RECENT ADVANCES IN SOCIAL HEALTH INSURANCE IN VIETNAM

Transcription

1 HEALTH FINANCING MASTER PLAN TECHNICAL PAPER SERIES-I WORLD HEALTH ORGANIZATION RECENT ADVANCES IN SOCIAL HEALTH INSURANCE IN VIETNAM A COMPREHENSIVE REVIEW OF RECENT HEALTH INSURANCE REGULATIONS DECEMBER st Draft Release Date: 16 Jan 2003 BY THI KIM PHUONG NGUYEN 1 AND AFSAR AKAL 1 Public Health Officer, World Health Organisation, Vietnam - [email protected]

2 TABLE OF CONTENTS Disclaimer... 5 Acknowledgements... 5 Introduction... 6 Summary of Regulations Covered in the Review... 7 Regulatory Review Administration of health insurance and the Policy Making process Who administers health insurance? What are the main administrative functions of VSS? What are the structure and main administrative functions of the Provincial HCFP Boards? Who makes and issues health insurance and financing policy? What is the highest order regulatory framework for health insurance? What are the main achievements of the Health Insurance Decree? Health Insurance Coverage and Benefits What are the main types of health insurance? Are dependents covered by health Insurance? What criteria is used for health insurance benefit package? Are all health insurance scheme benefits the same? Do waiting periods apply? Do co-payments apply? Can the breadth of health Insurance benefits improved? Where do members obtain health services and do they have a choice of provider? Are health insurance benefits portable? How do fee exemptions work? Has fee exemptions policy been successful? Health Insurance for the Poor-Recent Changes What is Health Care Fund for the Poor (HCFP)? How does HCFP work? What are the main regulatory changes introduced by HCFP? What implications does HCFP offer for government funding for health care? What is fragmentation of insurance risk pool? How do health care providers receive funding from HCFP? Can non-members be reimbursed by HCFP? How is HCFP administration funded? How is HCFP monitored? Voluntary Health Insurance-New Regulations What is voluntary health insurance and how is it regulated? How can one join voluntary health insurance? How much does it cost to join voluntary health insurance? how often are premiums collected? Is there any government subsidy available for voluntary members? What policy changes have been introduced for School Health Insurance? Are there benefit caps? What are community enrolment thresholds? Fund Management and Risk Pooling What is Health Care Benefit fund?

3 What is Social Insurance Fund? How are health insurance funds managed? Are there intra-fund and intra-regional transfers? How does risk pooling work? Can health insurance carry reserves? What happens if there is a deficit? How is health insurance administration funded? Contracting, Provider Payment and Member Reimbursement Methods Which providers can be contracted? What are the legal and administrative considerations for contracting? How are health care providers being paid by insurance? What s the basis of capitation-based advances? What is the basis of fee for service payments? What are the components of health care benefit fund? How are quarterly advances to providers calculated? Are there safety-nets for excessive out of pocket outlays? What are the complexities of Safety Net Provisions? Can members be reimbursed? Current Policy Issues Future policy direction for institutional insurance schemes Changes being considered for the new Health Insurance Decree Extending compulsory scheme to cover dependents Health insurance for children Change in co-payments policy Private sector coverage and compliance Increasing compulsory health insurance contributions Administrative capacity constraints for health insurance Debate on Community-Based Health Insurance (CBHI) Policy implications of Decree 10 on Social Insurance Conclusions

4 TABLES AND FIGURES Table 1: Main Features of HCFP and Pooling Arrangements 20 Table 2: Voluntary Health Insurance Premiums applicable in 2004 based on Circular Table 3: Community Enrolment Thresholds for Voluntary Health Insurance as per Circular Table 4: Pre-merger fund allocation policy of compulsory scheme health insurance premiums Table 5- Health Insurance Fund Allocation and Reserve Accumulation Rules 29 Table 6: Comparison of Fund Allocation, Quarterly Advance, Calculation and Final Settlement Methods of Institutional Health Insurance Schemes 32 Table 7: Health Insurance Participation Ratios Table 8: Distribution and Growth of Compulsory scheme membership by Public and Private Sector Figure 1: Number and Distribution of Employed Persons by Sector Figure 2: Source of Provider Income ADB CBHI CHS DHC GSO HCFP IEC MOF MOH MOLISA PM VHI VSI VSS ABBREVIATIONS Asian Development Bank Community Based Health Insurance Commune Health Station District Health Centre General Statistical Office Health Care Fund for the Poor Information Education and Communication (Campaigns) Ministry of Finance Ministry of Health Ministry of Labour, War Invalids and Social Affairs Prime Minister/Prime Ministerial Viet Nam Health Insurance (Agency)-former Viet Nam Social Insurance (Agency)-former Viet Nam Social Security (Agency)-current/merged 4

5 DISCLAIMER This review covers health insurance and financing regulations applicable as at the end of December Policy changes or regulatory amendments that were affected after this date are not covered. As in all regulatory documents, there is ample room for interpretation. The reviewers who authored this paper have exercised caution while interpreting the contents of these documents using both official and unofficial translations provided to WHO from various sources. Following this review, in depth discussions took place with legal experts in the relevant agencies such as MOH and VSS in order to clarify articles that are unclear to non-vietnamese speaking readers. It should be noted that the review does not endorse a particular view of WHO expressed or implied in this document. Readers are recommended to exercise caution and be willing to accept that errors may have occurred in the interpretation of reviewers while linking the policy and practice as evidenced from quantitative data. The reviewers have also benefited from statistical information available from MOH, VSS and GSO some of which have been used in this review. WHO happily welcomes all comments and suggestions from readers who have taken time to read this review. For errors, corrections and general suggestions, please contact WHO Viet Nam Office at [email protected]. ACKNOWLEDGEMENTS The first draft of this paper has been prepared by WHO country office in Viet Nam. Special thanks to [List of contributors after finalization Guy Carrin/Aviva Ron/Chris James, Dorjsuren Bayarsaikhan.] 5

6 INTRODUCTION Universal health insurance is a government endorsed national policy in Viet Nam. While the end is clear, the means for how to get there is currently debated at all levels of Viet Nam government and among the international development partners. WHO together with international development partners is supporting the government of Viet Nam for the preparation of a comprehensive master plan for health financing and insurance. This and forthcoming WHO papers on the Health Financing Master Plan Series aims to contribute to this policy debate and assist the master planning process. We first start with an in-depth review of past and more recent government regulations on health financing and health insurance in Viet Nam. This review aims to clarify and elaborate on current and future policy directions of the government and cater to tailor future donor support for health financing reform. The review also aims to provide input to the future health financing policies of the government. Ideally, health insurance should be embodied in a law. The National Assembly has requested government counterparts to redraft the 3 rd Draft of Social Security Law in which Health Insurance is a separate chapter. The current enactment plan for this law is late An advocacy of WHO is fostering equity. The review indicates that progress to date is highly successful in terms of putting pro-poor policies in use. Implementation of these policy initiatives need to be evaluated in terms of how well they provide equity in health service access and financing. Another finding of this review is despite starting from a very low revenue base, health insurance rules and regulations have become extremely sophisticated over years but at the same time somewhat administratively complex. Master planning process should also look into systemwide efficiency issues in service provision and finance. WHO hopes that future health financing policies will continually support equity and efficiency goals. This paper was written in this endeavor. 6

7 SUMMARY OF REGULATIONS COVERED IN THE REVIEW The following summary is a framework for this review. The table contains the title, date of issuance, the content of these regulations and why they were included in this review. For practical reasons, not all health financing/insurance regulations are covered. Attention is given to: areas/issues where a new policy has been put in place where a policy change is currently debated by the legislature where further regulatory improvements are needed. Policy environment in this area is highly dynamic. MOH, MOF, MOLISA, Prime Minister s Office and National Assembly are actively debating policy improvements and issuing new changes as we print. In terms of administration, Viet Nam Social Security and Provincial Authorities are jointly tasked to administer health insurance. The merger of health and other social insurance portfolios has been a major determinant of most recent regulatory changes (see Decree 100/2002). Following the setting up of Health Care Fund for the Poor (see PM Decision 139 and Circular 14/2002 below) health insurance administration has been further decentralized. Administrative issues are essential ingredients of this review and therefore covered in more detail. The summary also marks the historical significance of each regulatory change. 7

8 HEALTH FINANCING MASTER PLAN TECHNICAL PAPER SERIES-I Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance Decree 95 and revision of, by Decree 33-Schudule of Fees at Government owned Hospitals and Clinics. 27-Aug-1994 Revised 23 May Cost recovery at public health providers dates back to These two decrees have revised the official user fees. The Decrees constitute the most comprehensive fee schedule applicable at present for health services in public owned hospitals and clinics. The schedule established the basis of official user funded (out of pocket) and insurance funded health expenditure. Insurance applies a co-payment of 20% for some classes of covered persons based on this decree and all provider payments are reconciled against this schedule of fees and charges. The fees have not been changed for more than eight years and the decree is currently being revised by the government. Previous attempts to raise the fees have not received too much policy support. Publicly provided health care is officially no longer free... Inter Ministerial Circular 14/TTLB Exemptions Policy 1995 Groups of persons exempted from paying hospital fees. This circular exempts some groups from paying the official hospital fees promulgated by Decree 95/Decree 33 (see above) of which children under six the poor and ethnic minorities are three main target populations. but some groups of people are exempted from paying official user fees Decree 58-Health Insurance Regulations 13-Aug-1998 Also referred as the Health Insurance Decree replacing the first one in Covers the main health insurance operations from membership, contributions, benefit package, provider payments, fund management and health insurance administration. It regulated health insurance before the merger of health and social insurance. Administration and fund management articles in particular have been annulled as well as Voluntary Health Insurance chapter, which is now regulated by a new Circular. Currently the decree is being revised by technical assistance from WHO. ---and for some groups there is health insurance available. This will be administered nationally.

