Congressional hearing: Corruption allegations against PhilHealth

Congressional Hearing 5 August 2020
 
1) I do not agree with Cong. Defensor when he said that investing in an IT system while still using the All Case Rate (ACR) system will “computerize” corruption in PhilHealth. Regardless of the provider payment system, an IT system will actually help the Corporation and health care providers in 1) filing of claims, 2) reimbursement, 3) collection of data on health outcomes, and 4) analysis of data to inform policy.
 
The ACR system replaced the Fee-for-Service payment mechanism to simplify reimbursement processes and to promote efficiency in the delivery of quality care. The issue is not the ACR but how it was implemented. I believe a good IT system would have given us real-time data on the costs associated with specific bundles of care, utilization, and outcomes of care by collecting them in a systematic, secured way.
 
There is no perfect provider payment mechanism. Other countries utilize a mix of different PPMs. FYI the Philippines is now transitioning to global budget payments based on diagnosis-related groups. This policy was created by the same congressmen who approved the UHC bill.
 
2) COA suggests that PHIC will pay whichever is lower: case rate or actual hospital bill. The policy decision for this will serve as a precedent for prospective global budget payments. Quite dangerous, I must say.
 
In GBP, hospitals are provided a fixed reimbursement amount for a specific period rather fixed rates for individual services or bundles of services. This type of PPM provides hospitals the flexibility to allocate limited resources. In essence, it will help control costs.
 
There is a tendency for hospitals to under provide services. Hence, performance incentives should be linked to global budget payments. If PhilHealth will only be allowed to pay for actual charges, then it is precluded from providing prospective payments (GBP) which are allowed by the UHC law.
 
Finally, the Interim Reimbursement Fund (IRM) is also a form of prospective payment that is now being questioned by lawmakers. I do not understand their “anger” for “advance payment” when they were the same people who approved “prospective payment” under UHC?

On the corruption allegations against PhilHealth

I get our anger and frustration over the issue. But the claims forms (CF1, CF2, CF3, CF4) are not there to make it “easier” for PhilHealth to pursue corrupt practices. Actually, the forms are there to safeguard the interests of PhilHealth members by allowing the hospital to declare that the standards of care have been met. These forms are used so that hospitals can be reimbursed for the services they rendered to their patients.

I believe some PhilHealth employees are demoralized because of this issue. If the allegations are true, please spare other hardworking, honest employees who have given more than enough to improve health financing in the country.

Let us focus our frustration and disappointment on high ranking officials who swore to protect the interests of the people. PhilHealth, for the longest time, has not kept its promise of adequate financial risk protection. We still see patients who continuously suffer from huge out-of-pocket expenses that sometimes lead them to financial catastrophe.

This issue will have a great impact on our transition to DRG-based global budget payments. Ultimately, policy decisions made after this fiasco will determine how we will run the health financing system that will drive the universal health care we’ve always dreamed of.

We have the right to be angry, frustrated or disappointed. We have the right to demand for a better management. We have the right to demand accountability from those guilty of graft and corruption. And, yes, we have the right to a better health system that will ensure financial risk protection and achieve better health outcomes for all Filipinos.

#NoOneLeftBehind: Modify the HTA process for rare diseases

How do we shape a future with no one left behind? In many countries, health technology assessment (HTA) is a relevant consideration for the distribution of limited resources and is used to decide whether a health technology should be reimbursed or not. In the Philippines, under the Universal Health Care (UHC) Act, only health technologies with a positive recommendation from the Health Technology Assessment Council (HTAC) may be reimbursed by PhilHealth. This specific provision allows the government to prioritize scarce resources on health technologies that are proven cost-effective. For individuals with rare diseases, however, this provision puts them at an extreme disadvantage. Currently, PhilHealth’s benefit packages for rare diseases are limited to the Z Benefits for Children with Disabilities which include packages for hearing impairment, visual disabilities, mobility impairment, and developmental disabilities.

As part of HTA, the value of health technologies is often assessed through economic evaluation. Due to the low prevalence of rare diseases, we lack sufficient and robust clinical data about the course and management of these diseases. Many rare diseases are genetic, metabolic, and heterogeneous which makes it challenging to ascertain the value of treatment at a population level. Hence, the traditional HTA process may be considered less relevant given that technologies for rare diseases are often not cost-effective due to their high price and limited effectiveness.

If traditional HTA cannot be applied to health technologies for rare diseases, what else can be used to evaluate such technologies and provide the evidence to decision-makers? Some countries, such as Sweden, have accepted higher cost thresholds per health outcome for orphan drugs. In other countries, HTA agencies have revised their evaluation framework (e.g. Canada and the US), developed a separate review process (e.g. England) or established a separate funding program for rare conditions (e.g. Australia).

In our journey to UHC, we face a difficult trade-off between improving the health of patients in need of expensive orphan drugs and patients in need of other more practical health care interventions. While the HTAC uses multiple criteria in its decision analysis, the current framework by which health technologies are assessed may not be appropriate for rare diseases because the evidence base is limited. The HTAC should develop separate or modified processes to review and make decisions on technologies for rare diseases. Such new or modified evaluation processes can make expensive orphan drugs available, accessible, and affordable to individuals with rare diseases while ensuring that only cost-effective treatments are reimbursed by the government.

Stepwise Approach to Address the Nursing Shortage in Critical Care Settings

With limited manpower and resources, hospitals can only do so much in a pandemic. Sadly, the country is still in the pandemic phase of the COVID-19 outbreak and more cases are expected to be confirmed in the following weeks. The Department of Health (DOH) has recently identified six areas in the Visayas as emerging COVID-19 hotspots. This includes Cebu City, Cebu province, Ormoc City, Southern Leyte, Leyte, and Samar. As of June 29, there are more than 7000 confirmed cases in Central Visayas, with Cebu City having the highest number of confirmed cases in the country.

