GOVERNMENT OF MONGOLIA MINISTRY OF POPULATION DEVELOPMENT AND SOCIAL PROTECTION SOCIAL INSURANCE GENERAL OFFICE LONG TERM STRATEGY FOR THE DEVELOPMENT OF THE HEALTH INSURANCE OF MONGOLIA () Ulaanbaatar city 2013
GOVERNMENT OF MONGOLIA MINISTRY OF POPULATION DEVELOPMENT AND SOCIAL PROTECTION SOCIAL INSURANCE GENERAL OFFICE LONG TERM STRATEGY FOR THE DEVELOPMENT OF THE HEALTH INSURANCE OF MONGOLIA Ulaanbaatar city 2013 Printing financed by the GIZ project Reform of the Social Health Insurance
Contents LIST OF ACRONYMS... 4 GLOSSARY... 5 FOREWORD... 7 Introduction. UNIVERSAL HEALTH COVERAGE... 10 Chapter One. PURPOSE, PRINCIPLES AND OBJECTIVES... 12 Chapter Two. HEALTH INSURANCE COVERAGE AND REVENUE... 14 Chapter Three. HEALTH INSURANCE BENEFIT PACKAGE... 17 Chapter Four. QUALITY OF CARE AND PURCHASING... 20 Chapter Five. GOVERNANCE... 23 Chapter Six. HEALTH INSURANCE ORGANIZATION... 26 Chapter Seven. PRIVATE HEALTH INSURANCE... 28 3
LIST OF ACRONYMS CHIL Citizens Health Insurance Law (2006) CMTU Confederation of Mongolian Trade Unions FRC Financial Regulatory Committee HIF Health Insurance Fund HIO Health Insurance Organization HISC Health Insurance Sub-Council MNCCI Mongolian National Chamber of Commerce and Industry MoF Ministry of Finance MoH Ministry of Health MONEF Mongolian Employers Federation MoPDSP Ministry of Population Development and Social Protection NSIC National Social Insurance Council OOP Out-of-Pocket PHI Private Health Insurance SHI Social Health Insurance SIGO Social Insurance General Office UHC Universal Health Coverage VTIC Vocational Training and Industrial Center WHO World Health Organization 4
GLOSSARY LONG TERM STRATEGY FOR THE DEVELOPMENT OF THE HEALTH INSURANCE OF MONGOLIA Access Ability to utilize available health services without any significant barriers or obstacles; Benefit package The package of health services that members of the insurance scheme are entitled to; Catastrophic expenditures Paying more than 40% of household income directly on health care after basic needs have been met; Co-payment A proportion of total billed costs of services paid at the time of service by insured patients, mainly used as a cost-control measure; Diagnosis-related groups A system to classify hospital cases into groups of similar medical interventions expected to have similar hospital resource use for payment purposes; Financial protection Ultimate effect of health financing schemes that eliminate or greatly reduce the amounts patients must pay out-of-pocket; Health equity Equity in health implies that ideally everyone should have a fair opportunity to attain their full health potential and more pragmatically that no one should be disadvantaged from achieving this potential; Out-of-pocket payments Fee paid by the consumer of health services directly to the provider at the time of delivery; Provider payments The way that health care providers are paid for delivering health services. Fee-forservice, capitation, salary and global budget are common provider payment methods; Purchasing of services Function of paying for insurance-covered health care services provided to the insured; Social health insurance Usually a compulsory health insurance scheme, in which citizens pay the same proportion of their income as a contribution; based on the solidarity principle, whereby 5
health-related financial risks are shared by the wealthy on behalf of the poor, by the young on behalf of the elderly, and by the healthy on behalf of the sick; Social marketing Planning and implementation of programs designed to bring about social change using concepts from commercial marketing; Total health expenditure The sum of expenditures on health from various sources such as the government budget, health insurance fund, out-of-pocket payments and private sector as well as operational and investment costs of the health system; Universal health coverage All people have access to good quality of services needed without facing catastrophic financial expenses. 6
FOREWORD LONG TERM STRATEGY FOR THE DEVELOPMENT OF THE HEALTH INSURANCE OF MONGOLIA Access to quality health care services for citizens is a fundamental human right. However, this right will only be secured when a sustainable financing scheme for health sector expenditures is in place. For this purpose Mongolia introduced the social health insurance system based on the solidarity principle 19 years ago. Since 1994, the health insurance fund has been a reliable channel for health sector financing. Nevertheless, the fund accounts as of 2012 only for 25.1% of total health sector expenditures. The main reasons for the low rate are inadequate coverage of health care services by the health insurance benefit package, ineffective payment methods and insufficient management of fund planning and spending. Consequently, the health insurance services are not sufficiently serving the needs and requirements of the insured and are unable to fully protect the population from health associated financial risks. In 2012, Mongolia had a health insurance coverage rate of 90.4% of the total population but the value of the health insurance for the insured remains low. Even when the citizens pay their contributions on time, they face out-of-pocket payments, poor quality of care and services as well as barriers in receiving full benefits of drug discounts. Also population groups pay different contributions and the government subsidy is not satisfactorily reaching the poor and marginalized despite its wide range of targeted groups. The institution in charge of the social health insurance has limited legal power and low human resource capacity to function as an active purchaser of health care. Thus, it fails to fully protect the rights of the insured and only plays the role of a passive financer of health care expenses. Therefore, the Government of Mongolia is putting forward the goal to reform the health insurance system in order to fully cover the population of Mongolia and to enable each insured citizen, irrespective of their income, to benefit from quality health care without incurring financial hardships. To attain this goal, we developed the long term development strategy to lift the health insurance system to a new level in the coming ten years based on principles of solidarity, governance transparency, insuredcenteredness as well as safe and reliable health care. The strategy outlines six strategic objectives in key areas of health insurance development: health insurance coverage, revenue, benefit package, healthcare quality and purchasing, governance, health insurance organization and private insurance. I would like to thank government organizations, social partners, international organizations and international consultants of WHO and P4H. Especially, it s my 7