9 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance Inter Ministerial Circular 15-Guidelines for implementation of Compulsory Health Insurance 5-Dec-1998 Covers guidelines for implementation of Compulsory Health Insurance only. Covers contribution basis and rates for different classes of compulsorily insured persons. Introduced copayments for actively employed. Provides guidelines for companies/employers regarding compliance. Co-payments for some health insurance members are introduced. Circular 17-Guidelines on Health Insurance Administration 19-Dec-1998 Covers guidelines for providing health care benefits to members, insurance fund management, provider payments and reimbursement to members. This regulation has been a landmark change, which affected the behaviors of health insurance members, health care providers and policy makers to present day. It established patient referral lines by requiring members to register with a health care provider. Provider payment methods, insurance fund management and concepts like budget ceilings, capitation based budgeting, fund allocation are introduced. Fund allocation to reserves, insurance administration and health care benefits (for primary care, out-patient and in-patient treatments) are streamlined on a national basis. The fund protection measures have created room for insurance reserve build up, which caught the attention of policy makers. Patient referral lines, budget ceilings to providers and fund allocation rules are introduced. Health Insurance starts building larger reserves. 9

10 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance Inter Ministerial Circular 05/1999-Free Health Insurance Cards for the Poor 29-Jan-1999 Established government purchase of health insurance cards from Viet Nam Health Insurance Agency (VHI). This is the former scheme for health insurance for the poor whereby health insurance cards priced at 30,000 dong per card is purchased by the government from VHI. The scheme entitled members for free treatment at public facilities where the costs were reimbursed by VHI to the providers. Fee exemptions for the poor did not really work. Government backs it up with premium funding and includes the poor in insurance. Strategy for People s Health Care and Protection for Mar-2001 Outlines macro level health targets and major strategies to achieve these targets. This is a government endorsed policy strategy for Viet Nam to reach universal health insurance cover by 2010 with a proviso to increase government s role/share in financing health care. Universal health insurance is now a nationally adopted policy choice. Decree 10-Financial Regulations applying to Revenue Raising Public Service Entities 16-Jan-2002 Aims to reform public administration and make revenue-raising organizations and state owned enterprises to become semi-autonomous, selfsufficient and less reliant on state revenue. The decree has wide scale implications on the whole of the public sector. In particular calls for a full organizational reform including increased autonomy, downsizing and salary/wage improvement. It has implications on hospital management, revenue and costs, and could put upward pressure for hospitals to raise their fees or alternatively reduce staff. Health insurance emerges as a potentially important source of income for providers to offset cuts to operating budgets. Budget funded entities should stop relying on government funding alone. Public enterprises should become more autonomous and efficient. Hospitals are part of this process and they should treat health insurance revenue as another source of income. 10

11 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance Decree 63-Health Insurance for the Dependents of Armed Forces 18-Jun-2002 Decrees Ministry of Defense to purchase health insurance cards for armed forces and their family members. Dependents of one category of compulsory members are extended health insurance cover under a government- funded scheme. First instance of compulsory health insurance coverage extended to the dependents. Prime Ministerial Decision 139-Health Care Fund for The Poor 15-Oct 2002 Established a new insurance mechanism for the poor. Outlines the target groups to be covered, premiums, funding mechanisms, and organizational and administrative arrangements. A new risk pooling arrangement is introduced to reform the free health cards for the poor scheme. It opened a door for the health sector to receive more funds from state revenue. If implemented successfully, it is expected to expand insurance cover to 15% of the population or doubling the number of insured as at Previous health insurance mechanism for the poor did not really work. Government increases the premium, and changes the funding source. Decree 100-Prescribing the functions, tasks, powers and organizational structure of Viet Nam Social Security Agency 6-Dec-2002 Also referred as the Merger Decree for Viet Nam Social Insurance and Health Insurance agencies. Stipulates the new role of VSS after the merger. It decrees MOH representation in the Executive Board of VSS. Following organizational restructuring, the regulation outlines the 17 divisions of VSS in which Health Insurance is not a separate division. Physical merger of the two organizations takes place on 1 Jan Health insurance portfolio is moved out of MOH and handed over to VSS to unify social insurance administration. MOH retains policy control over health insurance. 11

12 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance MOH/MOF Inter- Ministerial Circular Guidelines on Implementation of Health Care Fund for the Poor 16-Dec-2002 Provides guidelines for the implementation of Decision 139. Outlines the paths for beneficiaries to receive support from this fund. States the responsibilities of each stakeholder tasked with its implementation. It creates breakthrough mechanism for expansion of health insurance and its independent administration separate from VSS to decentralize health insurance administration. It introduces capitation-based provider payments for commune health stations and sets out no fund rollover policy to stop reserve build-up. Some administrative bottlenecks, is intended to be amended in future years....furthermore, government decentralizes the administration of health insurance for the poor and stops reserve build up. Prime Ministerial Decision 02-Stipulating the Financial Management Regulations of Viet Nam Social Security 2-Jan-2003 Outlines the financial sources, spending and management of social insurance fund made up of various component funds for pensions, other social insurance and health insurance. The regulation has adopted a single fund holder approach for administration of all social security component funds. The new regulation has annulled health insurance fund regulations effective before the merger. Critical importance for this review is the risk pooling and cross-subsidization between component funds. All social security is now administered under a single fund holder made up of various component funds or risk pools each to be monitored separately. 2 Note that regulation reference numbers in Viet Nam are unique for the year of issue. In this review there are two circulars referenced with #14. Circular 14 for Exemptions Policy was issued in 1995 and Inter-ministerial Circular 14 for HCFP was issued in

13 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance Ordinance 07 on Private Medical and Pharmaceutical Practice Jan-2003 Stipulates the conditions for persons, group of persons or companies (domestic or foreign owned) to practice private provision of pharmaceutical drugs and medical services. The regulation can be considered as the privatesector chapter of Health Establishments Law, which does not yet exist in Viet Nam. It allows health insurance agencies to contract directly with private providers. Accordingly it has paved the path for VSS to become a strategic purchaser rather than contracting with public providers only. The regulation disallows private practitioners to engage in sale of pharmaceutical drugs making health insurance a more viable and sustainable source of income for private providers. Private provision of health needs to be regulated. VSS can contract with private providers. Medical practitioners cannot engage in provision and sale of pharmaceutical drugs. MOH/MOF Inter Ministerial Circular 77- Voluntary Health Insurance 5-Aug-2003 Provides guidelines for expansion of voluntary health insurance in Viet Nam replacing the regulations on voluntary insurance chapter of Decree 58. The circular has streamlined voluntary health insurance schemes across the country. Accordingly benefit package is harmonized and brought in line with compulsory schemes. The regulation incorporates community based health insurance principles by involving administrative units and associations/mass organizations in addition to schools to take part in the expansion process. It has also optioned out capitation, case-based or per-diem based provider payment methods. Voluntary insurance is now available to everyone with a broader benefit package. Other payment methods can be used in provider contracts. Policy makers agree to try the provider payment method changes before endorsing it in a higher order regulatory document. 13

14 Reference and Title of Regulation Date of Issue Main Contents Why is it Reviewed? Historical Significance VSS Circular Implementation Guidelines for Voluntary Health Insurance 30-Oct-2003 Provides detailed implementation guidelines for expanding voluntary health insurance implementation across the country. The guidelines clarify policies and cover all details for assisting Provincial and District VSS offices as well as administrative units and mass organizations in the implementation of Circular 77. It has introduced community enrolment thresholds focusing on enrolling all family members. Introduced community enrolment thresholds to eliminate adverse selection. Waiting periods and caps on some benefits introduced for the first time. MOLISA Circular 24 Health Insurance for the Elderly (Above 90) 6-Nov-2003 Expands health insurance to all persons 90 years of age and above. The regulation uses HCFP (Decision 139) per capita funding level to purchase health insurance cards for a target group. The short regulation replicates the use of an existing insurance mechanism for a new target group by backing a previous exemption mechanism with a governmentfunded premium. First instance of decentralised health insurance administration extended to non-poor. Another instance of fee exemption being replaced by premium-backed health insurance. 14