Patients with COVID-19 sometimes develop severe and critical conditions that will warrant admission in the intensive care unit (ICU). The effective management of critically ill patients infected with COVID-19 is dependent upon the efficient provision of evidence-based nursing care. Notably, Eastern Visayas has only nine ICU beds while Central Visayas has 111. More than 50% of ICU beds in Central Visayas have already been occupied. Interestingly, the DOH, in consultation with the Philippine General Hospital, has recommended a 1:1 nurse-to-patient ratio for ICUs. Maintaining appropriate staffing in health care facilities, particularly ICUs, is essential to providing a safe work environment for health care workers and safe patient care. With the current state of local health systems in the Visayas, this “ideal” ratio will be hard to comply with, risking quality care and patient outcomes.

Early into the pandemic, the government was quick to anticipate this and published a call for nurse volunteers who are willing to provide their services to the designated COVID-19 referral hospitals. While this policy has the potential to increase the supply of health workers, particularly nurses, this might not be enough when we reach the peak of 75,000 COVID-19 positive cases expected to occur in the next few months.

The Cebu Medical Society has raised its concerns over the city’s exhausted and overwhelmed health system citing health workforce shortage and scarcity of medical equipment. More than 130 health care workers in Central Visayas have been infected with COVID-19 as of June 15. Some hospitals have forced their nurses to undergo home quarantine after being exposed to positive cases. Consequently, this left the hospitals with a skeleton staff that is just enough to keep essential services running.

The surge of confirmed cases leading to an increase in demand for nursing services has significantly strained local health care systems. This expected surge of confirmed COVID-19 cases will now require the restructuring of policies to address the nursing workforce shortage in hospitals, particularly in intensive care units. Therefore, it is imperative for the government to seek ways on how to increase the capacity of the health care system, primarily by improving nursing resource management in hospitals. A combination of national- and hospital-level policies could be the key to solving this workforce problem.

Despite the efforts of the Department of Health to increase health workforce supply through volunteerism, there is a great potential that the program will not be able to adequately address the growing demand for nursing services, specifically intensive care nursing. Therefore, there is an urgent need to look at other policy alternatives that can complement this program alongside other policies.

POLICY ALTERNATIVES

The increase in service demand should be coupled with an increase in service supply. The government must ensure that hospitals are adequately staffed with competent nursing personnel that can deliver quality care to the people. Policies to make the necessary arrangements to ensure adequate staffing needed to respond to the increased demand for nursing services should now be taken into consideration. The recommendations provided below could hopefully give the government and nursing administrators a new perspective on how to address the imminent workforce shortage.

Status Quo: Emergency Hiring and Redistribution of Existing Staff
Current policies for managing the current issue on localized nursing workforce shortage are limited to the redistribution of existing staff from various sources and the temporary employment of volunteer nurses. Earlier this year, the DOH announced that it is hiring health personnel in select hospitals and other health facilities to expand the country’s response to the COVID-19 pandemic.

As of July 1, DOH Central Visayas has deployed 270 nurses across different facilities in Cebu City. Meanwhile, the Armed Forces of the Philippines has deployed nine nurses as a response to the shortage. In addition to this, nurses under the Nurse Deployment Program were also redeployed to DOH- and LGU-operated hospitals. Some NDP nurses, however, were retained in their original areas of assignment to help implement public health measures to prevent and control the spread of infectious diseases.

Alternative 1: Issuance of Temporary Licenses to Graduate Nurses
Through the Professional Regulation Commission and the Board of Nursing, with the recommendation of the Secretary of Health, the government can issue temporary professional licenses to nursing graduates and be classified as Graduate Nurses (GN). Similar to policies in the United States of America, the issuance of temporary licenses will permit Graduate Nurses to render nursing services to patients in non-COVID units. This will allow professional nurses to be deployed to critical care units flooded with confirmed cases of COVID-19.

Temporary licenses will only be given to individuals who have been conferred the degree of Bachelor of Science in Nursing by a reputable institution of higher learning in the Philippines. Individuals applying for temporary licenses may or may not have taken the nurse licensure examination; provided, that no applicant must have taken the licensure examination for more than three times. Successful applicants will be assigned to hospitals that have requested additional staffing complement due to shortages.

Alternative 2: A Tiered Staffing Policy for Pandemics
The government can direct public and private hospitals to adopt a tiered staffing strategy. This staffing strategy, adapted from the Society of Critical Care Medicine and the Ontario Health Plan for an Influenza Pandemic, can help address the need to staff inpatient and ICU beds by making use of existing nurse clinicians. This can be supplemented by other clinicians assuming new roles, students who were given temporary licenses, and resigned or retired personnel returning to work.

In this model (Figure 1), a registered nurse who is trained or experienced in critical care and who regularly manages ICU patients oversees the care of two to three groups of three to four patients each. A non-ICU nurse who has some ICU training or experience but does not regularly perform ICU care is inserted at the top of each triangle. This non-ICU nurse extends the knowledge of the ICU nurse while working alongside other members of the team without ICU training and experience. The tiered staffing policy can be an effective strategy to incorporate non-ICU-trained staff to augment the trained and experienced ICU staff.

Tiered Staffing v1

Figure 1. Tiered staffing model for critical care units

Less-skilled staff will have to assume roles previously performed by critical care nurses under the direct supervision and support of the latter. Nursing tasks may need to be delegated to less specialized workers such as nursing aides and ward assistants. Allowing this approach will reduce the responsibilities of the critical care nurses but it does not remove the accountability from these nurses. Critical care nurses remain responsible for any task delegated to lower-level cadres or non-critical care staff under their supervision.

POLICY ANALYSIS AND MATRIX

Status Quo: Emergency Hiring and Redistribution of Existing Staff

Public and private institutions have recruited retired, resigned, and unemployed nurses to help in the management of probable or confirmed cases of COVID-19 admitted in hospitals. This was supplemented by the redeployment of nurses from the military and those under the Nurse Deployment Program of DOH. These strategies effectively increased the number of available nurses for hospitals in the Visayas.

These strategies were economically efficient in that the government did not incur additional costs except for the health worker benefits prescribed by the Department of Health and the Bayanihan to Heal as One Act. Moreover, these strategies were easy to administratively implement as they fall within the mandate of local government units and the DOH. Further, these strategies enjoy political and social acceptance as they can address problems with coverage and access to health services, particularly nursing services.