pleasure to acknowledge the GIZ project called Reform of the Social Health Insurance, which contributed financially and with valuable professional assistance to the development of the long term strategy. I believe this long term development strategy will serve as a valuable source for staff working in health insurance, researchers and anyone interested in the topic as well as the insured. May good deeds flourish. MEMBER OF THE CABINET OF MONGOLIA, MINISTER OF POPULATION DEVELOPMENT AND SOCIAL PROTECTION S.ERDENE (PhD) 8
RESOLUTION OF THE GOVERNMENT OF MONGOLIA 13 April 2013 No.143 Ulaanbaatar City Ref: Long term strategy for the development of the Health Insurance With the aim to carry out the objectives of the Government Action Plan 2012-2016 on reforms of the health insurance, the Government of Mongolia RESOLVED to: 1. Endorse the long term strategy for the development of the health insurance. 2. Assign S.Erdene, Minister of Population Development and Social Protection, and N.Udval, Minister of Health, to incorporate the objectives of the Long Term Strategy for the Development of the Health Insurance into sectoral and national midterm and long term development policy papers and relevant legislations. 3. Assign Ch.Ulaan, Minister of Finance, S.Erdene, Minister of Population Development and Social Protection, and N.Udval, Minister of Health, to reflect necessary funds to implement the Long Term Strategy for the development of the Health Insurance into the annual economic and social development priorities and government budget. Prime Minister of Mongolia N.ALTANKHUYAG Minister of Population Development and Social Protection S.ERDENE 9
Introduction. UNIVERSAL HEALTH COVERAGE The Constitution of Mongolia legalizes each citizen s entitlement to health protection and medical care. Before 1990, the provision of health care services to the whole Mongolian population was the responsibility of the government, which ensured equitable services through full government budget financing. During the transition into market economy the government budget allocated for health was cut drastically because of the economic downturn. Nevertheless, the social health insurance was introduced in 1994 in order to maintain the achieved level of health care, to ensure that the population was protected from health associated financial risks and that service delivery was equitable. The introduction of the health insurance scheme created a stable financing source for the health sector. As of now health sector financing has several sources, including government budget, health insurance fund, fees for health care services and foreign loans and aid. The goal of our country s health sector has been to reach universal health coverage through an optimal financing mechanism. The World Health Organization (WHO) developed the concept of Universal Health Coverage (UHC), which aims to ensure the realization of the fundamental human right of citizens for health protection. The World Health Report 2010 stated this concept to be a path to deliver all types of health care services including preventive, supportive, curative and rehabilitative services to the population when needed and without incurring financial hardships. Universal coverage can be illustrated by a three dimensional model as shown in the graph below. Reduce cost sharing and fees Include other services Direct costs: proportion of the costs covered Extend to non-covered Current Pooled Funds Services: which services are covered? Population: who is covered? Three dimensions to consider when moving towards universal coverage 10
An optimal health financing policy plays a vital role to ensure access to health care services for the whole population and therewith to reach UHC. The above mentioned World Health Report recommends the following three strategies to be considered when moving toward UHC: 1. Raising sufficient resources for health; 2. Removing financial risks and barriers by reducing direct payments made at the point of delivery of health care services; 3. Promoting efficiency and eliminating waste. Our country has seen in recent years an increase in private sector involvement in the health sector as well as in the population s demand for quality of health services. Furthermore, a rapid rise in out-of-pocket (OOP) payments has become a major problem. Although the National Health Sector Financing Strategy endorsed by the Government of Mongolia has specified the goal of keeping OOPs within 25% of total health expenditures, OOPs recently reached 41% according to the world health statistics. In light of these circumstances it became necessary to define the Long Term Strategy for the Development of the Health Insurance of Mongolia (). It spells out principles for protection of the Mongolian people s health, for strengthening an optimal system to deliver quality health care services to the entire population, for full enrollment of citizens in the health insurance scheme, for pooling the health insurance fund, for purchasing and ensuring quality, safety, access, equity and efficiency of health care services, and for reducing direct payments paid by the insured. The implementation of the Long Term Strategy for the Development of the Health Insurance requires high commitment from all stakeholders. Therefore, in order to ensure their consensus all stakeholders were involved in the strategy development process, which was facilitated by the consultancy of the P4H network in a series of workshops, a national forum and discussions. As a result, the stakeholders were able to integrate their positions in the interest of the population and define main principles of the Government of Mongolia for the development of the social health insurance scheme of Mongolia for the coming ten years. They also formulated policy objectives and strategies to achieve UHC and to accelerate the sustainable development of the social health protection system. 11