15 HEALTH FINANCING MASTER PLAN TECHNICAL PAPER SERIES-I REGULATORY REVIEW ADMINISTRATION OF HEALTH INSURANCE AND THE POLICY MAKING PROCESS WHO ADMINISTERS HEALTH INSURANCE? Health Insurance is administered by Viet Nam Social Security Agency (VSS) and Provincial Management Boards for Health Care Fund for the Poor (HCFP). VSS with a head office in Hanoi and 64 Provincial/Regional and more than 500 district offices provides benefits for about 11.3 million people (2002) excluding the poor. 61 Provincial HCFP Management Boards administer benefits for a targeted 14.6 million people. The two administrations combined is expected to increase insurance coverage to 25-30% of the total Viet Nam population. WHAT ARE THE MAIN ADMINISTRATIVE FUNCTIONS OF VSS? VSS is governed by an Executive Board, which includes a MOH representative following the merger. The remaining four members of the Executive Board are representatives from MOLISA, MOF, General Labour Confederation of Viet Nam and the Director-General of VSS each representing their own agency in the decisions of this organization. The previous Health Insurance Management Board defined in Decree 58 is now replaced by this governing body. Under this new managerial arrangement VSS performs the following tasks. Revenue collection (payroll deductions and collection of voluntary premiums) Membership administration (application forms processing, card printing and distribution) Purchasing (contracting with health care providers), Benefit payments (direct payments to providers and reimbursement to members). Fund management (investments) In addition, VSS works with ministerial level and legislative bodies to develop social insurance policy. WHAT ARE THE STRUCTURE AND MAIN ADMINISTRATIVE FUNCTIONS OF THE PROVINCIAL HCFP BOARDS? The HCFP Boards are made up of Chairman of Provincial People s Committee, and provincial directors of Public Health Bureau (MOH), Bureau of Finance (MOF), Bureau of Labour Invalids and Social Affairs (MOLISA), Bureau of Planning and Investment (MPI), Ethnic Affairs Committee, Social Security Agency (VSS) and a representative from Fatherland Front Committee. The Boards perform the following tasks: Coordination of beneficiary identification. Decide and direct insurance mechanism such as purchasing health insurance cards from VSS or directly reimbursing providers or beneficiaries. Process benefit claims from providers or members.

16 Make a budgetary submission and manage the funds provided by the Central Government. Raising additional funds from local, non-governmental and international sources (donors). Finalising end of year accounts (deficits/surplus) and re-submitting beneficiary numbers and budgets. WHO MAKES AND ISSUES HEALTH INSURANCE AND FINANCING POLICY? Health insurance or health financing policy in general is jointly crafted by ministries of Finance, Health, Labour, War Invalids and Social Affairs with the involvement of VSS. The Prime Minister s Office and National Assembly can issue decisions or ordinances that bind all of these agencies. VSS can only issue regulations that bind provincial and district level VSS bureaus. For regulations that bind other ministerial portfolios such as provincial and district health authorities a signatory from the related ministry is required. WHAT IS THE HIGHEST ORDER REGULATORY FRAMEWORK FOR HEALTH INSURANCE? The highest order regulatory document is the Health Insurance Decree 58/1998. Health insurance in Viet Nam has not been adopted as Law although preparatory work has begun to include it as a chapter in the General Social Security Law. Various parts of the decree have been annulled by subsequent legislations. After five years of implementation and following the merger of health insurance with other social insurance schemes, the government is now revising this decree with the support of WHO. WHAT ARE THE MAIN ACHIEVEMENTS OF THE HEALTH INSURANCE DECREE? Decree 58 passed in 1998 has replaced the first health insurance decree of The main purpose was to streamline compulsory scheme implementation in the provinces under a single administration with a proviso to allow voluntary schemes for expanding insurance. Institutionalization of compulsory scheme administration has been achieved and voluntary schemes have been introduced and implemented on an ad-hoc basis. However voluntary scheme expansion for non-students have not been as successful. HEALTH INSURANCE COVERAGE AND BENEFITS WHAT ARE THE MAIN TYPES OF HEALTH INSURANCE? Currently, three institutional health insurance schemes operate today: Compulsory Insurance Scheme Voluntary Insurance Scheme Health Insurance for the Poor In addition, fee-exemptions for various groups of people have been operating as a form of non-institutional health insurance. 16

17 It should be noted that the former Student Health Insurance Scheme is now regulated by a new regulation (Circular 77). Previously this scheme was synonymous with voluntary health insurance due to more that 95% of voluntary members made up of students. ARE DEPENDENTS COVERED BY HEALTH INSURANCE? Currently dependents of insured are not covered by compulsory insurance except for the armed forces 3 although regulatory changes are considered. Non-working spouses of formal sector are hence excluded from compulsory insurance. Student Health Insurance Scheme was primarily designed to cover school-aged dependents but due to its voluntary nature not all schools have been able to offer this scheme across the country. Definition of dependents and the status of children under six years of age are two important policy issues that need proper regulatory design. Children under-six are entitled to free treatment at public facilities but there has been no direct funding or special budgetary allocation for this demographic group. This group is exempted from paying official fees but is not entitled to ambulatory medical drugs apart from a limited list of essentials provided at commune health stations. As a general guide, all family members are required to be enrolled to voluntary schemes except for students. All elderly persons above age 90 are covered by government-funded health insurance. Health cover for senior citizens from age 60 to 90 is only available under certain circumstances if the people are disabled, or living alone without a caretaker and having no income or other type of social protection (such as government pension). WHAT CRITERIA IS USED FOR HEALTH INSURANCE BENEFIT PACKAGE? The general framework for health insurance benefit package is based on three criteria: 1. whether separate government funding exists for particular health interventions, 2. whether there is a fee exemption policy for the type of benefits demanded by a target group, 3. whether another insurance scheme covers a benefit (i.e. employment injury or traffic accidents). Services that are funded by the government under a vertical program (i.e. vaccinations, TB, leprosy, malaria etc) or services, which are likely to be demanded by a target group under an exemption policy (congenital diseases), are generally speaking not covered by health insurance. This creates some policy vacuum when an average citizen is exposed to health insurance. People often are not fully clear about what they are entitled free of charge or government funding does not necessarily warrant full financial access especially if it is allocated for preventive care only but not for curative care as in the case of HIV/AIDS. Exclusion of motor vehicle accidents is also a 3 Approximately 400,000 dependents became eligible following this regulatory change representing 7% of total compulsory insured persons. 17

18 concern as there is no nationally administered insurance scheme provided out of annual motor vehicle registration stamp duties to provide benefits to persons injured in road accidents. ARE ALL HEALTH INSURANCE SCHEME BENEFITS THE SAME? The type of health services defined in the benefit packages of all institutional health insurance schemes are generally speaking identical as recent regulatory changes have aimed to harmonize them. The only differences exist in co-payments, waiting periods and benefit caps applicable to different contributory classes. As a regulatory improvement it should be noted that previously excluded outpatient care and pharmaceutical benefits for students is now included in the benefit package. Some differences in safety net thresholds and funeral grants are minor as compulsory scheme benefits are indexed to national minimum wage whereas voluntary scheme benefits are defined as flat-amounts. DO WAITING PERIODS APPLY? In compulsory and poor schemes, there are no waiting periods applied. Voluntary insurance regulation (Circular 77) has introduced waiting periods for maternity patients and some high-cost surgical interventions in order to stop hit-and-run 4 members. For all other health benefits, no waiting periods apply for voluntary members. The waiting periods policy may succeed in continued participation but caution needs to be exercised with regards to administrative efficiency of insurance. Members need to get timely service from VSS especially if they need to be reimbursed. DO CO-PAYMENTS APPLY? Poor scheme members, meritorious persons and pensioners are not required to pay copayments as before. Voluntary scheme members and active contributors (employed persons) out of compulsory schemes are required to pay 20% co-payment based on schedule of hospital fees. Voluntary insurance regulation has introduced a 20,000 dong threshold per service below which no co-payments are required in order to simplify insurance administration. Accordingly low cost services such as primary level care and essential drugs below this threshold are available for free to voluntary members. Co-payments for disposable medical supplies and high-technology diagnostic and treatment services are regulated separately. CAN THE BREADTH OF HEALTH INSURANCE BENEFITS IMPROVED? In the decree, circular or inter-ministerial circular type regulations, the type of benefit-paid services are defined broadly. For instance, hospital stays and diagnostic services are paid by insurance but certain items such as disposable medical supplies, high-technology diagnostic 4 A hit-and-run member is a person who joins health insurance at time of ill health or when he/she has an expected health intervention (such as maternity) but who subsequently drops out of health insurance after the treatment period is over. 18