These strategies, however, may not be enough to maintain the adequate supply of competent nurses with experience and training in critical care. Not all nurses will have the skills and knowledge needed to care for patients in ICUs. These strategies fall short in this aspect of the workforce shortage. Currently, no data is available on how many of the recruited and redeployed nurses have training and experience in critical care nursing.

Alternative 1: Issuance of Temporary Licenses to Graduate Nurses

DOH Department Order No. 2020-0169, which allows medical graduates to engage in the limited practice of medicine as deputized physicians, sets a precedent for this policy alternative. Moreover, R.A. No. 11469 vests in the President the power to engage temporary Human Resources for Health to complement or supplement the current health workforce. However, the issuance of nursing licenses and certificates of registrations falls under the jurisdiction of the Board of Nursing as stipulated in Republic Act No. 9173 or the Philippine Nursing Act of 2002. Only the Board has the authority to issue, suspend or revoke certificates of registration for the practice of nursing in the Philippines. As such, this alternative will require a stringent policy process that will take time before a sound policy can be considered. Nonetheless, this should not hinder the government from considering this policy option when the worst scenario is bound to happen.

This alternative can be effective in increasing the number of available nurses that can render health services. Reallocation of program budgets will be required to finance the compensation of Graduate Nurses as well as in instituting licensing procedures. A salary amounting to Php22,316/month, which is equivalent to Salary Grade 11, can be considered adequate compensation for a Graduate Nurse. Should the government decide to hire at least 100 nurses to maintain a 1:1 ICU nurse-to-patient ratio in Eastern and Central Visayas, the government will need to allocate 2.2 million pesos/month for salaries alone. The table below shows the direct costs associated with hiring a Graduate Nurse in varying durations of engagement with government hospitals.

Screen Shot 2020-07-24 at 7.07.38 PM

While this can be an efficient and effective strategy, hiring Graduate Nurses to assume the roles of Registered Nurses in hospitals is not very popular among patients and their caregivers, especially when complex procedures are involved. Past experiences, however, show that Filipinos are more accepting of student nurses and graduate nurses practicing basic nursing skills such as bed bath, wound care, and health teaching.

Alternative 2: A Tiered Staffing Policy for Pandemics

As opposed to other strategies, a tiered staffing policy will not result in an absolute increase in the number of nurses in hospitals. While the level of care may not be the same as in the typical ICU in non-crisis times, having care directed by trained and experienced critical care nurses is an effective way to maximize care for large numbers of critically ill patients. This approach with critical care nurses supported by additional staff members would increase a hospital’s capacity for care of critically ill patients. The use of this approach can help achieve or maintain a safe nurse-to-patient ratio in both general wards and critical care units.

With this alternative, no additional costs will be incurred by the government. Rather, it will only require the reorganizing of hospitals’ staffing management, particularly for nurses. It is technically and administratively feasible as this policy veers closely with the team-based approach which nurses are very familiar with.

This alternative may not need to go through the usual policy process engaged in creating national policies. The policy can emanate from the Centers for Health Development or local government units. Patients and their caregivers do not see this policy option as a hindrance to quality care. Rather, the policy sets a mechanism to improve access and coverage in critical care services while ensuring patient safety and quality of nursing services. Currently, no law or statute prohibits the institution of this kind of policy. It can serve as a quick fix to the local nursing shortage.

POLICY RECOMMENDATIONS

Cebu remains a high-risk area, which means that the SARS-CoV-2 is still spreading in the province. A study conducted by some professors of the University of the Philippines projects 15,000 cases in the province by the end of July. However, relaxing quarantine measures may cause an escalation of up to 30,000 cases by July 31. The occupancy of beds in Cebu City alone, where the majority of hospitals in the region are situated, is more than 70% while occupancy of ICUs is more than 60%. More than 4% of nurses in the Central Visayas region still cannot render services because they were either admitted to the hospital or quarantined in their homes or other health facilities.

Given this, the following stepwise recommendations based on this policy analysis should be considered to augment the required staffing patterns in intensive care units / critical care areas in Central and Eastern Visayas. The government should continue the emergency hiring of health workers which will result in an absolute increase in the number of available nurses. Because not all nurses have adequate training or experience in critical care nursing, this should be supported by a policy on tiered staffing. Such a policy will maximize the skills of critical care nurses while ensuring the delivery of quality nursing care to more patients. Lastly, should human resources for health become severely depleted due to sickness, death, and other reasons, the government should explore the option of issuing temporary licenses to graduate nurses.

  1. Issue a policy on tiered staffing

The government should enact local policy that will designate nurses with training and experience in critical care nursing as interim unit heads overseeing the care of two to three groups of critically ill patients. Each group of less specialized staff (i.e. nurses with inadequate ICU training and experience, nursing assistants, graduate nurses) will assume roles previously performed by critical care nurses. Moreover, hospitals should allow task shifting to less specialized health workers such as nursing aides and ward assistants to reduce the workload of registered nurses.

Additional training for less specialized workers in areas of potential increased service demand should be provided to ensure staff competency and capacity, especially when deployed to critical care areas. Procedures for supervision and monitoring of performance should be established to ensure the quality of services delivered.

  1. Continue hiring nurses from various groups

Retired, resigned, and unemployed nurses should be continuously recruited to help in the management of probable and confirmed cases of COVID-19 that are admitted in hospitals. Training and orientation should be provided to meet the needed minimum skill sets. Moreover, procedures for credentialing newly recruited staff, specifically looking at training and experience in critical care nursing, must be developed.

The government can also tap nursing organizations such as the Association of Private Duty Nurse Practitioners of the Philippines whose self-employed members are hired to care for private individuals and/or their families. More nurses from the military and police services can be deployed to civilian hospitals. NDP nurses should remain in their original area of assignment to help in the implementation of public health measures.

  1. Issue temporary licenses to graduate nurses

The Board of Nursing can issue temporary licenses to Graduate Nurses within a prescribed period (e.g. 90 days or until the pandemic is controlled) that will allow them to care for patients in non-COVID units. This will allow the reallocation of trained and experienced nurses to critical care units. Graduate Nurses can work under a tiered staffing approach where they are supervised by competent registered nurses.

Procedures for credentialing, training, and performance evaluation should be developed in consultation with members of the academe and nursing service administrators. The Board should also develop procedures for revocation of temporary licenses that can be done at a time the government deems the pandemic is under control or until hospitals are at the level of or below their surge capacities.

