Functional and Regulatory Review of Strategic Health Purchasing Under JKN POLICY NOTE July 15, 2018 Purchasing of Referral Services Under JKN Introduction The JKN benefits package covers a comprehensive implementation of JKN and as part of that mandate range of secondary and tertiary referral services for commissioned a review of strategic purchasing under participants. Purchasing of referral services under JKN JKN in partnership with USAID, the World Bank, Abt is carried out by Badan Penyelenggara Jaminan Sosial- Associates and Results for Development (R4D). This Kesehatan (BPJS-K), with some purchasing functions policy note summarizes the results of the strategic distributed across other institutions, including the purchasing review focused on the current status, Ministry of Health (MOH) and local government. results, and challenges of strategic purchasing of The Social Security Council (Dewan Jaminan Sosial secondary and tertiary services from referral facilities Nasional--DJSN) is responsible for overseeing the (FKTRLs) under JKN. BOX 1. FOUNDATIONS OF STRATEGIC HEALTH PURCHASING Strategic purchasing requires an institutional home where most purchasing functions will be carried out, although other institutions will likely be responsible for some purchasing functions. being clear and deliberate about what is being purchased, which starts with a well-defined benefits or essential services package. Once the service package is defined, the purchaser pays health providers specifically to deliver these services, which is referred to as output-based payment. Output-based payment typically goes hand-in- hand with some form of contracting to clarify the obligations of the provider and also the purchaser. It also requires that providers have some autonomy to make decisions to respond to incentives—they can decide to shift their staff around or other inputs. All of this requires new accountability measures and better use of information. PURCHASING OF REFERRAL SERVICES UNDER JKN What to Purchase article 43 A, which states that “BPJS-K develops the system of technical operationalization of services, quality control system, cost control system and the health facility payment in order to increase efficiency and effectivity Strategically deciding what to purchase for referral in coordination with related ministries.” Purchasing services means: agencies often have the authority to select which service delivery and quality standards (e.g. standard clinical a. The package of covered secondary and tertiary practice guidelines) will be used for purchasing services, services covered is clearly specified. even if they do not develop them. The role of BPJS to b. Quality or service delivery standards are defined that establish quality and service delivery standards for are used for purchasing decisions. referral services has not yet been operationalized. c. Mechanisms and/or financial incentives are in place to ensure that services are delivered at the REFERRAL SYSTEM appropriate level of care The health system in Indonesia has defined classes of hospitals that form the basis for a tiered referral system REFERRAL SERVICE PACKAGE AND SERVICE [Minister of Health Regulation Number 56 in 2014]. Type DELIVERY STANDARDS A hospitals provide a wide range of sub-specialty services, The JKN entitles participants access to a comprehensive and include teaching hospitals owned by the MOH. Type package of necessary health services, including B hospitals provide a wide range of specialist services comprehensive referral care [Presidential Regulation and a limited range of sub-specialist services. Type B Number 12 of 2013 Chapter IV on Health Care hospitals are established in each provincial capital as the Benefits]. The referral service package is defined as: referral point for district hospitals. Type B also include some teaching hospitals that are not classified as Type A 2 a. outpatient specialty services, which consist of: and receive case referrals from district hospitals. Type C • administrative services; hospitals provide limited specialist services, which should • examination, treatment and specialist consultation at the minimum include internal medicine, surgery, by a medical specialist or sub-specialist; pediatric medicine and obstetric services. Type C hospitals • specialist medical treatment in line with the receive case referrals from the puskesmas. Type D medical diagnosis. hospitals those that are in transition to becoming Type C • medicine and medical consumables hospitals, which currently only provide general medicine • medical implant services and dental services. • advanced diagnostic services in line with the medical diagnosis The tiered referral policy that limits referrals according • medical rehabilitation to level of care (e.g. Level C hospitals can only accept • blood services referrals from puskesmas; Level B hospitals can only • medical forensic services accept referrals from Level C hospitals, etc.). The MOH • morgue services at health facilities also has recently enacted a stricter referral policy, which b. inpatient services, which consist of: limits payment for hospital