitants was 0.69 in urban areas compared with 0.49 in rural areas. The disparity between urban and rural areas was observed in most counties. In 24 counties, density in urban areas was at least 10% higher than in rural areas, while in 10 predominantly urban counties, it was at least 20% higher. In addition, there were no family physicians in 169 of the 2,861 communes, many of which are rural (World Bank 2017). Supply-side and demand-side barriers contribute to low healthcare use. On the supply- side, there are rural-urban disparities in the distribution of family physicians, who own and operate PHC facilities. Up to 90% of the localities that lack a family physician are rural. On the demand-side, there are financial and social barriers to healthcare access. Up to 14% of the population or 2 million people are uninsured and ineligible for the basic benefits package, including for PHC. In a study of primary care across 34 countries, Romania had the highest percentage of individuals (23.8%) who reported postponing care due to 12 financial reasons, ranking above New Zealand (23.2%) and Bulgaria (22.8%) (Detollenaere et al. 2018). Social barriers predominate among ethnic minorities (including the Roma) and women, due to cultural norms that may not encourage healthcare use, difficulty navigating service delivery, and household decision-making dynamics. These barriers overlap. Up to 50% of the Roma, who face cultural barriers to health system navigation, are also uninsured, compared to 14% of the general population (World Bank Group 2019). The negative impact of access barriers on health outcomes is exacerbated by gaps in the quality of healthcare, particularly at the PHC level. About 16,764 annual deaths can be prevented from improving the quality of healthcare in Romania (Kruk et al. 2018). Effective or high-quality NCD management involves a central role for PHC, including as the first contact for most healthcare needs, providing a comprehensive scope of services, ensuring coordination across providers, and maintaining continuity across contacts (Starfield 1994). In contrast, in Romania, clinical guidelines do not allow family physicians to initiate care for several conditions that can be managed at the PHC level, including diabetes and asthma. In addition, family physicians are frequently bypassed for specialist or emergency services for care that is more effectively managed in PHC. These arrangements may contribute to poor PHC performance in Romania relative to comparator countries. In a 2011-2013 survey, PHC providers in 31 European countries plus Australia, Canada, and New Zealand assessed the strength of PHC process delivery on the dimensions of continuity, coordination, and comprehensiveness of care (Table 1). 5 Examples of indicators within these dimensions include the informational continuity of care between PHC and secondary care, coordination between providers, and the extent to which PHC serves as the first contact for common health problems (Pavlič et al. 2015). For all PHC dimensions, Romania performed below average. Furthermore, funding for primary care in Romania is also low, compared to other countries in the EU. The spending per capita in Romania on outpatient care, where PHC services are provided, was second lowest in the EU in 2018 (Eurostat 2021e). The variation between levels of spending and strength of PHC illustrate that the efficiency of spending, not only the level of spending, is important to influence PHC outcomes. Suboptimal allocative decisions, including on provider payment mechanisms, may contribute to low utilization and poor quality of PHC for NCDs. Capitation payments to family physicians do not account for historical utilization patterns and other proxies for case complexity, incentivizing over-referrals for riskier and expensive cases. Fee-for- service reimbursements, for preventive care and case management, are capped at 20 services per day, incentivizing undersupply of these services at the PHC levels. Payment mechanisms are not linked to PHC service coverage targets, coordination of care across providers, continuity across contacts, or other measures of clinical quality of care. The resulting hospital-centric nature of the service delivery in Romania also has negative implications for efficiency. In 2018, an estimated US$ 400 million or about 10% of hospital spending could have been avoided if conditions amenable to PHC were appropriately treated in the PHC system in Romania (World Bank Group 2019). 5Countries included the EU-27 except France, plus Macedonia, Iceland, Norway, Switzerland, Turkey, Australia, Canada, and New Zealand. 13 Table 1: PHC Spending and Performance Expenditure EU Romania Austria Germany Netherlands Latvia type (2018) Average Outpatient 6 spending 693 71 1170 998 1189 214 per inhabitant (EUR) Current health 2982 584 4501 4627 4480 936 spending per inhabitant (EUR) PHC indicators (2011-2013) Continuity, -- -0.065 -0.149 0.371 0.305 -0.02 composite z-score Coordination, -- -0.368 -0.468 -0.574 0.657 0.175 composite z-score Comprehensiveness, -- -0.532 -0.126 -0.263 0.574 -0.41 composite z-score Source: Eurostat, Pavlič et al. 1.3 THE ROMANIA HEALTH PROGRAM-FOR-RESULTS AND PROVIDER PAYMENT REFORM Reorienting service delivery towards PHC is a necessary step towards improving access, effectiveness, and efficiency in the Romanian health system, and improving population health outcomes via better management of NCDs. Following a request by the Government, the Romania Health Program-for-Results (PforR) operation of US$ 557.2 million equivalent was approved by the World Bank’s Board on September 17, 2019. The program development objective is to increase the coverage of PHC for underserved populations and improve the efficiency of health spending by addressing underlying institutional challenges. This operation links disbursement of US$ 125 million equivalent to results related to provider payment reforms through disbursement-linked indicators (DLIs). These results include an increase in the volume of preventive care and case management, expanding the scope of PHC to include services for ambulatory-care sensitive conditions (such as uncomplicated diabetes mellitus type 2), and improve coordination of care across service delivery. The DLIs and associated disbursement-linked results (DLRs) related to provider payment reforms are reviewed in Table 2 below. 6 Includes outpatient curative and rehabilitative care 14 Table 2: DLIs and DLRs for Provider Payment Reforms DLI 3: Share of the NHIH budget allocated to PHC Baseline Share of the NHIH budget allocated to family medicine is 6.5%; Provider payment mechanisms for PHC providers limits effectiveness of PHC provision; and Limited scope of PHC. Year 2 Framework contract is modified to increase the EUR 20 million effectiveness of PHC through: Revised provider payment mechanisms; and Expanded scope of services allowed at PHC. Year 3 Share of the NHIH budget allocated to PHC is at least 8%. EUR 20 million Year 4 Share of the NHIF budget allocated to PHC is 10%. EUR 35 million DLI 5: Scope and effectiveness of PHC traced through the share of diabetes medication initiated by PHC providers and the proportion of adults (40+) receiving annual medical check-ups Baseline Initiation of diabetes medication at the PHC level is 0%; and Number of adults (40+) receiving annual medical check- ups is 1%. Year 3 10% of initiated metformin prescription (a diabetes EUR 20 million medication) made by PHC providers; and 10% of adults (40+) receiving annual medical check-ups by PHC providers. Year 4 20% of initiated metformin prescription (a diabetes EUR 30 million medication) made by PHC providers; and 20% of adults (40+) receiving annual medical check-ups by PHC providers. The PforR also supports the attainment of results that address other barriers to ensuring access to high-quality PHC in Romania, through guaranteeing access to an expanded benefits package among the uninsured population and strengthening coordination between PHC and community services targeted at ethnic minority groups. During an implementation support visit from September 30 to October 4, 2019, the Government and the World Bank team developed a joint action plan to achieve the DLIs under the PforR operation. The NHIH requested technical support towards identifying PHC reforms to facilitate the attainment of the related results under DLIs 3 and 5. This note was developed in response to this request and aims to provide the NHIH with recommendations that facilitate the attainment of results under the PforR. The rest of this policy note is organized as follows. Chapter 2 assesses provider payment mechanisms at the PHC level in Romania, and the implications for PHC performance. Chapter 3 concludes with recommendations for the proposed reforms in Romania. 