CONCLUSION

The role of nurses has been considered crucial in managing this pandemic, most especially in implementing strategies to #flattenthecurve. While this is the case, shortage in the nursing workforce will not make the management of the pandemic any easier. Hence, the government and hospital administrators need to plan ahead of time to address pending problems such as nursing shortage and to increase the capacity of the health system to cater to the growing needs of the population.

Effective nursing workforce management is essential to ensure adequate staff capacity and competency during a pandemic which substantially increases the demand for nursing services. The recommended stepwise approach can be a promising solution to the local nursing workforce shortage. However, these recommendations are interim solutions to a possibly chronic nursing workforce shortage in the Philippines. A national investment in the nursing profession will be vital to address this shortage. Such investment will require significant political will, support, and financial investment.

REFERENCES:

1.    Aguilar, K. (2020). Gov’t allows ‘limited practice’ of medical graduates in COVID-19 response. Retrieved 5 July 2020, from https://newsinfo.inquirer.net/1258334/govt-allows-limited-practice-of-medical-graduates-in-covid-19-response
2.    COVID-19 FORECASTS IN THE PHILIPPINES: NCR, CEBU and COVID-19 HOTSPOTS as of June 25, 2020. (2020). Retrieved 5 July 2020, from https://www.up.edu.ph/covid-19-forecasts-in-the-philippines-ncr-cebu-and-covid-19-hotspots-as-of-june-25-2020/
3.    DOH RELEASES INTERIM GUIDELINES FOR EMERGENCY HIRING OF HEALTH PERSONNEL Press Release/12 April 2020 | Department of Health website. (2020). Retrieved 5 July 2020, from https://www.doh.gov.ph/doh-press-release/DOH-RELEASES-INTERIM-GUIDELINES-FOR-EMERGENCY-HIRING-OF-HEALTH-PERSONNEL
4.    DOH TO DEPUTIZE MED GRADS TO ASSIST IN NAT’L COVID-19 RESPONSE | Department of Health website. (2020). Retrieved 5 July 2020, from https://www.doh.gov.ph/press-release/DOH-to-deputize-med-grads-to-assist-in-nat%E2%80%99l-covid-19-response
5.    Duque: 22 more doctors to be deployed to Cebu City. (2020). Retrieved 5 July 2020, from https://www.sunstar.com.ph/article/1862123/Cebu/Local-News/Duque-22-more-doctors-to-be-deployed-to-Cebu-City
6.    Einav, S., Hick, J. L., Hanfling, D., Erstad, B. L., Toner, E. S., Branson, R. D., … & Christian, M. D. (2014). Surge capacity logistics: care of the critically ill and injured during pandemics and disasters: CHEST consensus statement. Chest146(4), e17S-e43S.
7.    Emerging Health Workforce Strategies To Address COVID-19 | Health Affairs. (2020). Retrieved 5 July 2020, from https://www.healthaffairs.org/do/10.1377/hblog20200414.197056/full/
8.    Goh, K. J., Wong, J., Tien, J. C. C., Ng, S. Y., Duu Wen, S., Phua, G. C., & Leong, C. K. L. (2020). Preparing your intensive care unit for the COVID-19 pandemic: practical considerations and strategies. Critical Care24, 1-12.
9.    Halpern, N. A., Tan, K. S., & SCCM, V. T. (2020). US ICU resource availability for COVID-19. Society of Critical Care Medicine, March25.
10. IN NUMBERS: What hospitals need to treat COVID-19 patients. (2020). Retrieved 5 July 2020, from https://www.rappler.com/newsbreak/in-depth/256133-numbers-what-hospitals-need-treat-coronavirus-patients
11. Nonato, V. (2020). Not Enough Beds, Healthcare Workers To Address COVID-19 Cases In Case Of Surge – UP Research | OneNews.PH. Retrieved 5 July 2020, from https://www.onenews.ph/not-enough-beds-healthcare-workers-to-address-covid-19-cases-in-case-of-surge-up-research
12. Phua, J., Weng, L., Ling, L., Egi, M., Lim, C. M., Divatia, J. V., … & Nishimura, M. (2020). Intensive care management of coronavirus disease 2019 (COVID-19): challenges and recommendations. The Lancet Respiratory Medicine.
13. Shang, Y., Pan, C., Yang, X., Zhong, M., Shang, X., Wu, Z., … & Sang, L. (2020). Management of critically ill patients with COVID-19 in ICU: statement from front-line intensive care experts in Wuhan, China. Annals of Intensive Care10(1), 1-24.

NOTE: This is an abridged version of an academic paper submitted to the faculty of the Department of Health Policy and Administration, UP College of Public Health.

PhilHealth should provide incentives to eliminate out-of-pocket expenses

PhilHealth has instituted a no copayment policy for its benefit packages for the diagnosis and management of COVID-19. The costing of these benefit packages is a result of an iterative process involving data collection, stakeholder consultations, and data analysis. As such, we can say that the “maximum” health care cost for a specific service (e.g. SARS-CoV-2 test) or bundle of services (e.g. management of mild pneumonia) should be the amount reflected in PhilHealth’s benefit packages. Thus, any PhilHealth member availing a benefit package should not have copayment except for amenities or accommodation other than the basic or standard room. However, in some instances, the opposite is true.

The reimbursable amount for PhilHealth’s benefit packages for SARS-CoV-2 test by RT-PCR ranges from 901 to 3,409 pesos, depending on the services covered and whether the equipment and materials are paid for or donated by other institutions. The Philippine General Hospital’s (PGH) published rate for this test is 3,800 pesos. That is 391 pesos more than PhilHealth’s benefit package, assuming that PGH procured its own supplies for the test. Other health care providers charge as high as 8,000 pesos.

PhilHealth members who are eligible for these services may be charged copayment if the service rate is higher than PhilHealth’s benefit package rates. As a result, PhilHealth loses its monopsony power to lower health care costs and out-of-pocket payments. Therefore, I suggest that PhilHealth does not only exercise costing studies to get some price reference for health care services. The Corporation should strive to create incentives for providers to alter their cost structure while at the same time achieving the desired health outcomes. Rather than focusing on average or absolute costs, PhilHealth can look at relative costs and incentives. Indirect costs, such as overhead costs, should also be factored in the equation.