cases that were not referred • non-intensive care hospitalization by the appropriate class of health facility. There is also • intensive care hospitalization a referral back system from hospital to primary care. • other medical services as stipulated by Minister BPJS-K has begun refusing to pay claims for inappropriate referrals, but this has been challenged by specialists. There is lack of clarity in the JKN law and regulations Furthermore, the lack of availability of certain medicines about authority for setting standards of care for referral in puskesmas makes it difficult to enforce the referral services purchased by BPJS-K. Law No 40/2004 Article 19 system consistently. Some stakeholders note that the states that BPJS-K sets the standards, the role of MOH is policy is discouraging inappropriate referrals in some to support hospitals accreditation, and the role of local cases. For example, the national referral hospital noted a government is to contribute incentive payments for steep decline in lower severity cases, which is likely to be specialized physicians. Some stakeholders also argue that a more appropriate case mix for that level, but there is also the responsibility for setting service delivery standards now less opportunity to cross-subsidize more costly cases is also clear in President Regulation number 19/2016 with excess revenue from simpler cases. Nonetheless, POLICY NOTE BPJS-K found that 1.2 million cases referred directly to CREDENTIALING AND SELECTIVE CONTRACTING Type A hospitals by puskesmas. BPJS-K is working to the BPJS-K contracts with health providers that meet health management information system by bridging the criteria for credentialing specified by the MOH P-Care and claims data to better enforce the tiered referral (Regulation of Minister of Health Number 71 of policy. 2013 Chapter III Cooperation of Health Facilities with BPJS Healthcare Section Two Article 9). The purpose of credentialing is to improve the availability From Whom to and accessibility of health facilities as well as the standardization effort of health facilities quality. Of Purchase the 2,408 registered hospitals in Indonesia, and there are 1,614 (67%)are credentialed as JKN providers. The BPJS-K credentialing process is as follow: Strategically deciding from whom to purchase → → needs analysis mapping of providers → profiling  secondary and tertiary services means: → credentialing → tariff agreement → contract a. Ensuring there are sufficient providers with According to Minister of Health Regulation number adequate capacity to deliver the PHC referral 71 hospitals that have a contract with BPJS must service to all JKN participants (“supply-side have the certificate of accreditation. Many of the readiness”). government hospitals do not have the certificate of b. Standards are established for hospitals to be accreditation or even meet the minimum standards contracted by the purchaser to deliver services to for their hospital class, but they are still contracted by JKN participants (credentialing), and public and BPJS-K. Preliminary evaluation by BPJS-K of hospital hospitals can be contracted equally if they meet input standard compliance shows that: only 6% of 3 credentialing criteria. class A public hospitals complied with Ministry of Health Regulation Number 56, nearly all of the class SUPPLY-SIDE READINESS B hospitals were non-compliant, and only 15% of the Local governments have the overall responsibility to class C hospitals were compliant, and 6% of class D ensure there is adequate infrastructure to supply the hospitals were compliant. referral services covered by JKN [Law Number 23 year 2014 concerning local government; Law number 32 How to Purchase year 2004 article 22; Health Law Number 36 year 2009 article 16,17; President Regulation 12/2013 article 35]. The licensing of private hospitals has also been decentralized, with subnational authorities responsible for issuing two-year licenses, according to standards set Strategically deciding from whom to purchase by the MOH. The MOH Directorate of Referral Services secondary and tertiary services means: of the Ministry of Health also provides an overall roadmap for ensuring that there is a match between a. Contracting procedures are in place that are supply and demand of health services. Mismatch leveraged to specify and create incentives to between supply and demand for JKN referral services adhere to service delivery and quality standards, continues, however, with under-supply in many specify reporting requirements for providers, rural and remote areas. On the other side, there can be and include other provisions that specify the over-supply of higher level facilities when investment responsibilities of providers and the purchaser. decisions are made at the local level that are based on b. Provider payment systems are selected, designed political pressures rather than an assessment of service and implemented to create the right incentives to need. These supply-side decisions also affect the costs drive provider behavior and service delivery toward to BPJS-K, because the agency is obligated to contract