Challenges and recent experience of countries leveraging provider payments in support of universal health coverage in Thailand Phusit Prakongsai, MD. Ph.D. International Health Policy Program (IHPP) Ministry of Public Health of Thailand Presentation to expert group meeting on provider payments WHO Barcelona Office, Spain 27 February 2011

Health financing arrangements and three public health insurance schemes in Thailand after achieving UHC in 2002 Full capitation Capitation for OP DRG with global budget FFSuntil 2006, DRG for IP Direct billing FFS(2006+) for OP Traditional FFS for OP Source: Tangcharoensathien et al. (2010)

Characteristics of three main public health insurance schemes CSMBS SSS UC scheme Scheme nature Fringe benefit Mandatory Citizen entitlement Population Gov employees, pensioners and their dependants (parents, spouse, children) 5 Million (8%) Formal-sector private employees, establishments/ firms of more than one worker since 2002 9.84 Million (15.8%) The rest of population who are not covered by SSS and CSMBS 47 Million (75%) Source of finance General tax (~323 US$/Cap*) Tripartite from employer, employee, government rate 1.5% of salary (max salary: 441 US$ - health care 37 US$ /Cap, total 63 US$/Cap) (62 US$/Cap) Management organization Comptroller general under ministry of finance Social security office under ministry of labor and welfare National Health Security Office (NHSO) Benefit package No preventive care No explicit exclusion Special bed Small number of exclusion lists eg. Organ transplantation, non medical plastic surgery, etc Small number of limited condition Prevention & promotion Payment OP: Fee-for-service IP: DRGs (piloted for only 2 years) Capitation with additional payments for high utilization rate and chronic illness patients OP: Capitation IP: DRGs with global budget Year 2008, CSMBS = Civil Servant Medical Benefit scheme, SSS = Social Security Scheme, UC scheme = Universal Coverage Scheme Adapted from: Mills et al. 2005; Srithamrongsawat S. Thammatacharee J. 2009 3

GNI per capita, US$ on a road towards UHC, 1970-2009

Historical development: provider payments 1991 Inclusive capitation Fee-for-service (FFS)  Mixed allocation   1993-4 Global budget 1995 Adjusted utilization Fee-schedule: HC 1998 Per capita allocation 1999 Demand side Piloting DRG/ Capitation DRG system for HC 2000 control  2001 Adjusted for risks 2002 Capitation and DRG weighted global budget 2005 Age-adjusted capitation 2006 Fee-schedule Performance-based payment Year SSS CSMBS MWS Health Card Uninsured This slide summarize historical development of payment methods in Thailand. Inclusive capitation was first introduced in 1991 by the Social Security Scheme and additional payments were added in later to collect the problem of selection bias according to free choice of beneficiaries to register with contracted hospitals. Per capita budget allocation was first implemented by the previous Health Card scheme, a public subsidized voluntary health insurance scheme, in 1994 when the government started to provide equal matching funds for the scheme. The Medical Welfare Scheme for the poor and other vulnerable groups also moved away from supply-side allocation formula to a per capita budget allocation later in 1998. A system of Diagnosis Related Group with global budget and capitation payments were piloted by the Medical Welfare Scheme and the Health Card scheme in 1999 and these two payment methods have been adopted as main payment methods by the UCS.

UHC scheme payments Basic health care ARV drug UC fund Provider RRT Capitation in OP, DRG with global budget in IP Population/patient ARV drug Fee schedule & development plan UC fund Provider RRT Fee schedule & development plan Chronic (DM/HT) Point by no of pt Mental health (Medicine) Medicine supply & development plan

Basic health care Type Payment Out patient(general Capitation with diff cap by age structure In patient (general) DRG with global budget Special budget for special area Cost function OP/IP special service Point system with global budget P&P Capitation, fee schedule, project based Rehabilitation Fee schedule, project based Thai traditional health service Fee schedule with global budget Capital replacement Capital investment plan Quality performance Specific criteria No fault liability for health personal No fault liability for patient

Coverage of health insurance: 1991-2003 Currently, there are three main health insurance systems which cover 95% of the Thai populations. The Civil Servant Medical Benefit Scheme cover around 9% of the populations similar to the Social Security Scheme. And the UC scheme covers around 47 million or around 75% of the populations. Source: HWS 1991, 1996, 2001, 2003

Achievements after implementation: key financing functions

Decreasing regressive (OOPs) and increasing progressive sources of finance (direct tax) over time

Increasing share of public financing sources in Thailand after achieving universal coverage Achieving UC Total health expenditure during 2003-2008 ranged from 3.49 to 4.0% of GDP, THE per capita in 2008 = 171 USD Capitation payment for UC beneficiary in 2010 = 80 USD per capita

Financial risk protection 1: Household OOP as % household income, 1992-2008 As a result from the UC policy and other piecemeal approaches, the proportion of HH spending on health to income in the first decile decreased from 8.2% of income in 1992, to 2.0% in 2008, while that of the richest decile was approximately 1.2-1.3% in the same period. Source: Analysis from household socio-economic surveys (SES) in various years 1992-2008, NSO

Financial risk protection 2: Incidence of catastrophic health expenditure 2000-2006 Source: Analysis from NSO SES 2000-2006

Trend of health impoverishment 1996-2008

Distribution of budget subsidies for health: BIA, 2001 and 2007 When we analyzed government subsidies on health gained by different income quintiles, we found that in 2003, the first and second quintiles gained higher percentage of net government health subsidies, compared to the situation before UC. In contrast, the proportion of the net government health subsidies in the third to the fifth quintiles decreased after implementation of universal coverage. The concentration indexes of the net government health subsidies in 2003 had a higher negative value than the subsidy in 2001, which means the poorer gained more government health subsidies in 2003 than the situation before UC.