If PhilHealth wants to become the country’s “strategic purchaser” of health care goods and services, its benefit packages should be designed to provide effective incentives to health care providers. During the pandemic, PhilHealth can pay higher rates for COVID-19-related services to incentivize health providers, and eliminate unnecessary copayments or out-of-pocket expenses which are barriers to the utilization of health services, especially among those in the lower-income quintiles.

Pandemic Financing: How the World is Funding the COVID-19 Response (Part 3)

What mechanisms are available to fund the pandemic response?

The Ebola crisis in West Africa in 2014 highlighted the difficulty in rapidly organizing funding for an outbreak, especially among economically vulnerable countries. To address this and to prevent future financial catastrophes, several financing mechanisms have been presented to countries. These mechanisms aim to fund the potential gaps between a country’s financial capacity and its actual spending requirements in response to the pandemic. They typically fall into three categories: (1) reallocation/realigning of existing funds, (2) external/donor funding, and (3) taxation.

1.  Reprioritization and reallocation: Use of existing budget to fund first measures

Countries are rapidly mobilizing domestic resources to increase public funds that can be deployed quickly in response to the COVID-19 pandemic.10,18 Public financial management systems provide flexibility for governments to tap budgeted allocations to fund a pandemic response.6

Such is the case in the United States of America where the declaration of a national emergency by the President allows the government to utilize an emergency fund amounting to US$50 billion under the Stafford Act.6 Similarly, the declaration of a state of public health emergency in the Philippines allowed government agencies to utilize resources to implement urgent measures in response to the COVID-19 pandemic. This includes the mobilization of local disaster risk reduction management funds (formerly calamity funds) by local government units.19

Many countries have reprioritized their government budget through reallocation and virements to create a space that can accommodate additional financing requirements.5,11 Government agencies have worked together to ensure that reallocated funds are drawn from non-urgent and non-essential activities rather than budget cuts across the board.5 Hence, many countries have canceled the delivery of non-essential services to increase fiscal space and improve their health systems’ capacity to respond to the pandemic.5 Consequently, this will result in unfavorable effects due to unmet health needs and will, therefore, require adequate attention immediately after the pandemic’s urgent phase has passed.5

2.  International Insurance Scheme: World Bank’s Pandemic Emergency Financing Facility

The Pandemic Emergency Financing Facility or PEF was launched in 2017 as an innovative mechanism that will rapidly mobilize funds to low-income countries battling pandemics while placing some risks onto financial markets rather than governments.20 The PEF draws on funds from private investors through bonds and swaps in exchange for high-interest rates. The PEF has two components: (1) a cash window designed to rapidly release funding to eligible countries, and (2) an insurance window that will help increase the scale of response in the event of a worst-case scenario.20

The maximum payout for the COVID-19 pandemic is US$ 195.84 million. Only 64 of the world’s lowest-income countries who are members of the International Development Association are eligible for PEF financing.20 Specific funding allocations for each country are determined by population size and reported cases. Financial disbursements begin when eligible countries submit authorized funding allocation requests.20 Interestingly, receiving countries do not need to repay funds from PEF.

Sadly, the cash window has been depleted to pay for Congo’s Ebola response and has not yet been replenished.21 Hence, any funding for the COVID-19 outbreak has to come from the investment window. For the bond to be triggered, however, several pandemic-related criteria have to be met. This includes outbreak size, outbreak growth, and outbreak spread. While the criteria have already been satisfied,20 this set of triggers has been widely criticized for being stringent, making the financing mechanism slow and complicated.21–23 The bond’s triggers are very late and put vulnerable countries at an extreme disadvantage. How do we expect countries who have been struggling financially to be able to reliably record and report cases and deaths early into the pandemic? Essentially, the delay has prevented PEF from enhancing low-income countries’ capacity to respond to the pandemic. Should funds had been paid out earlier, they could have been used to prevent the spread of COVID-19 in severely affected low-income countries.

3.  Collecting additional revenue: Taxation during the pandemic

The idea of increasing tax rates has been proposed as a possible solution to the long-term economic and health impact of the COVID-19 pandemic.24–27 In particular, governments have been mulling about introducing higher wealth tax rates which supposedly can increase the available funds for the long-term pandemic response, specifically during the recovery phase.24,25 Wealth tax can be promising for countries like Saudi Arabia that rely almost exclusively on a single sector (i.e. oil industry) to fund its entire government.27 An increase in wealth tax applied across the board (i.e. flat tax) tends to favor the rich and disproportionately burden the poor. In the Philippines, other taxes have been imposed and will likely push low-income families into financial hardship. All of these happening at the same time when the government decided to increase the profit for huge conglomerates by reducing corporate income tax.26

Imposing direct and indirect additional taxes on low-income families during a public health crisis creates a cyclical problem of inequality. Increasing taxes of even the most basic goods for survival somehow cancels out emergency subsidies (e.g. social amelioration program in the Philippines) provided to individuals who live day-to-day on subsistence earnings (i.e. no work, no pay arrangement). Some countries are now looking at imposing taxes only on the wealthiest.25,26 In the US, a 5% tax on the wealthiest 5% of American households can collect up to $1 trillion.25 Meanwhile, in the Philippines, imposing a higher income tax rate on the wealthiest 2.5% of Filipino households can raise revenue to P127 billion annually.26

What is the way forward?

The COVID-19 pandemic has exposed the interdependence of health security and economic security. Thus, governments are confronted with the challenge to employ a comprehensive pandemic response that will contribute to both health security and economic security. Policies, therefore, should strive to keep health care providers and businesses financially viable while balancing the need to continue providing non-urgent or non-essential services. The following are proposed policies that can support the government’s pandemic response:

  1. Provide financial relief in the form of a “global budget” for primary care

Primary care facilities have traditionally relied on fee-for-service which depended on the number of clinic visits. Due to restrictions on in-person visits and challenges in maintaining operations due to reduced demand, primary care facilities can be provided financial relief by instituting global budgets.