Chapter One. PURPOSE, PRINCIPLES AND OBJECTIVES Purpose The purpose of this document is to define the long term policy in order to enable each citizen of Mongolia to enroll in the health insurance scheme and to receive quality health care services whenever needed without facing financial difficulties. Principles The health insurance shall: 12 y serve as the main foundation to implement health protection policy for Mongolians; y be based on the principle of solidarity whereby the health-related financial risks are shared by the wealthy on behalf of the poor and marginalized, by the young on behalf of the elderly, and by the healthy on behalf of the sick; y be compulsory and universal; y uphold rights of the insured and aim to protect them from financial risk and to provide quality, client-centered, efficient and safe health care services that meet the health needs of the insured; y consist of compulsory contributions made by the insured according to the same proportion of their earning irrespective of their income level and enable them to receive health care services depending on their needs; y ensure social partnership and dialogue and maintain openness, transparency, accountability and good governance for insured; y be gender sensitive; y have an independent fund consisting of contributions made by citizens, legal entities and government and which is spent according to the solidarity principle in the interests and benefits of the insured, with the governance structure comprised of equal participation of the representatives of the government, employers and insured. Objectives In order to reach the purpose mentioned above the following objectives were set for key intervention areas; health insurance coverage and revenue, benefit package, health care quality and purchasing, health insurance system governance, health insurance organizational capacity and private health insurance. Health insurance coverage and revenue y Increase the health insurance coverage and ensure stability of the Health Insurance Fund (HIF) so to establish it as a sustainable financial mechanism to fully protect the population in case they need health care;
Health insurance benefit package y Define the benefit package of the health insurance so that the population is provided with health care services in line with all their essential health needs; Quality of health care and purchasing y Improve quality assurance of health care services y Set up an active strategic purchasing system for health care services Governance y Introduce good governance principles into the health insurance system and increase the population s confidence and trust in the health insurance Health insurance organization y Develop the health insurance organization (HIO) as an active strategic purchaser of health care services with an insured-centered modern management Private health insurance y Ensure coherency of the health insurance system through enabling the private health insurances to provide complementary services covering health care services not included in the health insurance benefit package Time frame to implement strategy y The strategy shall be implemented for ten years from 2013 until 2022. y A mid-term evaluation shall be conducted in 2017. 13
Chapter Two. HEALTH INSURANCE COVERAGE AND REVENUE In order to provide access to quality health care for citizens of Mongolia whenever needed without taking financial risk, every citizen must be effectively covered by health insurance. On one hand, this requires a mandatory insurance system for each citizen so that they contribute to the establishment of a reliable and sustainable source for financing all expenditures of the health sector and, on the other hand, it is essential to prevent health associated financial risks of each citizen and assure their social health protection. Current situation Since 1994 Mongolia has successfully been operating the compulsory health insurance scheme and implementing the Citizen Health Insurance Law (CHIL). The coverage of health insurance between 1995 and 2010 ranged from 73.5 to 82.6%, whereas in 2011 the coverage reached 98%. This is due to the fact that herders, students and unemployed, who previously had to pay contributions by themselves, were subsidized by the Human Development Fund in fulfillment of political promises to distribute benefits to the population. As this was a one-time measure, there is a high probability for coverage to decrease again to the previous average level in the future. The health insurance coverage in 2012 was 90.4%. The revenue of the HIF consists of contributions from employers and employees, government subsidies covering contributions of certain groups, contributions paid by herders, unemployed and other insured, penalties for exceeding payment deadlines and interest rates earned from investing the surplus reserves into financial instruments. The official system of the social insurance effectively collects contributions from economic entities and their employees. However, this official system is not effective in collecting contributions from the informal sector, where people are obliged to pay their contributions by themselves. The social groups, who fail to pay their contributions and are therefore not effectively by health insurance scheme, are mostly herders, unemployed, self-employed and students. The rate of contributions from employees of economic entities is to be set by the government on an annual basis and should not exceed 4% of monthly wages. The amount of contributions to be paid by the owners of economic entities and selfemployed workers is to be set by the Social Insurance General Office (SIGO) based on their income declaration submitted to the taxation office. The rate of contributions to be paid by herders, unemployed and citizens, whose contribution payments are subsidized by the government, is set by the government based on the proposal of the National Social Insurance Council (NSIC). 14