Profile of government health subsidies 2004

Fee-for-service CSMBS experience CSMBS’ OP-IP health expenditures (1988-2010) 2006 implementation: - IP DRG system - OP direct billing 1997 Asian economic crisis and conservative reform It would reach the ‘double expenditure’ milestone every 6 years if the annual growth was 12.5% The growth is real term, the expenditure here is a current-year nominal term. One slide nominal term both exp and growth, another slide in real term. There is a bit of work but very useful as future reference in HCF work krub. An asset for the country krub. Another key parameter is Baht per beneficiary comparision 3 schemes which is utmost important, perhaps in another slide krub. Any possible explanations of -2% annual growth 2009-2010? This is mainly due to slow increase in OP exp, while IP expenses were stabilized, although it's a conventional DRG where Baht per RW was given upfront. There is also limited as it is already full capacity of public hosp private wards to accommodate more admissions. If private admission is allowed, it would stir IP expenditure due to abuse and unnecessary admission. (Expenditures in nominal term) Source: Comptroller General Department, Ministry of Finance 18

Trends in Equity of Utilization of Health Facilities: 2001-2007 (based on analysis of concentration indices) 19 19

Summary: achievements Financing sources General tax and SHI contributions constituting 2/3rd THE - are very “progressive” or pro-poor. Marked decline in out-of-pocket expenditure to 18% of THE with elimination of rich-poor gap of OOP Financial risk protection Very low level of catastrophic health spending and impoverishment Public subsidies of health facilities Pro-poor subsidies of out patient and in patient Utilization of health facilities Pro-poor utilization of publicly financed out/in patient facilities Pro-rich utilization of privately financed out/in patient facilities

Contributing Factors to Effective Implementation Systems design for equity and efficiency Prakongsai et al, the equity impact of the universal coverage policy: lessons from Thailand, in Chernichovsky and Hanson (eds), Innovations in health system finance in developing and transitional economies 2009. Supply side capacity to deliver services Extensive geographical coverage of functioning primary health care and district health systems Long-standing policy on government bonding of rural services by doctor, nurse, pharmacist and dentist new graduates Availability of quality private services for which rich either covered by private insurance or OOP, can opt out Adequate funding Continued political commitment despite changing political party UC budget was estimated by actual utilization X actual unit costs projected for that year Financial access is determined by Comprehensive service package Zero co-payment at registered provider network

The increasing health budget 77,720.7 mil. ฿ (8.1%) 16,225.1 mil. ฿ (4.8%) 986.6 mil. ฿ (3.4%) In 2011, Public health budget rose to 13% of National budget 29,000 mil. ฿ 1972 335,000 mil ฿ 1,028,000 mil ฿ Using the fiscal space created by an improving security situation, along with strong economic growth and a commitment by successive governments to improving health care, the budget for health has been increased gradually and now stands at 14% of total budget. Not only has the budget increased but the health budget as a proportion of the total government budget has increased. 1990 National budget 2004 Public health budget 22 22

Long-term financial projection, 2006-2026 based on 1994-2005 NHA, by ILO and Thai experts in 2008

Contributing Factors to Effective Implementation Strong institutional capacities Information systems Burden of Disease, National Health Accounts, National Drug Account, National AIDS Spending Account, national household datasets for routine equity monitoring Health technology assessment HITAP institutional relation with UK NICE Key platforms for evidence informed decision National Essential Drug List sub-committee Benefit package sub-committee Mandatory economic evaluation and budget impact assessment for new drugs/interventions

Conclusions Health systems in Thailand equitable and responsive Full geographic coverage, well staffed and funded PHC capacity to absorb rapid increase in utilization translation and implementation capacity translate policy into real actions, M&E and feedback loops for fine-tuning policies strong leadership with continuity, Not only political but financial commitment Capable technocrats Active civil society long term investment in institutional capacity strengthening in health policy and systems research, Evidence generation, Effective mechanisms for evidence informed policy decisions First and foremost, the capacity of health service infrastructure, district health systems if the critical strategic hub in translating policy wishes into reality. It is geographically accessible by rural poor, A functioning PHC is not possible if there is no health workforce there. We introduced mandatory rural services since 1972. Access to care is not possible without removal of financial barrier through financial risk protection policies. It is the national health plans which ensure continuity of policies and programs. It is the merit of different political leaders in continuing good programs, It is the evidence which shows these programs deserve continuity.

Key challenges of UHC in Thailand Data from National Health Accounts (NHA) indicate the majority of health finance was spent on curative care, and low investment in health promotion and disease prevention - only 5% of THE in 2009, Inequitable distribution of human resources for health especially medical doctors and nurses is the key challenge in equitable access to MCH care, Harmonization of three public health insurance schemes, Double burden of disease (BOD) from communicable and chronic non-communicable diseases, Aging society and increasing demand for health care, Advance in expensive medical technologies including medicines.

Acknowledgements Ministry of Public Health (MOPH) of Thailand National Statistical Office (NSO) of Thailand National Health Security Office (NHSO) of Thailand Health Systems Research Institute (HSRI), Health Insurance System Research Office (HISRO) of Thailand, World Health Organization (WHO) London School of Hygiene and Tropical Medicine (LSHTM), United Kingdom