As hospitals continue to care for patients in critical condition, primary care facilities will be at the forefront of managing non-COVID conditions such as mental illness, substance abuse, and poorly controlled chronic diseases. Using a global budget will contain costs and allow governments to repurpose available funds to the pandemic response. This type of provider payment should be accompanied by provider incentives to encourage efficiency and utilization and ensure the quality of services.

  1. Increase wealth tax of the rich and employ mandatory coverage of services

Taxation is the easiest revenue source of governments. The intention to impose taxes should be balanced out with the objective to level the playing field, especially in terms of accessing health care services. Higher taxes can substantially reduce disposable income which in turn lowers consumer demand. In this case, taxation during a pandemic can lower demand for health services especially when mechanisms to lower out-of-pocket payments have not been instituted. At the moment, a wealth tax for the wealthiest families and corporations seems to be one of the most rational and equitable sources of revenue for the pandemic response.

The issue of increasing health care expenditures (i.e. out-of-pocket payments) is compounded by economic issues, such as massive unemployment, leaving low-income households more vulnerable. Interestingly, moral hazard seems to have a smaller effect during a pandemic. This provides a stronger argument for governments to enforce a system of cross-subsidies; thus, ensuring financial coverage for accessing essential services. Mandatory coverage promises financial access to health services that may be beneficial for those at the lower end of the income distribution. Those at the lowest income quintiles are not likely to take out coverage voluntarily. The government can step in to stimulate the voluntary purchase of coverage by fully subsidizing it. Mandatory coverage can encourage service utilization and may prevent free-riding even for high-income groups.

In conclusion, the COVID-19 pandemic has exposed deep-rooted and neglected health system issues which will require long-term structural changes. Countries are presented with many policy options that will not only immediately finance pandemic response but also policies that try to achieve social justice and health equity. These policy alternatives should be evaluated to inform how governments can make health care financing, particularly pandemic preparedness, become more effective in the long term. Ultimately, this will have implications on how both domestic and international resources can be used to prepare against future pandemics and sustain effective service coverage.

REFERENCES

  1. World Health Organization. How to purchase health services during a pandemic ? Purchasing priorities to support the. 2020;(April). https://www.uhc2030.org/blog-news-events/uhc2030-blog/how-to-purchase-health-services-during-a-pandemic-purchasing-priorities-to-support-the-covid-19-response-555353/.
  2. World Health Organization. Maintaining essential health services : operational guidance for the COVID-19 context. 2020;(June). https://www.who.int/publications/i/item/covid-19-operational-guidance-for-maintaining-essential-health-services-during-an-outbreak.
  3. Kurowski C, Evans D, Irwin A, Postolovska I. COVID-19 (coronavirus) and the future of health financing: from resilience to sustainability. Investing in Health. https://blogs.worldbank.org/health/covid-19-coronavirus-and-future-health-financing-resilience-sustainability. Published 2020. Accessed June 13, 2020.
  4. Development Aid. Financing of pandemic response: where does the money come from? https://www.developmentaid.org/#!/news-stream/post/62753/financing-of-pandemic-response-where-does-the-money-come-from. Published 2020. Accessed June 13, 2020.
  5. Thomson S, Habicht T, Evetovits T. Strengthening the health financing response to COVID-19 in Europe. 2020.
  6. Barroy H, Wang D, Pescetto C, Kutzin J. How to budget for COVID-19 response? 2020;(March):1-5. https://www.who.int/who-documents-detail/how-to-budget-for-covid-19-response.
  7. World Health Organization. Health systems governance and financing & COVID-19. https://www.who.int/teams/health-financing/covid-19. Published 2020. Accessed June 14, 2020.
  8. World Health Organization. Priorities for the Health Financing Response to COVID-19. DOI:10.1596/33738
  9. Glassman A, Datema B, McClelland A. Financing Outbreak Preparedness: Where Are We and What Next? Cent Glob Dev. 2018. https://www.cgdev.org/blog/financing-outbreak-preparedness-where-are-we-and-what-next.
  10. Cylus J. HOW MUCH ADDITIONAL MONEY ARE COUNTRIES ALLOCATING TO HEALTH FROM THEIR DOMESTIC RESOURCES? https://analysis.covid19healthsystem.org/index.php/2020/05/07/how-much-additional-money-are-countries-putting-towards-health/. Published 2020. Accessed June 18, 2020.
  11. Stone M, Saxena S. Special Series on Fiscal Policies to Respond to COVID-19 Preparing Public Financial Management Systems for Emergency Response Challenges 1. https://blog-pfm.imf.org/pfmblog/2020/03/preparing-public-financial-management-systems-to-meet-covid-19-challenges.html.
  12. World Health Organization. Joint External Evaluation of IHR Core Capacities of the Republic of the Philippines. Geneva, Switzerland; 2019. DOI:10.1142/9789812817945_0010
  13. Gupta S, Barroy H. The COVID-19 Crisis and Budgetary Space for Health in Developing Countries. https://blog-pfm.imf.org/pfmblog/2020/03/preparing-public-financial-management-systems-to-meet-covid-19-challenges.html. Published 2020. Accessed June 21, 2020.
  14. Barroy H. No calm after the storm: time to retool country PFM systems in the health sector. https://p4h.world/en/who-wb-no-calm-after-the-storm-time-to-retool-country-pfm-systems-in-health-sector. Published 2020. Accessed June 21, 2020.
  15. Verma A, Raj A. PFM Solutions in India to Combat the COVID-19 Pandemic.
  16. Philippines Health Insurance Corporation. OFFICIAL STATEMENT ON THE ALLEGED UNPAID CLAIMS TO PRIVATE HOSPITALS RAISED IN A RESOLUTION IN CONGRESS. https://www.philhealth.gov.ph/news/2020/rsltn_stmnt.php#gsc.tab=0. Published 2020. Accessed June 21, 2020.
  17. World Health Organization. Role of Primary Care in the COVID-19 Response.; 2020. https://apps.who.int/iris/bitstream/handle/10665/331921/Primary-care-COVID-19-eng.pdf?sequence=1&isAllowed=y. Accessed June 21, 2020.
  18. Thomson S, Habicht T, Evetovits T. HOW ARE COUNTRIES MOBILIZING ADDITIONAL PUBLIC FUNDS FOR HEALTH? https://analysis.covid19healthsystem.org/index.php/2020/04/27/how-are-countries-mobilizing-additional-public-funds-for-health/. Published 2020. Accessed June 18, 2020.
  19. Office of the Presidential Spokesperson. Palace announces state of public health emergency in PH. https://pcoo.gov.ph/OPS-content/palace-announces-state-of-public-health-emergency-in-ph/. Published 2020. Accessed June 19, 2020.
  20. The World Bank. Fact Sheet: Pandemic Emergency Financing Facility. https://www.worldbank.org/en/topic/pandemics/brief/fact-sheet-pandemic-emergency-financing-facility. Published 2020. Accessed June 21, 2020.
  21. Pillinger BM. The World Bank’s 2017 pandemic response fund isn’t working. The Washington Post. https://www.washingtonpost.com/politics/2020/03/31/world-banks-2017-pandemic-response-fund-isnt-working/. Published March 31, 2020.
  22. Strohecker K. Coronavirus spread triggers World Bank pandemic bond payout. Reuters. https://www.reuters.com/article/health-coronavirus-pandemic-bonds/coronavirus-spread-triggers-world-bank-pandemic-bond-payout-idUSL8N2C861O. Published April 21, 2020.
  23. Evans P. Pandemic bonds were supposed to fund the cost of fighting the coronavirus — so why aren’t they paying off? CBC News. https://www.cbc.ca/amp/1.5469646?__twitter_impression=true. Published February 22, 2020.
  24. Laurent L. Globalization ’ s Winners Are Prime Pandemic Tax Targets. Bloomberg. https://www.bloomberg.com/opinion/articles/2020-06-03/coronavirus-taxation-can-be-done-right-in-post-pandemic-world. Published 2020. Accessed June 22, 2020.
  25. Taylor C. Coronavirus crisis could see wealth taxes implemented around the world , economist claims. CNBC. https://www.cnbc.com/2020/05/11/coronavirus-wealth-taxes-may-be-rolled-out-globally-economist-says.html. Published May 11, 2020. Accessed June 22, 2020.
  26. Africa S. Why make the poor pay for the coronavirus response ? Rappler. https://www.rappler.com/thought-leaders/261874-analysis-why-make-poor-pay-coronavirus-response. Published May 25, 2020.
  27. Fayyad A. Saudi Arabia Isn ’ t Just Raising Taxes. The Atlantic. https://www.theatlantic.com/international/archive/2020/06/saudi-arabia-taxes-coronavirus-pandemic/612493/. Published June 11, 2020.

