Optimizing health care benefits by health insurance schemes A case of the National Health Insurance Fund

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1 Good Practices in Social Security Good practice in operation since: 2002 Optimizing health care benefits by health insurance schemes A case of the National Health Insurance Fund Winner of the ISSA Good Practice Award Africa competition 2011 National Health Insurance Fund United Republic of Tanzania Published

2 Optimizing health care benefits by health insurance schemes Summary Health policy and providing sustainable access to affordable and quality health care are some of the most important issues on current social policy agendas. For this reason, the Government of Tanzania initiated a prepayment health insurance scheme, the National Health Insurance Fund (NHIF), which started its operations in At the time of its inception, the scheme had accredited all government facilities. Later on, in 2004, the NHIF started to accredit faith based, NGO and private health facilities to bridge the gap on the supply side at the public health facilities that were initially accredited. Due to members complaints about the inadequacy of medical services obtained from accredited medical facilities, the NHIF considered what improvements could be made to its medical services package. Before expanding the benefits package, the main challenge was how to ensure the long-term sustainability of the scheme whilst meeting the members expectations concerning services. However, the Fund made four major strategic improvements in its medical benefits package with the aim of increasing the availability of medical services, enhancing the utilization rate, increasing reimbursement to accredited service providers and reducing complaints from members. CRITERIA 1: What was the issue/problem/challenge addressed by your good practice? Please provide a short description. The scope of the benefits package was very limited to the extent that members were not able to access a myriad of expensive medical services such as CT-Scans, MRIs and those related to kidney and cancer treatment. Whereas members of the Fund complained about the inadequacy (quantity and quality) of medical services they received at accredited medical facilities, the NHIF had to consider the sustainability of the scheme if these high cost treatments were to be included in the benefits package. Before expanding both the scope and depth of the NHIF benefits package, the main challenge was how to ensure that members get services that meet their expectations while the scheme continues to be sustainable in the long term. Thus, the challenge was how the scheme could trade-off a generous benefits package to beneficiaries while maintaining the long-term sustainability of the scheme.

3 2 CRITERIA 2: What were the main objectives and the expected outcomes? The general objective of expanding the benefit package was to meet the ever-increasing demands of medical services from members of the scheme and meet their expectations within the limits of scheme s finances. Objectives In particular, beefing up the benefits package aimed at: 1. Increasing the quantity and quality of medical services to members of the scheme. 2. Making scheme members feel that they obtain value for money for their contributions without compromising sustainability. 3. Enabling members of the scheme to obtain services, for example dialysis, that are not available at public facilities but only available at private-for-profit facilities. 4. Bringing on board new trends and developments in the medical fraternity such as new investigation techniques, new medical technologies such as cement-less total hip replacements, new pharmaceutical products in the market etc. 5. Sweetening the benefits package as a bait to increase the number of new members enrolling in the scheme i.e. to lure more people to subscribe to the scheme. Expected outcomes Improvements undertaken in the benefits package was expected to: 1. Increase availability of medical services on the supply side of the equation. 2. Enhance the utilization rate and increase reimbursement of funds to accredited service providers to increase the financial capacity of these facilities to purchase more medical supplies. 3. Reduce complaints from members of the scheme concerning the adequacy of the medical services offered. CRITERIA 3: What is the innovative approach/strategy followed to achieve the objectives? A comprehensive benefit package like that of the NHIF scheme is costly and has a linear relationship with the funding ratio and may have implications for the reserve funds. Taking into account the financial implications of expanding the benefit package, the NHIF undertook to increase the scope and depth of the package gradually. Since the inception of its operations in 2001, the Fund has made four major strategic improvements on its medical services package. In the year the Fund benefit package comprised minor and major surgeries, in-patient and out-patient services, investigations, and registration and consultation fees. Later on, in the year the Fund added specialized surgeries, physiotherapy and dental services to its benefit package. Moreover, in the year the Fund added medicines in its benefit package and in 2004/ the Fund added spectacles and prostheses as well as services to retirees.

4 3 CRITERIA 4: Have the resources and inputs been used in an optimal way to achieve the set objectives and the expected outcomes? Please specify what internal or external evaluations of the practice have taken place and what impact/results have been identified/achieved so far. Optimal use of resources and inputs to expand the benefits package While increasing the adequacy of health insurance benefits is very important, controlling cost to ensure sustainability is essential. Since the Fund started expanding its benefit package in 2003, reimbursement to accredited health facilities has kept on increasing and these funds have been used to improve the services and/or health related infrastructures of these facilities. Notwithstanding the increase in reimbursements to service providers, reserve funds have also continued to increase in order to maintain the necessary funding ratio as required by the best practice of social health insurance schemes worldwide. Outcome/results of expanding the benefit package As a consequence of the gradual expansion of the benefits package in the course of meeting members expectations, the scheme has remarkably achieved the following: 1. Claims lodged and paid have tremendously improved from (Tanzanian Shilling (TZS)1,345,852,463.00/= paid in 2003 to TZS25,154,081,201.00/= paid by the end of Trend for the past five years Year 2006/ / / / /2011 Claims paid in TZS 8,268,843,685 10,188,393,231 16,359,004,256 25,154,081,201 40,046,234,470 Growth rate 76% 23% 61% 54% 59% 2. As a result of the above, the significance of the NHIF scheme as one of the sources of off-budget health care financing mechanisms has increased in the National Health Accounts (NHA), now accounting for 20 per cent in the NHA, increased from 5 per cent in It has been acknowledged by beneficiaries of the scheme that the scope and depth of the benefits package now meets their expectations (this is the feedback the NHIF receives during stakeholders meetings). 4. The physical infrastructures at various accredited medical facilities have been improved mainly by use of NHIF reimbursements. We have cases whereby wards have been improved and equipment has been bought using reimbursements from the NHIF scheme.

5 4 CRITERIA 5: What lessons have been learned? To what extent would your good practice be appropriate for replication by other social security institutions? Please explain briefly. In the process of expanding the benefits package, several lessons have been learnt by the NHIF. These lessons are that: 1. Endeavours to increase the adequacy of the benefits package in social health insurance schemes should go in tandem with the sustainability modelling of these schemes. 2. Expansion of health insurance benefits must be undertaken in phases i.e. gradual implementation. This approach ensures that supply and utilization of medical services are well-studied over a span of time. 3. The more that the benefits package is improved, the more that beneficiaries demand luxurious medical services/products in developing economies. 4. There is no standard model/structure of a benefit package that can fit all countries that aspire to introduce social health insurance schemes. The nature of the benefit package must always take into account the socio-economic background and also the specific needs of the target catchment population.