15 CHAPTER 2: PROVIDER PAYMENT IN PRIMARY HEALTH CARE To develop reforms that address underlying drivers of sub-optimal performance, and which are feasible to implement, we assessed provider payment mechanisms at the PHC level in Romania. The description of payment methods was organized using a framework developed by the Joint Learning Network for Universal Health Coverage, that considers the design features of payment systems and implementation arrangements, reviewed in Table 3 (Cashin et al. 2015). We drew on key informant interviews, public datasets, and regulatory documents, including data from national legislation, annual reports of the NHIH and MoH, the National Institute for Statistics, the National Institute for Public Health, Eurostat, the European Centre for Disease Prevention and Control, and physicians. We identified design features and implementation arrangements that may contribute to challenges in increasing coverage of preventive healthcare and case management, expanding the scope of PHC, and improving coordination of care. Table 3: Characteristics of payment methods: design features and implementation arrangements Design Features # Feature Description 1. Included services The services that are paid for using the payment method. 2. Basis for payment The formula used to calculate the final payment to providers, specifying the unit of payment, and other parameters. 3. Cost items The inputs that are considered in the payment rates, including medicines and supplies, personnel, infrastructure, etc. 4. Adjustment The factors applied to the payments to adjust for systematic coefficients differences in cost of care by patient characteristics or facility type, including patient age, gender, and disease profile. 5. Contracting entities The providers that can be contracted for each payment method. Implementation Arrangements # Arrangement Description 1. Institutional The formal and informal rules that govern relationships relationships among policymakers, purchasers, providers, the population, and other stakeholders. 2. Quality assurance Systems to set standards for and monitor the quality of care and identify and address gaps in quality. 3. Supporting systems Systems that are not central to payment system design but affect how the payment system functions and how providers respond, including information systems. 4. Public financial Rules that govern how the health budget is formulated, management disbursed, and tracked. 5. Other regulations Other laws, regulations, and policies that are not part of provider payment policy but affect how the system functions and how providers respond. Source: Joint Learning Network for Universal Health Coverage 16 2.1 DESIGN FEATURES: CONTRACTING ENTITIES AND INCLUDED SERVICES In Romania, PHC is provided by family physicians, who specialize following a four-year residency program. Certification by the Romanian College of Physicians is required for practice. Physicians may set up individual or group practices, either as legal civil medical societies, or informal associations. Family medicine practices may be co-located with specialist care in larger clinics established as commercial entities. Practices may also have a principal and secondary offices across multiple communities. As of 2018, the NHIH had contracted 10,501 family physicians to provide PHC services. The vast majority (96%) were working in individual practices (National Health Insurance House 2019). Services provided in PHC are funded through the social health insurance system, national health programs, and permanence centers. An overview is shown in Table 4 and discussed below. Table 4: Overview of included services Provider Funding Service package Services provided payment scheme mechanism Capitation Social health Basic service Prescriptions (including refills of insurance package diabetes prescriptions for authorized physicians), referrals, certificates, emergencies, drug administration, and infectious disease surveillance. Fee-for- Social health Minimum service Preventive health checks, service insurance package emergencies, pregnancy monitoring, and infectious disease surveillance. Basic service Preventive health checks, curative package services for acute conditions, management of chronic patients, prevention (pregnancies including referrals for HIV testing, children, adults), directly observed treatment in tuberculosis, and selected ultrasound investigations. Ministry of National Health Immunizations. Health Program on Immunization National Health Identification, advice, invitation, Program on cervical referral, communication of results, cancer screening follow-up; certified physicians also collect pap smears. Hourly tariff Ministry of Permanence Medical emergencies. Health through centers made of the National family physicians Health Insurance House 17 There are two service packages funded under the social health insurance system. Access to either package requires registration with a family physician. About 86% of the population is insured and entitled to the basic services package, while the uninsured population is entitled to the minimum service package. The insured include formal employees and dependents, the self-employed, pensioners, children, students, unemployment benefits recipients, beneficiaries of social aid, pregnant women, and persons on parental leave. Eligibility for the basic service package can be verified in real time with an electronic insurance card. At the PHC level, the basic service package includes a broad range of services, comprising screening and other preventive care, case management, routine investigations, and minor acute care consultations (Figure 4). Since 2014, these services are classified such that capitation payments cover prescriptions, referrals, and low-volume services, while fee-for-service payments cover most high-volume consultations. The minimum service package is narrower in scope than the basic service package and is limited to emergencies and preventive care. In 2017, the number of family medicine services reimbursed by the NHIH for uninsured patients was only about 100,000 (National Health Insurance House 2017). Even within the low volume, about 75% of services reimbursed under the minimum service package were classified as acute care visits treated in the PHC office. PHC providers are not reimbursed for providing uninsured persons with case management, curative care, prescriptions, or referrals. While annual preventive checks are included in the minimum service package, included services are reduced compared to the preventive checks for the insured. Akin to the basic service package, preventive annual checks in the minimum service package are not mandatory, which does not encourage family physicians to place emphasis on them (National Health Insurance House 2016). Outside the social health insurance system, family physicians may be contracted by the NHIH or MoH for services under national health programmes, accessed by the entire population, including for immunization, cervical cancer screenings, and maternal and child health care, of which immunizations constitute the highest volume by number (Figure 5). These services are reimbursed via fee-for-service. National health programmes may fund some services under the basic services package, including refill of diabetes prescriptions, referral of pregnant women for HIV testing, and tuberculosis treatment. 