 

Pen Point 51

The deluge of health information poses a great challenge to patients, especially if the information cannot be critically analyzed and synthesized. Therefore, it is incumbent for health care providers to examine and integrate into a coherent whole all the pieces of evidence coming from disparate sources, and help patients make sense of the rapidly changing health care landscape.

Pen Point 50

Evidence-informed policies sound sensible, right? But why does it not often happen, especially in the Philippines? While the use of evidence in decision-making seems logical, policy-making (sadly) often isn’t rational. It’s almost always political.

Pandemic Financing: How the World is Funding the COVID-19 Response (Part 2)

What are the considerations in the provider payment mechanism?

How we raise money to pay for health care is an important issue. But equally important are the daunting tasks of organizing health service delivery, and compensating individuals and organizations that provide these services. To meet the increasing demand for health care services, health care workers need enough flexibility on methods of service delivery as well as in compensating for financial losses brought about by changing health care needs.

Service providers, especially those who are paid based on service outputs and volume (i.e. case-based payment or fee-for-service), will likely suffer from severe and sudden revenue losses due to the cancellation of elective and other non-urgent medical services.1,5 Moreover, some providers will be confronted with increased expenditure and costs (e.g. purchase of new equipment and supplies, higher staffing needs, etc.) which cannot be paid from their usual revenue sources.1,5 Thus, health and financing systems should quickly provide additional funds to hospitals and primary care facilities to compensate for both actual and anticipated revenue losses.

For health facilities, such as hospitals, who have been paid retrospectively based on fee-for-service or case-based payments, there is a call for a shift to other modes of provider payment.1 It has been suggested that the problem of maintaining provider revenue to prevent bankruptcy can be averted by front-loading budgets or capitation. In such a way, provider payment that would otherwise come through retrospective reimbursement of insurance claims will be paid in advance by providing a budget upfront based on historical utilization levels.1,5 In the Philippines, for example, Philhealth has released more than P43 billion to accredited hospitals to help them in the pandemic response of the country.16

Primary care, on the one hand, provides an essential foundation for the global response to the COVID-19 pandemic. It serves as a gatekeeper that can reduce the demand for hospital services. The main principles of primary care concerning the current pandemic include: (1) identify and manage potential cases as soon as possible, (2) avert the risk of transmission to contacts and health care workers, (3) maintain delivery of essential health services, (4) enhance existing surveillance, and (5) strengthen risk communication and community management.17

Inevitably, as the number of COVID-19 cases increases, the demand for primary care services will also increase. Therefore, health authorities should recognize the need to take immediate action to support the management of COVID-19 cases at the primary care level. Similar to hospitals, this will entail strategies to increase surge capacity and maintain stocks of personal protective equipment and other essential supplies, among others.17 The success of these strategies will be contingent on the availability of funds to support them. As such, widening the fiscal space for primary care facilities should come hand in hand with improving the health financing system for hospitals. This will ensure timely measures to address the needs of vulnerable groups in communities, and that essential health services are maintained to reduce preventable deaths.

In light of the pandemic, primary care also calls for support in innovations in service delivery. These innovations, such as teleconsultation and outside hospital care, aim to minimize the risk of COVID-19 transmission and maintain the provision of essential health services at the primary care level.5 Financial incentives can support the attainment of these objectives. Some European countries have already introduced or amended provider payment mechanisms to remunerate new forms of service delivery.5

Additional funds may also be needed to incentivize essential staff for their dedication and hard work during the pandemic. Pay-for-performance mechanisms are being revisited to adjust performance targets and ensure quality care is provided and incentives are appropriately given to deserving service providers1. Finally, health professionals who will have reduced income due to postponed or canceled elective procedures should also be compensated. Although some revenue may be derived from the adoption of telemedicine in numerous aspects of primary care, many medical and surgical specialties will have to deal with a significant decline in revenue.

