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.

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.

 

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.

Pandemic Financing: How the World is Funding the COVID-19 Response (Part 1)

Introduction

Many countries are scrambling to respond to the COVID-19 pandemic. The primary focus has been on strengthening health systems to improve surge capacity1,2. At the same time, countries are faced with the difficulty of balancing the demands of responding to the pandemic with the need to maintain the delivery of essential health services2. This increasing demand for health care can further strain health systems around the world. Thus, resulting in a dramatic increase in direct mortality from the outbreak and indirect mortality from preventable and treatable health conditions2.

A key challenge to the pandemic response is the struggle to reconcile scarce resources with many competing priorities. Many health systems, however, were already overwhelmed and underfunded even before the pandemic3. Unsurprisingly, the COVID-19 pandemic has caused a significant blow on the global economy, further constraining the fiscal capacities of economically-vulnerable countries3,4.

Timely policy actions are crucial to mitigate both the health and economic shocks brought about by the pandemic5. Therefore, governments must create a public finance environment that can provide sufficient funding to ensure a comprehensive pandemic response while also taking into account economic and fiscal constraints6.

How is the expression of health valuation and prioritization highlighted in the COVID-19 response?

Health financing policies are required to strengthen the pandemic response. Such policies should focus on (1) raising adequate revenues, (2) organizing these revenues to maximize risk-sharing across the entire population, and (3) mobilizing public funds so that they can be effectively translated into the provision of health services7.

Population-based services, such as comprehensive surveillance, data and information systems, and communication and information campaigns, take priority in the pandemic response. Funding these health services will help ensure that public health functions needed to respond to the crisis are all in place8. Unfortunately, in many countries, investment in the national capacity to prevent, detect, and respond to pandemics was not prioritized in recent years8. In some countries, a systematic financing response has not been established to help address these capacity gaps9.

Additional domestic spending can come from a mix of sources and is used to address different health system issues arising from the pandemic5. In Lithuania, the additional expenditure amounting to $386 purchasing power parity (PPP) per person was intended to cover equipment, salaries, and social security coverage10. In contrast, some countries, such as Bosnia and Latvia, have allocated less than $20 PPP per person from domestic resources for their pandemic response10. It is also interesting to note the variation of health spending across countries. Some countries have large additional budgets but have spent only a fraction so far. France and Croatia spend less than 2% of their regular health spending while Cyprus and Lithuania spend 12.4% and 27.2% of their regular health spending, respectively10.

The situation, then, begs us to ask the question, “How much additional funding should countries spend on their COVID-19 response?” Truth be told, it is difficult to determine the right amount of health spending for a pandemic response. The answer is probably context-specific and highly depends on the needs of the country. What is certain, however, is the fact that more additional funding will be required to meet the growing demand for non-essential health services together with the public health measures employed in the pandemic response. Undoubtedly, there will be higher health expenditure and more budget injections throughout the COVID-19 pandemic.

What are the challenges in financing the COVID-19 response?

In response to this, many countries have already reconfigured health service delivery to meet the immediate health care needs of their populations. However, a supportive health financing response is necessary to scale up both population-based and individual services, especially in countries that heavily rely on out-of-pocket payments1,8. Many of these countries were already experiencing significant gaps in health system coverage which can pose additional challenges to mitigating both health and economic shocks caused by the COVID-19 pandemic5.

1.  Inadequate sources of funding

Like previous public health emergencies (e.g. Ebola), the COVID-19 pandemic will again test public financial management systems in their capacity to support fiscal objectives. Challenges that these systems will face may come from (a) reassessing fiscal policy needs and identifying additional financial resources; (b) ensuring timely availability of funds to service delivery units; (c) tracking accounting for transparent reporting; and (d) ensuring business continuity11. Some countries will have an array of emergency response mechanisms at their disposal and most countries will utilize one or more of the available health financing tools to cope with emergency spending. Through public financial management systems, some governments have the capacity to activate contingency funds in emergency situations including pandemics5,6.

Arguably, major gaps in the health financing system are more challenging to address at the subnational level. In the Philippines, for example, funding level and spending capability vary substantially by local government unit. Some local government units have insufficient funds or sub-optimal budget allocation to implement an effective response to public health emergencies12. Thus, funding for a pandemic response may not always be allocated or readily available to support priority public health measures, especially at the subnational level.

Reprioritization through virements between government programs has been considered the primary action in securing budget funding for immediate pandemic response6. Private donations from individuals and local businesses have also been relied on as secondary sources of additional funding. Reallocating existing health budgets and private donations, however, may not be enough to fund health financing needs in the long run10. Conversely, many of the countries with low levels of an additional spending budget will eventually rely on funding from external donors such as the World Bank10.

2.  The need for timely and appropriate fund disbursement

More than the availability of funds, a financing mechanism is essential for the timely response to public health emergencies. Timely and appropriate financial decision-making requires a coordinated and harmonized governance structure across government agencies. The speed by which a country can respond to a public health emergency may depend on its public financial management system which establishes the rules and regulations for budget allocation and spending. In Australia and France, these rules are flexible which allowed for the rapid reallocation of program-based budgets and the immediate release of such funds to health care providers13.

An accelerated disbursement process will allow advance appropriation and fast-track payments to meet the spending needs of health systems. Several countries have explored different approaches to accelerate the release of public funds to government agencies and/or health service providers both in national and subnational levels14. In India, for example, procedures for fiscal transfers to subnational levels have been accelerated by authorizing emergency spending transactions without the approval of the Minister of Finance15.

In the Philippines, a quick response fund of the Department of Health is available and can be accessed when needed during times of emergencies and disasters. However, there is limited coordination and flexibility to reallocate or transfer the quick response fund to other key government agencies to support the response to public health emergencies12. The total turn-around time for the release of this fund takes about one to three weeks. When the disbursement of the fund is anticipated to last more than one week, the requesting office is asked to initially utilize their regular funds12. Hence, there is a need to enhance the capacity to optimize resource allocation by instituting innovative financing mechanisms that can hasten the disbursement of funds where they are needed most.

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.

 

Health Economics Series: Provider Payment in the UHC era

The country is considering several options for provider payment reform that will help achieve universal health care. Population-based interventions will be primarily offered by the government. As such, provider payment mechanism for these interventions will include salary and capitation. Philhealth considers primary health care capitation to promote integrated care through the service delivery network; thus, ensuring efficiency resulting to better health outcomes and financial protection. Moreover, funds in provincial and city-wide service networks for both population- and individual-based interventions will be pooled into a special health fund intended for health services. Sources for this fund include grants and subsidies from the national government, income from Philhealth payments, and other financial grants or donations.

For individual-based interventions, several payers are likely to use various payment mechanisms. The country’s social health insurance (SHI) will continue to use case rate payment system and capitation while transitioning to diagnosis related groups (DRG) for contracted networks and apex hospitals. Private companies, such as HMOs and PHIs, will likely continue to offer case rate payment and/or fee for service payment for their customers.

HPS 252 Provider Payment

The diagram sends us a message that 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 based on DRGs. 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.