As of 2012, health insurance contributions are set as following: y employees of economic entities and organizations pay 2% of the monthly salaries and wages employers are to pay equally 2%, y the contribution rate of the citizens subsidized by the government is 670 MNT monthly and 8040 MNT annually, y self-employed workers pay 1% of their monthly income. According to the CHIL the government subsidizes the contributions of: y children under 16 years of age and if attending general education school even up to the age of 18, y citizens with no monetary income except pensions, y one parent taking care of a child up to the age of 2 or up to the age of 3 in case of twins, and y compulsory military service soldiers. As of 2012, 51.5% of the total number of insured were subsidized by the government. In 2012 the government also undertook the responsibility to pay the contributions of students of higher education institutions and vulnerable groups of the society, which led to an increase of citizens subsidized by the government. There is a huge positive difference between the revenue and expenditures of the HIF. Thus, as of 2012 the free surplus of the HIF was equal to 95.3% of the annual HIF revenue. Areas of action y The population is not sufficiently protected from health associated financial risks and can be impoverished due to catastrophic health expenditures; y Health insurance enrollment among self-employed, herders and unemployed is declining; y The poor understanding and knowledge about the significance of health insurance among economic entities and the public leads to evasion of contribution payments and limits benefits received; y The collection of HIF contributions is organized by the social insurance organization, but its system is not adequate to reach self-employed workers, herders and unemployed; y The mechanism to set the amount of contributions to be paid by insured is not sufficiently developed; y It is difficult to estimate the income of self-employed workers; y The amount of monthly contributions for the citizens subsidized by the government, herders and unemployed is not risk adjusted; y The range of citizens receiving subsidies from the government for their health insurance is too wide. The government subsidies are not targeted enough; y Although the health needs of the population are not fully met, the surplus of the health insurance fund is increasing each year. Therefore, mechanisms of balanced budgeting have to be implemented. 15
Objective y Increase the health insurance coverage and ensure stability of the HIF so to establish it as a sustainable financial mechanism to fully protect the population in case they need health care Strategies y Fully enroll the whole population by extending effective to the citizens not yet covered by health insurance; y Establish a system to tie the amount of contribution for citizens subsidized by the government and citizens, who pay their contributions by themselves, to the minimum wages; y Improve management and policy planning of the HIF to balance revenue and expenditures; y Reduce OOPs to 25% of the total health expenditures. Main activities y Increase effective health insurance coverage and enrollment of citizens through cooperation with all concerned governmental, private sector and nongovernmental institutions such as bagh and khoroo governors, civil registration, taxation office, universities, colleges, Vocational Training and Industrial Centers (VTIC), Mongolian Employers Federation (MONEF), Mongolian National Chamber of Commerce and Industry (MNCCI), Confederation of Mongolian Trade Unions (CMTU) and organize contribution collection using appropriate and efficient mechanisms; y Conduct continuous social marketing activities in order to increase understanding and knowledge of health insurance among the public; y Study methodologies to target groups of the population that are to be subsidized by the government and introduce a targeting mechanism appropriate for the specific characteristics of the country; y Finance additional expenses resulting from tying the contributions of citizens subsidized by the government to minimum wages through shifting resources from the government health budget to the HIF; y Mobilize more resources for the HIF, e.g. through Sin Taxes from businesses with products and services entailing health risks (sugar, tobacco, salt, alcohol, etc); y Improve risk management of the HIF; y Improve efficiency of HIF expenses through expanding services of prevention, early detection screening, diagnosis and testing as well as Behaviour Change Communication and Information Education and Communication activities supporting a healthy lifestyle of insured; y Study the causes of OOPs and take measures to resolve them. 16
Chapter Three. HEALTH INSURANCE BENEFIT PACKAGE The main task of the SHI is to enable provision of necessary health care services to the population. In order to provide adequate financial protection to the whole population in respect to health associated risks, it is important to identify the benefit package and as accurately as possible that it is clear-cut and understandable to the insured, health care providers and private insurance organizations. Current situation Health care services are divided into two packages: one funded through the government budget and one financed by the HIF. The government budget finances health care services to be delivered during pregnancy and delivery as well as in case of tuberculosis and cancer. Also financed through government budget are primary health care and public health services such as routine immunization, sanitation and disinfection. In our country all insured are equally eligible to all health care services financed by the HIF, which has a single benefit package. The package of services funded by HIF is regulated by the CHIL. Therefore, each time the package is changed the law needs to be amended or altered. Main changes occurred in 2002 with the extension of the package to outpatient services and in 2006 with the removal of primary health care coverage, including family doctors and soum hospitals, from the list of HIF funded health care services. The current law specifies that health care services funded by HIF include services provided in the following cases: 1. Internal diseases; 2. Neural system diseases; 3. Ear, nose, skin and sebum, bone, muscle, connection tissue diseases; 4. Non-emergency injury and surgery The Minister of Health makes the decision as to which extent health care services are to be financed by the HIF in order to treat the diseases and injuries specified above. Currently the HIF finances outpatient and inpatient services provided by aimag, district and central level hospitals and day care provided by aimag and district hospitals. Furthermore, inpatient services of traditional medicine clinics, rehabilitative care provided by sanatoria and palliative care are financed through the HIF as well as discounts (equal to a certain percentage of the drug price) on drugs prescribed by bagh and soum doctor at primary health care level. The list of health care services to be covered by the health insurance benefit package is not defined in an evidence based manner. Both the Ministry of Health (MoH) and SIGO do not have the capacity to conduct research and analysis in this regard. 17