19 services and treatments 5 and benefit-paid drugs are specifically outlined in MOH regulatory decisions. These documents are generally speaking detailed lists or schedules under a broad heading 6 and can be varied by the decision of the health minister himself or the vice-minister in charge of health insurance portfolio. While the issuing of decisions allows flexibility to expand breadth of health insurance benefits, they create complexity in health insurance administration. For instance, disposable medical supplies and most high-technology diagnostic services were not included in the insurance benefit package until 2003 as they were not specified as a chargeable benefit in hospital bed day or out-patient consultation charges. To improve benefit payout amounts, MOH has issued a number of decisions to include some of these items in the benefit package albeit with different co-payment rates. Due to their introduction outside the Health Insurance Decree, the out-ofpocket outlays of insured members have not been protected under the safety-net provisions of the decree (See safety nets for more details in the following sections.) WHERE DO MEMBERS OBTAIN HEALTH SERVICES AND DO THEY HAVE A CHOICE OF PROVIDER? All members are required to nominate a primary level provider, which is often a district level hospital. Members can obtain health services from Commune Health Stations (CHS) if there are sufficient members residing in the area and the District Health Centre (DHC) has an agreement with the CHS. Generally speaking, members have free choice of provider, which can be changed every quarter according to Circular 17-Health Insurance Administration Guidelines. Members can also obtain services from private providers even in the absence of a contract between VSS and the private provider. The health insurance benefit for private consultations is often lower than the actual charge commensurate with the level of fee that would be payable to the equivalent public level provider. ARE HEALTH INSURANCE BENEFITS PORTABLE? Insured members can obtain health services from any provider in their own provinces or outside in accident and emergency cases but they are normally required to make payments and seek reimbursement once they return to the jurisdiction where they normally reside. If the case is referred to a tertiary hospital outside the province of usual residence, in most cases the member needs only pay the co-payment amount. Active contributors who move to another province for employment reasons also retain their health insurance entitlements until the expiry date of their cards and continue afterwards provided that the new employer is a contributory under the compulsory scheme. 5 Decision by the MOH in August 2003 has expanded benefits to the following high technology interventions: Coronary stent implantation, balloon valvuloplasty, Phaco operation for cataract, TOCE, cancer treatment by linear accelerators and radio frequency energy, uterine angiography, laser treatment of intervertebral disks, platelet separation by COBE or CS300+ Baxter. 6 For practical reasons, the summary section of this review has not documented these decisions. 19

20 HOW DO FEE EXEMPTIONS WORK? As a general guide, all meritorious people, children under six years of age, specific ethnic minorities living in rural, remote and mountainous provinces or all residents in such classified areas regardless of ethnicity, and poor people have been entitled fee exemptions. Inter- Ministerial Circular 14/TTLB issued in 1995 is the highest order regulatory document covering fee exemptions. On theoretical grounds, if one can show objectively verifiable written evidence suggesting that he/she belongs to one of the exempted categories of people, public providers are legally bound to provide services free of charge. The documentary backing has been in the form of a benefit card issued by one of the agencies such as MOLISA (i.e. meritorious persons) or from a local authority often as a signed letter from chairpersons of commune or district people s committees (i.e. for the poor). The financing mechanism behind fee exemptions policy can be labeled as cost-absorption by public providers. HAS FEE EXEMPTIONS POLICY BEEN SUCCESSFUL? Fee exemptions in Viet Nam were early experimentations of putting safety nets in place especially for vulnerable people. However due to budget constraints that have been pressuring the general public hospital operations, providers have been reportedly relying on unofficial fees and generating revenue out of drug sales. Fee exemptions have proven to be partially successful and hence a number of regulations have been issued to replace them with premium-backed health insurance. Meritorious persons, the poor, ethnic minorities and those living in rural and mountainous, all citizens above 90 years of age have gradually been added to premium-backed social insurance schemes with more to follow such as for children under six. HEALTH INSURANCE FOR THE POOR-RECENT CHANGES WHAT IS HEALTH CARE FUND FOR THE POOR (HCFP)? It is an insurance mechanism set up for a designated group of people by a decision of the Prime Minister (referred as Decision 139/October 2002). The decision has consolidated a number of regulations that exempted certain groups of beneficiaries from paying hospital fees in the past. Table 1: Main Features of HCFP and Pooling Arrangements HEALTH CARE FUND FOR THE POOR Main Features Target Pop.million persons 14.6 Per capita Allocation dong 70,000 Central Government Contribution Billion dong $ in USD millions Local Government and Donor Contribution Billion Dong $ in USD millions Total estimated expenditure per year Billion dong 1,022 $ in USD millions Pooling Arrangements Insurance card price dong 50,000 Health Insurance Pool-VSS (maximum) Billion dong

21 $ in USD millions Provincial Pool (Government Guaranteed minimum) Billion dong 36.5 $ in USD millions 2.37 Provincial Pool (Minimum if all local/donor contribution is collected) Billion dong 292 $ in USD millions Note: The sharing of the funding pool depends on provincial level arrangements. Cards could either be purchased from Viet Nam Social Security or members receive direct reimbursement for their Health expenses. Alternatively care providers can get reimbursed from the Provincial Board. HOW DOES HCFP WORK? The fund works on the basis of a per capita allocation of 70,000 dong where the government funds a minimum of 75% and the remaining 25% is sourced from international and domestic donors. The fund is administered by Provincial Management Boards. They can either decide to purchase health insurance cards from VSS for a fixed price of 50,000 dong per card or reimburse health expenses of eligible members. Alternatively, care providers who provide services to the exempted beneficiaries could also be reimbursed by these boards. As at the end of 2003, VSS reported approximately 4 million card purchases by the Provincial HCFP Boards accounting for 30% of total beneficiaries. The fund needs to be spent for providing health benefits only and fund rollovers (reserve accumulation) is not allowed. WHAT ARE THE MAIN REGULATORY CHANGES INTRODUCED BY HCFP? The issuance of Decision 139 and Circular 14, which covers the implementation guidelines of HCFP have the following policy implications: Increasing government s funding for health care Decentralization of health insurance administration Fragmentation of risk pools Changing flow of funds from provincial special allocations to central government consolidated budget. WHAT IMPLICATIONS DOES HCFP OFFER FOR GOVERNMENT FUNDING FOR HEALTH CARE? Previously, free health insurance cards for the poor scheme was administered through VSS, with provincial governments purchasing cards on behalf of the poor, at 30,000 dong per card (Circular 05/1999) from the Viet Nam Health Insurance Agency (before the merger). There was no formal arrangement for central budget to provide funding for provinces and hence, poor provinces relied on special budgets that were allocated broadly under Hunger Eradication and Poverty Reduction Program of MOLISA. The few provinces that are self sufficient in terms of local tax and revenue sources could make the necessary allocations while the remaining provinces suffered from budget constraints. Due to lack of funding, the target of four million cards was not achieved and total distributions were reported to be around 1.6 million by

22 The directing of government subsidies from the central government has established greater equity in funding. The likely impact of this policy change is expected to increase public funding for health care (including tax funded and VSS administered social insurance/prepayment schemes) by 12%. WHAT IS FRAGMENTATION OF INSURANCE RISK POOL? HCFP mechanism has created separate health insurance risk pools (See Table 1) as per capita financing is 70,000 dong whereby insurance card cost is 50,000 dong. As the government guarantees 75% of the per capita allocation, under normal circumstances each province would receive 52,500 dong per person from the central government. If the provinces choose to purchase health insurance cards for all eligible members, and if no donor support is received, the provincial boards would still have a secondary pool arising from the difference between the insurance card cost and government guaranteed minimum 7. This pool would increase by the amount of donor and local government support. Each provincial pool is separate and hence fragmented. The deficit in the pool of one provincial HCFP is not subsidized by the surplus of another. The VSS health insurance risk pool is made up of compulsory and voluntary schemes as two component funds yet risk-pooled nationally as per PM Decision 02/2003. Poor scheme premiums are not pooled nationally and identified as a separate component fund in VSS accounts. HOW DO HEALTH CARE PROVIDERS RECEIVE FUNDING FROM HCFP? Providers can receive funding from VSS or from the Provincial HCFP Boards. VSS channel operates if the Provincial HCFP Board purchases health insurance cards from VSS. Payments to these providers are based on VSS s current policies and practices. (See Contracting and Provider Payments in further sections). If the Provincial HCFP Board chooses the direct reimbursement method to the providers, the board needs to make quarterly advances to providers according to the rules stipulated by Circular 14 on HCFP implementation guidelines. Accordingly, a capitation based payment of 10,000 dong per member needs to be allocated for commune level health services. This amount would normally be forwarded to the District Health Centre (DHC), which supervises the activities of Commune Health Stations (CHS) in their locality. In return, the DHC needs to purchase drugs and supplies and distribute them to CHSs in their area. For district and provincial level hospital in-patient and out-patient services, the Provincial HCFP Boards need to make a budgetary estimate for services to be rendered to the poor and forward 70% of this amount to each of the district and provincial hospitals every quarter. The advance would then be reconciled against actual expenses whereby the shortfall would be covered by the fund and the surplus adjusted (netted-off) in the following quarter s advance. Central level hospitals would not be paid in advance as some of them are located outside provincial borders and receive tertiary referrals (cross-border patients). These facilities are required to provide services free of charge to eligible members which then would be submitted to each of the Provincial HCFP Boards where these members reside for reimbursement. 7 Note that this government guaranteed minimum pool may only be sufficient to cover administrative expenses. (See further information on funding of insurance administration). 22