18 Figure 4: Service groups included in basic service package Capitation • Prescriptions • Referrals to other providers of health services • Other support activities (sick leave, medical certificates, death certificates, etc.) • Surveillance and identification of diseases with epidemic potential (that is, infectious diseases) • Small medical-surgical acute care visits treated in the PHC office • Consultations for family planning • Drug administration services (other than tuberculosis) Fee-for-service • Consultations for acute and sub-acute conditions or acute manifestations of chronic conditions • Periodic consultations for chronic patients • Case management consultations based on integrated management plans (hypertension, dyslipidemia, diabetes mellitus type II, chronic obstructive pulmonary disease, asthma, and chronic kidney disease) • Preventive consultations (0-18 years and asymptomatic adults) • Pregnancy monitoring consultations • Home consultation for death ascertainment • Drug administration services (directly observed tuberculosis treatment) • Abdominal and pelvic ultrasounds Source: Framework contract 2017-2018 Figure 5: Services included in the minimum service package Fee-for-service • Small medical-surgical acute care visits treated in the PHC office • Surveillance and identification of diseases with epidemic potential • Pregnancy registration and monitoring consultations • Consultations for family planning • Preventive consultations for asymptomatic adults • Support activities (death ascertainment and certificates etc. Source: Framework contract 2017-2018 Service users can access care at the PHC level for minor emergencies, outside the working hours, through permanence centers. The service scope includes diagnostic tests, minor surgery, medicine administration and referral to specialist service. Services are reimbursed via hourly tariffs. The centers are established by 5 to 7 family physicians, in any county, and receive any patients regardless of registration or insurance status. While the permanence centers were initially aimed at ensuring access in rural areas, they are equally distributed across urban and rural locations (Figure 6). 19 Figure 6: Rural population and density of permanence centers in 2019 80% y = -0.0005x + 0.4995 R² = 0.001 70% % rural population 60% 50% 40% 30% 20% 10% 0% - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Permanence centers per 10,000 population Source: NHIH, National Institute for Statistics The basic service package in PHC does not identify the conditions to be managed by family physicians. The framework contract mandates PHC providers to care for patients with acute conditions and exacerbation of chronic conditions. These regulations also provide guidelines for chronic conditions that require case management, including hypertension, dyslipidemia, diabetes, asthma, COPD and chronic kidney disease. Where the case complexity exceeds the expertise of the family physician, the patient is referred to specialists. In practice, care for ambulatory-care sensitive conditions and for non-complex cases, is routinely provided in hospitals. Illustratively, Table 5 shows the number of hospitalizations from 2015 through 2019 using diagnostic-related groups for 10 ambulatory-care sensitive conditions, without complications, comorbidities, or procedures (Billings et al. 1993; National School for Public Health Management and Training in Healthcare 2021). Patients with these conditions are admitted to hospital after being referred by family physicians or outpatient specialists and after presenting to the emergency room. The probability of acute care hospitalizations for ambulatory-care sensitive conditions has fallen between 2015 and 2019 and form less than 5% of all hospitalizations. However, a significant number still occur annually, and these services continue to be reimbursed by the NHIH. Hospitalization of ambulatory-care sensitive conditions reflects the relatively narrow scope of PHC in practice, over-referrals, ambiguity over patient pathways for NCDs, gaps in the quality of first-level care, and barriers to accessing PHC. 20 Table 5: Acute care hospitalizations for ambulatory-care sensitive conditions in Romania 2015-2019 Average annual DRG name 2015 2019 change (%) Heart Failure and Shock 83,139 43,337 -15% Otitis Media and Upper Respiratory Infections 17,591 12,313 -9% Esophagitis, Gastroenteritis and other Digestive System 15,152 10,518 -9% Disorders > 9 years old Diabetes 12,203 9,358 -6% Respiratory Infections and Inflammations 17,514 9,298 -15% Hypertension 8,192 4,859 -12% Kidney Failure 7,062 4,693 -10% Gastroenteritis < 10 years old 3,312 2,337 -8% Bronchitis and asthma < 50 years old 2,995 1,594 -15% Unstable angina 3,976 1,555 -21% Subtotal ACSCs 171,136 99,862 -13% % of total hospitalizations 5% 3% Source: National School for Public Health Management and Training in Healthcare 2.2 DESIGN FEATURES: BASIS FOR PAYMENT, COST ITEMS AND ADJUSTMENT COEFFICIENTS Prior to the creation of the social health insurance system in 1999, family physicians were paid salaries. Currently, they are paid via capitation, fee-for-service, and since 2004, hourly tariffs for after-hour services. Providers do not receive separate transfers to cover fixed costs. Revenue under the social health insurance system and national health programmes is not earmarked to specific cost items. However, a proportion of the revenue for services provided in permanence centers is earmarked for facility maintenance and procurement of emergency kits. Capitation under the basic service package is calculated as the product of the number of insured enrollees, the base points per enrollee with adjustment for age, professional grade of the physician, practice location and excess enrollees, and the respective base value. There is no adjustment for gender or pre-existing conditions of enrollees with implications for the cost of care. Monthly payments are made in the amount of 1/12 of the annual calculated base points given the minimum guaranteed base value. However, every quarter, family physicians may receive an additional settlement, equivalent to the final base value. This is determined at the national level by dividing the quarterly budget for capitation-reimbursed services by the total number of base points reported for the quarter. If the result is higher than the minimum guaranteed base value, the quarterly reimbursement of family physicians is supplemented (Table 6). 21 Table 6: Capitation under the basic service package Unit of payment Enrolled insured person, the number of which is updated monthly. Base 7.2 pts per year per individual Base points rate Base Minimum guaranteed value in lei, which is the basis of monthly payments value Final value in lei, which is the basis of quarterly settlements Age: (+) 4 pts per year for each enrolled insured person below 4 years and over 59 years Professional grade: (+) 20% for family physicians with professional grade as "primary"; (-) 10% for generalist physicians without specialization in family medicine Excess enrollees: downward adjustment of the number of base points where the number of enrolled insured persons exceeds the statutory threshold of 2,200. The adjustment applies if the total number of base points exceeds 18,700 per year, accounting for the higher points for specific age groups. The downward adjustments are calculated in Adjustments stages, which are directly correlated to the number of points: 25% for applied to base 18,701 – 22,000, 50% for 22,001 – 26, 000, and 75% for over 26,000. points The discounts are different if the family physician hires additional full- time physicians or if the practice is located in areas designated as underserved: 25% for 22, 001 – 26, 000, 50% for 26,001 – 30, 000 points and 75% for over 30,000 points. Location of practice: up to 100% increase for practices in rural local governments or towns with less than 10,000 inhabitants with difficult working conditions and in ease of access, established by a multi- stakeholder county committee using a scorecard approved by joint order of MoH and NHIH. See Appendix A.1 for description; (+)200% for practices located in the Danube Delta, which is remote and sparsely populated. 