The insured are still paying a significant part of health expenses (OOP) for treatments of diseases included in the four categories mentioned above. For instance, cost for drugs prescribed by doctors to outpatients at secondary and tertiary health care level, diagnostic services and tests exceeding 36000 MNT, CT scans, MRI and other high cost diagnostic services and tests for both outpatient and inpatient services need to be paid by the patient. Also they pay fees for high cost surgery, medical devices like brain stent used in such surgeries and dental treatment materials. Private hospitals also receive financing from the HIF but they as well collect fees from patients. There is no detailed data about direct payments made by insured at the point of service delivery, but WHO statistics show that the amount of direct payments is increasing in Mongolia. As of 2009, 54.8% of the country s total health expenditures were covered through the government budget and through the HIF, whereas 45.2% came from private financing 1. OOPs increased by 26.6% compared to 2008. They accounted for more than 90% of private financing 2. The list of discounted drugs, which the HIF subsidizes, is issued by the MoH and the upper discount limit is set by the HISC. Drugs prescribed by outpatient doctors of district and central hospitals (secondary and tertiary health care level) as well as specialized centers are fully financed through OOP of the patients, as discounts are not applied in this case (which are applicable only at primary health care level). In 2010 a study on the Financial Burden of Health Payments was conducted in Mongolia using WHO methodology. The study showed that the major part of the OOPs consists of drug expenses. The cost for drug expenses accounted for 95% among the poorest quintile and 68% among the richest quintile 3. A number of surveys showed that the insured are losing trust in the SHI and its benefits as they have to pay OOPs for various diagnostic and testing services as well as medical devices though they pay insurance contributions. Areas of action 18 y The benefit package purchased by HIO is defined too generally and it is not clear which benefits are included and which are not, causing confusion between the providing and the purchasing parties; y The decision making mechanism to define the package composition is unsatisfactory, participation of stakeholders is weak; y The package does not completely cover services needed by insured leading to the situation, where the insured need to pay for the services that are omitted; y Sudden changes in package composition are made without a clear evidencebased justification. For example, primary health care was removed from the package and current discussions consider including it back into package but no analysis is done on this issue; 1 Private financing includes all types of payments such as taxes, insurance contributions, direct or out-ofpocket payments. 2 World Health Statistics, 2011, 2012. 3 Tsolmongerel et al, Financial Burden of Direct Payments for Health Care on Population in Mongolia, WHO, MOH 2010
y No consideration is paid to OOPs when defining the benefit package, which leads to increasing OOP from year to year. Objective y Define the benefit package of health insurance so that the population is provided with health care services in line with all their essential health needs Strategies y Expand the benefit package funded by HIF through phased inclusion of health care services funded by the government budget into the package; y Study economic, social protection and health impacts regarding inclusion of primary health care into the HIF benefit package and make an appropriate decision to ensure accessibility to services in remote areas; y Set the co-payment amount differently at each level of health care in order to deliver the benefit package in an efficient manner; y Establish an appropriate organizational structure and process to discuss and make decisions on the benefit package to be purchased by the HIF. Main activities y Expand in phases the health insurance benefit package by increasing the revenues of the HIF through tying the rate of contributions of the citizens subsidized by the government to the minimum wages; y Create conditions for phased transitioning into a single-purchaser system through step-by-step integration of the health care services covered by the government budget into the health insurance package and accordingly shift the relevant government funds into the HIF; y Study and analyze economic effectiveness and efficiency of primary health care and other services provided to the population of remote rural areas and define possibilities for integrating such services into the health insurance package; y Preserve the current co-payment system supporting the referral system of health care and efficient use of health care services; y Introduce an evidence-based and standardized methodology to define the benefit package and ensure that the decision making procedures is transparent; y Set up an information system to communicate to the insured which services they are entitled to and which rates of contributions they need to pay. 19
Chapter Four. QUALITY OF CARE AND PURCHASING As the insured are paying the contributions, they are entitled to receive safe and riskfree health care of good quality. The HIO is responsible for realizing these entitlements by purchasing good quality and safe health care on behalf of the insured that meets their needs. Contracting is the main instrument to purchase health care from the health care providers. It is important to ensure equal participation of all parties involved in the contracting process. Current situation The current CHIL does not specifically describe purchasing of health care. The purchasing activity is carried out by the HIO through contracting health organizations. Based on the budget approved by the Parliament the HIO contracts hospitals in the first quarter of each year. The HIO takes into consideration the number of beds approved by the MoH and negotiates and agrees on the estimated number of inpatient clients, outpatient checkups/examinations and the number of clients to receive diagnostic services. The current contract mainly focuses on the monthly allocation of health insurance funds to hospitals. The contract deals with issues of quality of care in general terms and does not specifically incorporate any definitions regarding quality of care, indicators to measure it and principles, methodology and processes to evaluate it. As of now there are no tools or guidelines to evaluate