quality, efficiency, and other objectives. with all public facilities that meet credentialing criteria c. Monitoring of hospital performance and quality and when a hospital is upgraded to a higher level assurance systems are carried out routinely by BPJS-K is obligated to pay higher tariffs. the purchaser and used to provide feedback to improve provider performance. PURCHASING OF REFERRAL SERVICES UNDER JKN CONTRACTING AND PROVIDER PAYMENT FOR PHC coding. A separate component is based on costing that The original social security law of 2004 [Law no. 40 assigns a weight and any accompanying tariff to each Article 44 the National Social Security System] states case group. that “The Social Security Administering Body shall develop a health service system, a service quality In addition to the payment rates (tariffs) being control system, and health service payment system considered to be low overall, representatives from to improve the effectiveness and efficiency of health hospitals and hospital associations noted that the insurance.” A 2013 regulation [Regulation of Minister grouping and weights are inadequate to capture of Health Number 71 of 2013 CHAPTER VI Quality actual relative cost differences, particularly for the and Cost Control], however, states that the MOH national referral hospital, even given that Type A should coordinate with the Health BPJS to develop national referral hospitals have higher costs that are the technical operation of the health care system, accounted for in their payment rates. For example, quality control system, and health care payment no differentiation in payment outlier cases or for ICU system to improve the efficiency and effectiveness of cases was considered, putting the hospitals at great the Health Insurance. financial risk. The hospital representatives noted that while in many cases the relative tariffs are too low, By regulation, refers to the Indonesian Law: 44/2009 in some cases such as cataract the relative tariff is too article 49 stated that the MOH is responsible to develop high, which pushes hospitals toward more profitable provider payment systems for both at primary care types of cases so they can cross-subsidize underpaid facilities and hospital levels. In fact, the MOH has not cases such as ob-gyn. only developed the provider payment systems but The INA-CBG tariffs are adjusted by the class of also the payment rates paid to the health facilities. hospital, based on a review of the average cost-per case Presidential Regulation Number 12 Article 37 states discharged from the hospitals in that class obtained 4 that payment rates should be based on agreement from costing exercises across several hospitals. Under between BPJS-K and the association of health facilities the JKN program, the tariffs of specialty hospitals are “with reference to” the standard tariff specified by differentiated from non-specialty hospitals. Article the Ministry. The regulations on which institution is 16 of the MoH Regulation No. 52 of 2016 states that a responsible for developing the payment systems for health service delivered by a specialty hospital beyond referral services and establishing payment rates are its specialization is paid according to the INA-CBG tariff unclear and contradictory, and in practice BPJS-K has of hospitals class one level higher than the hospital. had a very limited role in provider payment policy and There are a number of inconsistencies in the regulations rate-setting. The MOH sets the INA CBG tariffs based on classification and tariff calculations for specialty on input from the National Casemix Center (PPJK). hospitals that create confusion and lack of transparency. BPJS-K and professional associations have not been If the case groups for the INA-CBGs were technically significantly involved in tariff calculations. Since most valid, however, the level of hospital would not need of the public hospitals, in particular type A and some to be part of the tariff. There are incentives to invest in type B, are owned by the central MOH, MOH may have expensive equipment to upgrade hospitals to a higher conflicting interests in the price-setting. classification to receive higher tariff payments. On the other hand, it may be appropriate to differentiate INA- Presidential Regulation number 12 year 2013 states CBG tariffs by region because of Indonesia’s geographic that BPJS-K should pay FKTRLs based on Indonesian diversity, but this has not been done. Case Base Groups (INA-CBG’s), with the INA-CBG tariffs reviewed at least every two years by MOH in A more general concern with all of the payment systems coordination with the Finance Minister. There are used to purchase services under JKN is that they are many challenges with the current INA-CBG payment fragmented across different levels of care with no system that have limited its effectiveness for strategic linkages between capitation for PHC and the INA-CBG purchasing. The INA-CBG payment system consists payment system for secondary and tertiary services. of several components that are inter-related. The first component is the set of case groups that organize Although there is agreement