1. Annual contract value: enrolled insured persons X basis points X adjustments X minimum guaranteed base value Formula 2. Monthly payments: (enrolled insured persons X basis points X adjustments X minimum guaranteed base value) / 12 Payment Monthly, with quarterly settlements. Settlements are carried out if the frequency final base value is higher than minimum guaranteed value. Fee-for-service payments under the basic service package are calculated at the practice level as the product of the number of consultations for included services, the base points allocated to each consultation, the adjustments related to professional grade of the physician and the base value (Table 7). There are no adjustments for risk, including age or pre-existing conditions. Payments are made every month using the minimum guaranteed base value. Every quarter a settlement is conducted using the final base value. The final base value is calculated at national level by dividing the quarterly budget for fee-for-service payments by the total number of base points reported by health insurance houses for the respective quarter. If the result is higher than the minimum guaranteed base value, the quarterly reimbursement of family physicians is supplemented accordingly. For each consultation, there are volume thresholds or caps related to the episode of care or time interval, set at the PHC practice level, above which there is no reimbursement even though services are reported. Additional thresholds apply to daily consultations at the practice level: no more than 20 of fee-for-service consultations on 22 average can be reimbursed for any practice with up to 2,200 insured enrollees, i.e. more than 70% of PHC practices (Table 7). The thresholds do not adjust for the number of physicians in the practice, but they can be increased if the number of insurees exceeds 2,200. Table 7: Fee-for-service under the basic services package Base Caps on episode of Caps on daily Services points care or interval consultations Consultations for 5.5 per 2 consultations per Average daily acute conditions consultation episode threshold of 20 in- Regular check-ups 5.5 per 1 consultation per facility consultations for chronic conditions consultation month per PHC practice 5.5 - 6 per 4 consultations per (i.e. per list of Case management insurees, regardless consultation year Pregnancies: 1-2 of the number of consultations per employed month (up to 12 per physicians), pregnancy) calculated every Children: 1 quarter. Facility Preventive check- 5.5 per consultation at ups consultation predefined intervals The threshold may Adults: 1-2 increase by 4 or 8 consultations every per day if the number year (3 years for of insured enrollees adults under 40 exceeds 2,200 or years) 3,000, respectively. 5.5 per 1 consultation per Emergencies The threshold does consultation episode Directly observed not separate 40 per Full treatment between treatment for month course per month consultations for tuberculosis 15 per 1 consultation per insurees and non- Emergencies insured. consultation episode Consultations for 15 per 2 consultations per acute conditions consultation episode Daily caps on Regular chronic 15 per 4 consultations per consultations are check-ups consultation year calculated based on 15.5 - 16 the daily working 4 consultations per time in office (at least Case management per year 5 hours) and the Home consultation minimum time per services Newborn and mother 15 per 2 consultations in consultation check-up consultation the first month established at 15 minutes. 15 per A threshold of 42 Death ascertainment 1 consultation monthly or 2 daily consultation consultations is applied to home services. 23 During the COVID 19 pandemic family physicians can conduct consultations remotely and issue prescriptions and referrals by e-mail. In addition, the cap on daily consultations was doubled (family physicians can conduct 8 consultations per hour). Base value: 1. minimum guaranteed value, which is the basis of monthly payments 2. final value, which is the basis of quarterly settlements Adjustments for professional grade: (+) 20% for family physicians with professional grade "primary" (-) 10% for generalist physicians without specialization in family medicine Since 2013, allocations by the NHIH to PHC based on the number of insured enrollees have been equally split between capitation and fee-for-service. Between 2015 and 2017, the number of consultations reimbursed for by fee-for-service declined for both the basic (-3%) and minimum (-34%) service package. Over the same period, the volume thresholds for consultations reimbursed by fee-for-service was reached (Figure 7). Taken together, these facts point to volume thresholds potentially creating an undersupply of services reimbursed by fee-for-service. In 2017, preventive care and case management accounted for 4% of service volume while care for acute conditions accounted for 45.7%. The volume of reported preventive services has also declined between 2015 and 2017 (Figure 8). While this may represent undersupply, it also reflects underreporting by family physicians who do not report preventive care supplied when they exceed the volume thresholds. There may also be an undersupply of preventive care services ordered by family physicians that are rendered by laboratories. Laboratories must fund these services themselves, and are not reimbursed by the NHIH, resulting in reluctance to fulfill all requested services. 24 Figure 7: Average daily volumes of care through fee-for-service 25.0 20.1 20.0 18.9 18.8 15.0 10.0 5.0 0.6 0.6 0.7 0.0 2015 2016 2017 in-facility consultations per day home consultations per day Source: NHIH Figure 8: Reported preventive and case management services in PHC 2,309,483 1,896,747 1,717,214 391,370 332,047 390,494 2015 2016 2017 case management (selected chronic diseases) prevention Source: NHIH Fee-for-service payments in national health programs for vaccination and cervical cancer are approved annually in technical norms. In 2020, the fee for vaccinations reported in the national registry was 27 lei, compared to 10 lei in 2015. There are no volume thresholds or adjustment coefficients. Between 2015 and 2020, family physicians were paid 15 lei for every woman who was referred and screened under the national program for cervical cancer. For every pap smear sample collected for screening the fee increased from 18 lei in 2015 to and 28 lei in 2020. Despite the increase, the number of pap tests in the entire program was down in 2018 to 42,000 from 62,000 in 2015, perhaps due to other faults in organization, pathways and awareness. Hourly tariffs for services provided at permanence centers are updated annually. In 2020, family physicians were reimbursed at 40 lei per hour, with a 15% upward adjustment for the coordination of the center. Services provided in the physician’s office were reimbursed with a 50% increase to the hourly tariff, to cover expenditures on goods and services, including emergency kits. Where the office is managed and equipped by the local government, the physician receives a lower tariff increase of 10% towards emergency kits. Nurses are paid between 20 and 22.5 lei per hour. 25 2.3 IMPLEMENTATION ARRANGEMENTS: INSTITUTIONAL RELATIONSHIPS Provider payment at the PHC level is governed by the law on health care reform 95/2006. This law specifies that capitation and fee-for-service are the only payment mechanisms allowed for PHC within the social health insurance system (Government of Romania 2006). 