the implementation of the contract. The contract allows surveying the satisfaction of the insured regarding the services, collecting complaints and feedback and providing information to the insured. However, there are no budget and human resources allocated for this purpose. The health care services to be purchased by the contract are reimbursed by 115 Diagnosis-Related Groups and fall into seven types: inpatient, day care, outpatient, diagnostics and testing, traditional medicine, rehabilitative services and palliative care. The total amount of payment to be provided to each organization is set based on the amount and tariffs of services approved jointly by the MoH, Ministry of Finance (MoF) and Ministry of Population Development and Social Protection (MoPDSP). The duty to implement the contract is carried out by the local offices of SIGO. The implementation entails claim review process and transfer of payments, also the local health insurance inspectors conduct inspections in health organizations, but inspections focus mostly on financial aspects. This shows that the concept of actively purchasing quality health care is new for the HIO and in the past it was carried out in a passive form. As of 2012 the HIO contracted 537 pharmacies, 32 sanatoria and over 200 state and private hospitals. The list of contracted hospitals and their bed capacity is approved 20
by the state administrative organization in charge of health. On the other hand, the majority of health care providers are state owned facilities at central and local levels. They report to the state administrative organization that sets the main principles of purchasing the services and appoints their directors. Structure, organization and governance of health organizations have been intensively discussed in recent years and governing boards of centrally and locally administered facilities were established, consisting of patients representatives, MoH and other parties. The providers are financed by the HIF through Diagnosis-Related Groups whereas the government budget uses line-item budgeting. Moreover, the providers collect fees from users for services according to the order of the Minister of Health. Areas of action y The HIO, health care providers and other stakeholders of SHI do not possess sufficient understanding on purchasing and its principles; y There is no legal environment for the HIO to carry out responsibilities of an active purchaser such as studying the needs of the insured, defining the health care services, selecting health care providers and negotiating/setting prices and tariffs of health care services; y The HIO purchasing activities are carried out passively: oo Contracting is used as a nominal way of purchasing; oo Weak legal power to enforce contract duties and responsibilities; oo Contract content and structure are not adequate; oo Contracting is not aimed at improving quality of care; oo Contracting does not aim to limit supply-induced demand. y There is no system to support the development of treatment and diagnostic standards and guidelines, which are the main elements of the indicators to be used in evaluating the contract; y The HIO does not participate in tariff setting; y The capacity to estimate the real health care service cost is not adequate; y Health insurance funds paid to hospitals are used for reimbursing the costs not adequately covered by the government line-item budget and for this reason this method of payment is failing to act as an instrument to improve quality of health care and performance; y Health care providers have limited power to make financial decisions in order to carry out obligations specified by the contract and their autonomy is not ensured; y There is no system of cost calculation and analysis for Diagnosis Related Groups. Objective y Improve quality assurance of health care services y Set up an active strategic purchasing system for health care services 21
Strategies y Use contracting between the HIO and health care providers as the tool to purchase quality health care services and specifically include into the contract the duties of the parties involved and the details for monitoring the fulfillment of these duties; y Set up an active health care service purchasing system with capacities to select and contract health care providers, set the health care benefit package and tariffs in line with the needs of the insured; y Introduce quality management instruments such as accreditation, peer review and satisfaction survey of the insured in order to improve the quality management system required for purchasing quality health care services based on evidence. Main activities y Define specifically the contracting process and sequence, in particular, specify in the law the information exchange, consultation and negotiation mechanisms as part of the rights and duties of the parties and improve the control mechanisms; y Clarify how contracting will aim to improve quality of care and specify the methods to evaluate the contracts; y Incorporate into the legislations the provisions for the HIO to select health care providers; y Create a flexible system to set tariffs of services and develop capacity to conduct cost analysis necessary for tariff setting; y Increase significantly the percentage of health insurance funds in the total financing of health care providers in order for the HIO to become a strong purchaser that influences activities and behavior of health care providers; y Link directly the efforts to improve the enforcement of health care standards and clinical guidelines with purchasing activities; y Ensure participation of the insured in control and management of quality of care, for instance, survey the satisfaction of the insured, create a complaint resolution mechanism and establish an ombudsman system; y Strengthen legal environment to increase autonomy of the state-owned health care providers and create conditions for them to equally participate in contracting through medical associations; y Promote the continuous quality improvement concept in regard to health care services; y Support an autonomous accreditation system. 22