across all stakeholders diagnoses into groups for payment. The case groups that it is necessary to more fully engage the private relate to the service output, the clinical pathway, and sector in JKN to improve supply-side capacity, current POLICY NOTE government purchasing mechanisms do not create a The detection, classification, monitoring and reporting level playing field for private providers and encourage of fraud are based on BPJS-K Regulation No. 7 of 2016 investment. For example, BPJS-K pays the same on Fraud Prevention System in the Implementation INA-CBG rates to both public and private providers, of Health Insurance Program. The Anti-Fraud although public providers are highly subsidized by Management Department in MPKP and MPKR Groups the government, which covers health worker salaries monitor and report on incidents of fraud by JKN and investment costs. Furthermore, private providers participants, health facilities, and BPJS-K officers, as complain that unlike public providers, they cannot well as implement preventive mechanism that: access medicines at favorable prices through the government procurement system. Some private, not- a. Strengthens cooperation agreement (PKS) for-profit hospitals are forming networks to be able to b. Provides Early Warning System for Participant negotiate better prices for medicines. Private hospitals Eligibility Letter (SEP) Application verification are at a further disadvantage as they are taxed as (consensus-generated warning) business enterprises. The Ministry of Health has raised c. Provide Fraud Incidents Detection System or the issue of tax exemption status for private hospitals, Techniques but it has not yet been addressed. MONITORING PROVIDER PERFORMANCE AND QUALITY OF REFERRAL SERVICES Both Presidential Regulation Number 12 of 2013 on Health Care Benefits and Regulation of the Minister of Health Number 71 of 2013 CHAPTER VI Quality and Cost Control Article 38 state that BPJS-K is responsible for monitoring provider performance, although the 5 same regulations also give the MOH responsibility for monitoring and quality control, so the institutional responsibility for this function is unclear. Regulation of the Minister of Health Number 71 states that BPJS-K should monitor quality through a cost and quality control team (Tim Kendali Mutu dan Biaya- -TKMKB) made up of representatives of professional organizations, academicians, and clinical experts. TKMKB is independent but BPJS-K provides support for the activities. The TKMKB structure comprises the central level, regional division level and branch level. Regular meetings are held with relevance to: a. health care quality service evaluation, utilization review b. medical audit performance c. ethical and professional orderliness dissemination and guidance BPJS-K also periodically conducts claims audits with agreement of all parties involved. The auditors come from the Financial Services Authority (OJK), Financial Examination Agency (BPK), Corruption Eradication Committee (KPK), Public Accountant Office (KAP), as well as internal auditors of the hospital and BPJS-K. PURCHASING OF REFERRAL SERVICES UNDER JKN Options for Improvement in Strategic Purchasing of PHC Under JKN Some of the challenges with strategic purchasing of secondary and tertiary services under JLN stem from lack of clarity in the regulation (contracting and provider payment and provider performance and quality monitoring), while others stem from the general status of health facility infrastructure and clinical capacity (referral system, supply-side readiness and credentialing and selective contracting of FKTPs. OPTIONS TO IMPROVE STRATEGIC HEALTH PURCHASING UNDER JKN Purchasing Related Regulations Options for Improvement Function Accountability Law no. 40 on the National • Strengthen accountability through improved governance system of JKN with Social Security System clear definition of which institutions are responsible for which outcomes of JKN implementation. Law No. 24 of 2011 Chapter • Clarify the mandate and accountability of BPJS-K as both a health and a VIII Accountability Article 37 finance institution, increasing accountability for access to service by JKN participants, effective and efficient service delivery, quality of care, and cost management. • Establish a routine monitoring system based on a jointly used database of BPJS-K claims data, other MOH service utilization data, and other key 6 indicators and data sources. • Establish a link between central-level financial transfers to sub-national governments and accountability for JKN implementation. WHAT TO PURCHASE Service delivery Law No 40/2004 President Gradually shift authority to BPJS-K to select which service delivery and quality standards Regulation number19/2016 standards (e.g. standard clinical practice guidelines set by MOH) will be used for article 43 A purchasing services, even if the agency does not develop them. FROM WHOM TO PURCHASE Supply-side readiness Law Number 23 year 2014 • Establish regional-level joint service delivery planning team including concerning local government representation of local governments, District