7 The health care reform law also specifies that national health program expenditures are reimbursed per service. The law on medical care continuity through permanence centers 263/2004 specifies that provider payment mechanisms are defined in methodological norms, which in 2011 set hourly tariffs as the payment method. Introducing new provider payment mechanisms at the PHC level will require amendments to the law on health care reform. The law also identifies key institutions and actors involved in purchasing health care, including provider payment (Figure 9). We review the institutional relationships and regulations governing provider payment at the PHC level below. Figure 9: Institutional relationships in the Romanian health system Source: World Health Organization As noted in Chapter 1, the main institutions that oversee provider payment at the national level are the MoH and the NHIH. The MoH is the main regulatory authority in the health system, responsible for strategy and developing primary and secondary legislation, including laws, emergency ordinances and decisions. In addition, the MoH approves tertiary legislation, including methodological and technical norms, by order of the minister. DPHAs represent the MoH at the district level. 7 Article 261 par (1) letter a) of the law on healthcare reform 95/2006 with subsequent amendments 26 The NHIH is the single payer in the social health insurance system, responsible for co- initiating legislation related to purchasing with the MoH. The NHIH oversees the activities of 43 DHIH, including in each district, the capital city of Bucharest, and a Health Insurance House covering employees of the Ministry of National Defence, Ministry of Internal Affairs, Ministry of Justice, and the agencies related to national security. DHIHs interact directly with service providers, and are responsible for contracting, billing, disbursement, monitoring and implementing controls. In 2018, 86.2% of the 12,185 certified family physicians in Romania were contracted by DHIHs and the Health Insurance House covering employees of the Ministry of National Defence, Ministry of Internal Affairs, Ministry of Justice, and the agencies related to national security. For services funded through the social health insurance system, the MoH and NHIH jointly initiate a framework contract every other year. Methodological norms of the framework contract are then issued annually. The framework contract and methodological norms specify the details of the basis of payment, adjustment coefficients, included services, and other characteristics of each payment method. The methodological norms specify the volume thresholds for services reimbursed through fee-for-service. The framework contract is approved by government decision, while the methodological norms are approved by a joint order of NHIH and MoH. Procedures and templates for reporting service provider performance are approved by NHIH order. To be contracted under the social health insurance system, providers meet criteria specified in national regulation. Compliance is evaluated biennially by a committee at the district level, including representatives from the DHIH and DPHA (Table 8) (Government of Romania 2015). Each family physician, even in group practices, is required to maintain separate rosters of insured and uninsured persons enrolled for care. The number of insured enrolled persons forms the basis for capitation payment and informs volume thresholds. Table 8: Overview of scope of evaluation of district-level committee • The practice has legal status, sanitary certification, and complies with specified internal procedures • The family physician is a member of the Romanian College of Physicians and insured for malpractice • The practice has at least one nurse or midwife, who is a member of the National Order of Nurses and Midwifes, and insured for malpractice • The practice communicates transparently with patients on their rights and obligations, working time, tariffs for services outside the service packages, etc. • The practice is equipped with the standard clinical equipment provided by law: medical emergency kit, blood pressure gauge, weighing machine, height gauge, pelvimeter, device for displaying X-ray films, tongue presser, mouth opener, reflex hammer, various cannulas, gynecological table, speculum, Guyon syringe for ear lavage, Kramer splint, thermometer • The practice disposes waste safely • The practice provides easy access for disable person • The practice has procedures in place for safety, ensures data privacy and keeps full records using standardized registers 27 The minimum number of insured persons enrolled, required for a contract, is about 800 in urban areas. In rural and underserved urban areas, thresholds are set by district committees, that include representatives of the DHIH, DPHA, and district-level College of Physicians. The number of insured persons enrolled per practice ranges from 800 to 3,000 in over 90% of practices (Figure 10). Rural areas have a lower density of family physicians (0.47 per 1,000 population) compared to urban areas (0.6 per 1,000 population). While 4% of rural practices do not meet the threshold of 800 insured enrollees, this proportion falls to 1% of urban practices. In the first six months after opening a new practice, family physicians are paid a global budget independent of the number of enrolled insured persons on their rosters. Figure 10: Distribution of PHC practices by number of insured enrollees 30% 25% 26% 24% 25% 22% 22% 23% 22% 20% 18% 15% 10% 6% 7% 4% 5% 1% 0% 0-799 800-1399 1400-1799 1800-2199 2200-2999 >=3000 Number of insured enrollees rural urban Source: NHIH Providers under the social health insurance system are obligated to maintain working hours specified in the methodological norms of the framework contract. Practices with up to 2,200 insured persons are required to open 7 hours daily during the work week, including 5 hours for facility services and 2 hours for home services. Practices with over 2,200 insured persons can provide up to 7 hours daily of facility services. Outside working hours (including weekends), family physicians in permanence centers fill rotating shifts. Providers are obligated to send to the DHIH a monthly report including the list of insured and non-insured persons, and the list of enrolled insured persons that received specific services or diagnosis – treatment for work injuries, diagnosis with hypertension, dyslipidemia, diabetes mellitus type 2, chronic obstructive pulmonary disease, asthma, or chronic kidney disease. Romania ranked in the lower third in a survey of general practitioners in 31 European countries, Canada, and New Zealand on topics such as job stress and levels of unnecessary administrative detail (Schäfer, van den Berg, and Groenewegen 2020). Services reported by contracted providers are electronically validated by DHIH. This process verifies that services meet requirements in the methodological norms of the framework contract, including volume thresholds, insured status for services in the basic package, restriction to medicines or tests allowed at the PHC level. Family medicine practices bill the DHIH at the end of the month, and reimbursement is received by the 18th of the following month. Where a service is invalidated, penalties are exacted at the end of the quarter. Providers can send a request for redress to the DHIH, which if unresolved, 28 can be referred to the national commission for arbitration under the NHIH. Complaints that are not addressed by the NHIH can be settled in the courts. To access services under the social health insurance system at the PHC level, service users are required to register or enroll with a PHC practice and are restricted to care within that practice. Where the