Chapter Five. GOVERNANCE LONG TERM STRATEGY FOR THE DEVELOPMENT OF THE HEALTH INSURANCE OF MONGOLIA The main factor for the successful development of the health insurance is the establishment of a governance system that ensures citizens participation based on the principles of transparency, justice, accountability and openness. The core of good governance is the transparent social dialogue process among parties representing the insured where parties enjoy equal rights and mutually respect each other. For this purpose it is essential to have a clear legal framework specifying the methods and process of dialogue and negotiation among parties as well as their duties, responsibilities and power. Current situation The CHIL divides the functions, the steering and decision making of SHI among different stakeholders such as the National Social Insurance Council (NSIC), HISC, MoPDSP, MoH, MoF and SIGO with considerable fragmentation and overlapping. The mandate to determine the health insurance policy is given by law to the MoPDSP. However, the MoH is authorized to develop the basic methodology and mechanisms for implementing the policy, which are, among other things, the selection of health care providers and the definition of payment methods, tariffs and benefit package. The HISC within the NSIC endorses the annual benefit cap of the HIF, the list of discounted drugs and the percentage of the discounts given. Tariff setting and approval of payment methods involve MoH, MoF, MoPSDP, NSIC and HISC. The HISC at the NSIC has the mandate to make decisions on health insurance issues by ensuring social consensus on health insurance matters and representing the interests of three parties (state, employers and employees). It has branches in 21 aimags and the capital city. The central and local sub-councils on health insurance consist of 3 representatives from the government (1 representative of each state central administrative organization in charge of health, finance/economy and social protection), 3 representatives of the insured (usually the representatives of the trade unions) and 3 representatives of employers. The HISC is a non-vacant council with only one full time secretary and no independent secretariat. It is limited in terms of legal power and resources for conducting and steering the national level social dialogue, informing the parties and reaching out to local level. Currently, the sub-council is passive and only convenes when one of the parties submits an agenda for a meeting. According to the terms of reference of the HISC, it is supposed to develop certain proposals that are to be submitted to the NSIC. However, for a non-vacant council with only one full time secretary and no permanent secretariat this is not feasible in terms of the human resources and capacity. 23
It has been agreed among all stakeholders that greater success in respect to SHI can only be achieved by developing and implementing a SHI policy involving the government, insured, trade unions, employers and health care providers considering their interests. Therefore, the Social Partners Meeting in 2009 highly recommended carrying out a permanent social dialogue in order to improve health insurance activities. The stakeholders meeting also developed a Memorandum of Understanding on stakeholder cooperation and strengthening of the social dialogue. The Memorandum was signed by CMTU and MONEF. Areas of action y There is no clear governance structure because functions and responsibilities of SHI stakeholders are fragmented and overlapping; y There is no integrated policy and planning as parties do not agree on which ministry, either MoH or MoPDSP, is responsible for health insurance policy and planning; y The activities, human resources and capacity of the HISC, which is the governance structure to ensure social dialogue, are not adequate, especially the knowledge and information transfer at local level; y The government dominates the decision making process in the HISC and participation of other members, like the trade unions and employers, is not sufficient; y Though the HIF is considered as a special fund, separate from the government budget, the fund disposal and its management is done according to the mechanism of the government budget financing; y The stakeholders did not reach consensus on whether the HIF and its management is to be separated from other social insurance funds. Objective y Introduce good governance principles into the health insurance system and increase the population s confidence and trust in the health insurance Strategies y Create a good governance system which considers and unites the interests of the stakeholders by working based on the principles of accountability, transparency, justice and efficiency; y Ensure equal participation of SHI stakeholders in the governance structure of the SHI scheme; y Ensure that the health insurance organization autonomously plans and distributes resources of the health insurance fund independent from any party. Main activities y Specify by law the rights and responsibilities of the joint governance mechanism or the council to ensure social dialogue as the governing body of the social health insurance; 24
y Bestow the Governing Council with the power to define health insurance strategic policy and planning, to make decisions to efficiently deliver quality health care services to the insured within the existing resources and to determine the management, structure and mandate of the organization in charge of health insurance; y Set up a mechanism to bring the knowledge, capacity and understanding of all SHI stakeholders to the same level and to continuously inform them; y Ensure participation of stakeholders in the implementation and monitoring of the HIF planning and budgeting; y Specify by law the role of the insurer as purchaser and the providers as health care suppliers to ensure separation of provider and purchaser. 25