23 Providers may also receive funding for patients who have been issued with exemption letters by the local authorities for persons who have not been pre-qualified as an eligible beneficiary. In these cases, the provider needs to submit total expenses based on the hospital fee schedule for approval by the Provincial HCFP Board. As a board member provincial VSS offices may qualify whether the expenses are benefit-payable as defined in the benefit package. Payment to the provider would be subject to approval and availability of funds. CAN NON-MEMBERS BE REIMBURSED BY HCFP? Circular 14 on HCFP implementation guidelines, specifically outlines people who are not eligible to receive benefits from HCFP such as those that are already insured by the compulsory schemes. On the other hand, persons who are not considered as poor but have experienced severe financial loss due to ill health may directly apply to the Provincial HCFP Board for full or part reimbursement of the payments they have incurred. The regulation also allows meritorious category people who are already covered by compulsory schemes to be considered for additional payment for out-of-pocket expenses that have not been paid by compulsory health insurance. Circular 14 requires all benefit-payable services to be in line with VSS benefit package. However, items such as disposable medical supplies and high-technology diagnostic and curative services are subject to different co-payment regulations, which eligible HCFP members may have to incur despite the requirement in Circular 14 that no fees would be collected from these members. If discretionary fee collection policies are applied to eligible members, these persons can contact Provincial HCFP Boards and seek reimbursement. HOW IS HCFP ADMINISTRATION FUNDED? The administrative expenditure of HCFP is funded from this fund even if the cards are purchased from VSS. The difference between insurance card cost and government s guaranteed minimum funding for HCFP represents 5% 8 of the card price. Circular 14 on implementation guidelines of HCFP requires administrative outlays not to exceed 5% of total income of the fund in a year. Within this bound, VSS requests funding from the Provincial HCFP boards for covering card printing and distribution costs as well as for the costs of investigations. This could be funded from the secondary health insurance pool managed by these boards as the government guaranteed minimum is technically sufficient. The HCFP fund would also cover personnel related costs for those who are members of the Provincial Board. There is no provision in Circular 14 with regards to the exact amounts that would be paid to VSS or to other agencies involved in the administration of HCFP. HOW IS HCFP MONITORED? All health care providers are required to submit actual expenses incurred for servicing HCFP members to the Provincial HCFP board or to VSS depending on the method chosen. VSS is responsible for internal audit of HCFP for payments made to providers by the reimbursement method to ensure consistency in benefits regardless of whether they are made from VSS (via insurance card purchase) or by the Fund s management board out of the secondary pool. 8 Government contribution is 70,000 x 75%=52,500 and VSS card Cost is 50,000. The difference of 2,500 is 5% of card price. In effect, the full price of the health insurance card needs to be spent on health insurance benefits. 23

24 Bureau of Finance in each province is tasked with conducting regular inspections on the use of the fund and audit the annual financial reports, which then needs to be submitted to the Provincial People s Committee. At the first quarter of each year, financial statements approved by the Provincial Committees would be submitted to the central level MOH and MOF who would then consolidate all provincial summaries for submission to the Prime Minister. VOLUNTARY HEALTH INSURANCE-NEW REGULATIONS WHAT IS VOLUNTARY HEALTH INSURANCE AND HOW IS IT REGULATED? Voluntary health insurance is a VSS administered pre-payment scheme being experimented as an interim mechanism for reaching universal health insurance. Unlike compulsory insurance premiums, which are a fixed percentage of salary or other forms of income, voluntary health insurance premiums are defined as flat-amount contributions and paid by the households. Recently issued Circular 77 regulates voluntary health insurance, which has expanded health insurance benefit package and brought them in line with compulsory scheme. HOW CAN ONE JOIN VOLUNTARY HEALTH INSURANCE? People can join VSS administered voluntary health insurance from three channels Schools (as before) Administrative Units (i.e. commune, village, hamlet, ward) Associations/Mass Organizations (i.e. Women s Union, Farmers Union, Youth Union, Fatherland Front etc) The latter two channels have been created by Circular 77 for community mobilization and designed to enroll all family members where commissions are payable to the community agencies undertaking health insurance enrolment campaigns. Family enrolment is functional only if families join through mass organizations (Farmers Union, Women s Union) or through an administrative unit (Commune People s Committee) although its enforcement needs to be assessed after implementation starts in

25 HOW MUCH DOES IT COST TO JOIN VOLUNTARY HEALTH INSURANCE? Premiums for voluntary insurance are defined as flat-amounts per person where a discount of 5% is incrementally applicable for each additional member 9. Table 2: Voluntary Health Insurance Premiums applicable in 2004 based on Circular 77 Members Areas (VND) Local administrative units (commune, hamlet or ward) Associations (Women s Union, Farmer s Union, Youth Union etc) Pupils, students (Schools) Urban Rural Each local jurisdiction can choose an affordable premium amount established within the bounds of Circular 77 (See table 2). The bounds can only be increased by VSS if official hospital charges are increased by the government (MOH/MOF). HOW OFTEN ARE PREMIUMS COLLECTED? As a rule, members can pay their premiums every six months (semi-annual). However, this does not mean the collection cycle is year round every month, where each member can join anytime and pay their premiums six months after their joining date. Circular 77 requires each member to join for at least six months in order to print the card validity period. The premium collection cycles are timed to be around harvest times and need to be completed within a month. Those who do not join at the collection time are generally excluded until the next collection cycle arrives. Circular 3631 however eased these rules for schools and community organizations to make monthly premium payment to VSS provided that at least 50 members are joining. IS THERE ANY GOVERNMENT SUBSIDY AVAILABLE FOR VOLUNTARY MEMBERS? There is no guaranteed minimum government subsidy for voluntary members unlike HCFP, which is 75% government funded. Circular 77 on the other hand does not rule out subsidy however due to provincial level commitments for HCFP, it is impractical to consider Provincial, 9 A family of five in a rural area where the authority sets the base premium at 60,000 would be paying 270,0000 dong per year calculated as 60,000+57,000+54,000+51,000+48,000 with the 5% discount of 3,000 dong incrementally applied for each additional member. 25

26 District or Commune level people s committees to accommodate funding requests 10. The Circular leaves it open for community organizations (unions and associations) to use their working budgets to subsidize premiums of their members who need financial assistance. WHAT POLICY CHANGES HAVE BEEN INTRODUCED FOR SCHOOL HEALTH INSURANCE? The former School Health Insurance Scheme is now regulated by Circular 77. Benefits now include out-patient care. Formerly students were only covered for accident and emergency and in-patient treatments. The flat amount premiums albeit higher than before are now different for urban and rural students to create more equity. School scheme can only operate after reaching a minimum percentage of student enrolment (See threshold policies below). Schools can only receive funding from health insurance premiums to support school health activities if there is a health clinic within the school and at least 600 students or 50% of students are enrolled in health insurance. The revenue retention policy for school clinic activities has been reduced from 30%% to 20% of health care fund. 11 ARE THERE BENEFIT CAPS? Unlike compulsory scheme, voluntary health insurance Circular 77 has introduced benefit caps for high cost surgical and medical interventions. Accordingly, VSS pays up to 10 million dong per person for heart surgeries and 12 million dong for kidney transplants. Vaccinations for rabies/animal bites are also capped at 300,000 dong per person per year. WHAT ARE COMMUNITY ENROLMENT THRESHOLDS? Community enrolment thresholds have been introduced by VSS Circular 3631 in order to overcome adverse selection. Accordingly VSS administered voluntary health insurance will be offered to public only if a community channel can warrant a minimum percentage of enrolment among target people before VSS processes membership applications. Table 3: Community Enrolment Thresholds for Voluntary Health Insurance as per Circular 3631 Enrolment Channel Local administrative Community Enrolment Thresholds Minimum 20% of total households residing 10 It should be noted that this could easily crowd-out fund raising efforts of Provincial HCFP Boards who are required to source 25% of the per capita amount from donors. 11 Health Care Fund is premium income after allocation for administration. For Voluntary Insurance, health care fund is 90% of premium income. See more details under Fund Management. 26

27 units (commune, hamlet or ward) Associations (Women s Union, Farmer s Union, Youth Union etc) Pupils, students (Schools) Minimum 40% of total members of an association excluding compulsorily insured Minimum 30% of students at school (special threshold of 15% applies for the 2003/04 school year) FUND MANAGEMENT AND RISK POOLING WHAT IS HEALTH CARE BENEFIT FUND? Health Care Benefit Fund is an allocated amount out of total health insurance premium income for exclusive use of paying out health care benefits to members. In short, it represents recurrent amount available after allocation for reserves and health insurance administration. Before the merger of health and social insurance, Circular 17-Guidelines on Health Insurance Administration has allocated total health insurance premium income as shown in Table 4. Table 4: Pre-merger fund allocation policy of compulsory scheme health insurance premiums 86.5% Health Care Benefit Fund 5% Reserves 8,5% Insurance Administration 100% Total for health care benefit fund. This fund allocation policy has been replaced by the PM Decision 02/2003-which stipulates the financial management regulations of VSS. Accordingly, allocation for health insurance reserves and administration is abolished. 100% of compulsory health insurance premium income is now allocated to the health care benefit fund. Voluntary insurance premiums however allocate 10% for administrative expenses to pay agent commissions for contracted parties (community organizations, associations) and for public information, education and communication (IEC) campaigns leaving 90% of total premium income WHAT IS SOCIAL INSURANCE FUND? Social Insurance Fund is made up of three components : 1. Pension and Allowance Fund 2. Compulsory Health Insurance Fund 3. Voluntary Health Insurance Fund Investment decisions regarding the management of health insurance reserve carry-overs from past years have been combined with total Social Insurance Fund but monitored separately. 27