service user is insured, their status is validated using an electronic card, prior to filing the request for enrollment with the DHIH. Uninsured persons are also required to enroll on a separate roster at the PHC practice to access the minimum service package and preventive checks. In 2018, 21.3 million people were registered to receive PHC, 82% of whom were insured (National Health Insurance House 2018). Within six months of enrollment, a service user can change family physicians, by filing a new request with a different PHC practice. The new practice receives the medical records of the service user following a request to the prior PHC practice by email. The electronic insurance card is used to report in real-time, the services received by insured enrolled persons to DHIHs. Where the real-time validation system breaks down, PHC providers must record services delivered offline and report them within three days to the DHIH. For services funded through national health programs, the regulatory framework, including institutional relationships, is defined in a biennial government decision and annual technical norms. The government decision which regulates national health programs is initiated jointly by the MoH and NHIH. Subsequently, the MoH issues technical norms for the national health programs for vaccination, tuberculosis, HIV and cervical cancer screening, while the NHIH issues technical norms for the national health program for diabetes. For programs under the MoH, the family physician signs a contract with the respective DPHA, whereas the DHIH signs and executes the contract for services under the NHIH. The responsibilities of family physicians differ by national health program and eligibility for the use of services under the national health programs is not restricted by insurance status (apart from the national health program for diabetes under the NHIH). For the national health program for immunization, family physicians are required to obtain vaccines from the DPHA, conduct immunizations, identify all individuals who meet the eligibility criteria for each vaccine on their roster, and report to the national registry for vaccinations. These requirements differ from those under contracts under the social health insurance system. For the national health program for tuberculosis, family physicians administer directly observed treatment, identify and register infected persons, undertake contact tracing, and education, while under the national health program for HIV, family physicians refer pregnant women for HIV tests. The national health program for cervical cancer screening involves a contract between family physicians, DPHA, and a hospital that manages the district referral network. Family physicians identify women who are eligible for the screen, refer them to testing units, inform users of the results, and undertake follow-up actions including referrals to specialist care if needed. Some family physicians are certified to undertake cervical cancer screens via pap smears. Services are paid for by the hospital which manages the county referral network. The NHIH administers and funds the national health program for diabetes mellitus. In districts with an undersupply of specialists in endocrinology or diabetes mellitus, designated family physicians are authorized to refill prescriptions for insured enrolled people. 29 For services provided within permanence centers, family medicine practices involved sign separate contracts with DHIHs. Financing is provided through the MoH as a subsidy to the NHIH. A pre-requisite for these contracts is compliance with requirements specified in MoH Order 697/2011 relating to personnel, equipment, and infrastructure. Permanence centers are also required to be open from 3 pm during the work week to 8 am the following day, and for 24 hours over the weekends. Approximately 15% of the 10,501 family physicians contracted by DHIHs are involved in service provision in the 400 permanence centers in Romania (National Health Insurance House 2019). 2.4 IMPLEMENTATION ARRANGEMENTS: QUALITY ASSURANCE Contracted PHC practices are required to meet specific standards with respect to structural quality to be contracted under the social health insurance system and to provider services in permanence centers. These include the requirement for certification of physicians and nurses to practice, with insurance for malpractice and pre-requisite equipment for contracts under the social health insurance scheme and permanence centers. See Section 2.3 for a detailed discussion of these requirements. Provider payment is not linked to compliance with clinical guidelines. In 2010, clinical guidelines for several specialties were approved for practice. In several cases, these guidelines were direct translations from other contexts and were not adapted to Romania. Compliance with these guidelines is not monitored. 2.5 IMPLEMENTATION ARRANGEMENTS: SUPPORTING SYSTEMS To support contracting under the social health insurance system, the NHIH hosts a Health Insurance Information Platform, which integrates several interoperable components: the Single Integrated Information System is used for reporting, validation, and billing of health services; the Information System for Electronic Prescriptions is used to issue and dispense prescriptions; the Health Insurance Electronic Card is used to validate the insurance status of service users; and the Electronic Health Record Platform is used to document services provided, including for PHC and hospital care. However, the Electronic Health Record platform is not fully operational. The NHIH aims to add e-referral and e-appointment systems to the Health Insurance Information Platform. At the service delivery level, PHC practices use different software for practice management that are interoperable with the Health Insurance Information Platform. PHC practice management software generally do not provide clinical support, including recommendations in line with clinical guidelines. Some practice management platforms include information on prescription guidelines and adverse interactions between medication. At the PHC level and in ambulatory specialist care, diagnoses for services use the short version of the International Classification of Diseases, Tenth Revision (ICD- 10), in contrast to hospitals that use the full version. The differences in coding create difficulties in monitoring patient pathways across levels of care. The Single Integrated Information System under the NHIH also has a module for PHC practice management that is not widely used. 2.6 IMPLEMENTATION ARRANGEMENTS: PUBLIC FINANCIAL MANAGEMENT Under the social health insurance system, the NHIH follows public financial management regulation for budget formulation, execution, and evaluation, in an annual budget cycle, including for PHC. 30 Regarding budget formulation, the NHIH prepares a budget proposal for the NHIF, broken down by functional classification, into PHC, medicines, medical devices, outpatient specialist care, hospital services, etc. The Ministry of Finance defines total expenditure for the NHIF while the NHIH defines the distribution across functional classifications. Projected PHC expenditure is estimated based on the total base points and final base values for the previous year and may be adjusted to reflect changes in reimbursement for specific services. Regarding budget execution, family medicine practices receive payments for services rendered by the 18th of the following month in account in the Treasury. As service providers in the private sector, family physicians are not required to develop budgets, justify expenditure decisions, or follow public procurement regulations regarding hiring of personnel or setting salaries. Where there are surpluses, the practice retains them. Budget evaluation involves monitoring and controls within the NHIF and at the service delivery level. DHIHs undertake periodic investigations of compliance of PHC practices with contractual obligations. The Romanian Court of Accounts also conducts external audits of the budget execution at the PHC practice level. These financial audits ascertain that the roster does not include deceased persons, medicines were prescribed within regulatory limits, actual services were delivered, etc. Performance audits, which aim to examine if available resources are maximized in terms of effectiveness and efficiency, are not performed. The NHIH produces annual reports detailing spending within the NHIF but does not routinely undergo detailed expenditure reviews. As the NHIF must end the year with a balanced budget, the state budget provides subsidies to offset any deficits. These deficits are driven by hospital expenditure and have averaged US$ 500 million annually (World Bank Group 2019). 