What are the implications to the patient payment system within countries?

Citizens should be able to understand the importance of timely diagnosis and treatment of COVID-19. Concerns about the affordability of health care should not be a factor in health-seeking decisions as it may delay people from seeking treatment or be prevented from obtaining the services they need.5,8 Out-of-pocket payments, user fees, and co-payments at the point of care for essential services have been constant financial barriers to accessing health services, and sometimes push people to financial hardship.2,5 It has been argued that co-payments and user fees for all patients, including for non-COVID-19 health services, should be suspended.2,5

When user fees have to be suspended, it must be communicated clearly to people that services are free at the point of care.2,5 Patient benefits should be clearly defined and included in risk communication strategies and public announcements. However, the mere statement of free services might not be enough, especially in countries where people face other barriers to access (e.g. transportation costs).8

Unemployed or self-employed people, and those working in the informal economy, may not be able to pay their insurance contributions. In turn, this may render them ineligible to access health care particularly in health systems where entitlements are linked to payment contributions. To address this, some countries have already extended benefit entitlements to ensure wider coverage.5 In the long run, however, countries that have suspended co-payments / user fees and expanded insurance coverage will need additional resources to compensate service providers for lost user fee revenues.

References:

  1. World Health Organization. How to purchase health services during a pandemic ? Purchasing priorities to support the. 2020;(April). https://www.uhc2030.org/blog-news-events/uhc2030-blog/how-to-purchase-health-services-during-a-pandemic-purchasing-priorities-to-support-the-covid-19-response-555353/.
  2. World Health Organization. Maintaining essential health services : operational guidance for the COVID-19 context. 2020;(June). https://www.who.int/publications/i/item/covid-19-operational-guidance-for-maintaining-essential-health-services-during-an-outbreak.
  3. Kurowski C, Evans D, Irwin A, Postolovska I. COVID-19 (coronavirus) and the future of health financing: from resilience to sustainability. Investing in Health. https://blogs.worldbank.org/health/covid-19-coronavirus-and-future-health-financing-resilience-sustainability. Published 2020. Accessed June 13, 2020.
  4. Development Aid. Financing of pandemic response: where does the money come from? https://www.developmentaid.org/#!/news-stream/post/62753/financing-of-pandemic-response-where-does-the-money-come-from. Published 2020. Accessed June 13, 2020.
  5. Thomson S, Habicht T, Evetovits T. Strengthening the health financing response to COVID-19 in Europe. 2020.
  6. Barroy H, Wang D, Pescetto C, Kutzin J. How to budget for COVID-19 response? 2020;(March):1-5. https://www.who.int/who-documents-detail/how-to-budget-for-covid-19-response.
  7. World Health Organization. Health systems governance and financing & COVID-19. https://www.who.int/teams/health-financing/covid-19. Published 2020. Accessed June 14, 2020.
  8. World Health Organization. Priorities for the Health Financing Response to COVID-19. DOI:10.1596/33738
  9. Glassman A, Datema B, McClelland A. Financing Outbreak Preparedness: Where Are We and What Next? Cent Glob Dev. 2018. https://www.cgdev.org/blog/financing-outbreak-preparedness-where-are-we-and-what-next.
  10. Cylus J. HOW MUCH ADDITIONAL MONEY ARE COUNTRIES ALLOCATING TO HEALTH FROM THEIR DOMESTIC RESOURCES? https://analysis.covid19healthsystem.org/index.php/2020/05/07/how-much-additional-money-are-countries-putting-towards-health/. Published 2020. Accessed June 18, 2020.
  11. Stone M, Saxena S. Special Series on Fiscal Policies to Respond to COVID-19 Preparing Public Financial Management Systems for Emergency Response Challenges 1. https://blog-pfm.imf.org/pfmblog/2020/03/preparing-public-financial-management-systems-to-meet-covid-19-challenges.html.
  12. World Health Organization. Joint External Evaluation of IHR Core Capacities of the Republic of the Philippines. Geneva, Switzerland; 2019. DOI:10.1142/9789812817945_0010
  13. Gupta S, Barroy H. The COVID-19 Crisis and Budgetary Space for Health in Developing Countries. https://blog-pfm.imf.org/pfmblog/2020/03/preparing-public-financial-management-systems-to-meet-covid-19-challenges.html. Published 2020. Accessed June 21, 2020.
  14. Barroy H. No calm after the storm: time to retool country PFM systems in the health sector. https://p4h.world/en/who-wb-no-calm-after-the-storm-time-to-retool-country-pfm-systems-in-health-sector. Published 2020. Accessed June 21, 2020.
  15. Verma A, Raj A. PFM Solutions in India to Combat the COVID-19 Pandemic.
  16. Philippines Health Insurance Corporation. OFFICIAL STATEMENT ON THE ALLEGED UNPAID CLAIMS TO PRIVATE HOSPITALS RAISED IN A RESOLUTION IN CONGRESS. https://www.philhealth.gov.ph/news/2020/rsltn_stmnt.php#gsc.tab=0. Published 2020. Accessed June 21, 2020.
  17. World Health Organization. Role of Primary Care in the COVID-19 Response.; 2020. https://apps.who.int/iris/bitstream/handle/10665/331921/Primary-care-COVID-19-eng.pdf?sequence=1&isAllowed=y. Accessed June 21, 2020

Pen Point 49

Various provider payment mechanisms will continue to exist in the country’s health care system. Emphasis is placed, however, on the current movement towards using performance-driven, prospective payments (e.g. Global Budget Payment) based on diagnosis-related groups (DRG). The shift to DRG-based GBP will not be easy. Mechanisms should be in place to avoid underprovision and ensure quality health care.

At the end of it all, “mixing” of provider payment mechanisms can be complementary or compensatory. It is promising how incentives will come into play when these mechanisms align themselves during the implementation of the UHC law.

Happy to know that PHIC is now working on this with various agencies. Very few hands on deck though.