Health Offices, professional associations (public and private), and local branches of BPJS-K to discuss Regulation of Minister of service delivery investment needs to meet service delivery standards but in Health No. 71 of 2013 consideration of the budget impact on BPJS-K. • Increase regional commitment to allocate funds used to build adequate health facilities, particularly in rural and remote areas. • Improve regulations to allow compensation funds as an alternative for source of health expenditure in some rural and remote areas with low fiscal capability. • Increase partnerships with the private sector, particularly for rural and remote areas, with the payer for the health care, BPJS-K, as the guarantor. Selective contracting Regulation of Minister of • Increase the role of BPJS-K in the contracting function by giving greater Health Number 69 on Health authority to establish provider selection criteria, establish the terms of Services Standard Rates At contracts, negotiate contracts with providers, and monitor and enforce First Level Health Facilities contracts. and Advanced Level Health • Implement the BPJS-K credentialing process in a participatory way with Facilities in Health Insurance DHOs, local governments, professional associations (public and private), Program Implementation and other stakeholders to jointly carry out mapping in the regions, analyze population growth, and project future PHC supply needs for JKN. • Create more opportunity for private FKTPs to contract with BPJS-K: • Specify the role of private providers in JKN/BPJS-K regulations • Engage private professional associations in credentialing POLICY NOTE Purchasing Related Regulations Options for Improvement Function HOW TO PURCHASE Contracting and Regulation of Minister of • Increase the role of BPJS-K in the selection and development of provider provider payment Health Number 69 on Health payment systems, and provider rate-setting. policy Services Standard Rates At • Explore options to better harmonize between capitation payment for PHC First Level Health Facilities and INA-CBG payment for secondary and tertiary services. and Advanced Level Health • Provide fair contracting conditions for private providers, including tariff Facilities in Health Insurance adjustments and access to government medicines prices. Program Implementation • Consider establishing an independent provider payment policy analysis unit to gather cost information, conduct analysis to inform provider payment system design and parameter development, and budget impact analysis (possibly built from the MOH Case Mix Unit) Capitation • The capitation rate-setting should be more explicitly linked to the package of services and, include adjustments for geography and other factors related to health need. • The capitation payment system should be refined to include regulations on the upper and lower limits of ratios of registered participants to physicians in a FKTP. • The pay-for-performance component should be evaluated and revised to ensure that incentives are aligned with service delivery objectives and rural and remote FKTPs are not disadvantaged. INA-CBGs • The INA-CBG payment system should be refined to improve alignment between case groups and relative costs. • The hospital costing system should be evaluated and possibly refined • Consider transitioning the INA-CBG payment system to a budget-neutral payment system (either volume caps or adjustable base rate). 7 Provider autonomy Regulation of Minister Test a capitation waiver that allows puskesmas meeting certain criteria to of Health Number 19 of pool revenues from multiple sources (capitation, BOK, local funds, etc.) with 2014 regarding the Use increased autonomy for management and allocation of funds. of Capitation Fund of the • Set up a district-level platform for communication and monitoring among 4 National Health Security entities: DHO, BPJS-K, puskesmas providers, and local government For Health Care Service And • Monitor effects on service delivery Operational Cost Support on Regional Government-Owned First-Level Health Facilities MOH regulation no 21/2016 Provider performance Regulation of Minister of • Establish an integrated health information system that can be used by monitoring Health Number 71 of 2013 multiple stakeholders for multiple purposes. CHAPTER VI Quality and Cost • Improve the P-Care data system to that it can be used effectively by Control Articles 33, 37 and 38 all stakeholders, especially FKTPs, for planning, management, and performance monitoring and improvement and link it to the BPJS-K Regulation of Minister of claims database. Health Number 71 of 2013 • Establish a routine monitoring system within BPJS-K that analyzes and Chapter VII Reporting And reports on a set of standard indicators related to service delivery and other Utilization Review Article 39 key JKN outcomes. • Build on the BPJS-K cost and quality control team to build Joint provider monitoring and quality assurance commissions at the district level, including representation of the local branch of BPJS-K, DHO, and local government. • Establish the authority of BPJS-K to act on