28 It should be noted that, health insurance for the poor scheme is not defined as a component fund within Social Insurance Fund. The rules and regulations applicable to this scheme are prescribed by PM Decision 139 and Circular 14/2002 for HCFP implementation. In other words, VSS administers benefits for all poor scheme members whose health insurance cards have been purchased and paid for by the Provincial HCFP Boards. Accounting and reporting of this scheme is kept independent of the Social Insurance Fund. HOW ARE HEALTH INSURANCE FUNDS MANAGED? VSS transfers a fixed percentage of premium income to each of the contracted health facilities based on the number of registered members. This capitation-based budget is for supporting health care services (see Provider Payments). The remaining funds are invested in bank deposits and government bonds. The investment decisions are made for all funds managed by VSS for pension, other social insurance and health insurance. ARE THERE INTRA-FUND AND INTRA-REGIONAL TRANSFERS? Within Social Insurance Fund, Pension and Allowance component has a built in health insurance premium for pensioners. These contributions often from state are intra-transferred to the Compulsory Health Insurance component fund within VSS although the net effect on the Social Insurance Fund balance is zero. Before the merger, health insurance benefit payments made to a member from another province (a cross-border patient) where the premium is collected used to be settled between the provincial insurance bureaus. This practice will gradually cease following the merger. HOW DOES RISK POOLING WORK? Since the merger of social and health insurance portfolios under VSS, the financial regulations have also been modified to pool compulsory and voluntary schemes in one risk pool. Unlike the past practice, deficit of one provincial scheme can be cross-subsidised by the surplus of another within the provincial pool. If the province carries an overall deficit then this would be cross-subsidised by the surplus from other provinces. Due to fragmentation of HCFP risk pool, the poor scheme administered by VSS is not pooled nationally. Accordingly, unspent part in each province needs to be remitted back to the Provincial HCFP Boards. In the case of VSS overspending in a province, the deficit financing needs to be negotiated with the Provincial HCFP Board, which has access to funds from the donors who contribute to the fund. As HCFP scheme is not pooled nationally, VSS does not need to cover deficit of poor scheme in one province from the surplus of another, neither is there a mechanism to cross-subsidise HCFP members from surpluses of compulsory or voluntary schemes. CAN HEALTH INSURANCE CARRY RESERVES? VSS can carry reserves for compulsory and voluntary health insurance schemes. Reserve carry-overs for health insurance for the poor have been disallowed by Circular 14- implementation guidelines for HCFP. Accordingly, if health insurance cards have been purchased from VSS and if total amount of benefits paid in a year is less than total amount being used by the Provincial HCFP Board to purchase these cards, then VSS is required to remit the unspent part to the Provincial Board in each province. 28

29 WHAT HAPPENS IF THERE IS A DEFICIT? The cross-subsidisation decisions for provincial level deficits would be taken by the Executive Board of VSS. The Executive Board would seek clearance from PM only if there is an overall national deficit within component funds. If both compulsory and voluntary health insurance schemes combined have an overall deficit, then VSS would request PM to issue a decision on deficit finance. HOW IS HEALTH INSURANCE ADMINISTRATION FUNDED? Insurance administration is for card printing and distribution, paying agent commissions, for IEC-Information Education and Communication campaigns and for conducting regular inspections at enterprise level (for premium payment compliance) and at health care provider level (to detect fraud). The main policy change that has been introduced after the merger of health and social insurance is the funding of administration to be sourced from total revenue of Social Insurance Fund in a year subject to the approval of VSS Executive Board and submission to the National Assembly. PM Decision 2/2003 on Financial Regulations of VSS requires administrative expenses not to exceed 4% of the estimated value of Social Insurance Fund revenue in a year 12. This broad budgetary cap on administration is fixed from 2003 to 2005 however, the cap does not imply VSS can exercise discretion to make administrative outlays up to the cap. As insurance coverage for both social and health insurance expands following the merger, the government intends to benefit from economies of scale in social insurance administration and hence reduce this budget-cap ratio over years. Table 5 summarises fund allocation, reserve accumulation and administrative expenditure rules before and after the merger of health and social insurance and after the introduction of HCFP-decentralized health insurance administration. Table 5- Health Insurance Fund Allocation and Reserve Accumulation Rules Compulsory Scheme Voluntary Scheme Poor Scheme HCFP- Pre-Merger Post-Merger Circular 77 VSS Boards Health Care Fund 86.5% 100% 90% 100% 95% Reserves 5% Allowed Allowed** Not allowed Not allowed Administration Funded out of Funded out of -General 8.5% unified Social 8% HCFP Boards Insurance administrative 5% -IEC Administration* 2% budget *Capped at 4% of all Social Insurance Fund revenue in fiscal years between **80% of surplus funds go to reserves, 20% is used for paying staff bonuses for health insurance implementers at VSS and at community organizations. 12 As health insurance premiums are part of the Social Insurance Fund, 4% of total health insurance premium can be considered as administrative allocation. However, the contributions of 3% of average earnings for health insurance is insignificant compared to 17% for pension and other types of social insurance. 29

30 CONTRACTING, PROVIDER PAYMENT AND MEMBER REIMBURSEMENT METHODS WHICH PROVIDERS CAN BE CONTRACTED? Government administered health insurance is generally for contracting with public providers. Private hospital contracting has been piloted in a small scale. National Assembly Ordinance 10 on private medical practice now allows VSS to sign contracts with private providers. Contracting with private general practitioners and specialists has not been experimented. VSS can however reimburse expenses of members from non-contracted providers. WHAT ARE THE LEGAL AND ADMINISTRATIVE CONSIDERATIONS FOR CONTRACTING? Contracting between VSS and a health care provider is normally done for providers who operate as a separate legal entity. In effect, these are limited to provincial, central and district level hospitals. Commune health stations and inter-commune polyclinics can provide services to insured members but they are supervised by District Health Centers (DHC) and hence they do not possess a legal entity status to operate a bank account. VSS therefore cannot contract directly with them but coordinate commune level health service provision under the supervision of DHC. In the past, only communes that had large enough health insured persons were considered for commune level services. With the expansion of HCFP all communes can be considered for such although implementation normally takes time. Some DHC have reported problems for drug supplies normally provided for health insurance members being dispensed to ineligible persons at the communes. Due to lack of administrative capacity at commune level, not all members can receive insurance-paid services from CHS. As the contracts are between VSS and DHC, there is little room for VSS to exercise supervisory control to oversee commune level service provision for quality of care or for detecting fraud such as health insurance cards being used by non-members. Some CHS have also reported problems with inadequate financial support from DHC as the payment terms were based on internal arrangements between the DHC and the CHS. HOW ARE HEALTH CARE PROVIDERS BEING PAID BY INSURANCE? Quarterly, providers receive capitation-based budgets from VSS based on registered number of members, but essentially all health services provided to insured persons are reconciled against itemized bills. The payment method is hence fee-for-service with budget capping/ceilings in order to safeguard the fund. The capitation-based allocation rules are not identical across institutional schemes. Compulsory and voluntary scheme reimbursement or payment methods vary significantly. Poor scheme payments, either originating from VSS or Provincial Boards also apply different methods. Harmonisation and simplification of provider payment methods are two areas that require careful re-design and reform. WHAT S THE BASIS OF CAPITATION-BASED ADVANCES? Capitation based advances are a function of the amount of contribution received by VSS from contributors and the number of patient registrations with the care provider. In effect, a health care provider who has patient registrations with higher contributions receive a higher 30

31 advance compared to those who have been registered with low level contributions. Even though these advances are adjusted at the end of each quarter based on actual amount being spent, the mechanism is administratively complex. Providers that have higher numbers of registered patients, naturally receive a higher quarterly advance, which in fact is the rationale behind capitation payment method. WHAT IS THE BASIS OF FEE FOR SERVICE PAYMENTS? The hospital fees are based on Decree 95/Revision Decree 33, which applies to publicowned and operated hospitals and clinics. This revised regulation is more than eight years old and the fees have not been varied since their official introduction. Providers on the other hand have moved the fees upward within the range applicable in this regulation as well as introducing discretionary fees for advanced diagnostic and treatment services. Due to more flexibility allowed for drug and disposable medical supplies prices, which are more or less determined by market forces, most provider income in the past has been highly dependent on movement in prices of pharmaceutical and medical supplies and volume of prescriptions given to patients who are willing to pay. WHAT ARE THE COMPONENTS OF HEALTH CARE BENEFIT FUND? The Health Care Benefit Fund is allocated to three broad types of health services 1. Primary Health Care 2. Out-patient Care 3. In-patient Care The allocation rules for different types of care and their reconciliation, capping and final account settlement methods vary between compulsory and voluntary schemes. For HCFP members whose cards are purchased from the VSS, the agency applies the same allocation rules as per the compulsory scheme. HOW ARE QUARTERLY ADVANCES TO PROVIDERS CALCULATED? Quarterly advance for the compulsory and the poor scheme members is approximately 70% of the Health Care Benefit Fund for the quarter and covers all primary, out-patient and in-patient cares services. For voluntary scheme members, only primary and out-patient care budget equivalent to the 50% of the Health Care Benefit Fund is advanced. The remaining 50% is kept for reimbursing in-patient care expenses and funeral grants. As Circular 77 has allowed different provider payment methods, the arrangements for paying for in-patient care in particular is subject to negotiations with the providers during implementation. Table 6 makes a comparison of VSS s Health Care Benefit Fund allocation to different type of services and provider types as well as HCFP reimbursement methods administered by the Provincial Boards. 31