Chapter Six. HEALTH INSURANCE ORGANIZATION In order for the health insurance organization to protect interests of insured and deliver them quality health care that meets their needs, it must have the corresponding capacities that can ensure access and quality of care, efficiently use and monitor resources and funds, continuously introduce the latest information technologies and other progressive technologies. Current situation The Health Insurance Department is a department under direct affiliation of SIGO, which is the Government Implementing Agency under the Ministry of Population Development and Social Protection, and carries out its legally specified mandate under supervision of multiple direct and indirect authorities. Health insurance activities are not institutionalized in an autonomous institution. There is no continuous professional training system for the staff. The HIO public relations and awareness raising activities are not satisfactory leading to low acceptance among insured that tend to evade paying for SHI. The Social Insurance Organization (SIO) approved the Mid-term Strategy for the Development of SHI, which clearly specifies how to improve and strengthen organizational management, structure and capacity for the coming five years and, in particular, provides solutions to the problems faced at the moment. Also in recent years health care providers have been carrying out management and information technology reforms. Organizations representing employers and employees such as employers association and trade unions, who play a major role in contributing to the HIF, are participating in the decision-making, monitoring and evaluation activities through appointing their representatives to the HISC at national level and its local branches. Areas of action 26 y As of now there is no autonomous institution in charge of health insurance, it is organized as an internal unit of the SIO and, therefore, has limited authority to make decisions and changes regarding internal structure of the organization and its human resources; y Decision making on SHI is not based on evidence, there is no mechanism to support academic research, the activities of the professional associations are not institutionalized; y Purchasing of health care on behalf of insured is not realized and purchasing is done in the form of passive financing; y Insured are not sufficiently informed by HIO; y Data of insured in rural areas are not immediately entered into the integrated database due to the lack of a national real time information system leading to
problems for rural insured to obtain health care at central level; y The links between the IT networks of HIO and health care providers are inadequate; y Inadequate capacities of SHI stakeholders, namely the employers associations and trade unions, who are represented in the HISC, to initiate and engage in the social dialogue leads to weak involvement. Objective y Develop the HIO as an active strategic purchaser of health care services with an insured-centered modern management Strategies y Introduce modern management methods to the health insurance organization; y Continuously introduce modern IT solutions and improve efficiency of the operations of the health insurance organization in a way that they meet the security requirements for data of the insured; y Conduct social marketing to communicate the product-service of the health insurance organization; y Strengthen capacity of the health insurance organization to carry out quality assurances of the health care services. Main activities y Strengthen the organizational management by aligning it with its vision and mission and by instilling the culture of a learning organization; oo Strengthen fund management in financial, risk and investment areas; oo Strengthen human resource management and improve salary, incentive and training systems; oo Build academic research capacity to facilitate decision making on health insurance issues and to provide evidence; oo Establish and operationalize a mechanism to carry out analysis on quality of health care services; oo Instill an organizational culture of collaboration with health care providers on continuous quality improvement providing them professional guidance. y Organize a continuous real time update of the information database of the insured; y Create an integrated IT environment for the insurance organization and health care providers, improve the claim checking process and payment system and introduce a simplified software; y Introduce an e-card system containing the basic information of the insured; y Enhance capacity to inform insured and stakeholders about SHI and carry out PR and advocacy; y Cooperate and exchange information with organizations responsible for developing, revising and introducing treatment and service standards and clinical guidelines, and organizations in charge of quality inspection; y Introduce peer review, claim checking algorithm and other progressive methods into the quality management carried out by the HIO. 27
Chapter Seven. PRIVATE HEALTH INSURANCE The SHI benefit package might not be able to fully cover the health care demand and expectations of wealthier people. An effective way to address this issue might be to engage private health insurance (PHI) companies to provide various complementary benefits packages that offer health care and services not covered by SHI benefit package. Current situation The CHIL stipulated that citizens can be voluntarily covered by private insurance in addition to the compulsory social health insurance. Voluntary health insurance has a history of over 10 years in Mongolia and as of now there are about 10 companies licensed to provide such insurance. The PHI companies are licensed and monitored by the Financial Regulatory Committee (FRC), which regulates the financial market. The services provided by PHI companies have various forms and products. The benefit package includes outpatient examinations, inpatient care and preventive screening. The policyholders of international health insurance are entitled to some travel and emergency health care free of any additional charge. As of now PHI has mostly reimbursed services of private and foreign hospitals. In most cases 80% of treatment and service expenses have been reimbursed within the annual benefit cap. These services are mostly used by private company CEOs, staff of mining companies, large economic entities and foreign citizens. Although the PHI share is a very small part of the total health expenditures (0.2%), it has a potential to further expand in Mongolia and attracts the well-off population and citizens, who are going abroad to get treatment and services. Areas of action y There is no other legislation or policy document except the CHIL to regulate activities of PHI, although the number of private companies providing health insurance increased and established a tangible presence in the market; y The citizens have the needs to reduce their financial risk associated with health care services not covered by the HIF benefit package; y There is a need to regulate the PHI, because it entails the risk of diminishing acceptance of SHI among the population by covering health care services, which are included in the HIF benefit package, and diverting healthy and rich population away from the social health insurance, which leads to an enhanced risks to be borne by the HIF and decreased risk-sharing and crosssubsidization among population groups. 28