2.7 IMPLEMENTATION ARRANGEMENTS: OTHER REGULATIONS Under the social health insurance system, a prescription or referral from the family physician is a pre-requisite for receiving reimbursable services from specialists, laboratory, or rehabilitation services. However, the methodological norms of the framework contract allow for service users to access specialist care without a PHC referral following an initial diagnosis for 58 conditions, including for conditions that can be managed at the PHC level like uncomplicated diabetes mellitus and asthma. This provision has introduced overlaps between case management for NCDs at the PHC and specialist level and contributes to overuse of specialist care. Similarly, family physicians are not allowed to initiate some prescriptions in the list of reimbursed medicines, even for conditions that can be managed at the PHC level. For uncomplicated diabetes mellitus and asthma, initial prescriptions must be initiated by specialists, and can be refilled by authorized family physicians following re-evaluation by specialists. During the COVID-19 pandemic, these requirements have been relaxed, allowing for family physicians to initiate and refill prescriptions without specialist re- evaluation in selected cases and for prescriptions to be sent online to patients following remote consultations. 31 CHAPTER 3: POLICY RECOMMENDATIONS We conclude this policy note with recommendations for provider payment reforms consistent with the objectives identified, in the short and medium term. These recommendations are informed by the assessment of potential drivers of PHC underperformance that arise from the design features and implementation arrangements of provider payments in PHC. They also consider lessons from countries in the Organization for Economic Co-Operation and Development (OECD) that have undertaken provider payment reforms towards similar objectives (Box 2) (OECD 2016). The short- term recommendations can be implemented within two years, while medium-term recommendations can be achieved within five years. 1. To increase the supply of preventive care and case management: • In the short-term, the NHIH should allow the volume thresholds for fee-for-service payments, including for preventive care and case management to reflect the number of enrollees and the number of physicians in a practice. This may require a change in the balance in reimbursement through capitation and fee-for-service, or an increase in funding for PHC relative to other budget categories (e.g. drugs, medical devices, hospital care, etc.), or an increase in funding for PHC in absolute terms. While the first two options are within the decision-making space of the NHIH, the third option will involve the Ministry of Finance and MoH. • To reduce under-reporting of case management that occurs because the full scope of cumbersome laboratory tests is not performed, the NHIH and MoH should task physician commissions with reviewing the protocols under case management to restrict to a narrower scope of tests that are also consistent with global best practice. We also recommend that provisions be made to reimburse the cost of laboratory tests under the revised case management guidelines. • In the medium-term, the MoH and NHIH should co-initiate amendments to the law on health care reform to enable the introduction of innovative provider payment mechanisms that can increase preventive care and case management supply, such as pay-for-performance. The amendments should be drafted with sufficient flexibility to forestall the need for changes in the future with advancements in provider payment innovation. 2. To expand the scope of PHC and strengthen coordination of care with hospitals: • In the short-term, the NHIH and MoH should task physician commissions with periodic reviews of the provisions of the framework contract and methodological norms on services that are provided in PHC versus by specialists, and expand the scope of services in PHC that are reimbursed through the NHIH to include care for other conditions that can be managed in PHC (as obtains in other EU countries), including care for uncomplicated diabetes mellitus and asthma, and initiation of prescriptions for these conditions. • Capitation payments under the basic service package should be revised to adjust for risk, including gender, pre-existing medical conditions, and historical service utilization, to reduce incentive for over-referrals to specialists for conditions that can be managed at the PHC level. • In the medium-term, the coordination of care may benefit from the introduction of innovative payment mechanisms by the NHIH, including population-based and bundled payments, which require provisions in the framework contract for 32 contracting provider networks as per cervical cancer screening under the national health program. 3. To establish an enabling environment for provider payment reforms: • The NHIH should continue to invest in strengthening the health information system to enable coordination of care across providers, including through unifying coding of diagnosis, establishing quality standards, and ensuring full functionality of modules for referrals and inter-provider communication. • The MoH should mandate a technical institution to collaborate with physician associations to review the current clinical guidelines for conditions that represent the top 10% of annual claims to the NHIF under the social health insurance system, and ensure these guidelines represent current best practice. These guidelines should be adapted to the Romanian context and used to inform future payment innovations aimed at improving the quality of PHC. • The process of introducing modifications to traditional payment methods or new mechanisms should be informed by extensive consultations with providers at all levels of service delivery to broker consensus on the objectives of these reforms and identify options to reduce the attendant administrative burden of reporting. • The Ministry of Finance and Ministry of Health should work to expand outpatient spending to match expenditure levels in high-performing health systems in the EU. This is necessary to increase reimbursement levels for PHC providers to support improvements in the supply of PHC care to meet population health needs. Greater fiscal space for health may be achieved by budget changes to appropriate a greater share for health, improved health spending efficiency, and improved tax administration. 33 Box 2: Lessons on provider payment reform for PHC performance Over the past few decades, several OECD countries have implemented modifications in traditional payment methods and introduced innovative new mechanisms to improve provider performance, including at the PHC level. Lessons from these countries that are relevant for Romania are summarized below: Challenges with ‘pure’ traditional PHC payment methods: • Fee-for-service payments incentivize an increase in supply of care, but costs rise as well. • Capitation payments control costs but incentivize an undersupply of care relative to needs. • Global budgets control costs but may also incentivize an undersupply of care. Adapting traditional payment methods: 1. Activity above volume thresholds for fee-for-service at the PHC level are rewarded at a reduced tariff or not at all. 2. Nearly all OECD countries adjust capitation for risk factors to reduce incentive for providers to select service users with a positive risk profile, including age, gender, health status, service use history, geographic factors, and socioeconomic factors. 