32 Table 6: Comparison of Fund Allocation, Quarterly Advance, Calculation and Final Settlement Methods of Institutional Health Insurance Schemes Compulsory and the Poor Scheme Administered by VSS Type of Care Allocation % Advance Calculation Method Final Settlement of Health Care Benefit Fund Primary Health Care 5% 70% Fixed % of premium income Capped Out-patient Care 45% 70% Fixed % of premium income Capped-Intra- Provider Adjusted* In-patient Care 50% 70% Historical average cost Un-capped for each clinical department adjusted by price index Voluntary Scheme Student Members School Clinics/School Health Program 20% 100% Fixed % of premium income Out-patient Care 40% 100% Fixed % of premium income In-patient Care 40% Kept at VSS Fixed % of premium income Other Voluntary Members Primary Health Care 5% 100% Fixed % of premium income Out-patient Care 45% 100% Fixed % of premium income In-patient Care 50% Kept at VSS Fixed % of premium income Poor Scheme Administered by Provincial HCFP Boards Commune Health 14.29% 100% 10,000 dong per capita Stations per year District and Provincial not applicable 70% 70% of estimated Hospitals reimbursement amount Central Level Hospitals not applicable 0% Reimburse at actual cost Capped Capped Capped-Intra- Provider Adjusted* Un-capped Capped-Intra- Provider Adjusted* Un-capped Capped Un-capped Un-capped *Expenses for patients referred to other hospitals are deducted from the payment of members principle registered provider. ARE THERE SAFETY-NETS FOR EXCESSIVE OUT OF POCKET OUTLAYS? Safety nets provide financial protection for members who suffer catastrophically expensive health ailments in a year and apply to persons who are required to pay co-payments. For compulsory members, annual co-payments exceeding six times minimum salary per month is set as a safety-net threshold above which all benefit-payable health expenses of the member is covered by VSS. The increasing of minimum salary from 210,000 dong to 290,000 dong per month has increased the safety net threshold to 1,740,000 dong for active contributors whereas pensioners, meritorious members and the poor are not affected by this increase, as they are not required to pay co-payments. 32

33 The poor on the other hand may incur additional expenses, which are not covered by VSS administered health insurance. In these instances, Provincial HCFP Boards may take a decision to cover these expenses from the Fund s secondary pool. The voluntary scheme safety net threshold as per Circular 77 is a flat 1,500,000 dong per year, which is lower than the compulsory scheme threshold and hence equitable for cross-subsidisation between compulsory and voluntary schemes if the latter runs a deficit. WHAT ARE THE COMPLEXITIES OF SAFETY NET PROVISIONS? There are two complexities in the safety net rules. The threshold only covers services where 20% co-payments apply. In other words, 50% co-payment applied to disposable medical supplies and high-technology diagnostic and treatment services are excluded from the calculation amount as they are not defined in the fee schedule of hospital bed-day charge or out-patient consultation fee as defined by the Health Insurance Decree 58. Secondly, voluntary health insurance scheme has introduced benefit caps on high cost surgical interventions such as heart surgery and kidney transplants. In effect, members would have to pay for the gap between total hospital charge and the benefit cap. These two complexities demonstrate that, the breadth of health insurance benefit is narrow. Members may also find these special insurance rules far too complicated when they are faced with excessive out-of-pocket expenses. CAN MEMBERS BE REIMBURSED? Insured persons can be directly reimbursed by health insurance (either VSS or Provincial HCFP Boards). Reimbursement applies under the following circumstances: Member receives services not from his/her principle registered care provider such as in the case of accident and emergencies. Member is outside his/her residential province. Under normal circumstances, the care provider should normally honour the health insurance card of the member and provide services for free or collect only the copayment. Member receives services from a private provider. The payment amount for the service would be based on the fee schedule applicable to the principle registered public care provider with a provision to allow a benefit up to of 20% more than the public provider s fee. 13 Member has paid co-payments in excess of the safety net thresholds. A person was not pre-qualified as an eligible poor for benefiting from the HCFP but incurred a sizeable health expense pushing him/her to poverty. 13 In other words, the member has to pay the fee charged by the private provider but VSS would only reimburse at the applicable fee of the public provider where the member is registered multiplied by 1.2 The member s total co-payment depends on the actual charge of private clinic/hospital. This co-payment is referred as gap payment. 33

34 CURRENT POLICY ISSUES FUTURE POLICY DIRECTION FOR INSTITUTIONAL INSURANCE SCHEMES The current policy climate in Viet Nam is to continue running three institutional insurance mechanisms for compulsory, voluntary and poor scheme members. The government may scale down membership of the poor scheme (HCFP target population) as poverty is gradually reduced in the country. There is currently limited policy support to make health insurance compulsory for all people. CHANGES BEING CONSIDERED FOR THE NEW HEALTH INSURANCE DECREE The merger of health and social insurance has created an urgent need for a revised Health Insurance Decree. The following areas are considered for revision although some of them could be covered in a separate regulation. Inclusion of dependents Benefit package revisions The co-payments policy Inclusion of all private enterprises regardless of size Compliance measures Removal of annulled articles (i.e. Voluntary Insurance chapter and Health Insurance Management Committee) EXTENDING COMPULSORY SCHEME TO COVER DEPENDENTS The most rational approach for expanding health insurance coverage as a start is to include all dependents of compulsory scheme members under this scheme. This can either be prescribed in the new Health Insurance Decree or legislated in the Social Security Law. The first option has a number of implications: Income-earning working spouses such as self-employed or those working for private companies with less than 10 employees need to be separated out from non-working spouses so that an equitable contribution is collected from single and double income earners. School administrations that offer voluntary health insurance as per Circular 77 would experience a setback. While they need to reach voluntary insurance enrolment threshold, dependent kids who would be eligible for compulsory insurance need not join 14. Alternatively, the schools may request parents to pay voluntary insurance regardless of compulsory scheme dependent coverage and VSS would classify insurance status either as compulsory or voluntary. 14 The normal practice of schools is billing the parents for a range of fee-paid services related to education and hence health insurance premium constitutes one entry in the itemized bill. 34

35 Rural residents with a single contributory compulsory member may opt out of voluntary health insurance. Coverage rate would improve but premium income of VSS would fall. The policy environment in Viet Nam is not too receptive for flat amount family contributions. VSS is also inclined to direct contributions adjusted for family size as prescribed in Circular 77. Therefore, dependent coverage decision predominantly depends on the policy makers preference to make all insurance compulsory or keep the status-quo. HEALTH INSURANCE FOR CHILDREN In October 2003, the MOH has submitted a new proposal to the National Assembly regarding health insurance for children under six. The proposal seeks partial government funding for 50,000 dong per eligible child to purchase health insurance cards. The policy uses the same insurance card benchmark price prescribed in Decision 139 for purchasing cards from VSS for the poor although the financial consideration for the poor scheme is higher at 70,000 dong (where the Provincial HCFP Boards can exert discretion regarding the benefits payable to the members). According to the proposal, the government would fund full premium (100% of the per capita 50,000 dong allocation) for children living in remote and mountainous areas of the country, 70% of the premium for Delta Areas and 50% of the premium for all urban areas. The difference between the government subsidy and card price needs to be collected from the households. The proposed policy is targeting pre-school aged children only. In other words, school aged children will continue to be covered by Circular 77-Voluntary Health Insurance. Children under six comprise some 9 million or 11.25% of total population. Currently, it is believed that, no exclusions apply for children under six, which suggests dependents of high-income persons would also be covered by the proposed regulation. However the proposal has not yet outlined how the collection of unsubsidized part for the card cost from households would be administered. The proposed policy is another step in the Government s direction to replace exemption policy with premium-backed insurance. CHANGE IN CO-PAYMENTS POLICY There is growing evidence as documented by VSS s provincial level review of Decree 58 implementation that the 20% co-payment policy is not achieving its objectives. This acknowledgment of the shortcomings of the current co-payment policy is a positive move to simplify benefit payment administration and will most likely be removed in the new health insurance decree. As documented in this review, co-payments are collected only from active contributors some of which already waive using their health insurance cards. There is currently no evidence in Viet Nam that insured patients are seeking unnecessary care, which needs to be deterred by a copayment policy for three reasons: There are limitations as described in the benefit exclusions. Some items are subjected to a separate benefit schedule such as disposables, high technology diagnostic and curative interventions, which attract a higher copayment (50%) and are excluded in the safety-net threshold. 35

36 Indirect costs of obtaining health care such as transport costs, meals, costs of accompanying relatives and under the table payments already serve as a major deterrent. The new health insurance decree will most likely remove the 20% co-payment policy and work with additional benefit schedules for high-cost interventions. This move would make health insurance more attractive to members and simplify account settlement between VSS and the providers and members. Co-payments have already been removed from voluntary scheme below the 20,000 threshold, indicating that VSS is moving forward in phasing out co-payments for essential health interventions. It is however expected that some high cost interventions with low-volume demand will always attract a co-payment due to low revenue base of social health insurance. PRIVATE SECTOR COVERAGE AND COMPLIANCE Currently, compulsory scheme excludes private businesses with less than 10 employees. There are two problems with this Table 7: Health Insurance Participation Ratios-2002 cut-off. Firstly, the economic transition in Viet Nam is shifting Formal Sector Compulsory Health Insurance membership employment from large among Total Employment in each sector enterprises to small businesses Government-Contributory classes 87.35% mainly in the services sector. Private Enterprises 19.40% Secondly, small private companies Foreign and Mixed Owned 58.07% that normally employ more than Source: MOLISA,VHI 10 people report fewer than this cut off in order to opt out. It is expected to make the change to cover all registered businesses to increase coverage. Table 7 shows less than 20% coverage among private sector formal employment mainly due to 10 staff cut off. If administrative capacity considerations are set aside, there is ample room to improve coverage and revenue base of both pension and health insurance schemes. 36