results of the cost and quality control teams utilization reviews, etc. and possible link to financial or other incentives. • Establish a routine reporting system for BPJS-K to report routine monitoring and evaluation results to MOH and DJSN on a regular basis PURCHASING OF REFERRAL SERVICES UNDER JKN Annex 1. Health Sector Laws and Regulations in Indonesia Related to Purchasing Referral Services STRATEGIC PURCHASING REGULATIONS IMPLEMENTATION/ ROLE OF STAKEHOLDERS FUNCTIONS ACCESS/infrastructure • Health Law Number 36 year 2009 article Role of local government to provide health facilities and 16,17 infrastructure. • Law number 32 year 2004 article 22 about the Local government’s role to provide Health facility • President Regulation 12/2013 article 35 Standards of service SJSN Law No 40/2004 article 19 and article • Article 19 delivery and quality 23 • ROLE OF MOH: • Subsidy for the Hospital’s Accreditation • ROLE OF LOCAL GOVERNMENT • Additional incentive for Specialized Doctors • ROLE OF BPJS-K : Set the standard • Article 23 • ROLE OF MOH: Special incentives for specialized doctors Regulation of the Minister of Health Many of the Government’s Hospitals do not have the certificate Number 71 year 2013 : The Hospital that of accreditation, but they should be contracted by BPJS. cooperates with BPJS-K must have the 8 certificate of accreditation. • President Regulation number19/2016 ROLE OF BPJS article 43 A: BPJS-K develops the system The role of BPJS-K to form the standard quality of service and the of services’ technical operationalization, payment system to increase quality is not yet optimum. quality control system, cost control system and the health facility payment in order to increase efficiency and effectivity -> coordination with related ministries • President regulation number 12/2013 article 42 : The implementation of KMKB system is managed by the BPJS regulation • BPJS regulation number 8/2016) : about the QUALITY CONTROL AND COST- CONTROL TEAM and also Medical Consideration Council CREDENTIALING • Ministry of Health Regulation Number The reality in the field: BPJS-K should arrange a participation AND SELECTIVE 12/2013 article 36 with Government’s health Facility even they do not meet the CONTRACTING • President Regulation number 19 year standard requirements 2016 article 36: Government’s health Facility must meet the standard requirements to participate POLICY NOTE STRATEGIC PURCHASING REGULATIONS IMPLEMENTATION/ ROLE OF STAKEHOLDERS FUNCTIONS PROVIDER PAYMENT • Hospital Law Number 44 year 2009 The ministry should determine the tariff schedule and the (Tariff) • Ministry of Health Regulation number Governor determine the maximum limit of fare based on 85 year 2015 about the national tariff’s national fare scheme (Hospital Regulation), nevertheless, the scheme, National hospital tariffs Ministry of Health determining the JKN’s fare arrangement • President regulation 12/2013 article 37: (INA CBGs) The amount of payment considered based on BPJS-K agreement with Health Facility Association Facility • President Regulation 19/2016 article 39: capitation payments and INA CBG tariffs should be assessed by the Ministry of Health once every 2 years • President Regulation 12/2013 article 41: The ministry determines the JKN standard tariffs • Ministry of health regulation number 52 year 2016 about the JKN standard tariffs • SJSN Law number no 40/2004 article 24 : the amount of payment to the health service facility is based on the agreement between Regional Health Facility Association • (3) BPJS-K developed the health service The absence role in Health Facility Association and BPJS-K system, KMKB system and payment because the JKN’s fares is determined by the Ministry of health. system to increase efficiency and effectivity. Ministry of health regulation number The role of Professional Organization and the Health Facility 455/2016 : Health Facility Association Association in the fares negotiation with BPJS-K is not 9 without the professional organization  optimum yet. Ministry of Health 252/2016 : Health facility association with the professional organization rule out a negotiation to set tariffs with BPJS-K • Ministry of Health regulation number The determination of Specific Hospital fares outside its own 52/2016 : The Specific Hospital fares is specification (as mentioned in Ministry of Health number outside its own specification 56/2016) • Ministry of Health Regulation 76/2016 The fares is one level lover than the hospital class, in Ministry • The Specific Hospital fares is outside its of Health regulation number 72: suitable with the Classes own specification • Ministry of Health Number 56/2016 • Hospital Classification Directorate general Regulation year 2014 ROLE OF MOH : Subsidy ROLE OF LOCAL GOVERNMENT: Subsidy for the province’s referral hospital MONITORING AND BPJS-K ROLE NUMBER 8/2016 BPJS-K forms QUALITY CONTROL AND COST-CONTROL EVALUATION Ministry of Health Regulation TEAM and Medical Consideration Council, while the Ministry of Health forms the QUALITY CONTROL AND COST-CONTROL TEAM FRAUD • Ministry of Health regulation • BPJS Regulation number 7 year2016