3. Global budgets are adjusted for risk factors to reduce incentive for risk selection. Introducing innovative provider payment methods: 1. Pay-for-performance linked to evidence-based and preventive care targets are implemented in over two-thirds of OECD countries. Results are mixed and difficult to disentangle from secular trends and selection of higher performing providers into schemes. Add-on payments that build on existing payment mechanisms and reward coverage, quality, and efficiency goals, have been shown to improve some outcomes. In Germany, add-on payments and contracting changes were introduced to incentivize coordinated care for patients with cardiovascular diseases. About 89% of patients acknowledged better cooperation between GPs and cardiologists. 2. Bundled payments fix reimbursement for an episode of care (e.g. pre-, intra- and post- surgery) or care along care pathway. Better provider performance has been detected in the Netherlands for diabetes following introduction of bundled payments. The payments incentivized a shift in tasks across providers, and changes in the scope of practice. 3. Population-based payments that cover a range of services by provider groups who are encouraged to control costs and meet quality standards to retain a proportion of savings and/or share in losses. In Massachusetts, United States, population-based payments were associated with improved chronic disease management and adult preventive care, with mixed findings on savings. Other lessons: 1. It is important to use transparent, scientific criteria to identify patient populations who may be high risk and who to target with payment reforms. 2. Regardless of what method is adopted, these payment systems must be monitored, and be revised as providers adapt to reduce the effectiveness of the incentives. 3. Set tariffs based on evidence-based clinical guidelines and draw on a broad set of measures. 4. Build up the IT system to support integration across levels of care and record payments for billing purposes in formats that are adaptable to varied payment methods. 5. Engage providers in defining objectives of payment reform, mitigating concerns on financial risk, and balancing accurate reporting with administrative burden. Source: OECD 34 APPENDIX A.1 ADJUSTMENT OF CAPITATION PAYMENT FOR LOCATIONS WITH DIFFICULT CONDITIONS Per MoH order no. 391/2015, the below adjustments apply to PHC practices in rural local governments and in towns with up to 10,000 inhabitants. The assessment defines the upward adjustment of capitation basis points and is conducted at county level by the joint committees made of representatives of health insurance houses, public health departments and the college of physicians. Criterion Number of points 1. Conditions of service provision a. distance between extremities of the local government 7-12 km 2 Over 12 km 4 b. travel conditions within the local government More than 50% of roads are dirt roads 4 Roads with level difference of over 200 meters 8 c. Population density in the local government Between 75 and 150 inhabitants per square kilometers 2 Below 75 inhabitants per square kilometers 4 2. Road distance between the PHC practice and the closest hospital emergency room within the same county 20-40 kilometers 4 41-60 kilometers 6 over 60 kilometers 8 3. Number of insured persons on family physicians’ rosters in rural local governments and in towns with up to 1,200 inhabitants provided a single PHC practice is open in the respective local government Under 400 insured people 30 401-600 insured people 20 601-1,200 insured people 5 4. PHC practices in rural communities and towns up to 10,000 20 inhabitants which have been declared underserved from the point of view of family medicine by the county joint committee Results Score interval Adjustment interval (%) Between 75 and 78 100 Between 61 and 74 71 -97 Between 41 and 60 40 - 69 Between 2 and 40 1-39 35 Note that the actual percentage of the adjustment is calculated such that any point above the lower limit of the score intervals adds pre-specified percentage points to the lower limit of the respective adjustment up to the maximum of the adjustment upper limit: 2 percentage points for the 61 to 74 score interval, 1.5 percentage points for the 41 to 60 score interval and 1 percentage points for the 2 to 40 score interval. 36 REFERENCES Billings, John, Lisa Zeitel, Joanne Lukomnik, Timothy S. Carey, Arthur E. 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"European Health Information Gateway." 2018. https://gateway.euro.who.int/en/ 38 Romania faces high levels of amenable mortality reflecting, in part, the relatively low utilization rates of high-quality primary health care (PHC), particularly for non-communicable disease (NCD) prevention and treatment. Provider payment mechanisms do not reward the high-quality care provision and may incentivize bypassing of PHC for hospitals, exacerbating challenges presented by physical, financial, and social barriers to accessing essential care. This paper assesses provider payment mechanisms at the PHC level, by examining their design features and implementation arrangements, and exploring their implications for PHC performance in terms of access and quality of care. We conclude with policy recommendations to address the constraints identified. To increase the supply of preventative care and case management, we recommend that volume thresholds for fee-for-service payments reflect both the number of enrollees and physicians in a practice; laboratory tests required for case management be reduced in scope and their costs be reimbursed; and the law on health care reform be amended to enable the introduction of new payment mechanisms, such as performance-based payments. To expand the scope of PHC and strengthen care coordination with hospitals, periodic reviews by physician commissions should aim to expand the scope of PHC care in line with provisions in other European Union (EU) countries for ambulatory-care sensitive conditions; capitation payments should be adjusted for gender and historical service use to reduce incentive for over-referrals; and payment mechanisms that reward coordination of care, including bundled payments, should be introduced. To establish an enabling environment for provider payment reforms, health information systems should be strengthened by unifying diagnosis coding, establishing quality standards, and ensuring referral module functionality; payment reforms should be informed by extensive consultations with providers at all service delivery levels; and PHC spending should be increased to support higher reimbursement levels for providers and match expenditure levels in high-performing EU health systems. ABOUT THIS SERIES: This series is produced by the Health, Nutrition, and Population Global Practice of the World Bank. The papers in this series aim to provide a vehicle for publishing preliminary results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For free copies of papers in this series please contact the individual author/s whose name appears on the paper. Enquiries about the series and submissions should be made directly to the Editor Jo Hindriks (jhindriks@ worldbank.org) or HNP Advisory Service (askhnp@worldbank.org, tel 202 473-2256). For more information, see also www.worldbank.org/hnppublications. 1818 H Street, NW Washington, DC USA 20433 Telephone: 202 473 1000 Facsimile: 202 477 6391 Internet: www.worldbank.org E-mail: feedback@worldbank.org