37 Table 8: Distribution and Growth of Compulsory scheme membership by Public and Private Sector Distribution of Insured Persons under Compulsory Health Insurance est Annual Average Growth between Total Compulsory Insured 6,354,821 6,469,322 6,976,120 6,976, % Public Sector Civil Servants 1,457,867 1,492,170 1,568,347 1,598,673 State Enterprises 1,612,226 1,617,798 1,707,955 1,660,593 Pensioners 1,607,077 1,583,032 1,597,340 1,596,153 People of Merit 1,182,481 1,152,820 1,142,228 1,126,751 Members of People Committees 49,256 57,395 80,250 77,832 Commune Administration Staffs 68, , , ,866 Total Public 5,976,984 6,016,402 6,240,678 6,211, % Public % 94% 93% 89% 89% Private Sector Private Enterprises 121, , , ,989 Foreign Investment Enterprises 256, , , ,411 Others ,231 42,366 Total Private 377, , , , % Private % 6% 7% 11% 11% Source: VHI Statistics The merger of VHI and VSI is expected to increase compliance once duplicate enterprise inspections are done single handedly for both pensions and health. Chapter IV of Decree 58 mandates the rights and responsibilities of each partner to comply with this regulation. VSS can perform regular inspections to oversee compliance although the agency is positioned to be service oriented to its clientele rather than performing a policing role. While the regulations are well-targeted and well-designed, the main issue with compliance is administrative capacity. Table 8 shows change in the composition of compulsory scheme membership between Accordingly, private sector membership has doubled in three years representing about 11% of total membership. However, private, foreign-owned and mixed owned businesses still account just 6% of total employment in the country (See Figure 1). For household informal and collectively owned employment sectors, the only insurance option at this stage is voluntary scheme membership. 37

38 Figure 1: Number and Distribution of Employed Persons by Sector-2002 Source: MOLISA From insurance coverage point of view, there is ample room for increased membership. Information on health insurance revenue by public and private sectors is limited although VSS has reported evidence of underreporting of salaries among private sector companies. INCREASING COMPULSORY HEALTH INSURANCE CONTRIBUTIONS Compulsory health insurance contribution is 3% of average pay/earnings and compared to international benchmarks, it is rather low. However, there has been no government policy debate to increase the contribution rate for the following reasons: The government has policy lever to change the minimum wage which affects contribution income of all compulsory social insurance 15. The bulk of social insurance premium income is still sourced from government revenue and hence, an increase in contribution rate has direct consequences on the government s fiscal balance. As health insurance has accumulated reserves in the past, the government sees no immediate need to increase contributions before the reserves are depleted either by expanding insurance coverage or by expanding the breadth of benefits This lever was used recently when minimum wage was raised from 210,000 dong per month to 290,000 dong per month. 16 Keeping the benefit packages constant, the benefit pay-outs can only increase by expanding the list of benefit paid drugs or by reducing co-payments of some high-tech diagnostic services. 38

39 ADMINISTRATIVE CAPACITY CONSTRAINTS FOR HEALTH INSURANCE Compared to peer organizations of VSS in other countries, the administrative tasks are fairly complex. Revenue collection in some countries is performed by national tax collection agencies rendering no need for payroll tax collection or fund management. Governments in some countries allocate special budgets for health insurance administration, which depends more on the capacity needs rather than premium income. For an organization of its size (10,000 staff) and decentralized structure, VSS has administrative capacity constraints to cater for the whole of Viet Nam population. These constraints can be eased by simplifying administrative functions such as provider payment methods. Administrative capacity of Provincial HCFP Boards needs to be assessed due to their recent set up in DEBATE ON COMMUNITY-BASED HEALTH INSURANCE (CBHI) CBHI is a pre-payment scheme operated by a community organization or a local administrative unit with limited or no degree of government involvement in its administration. (Also referred as community-financing or micro-insurance schemes). Some variants of CBHI in Viet Nam were designed by WHO as pilot schemes. Initially these pilots were to provide health insurance cover for rural/informal sector targeting the poor where government funded/administered health insurance was limited. The introduction of HCFP with a target of 14.6 million beneficiaries, have negated the importance of CBHI pilots. Instead, there is room to target the near-poor and the better-off segments of the total population. CBHI schemes can be regulated by the government and administered by non-governmental community agencies or mass organizations like Women s Union, Farmers Union etc. Various policy discussions within the government agencies (MOH, VSS) and in between international development partners have been inconclusive with regards to which experiment needs to be done. After recent regulatory changes targeting the poor (HCFP) and decentralized voluntary health insurance administration involving community mass organizations (Circular 77), there is limited scope for experimenting with non-government/community-administered CBHI schemes. However VSS Circular 3631 has introduced community enrolment thresholds before voluntary health insurance can operate. Furthermore, VSS as the main steward of voluntary schemes has administrative capacity constraints. Therefore community administration approach or microinsurance finds some support among domestic academic institutions and international development partners as a complementary step to speed up universal health insurance implementation. POLICY IMPLICATIONS OF DECREE 10 ON SOCIAL INSURANCE Decree 10 based on one perspective intends to make state owned enterprises involved in non-core government activities to be less reliant on state budget in order to free more public funding for health, education and other social services. The decree makes a distinction between full cost-covered and part cost-covered entities where health care providers fall into the latter category. The decree allows hospitals and schools to raise their fees in order to match their operating expenses with revenues from user charges, which was the main point of controversy in this policy debate. In an indirect way, all non-labour related expenses of hospitals for utilities; electricity, water, drugs etc which are purchased or procured from state owned enterprises or utility companies are expected to rise putting upward pressure on hospitals to raise their fees. 39

40 As insurance coverage expands, there is potential scope for health insurance to become a dominant source of provider income. In 2000 before HCFP was introduced, only 10% of public provider revenue was sourced from social insurance (Figure 1). Despite larger number of people covered by social insurance compared to private, there is a mitigated impact for its importance as a revenue source compared to households out of pocket payments and private insurers. Figure 2: Source of Provider Income Public Public Hospital Hospital and and Clinic Clinic Revenue Revenue by by Source-2000 Source-2000 Households Households 24% 24% Other Other 3% 3% Central Central Government Government 13% 13% Private Insurance Private Insurance 11% 11% Social Insurance Social Insurance 10% 10% Provincial Provincial Government Government 39% 39% Source: MOH National Health Accounts Study Source: MOH National Health Accounts Study Special provisions exist in Decree 10 implementation guidelines to ascertain government funding is warranted until Hospitals and clinics being partial cost-covered entities are likely to retain nominal rises or obtain real-term growth in their budgetary allocations from central and provincial authorities. Among the care providers, only tertiary referral facilities with high patient throughput are welcoming the decree as they have access to more financial resources to obtain high-technology capital equipment to attract more user-pay clients. District level hospitals or provincial hospitals with low population catchments are reluctant to implement this decree. The government with the stewardship of MOH intends to pilot the implementation of this decree. CONCLUSIONS This review shows that, Viet Nam is continually putting more equitable and pro-poor health financing policies in place. The achievements to date can be summarized as follows: Fee-exemptions policy is gradually being replaced with premium-backed health insurance. Introduction of HCFP has created a safety net for the lowest income quintile. This initiative is expected to increase total health insurance coverage to 30% of the population by 2004/05. 40

41 Voluntary insurance schemes are unified and gradually being introduced to the largest segment of the uninsured population (rural/informal sector). Policy considerations are debated for including dependents starting with the young aged. The benefit packages of different institutional insurance schemes have been harmonized and the breadth of health insurance benefits has improved. There are positive indications that the government s funding for health care through increased demand-side subsidies such as HCFP initiative will account a higher percentage of total health expenditure coming from public sources instead of private out-of-pocket payments. While sufficient attempts have been made to increase population coverage, the amount of complexity in the administration of health insurance is largely ignored. It should be noted that, most of the administrative tasks performed by VSS in particular are sophisticated techniques widely practiced in the developed world. However, with the low revenue base of health insurance in Viet Nam, there is an immediate need to simplify insurance administration. Members need to value the benefits they get from health insurance. Here quality of health care is one dimension and quality of health insurance services is another. Quality of care may improve once targeted government funding reaches the providers and VSS becomes a dominant source of finance for providers. Providers however need to be adequately rewarded in a timely manner. Furthermore prompt benefit settlement is crucial especially if members have to be reimbursed for expenses they incurred out-of-pocket at times of ill health. The administrative improvements that are covered in this review can be summarized as follows: Developing a unified provider payment method for all institutional schemes and abolishing the practice of reconciling itemized bills. Elimination of fragmented risk pools created by HCFP. Inclusion of dependents in the compulsory schemes and phasing out school health insurance. Eliminating co-payments to ease administrative workloads. Designing transparent safety-nets to make sure that out of pocket outlays of members are protected against all catastrophically high expenses and not just for some. 41