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Other Events and Developments Relevant to Health Financing

Health Expenditures by Financing Agents

C. Other Events and Developments Relevant to Health Financing

Between 2002 and 2013, also health care financing went through a period of major reforms. Reimbursement Commission was established in 2004 consisting of representatives from the SSI, the Employment and Pension Fund, the MoH, the Ministry of Finance, the State Planning Organization and the Undersecretariat of Treasury. The Commission, which was devolved to the SSI in 2007, was made in charge of setting prices for health care services, medicinal products and other health services reimbursed by the SSI as well as making changes to the SSI benefits package. Pricing Committee on Health Services operates under this commission and is responsible for necessary technical work to facilitate decision-making by the Reimbursement Commission.

In May 2006, the Law No. 5502 was adopted by the Turkish Grand National Assembly. The law, which was meant to accompany the Law 5510 (Law on Social Security and Universal Health Insurance), aimed at unifying the three different social security and health insurance schemes (SSK, BAG-KUR and ES), which seemed to be quite fragmented from 2002 to 2013, into one unified social security administration. It could be asserted that this reform targeted to set up a single pension and health insurance system that would equalize rights and liabilities and ensure financial sustainability.

Implementing this reform, a universal health insurance system was targeted to provide entire population with equal, easy-to-use, accessible and high-quality health care services. Being the first step towards the reform, the Law on Social Insurance and Universal Health Insurance No. 5510 was adopted in May 2006 and would be put into effect on 01.01.2007. However, the enactment of the law was postponed to 01.07.2007, first and to 01.01.2008, later and the law came into effect on 01.10.2008, finally, due to some obstacles such as the annulment of some of its articles by the Constitutional Court and issuance of some additional legislations. The Law No. 5510 unified the norms and standards, and started proper implementation.

In this process, first SSK, BAG-KUR and ES payments were included in the SSI beginning from 2007 which were followed by the government employees’ payments being included in the SSI in 2010 and the Green Card payments being included in the SSI in 2012.

Figure 2. Fund Flow Chart in the Turkish Health Care System, (2013)

Out-of- Pocket Health Expenditure

General Directorate of Health for Border and

Ministry of Finance

Central Government SSI

Green Card Active Civil Servants Global Budget Global Budget Mandatory Copays Taxes Pay for Service and Pay per Capita Pay for Bill Service Providers Services ES Social Assistance and Solidarity Foundation SSK BAG-KUR Ministry of Health Public Hospitals Agency Public Health Institute Ministry of Family and Social Policies Under- secretariat of Treasury Citizens, Facilities and Institutions Patients Premiums MoH (112 Emergency Care) Services Public Hospitals Agency Public Health Institute Universities Private Health Care Facilities Nongovernmental Organization Hospitals and Other Hospitals Budget Budget Budget Budget

Hospitals and Other Outpatient Treatment Facilities Pharmacies Revolving

The Law on Social Insurance and Universal Health Insurance became fully effective and functional once the Green Card payments were covered by the SSI in January 2012. Benefit packages were made compatible for the SSK and BAG-KUR insurees first, for the ES later (in 2007), and for the civil servants under the SSI, finally (in January 2010). Yet, the only benefit package, which is different from the former four, is the one that applies for the Green Card beneficiaries, as of 2012. To give an example, the Green Card holders can visit the Family Medicine Centers and the MoH hospitals freely but cannot receive treatment at university hospitals in most cases if they have not been referred properly. As for visits to private hospitals, only some exceptional cases are allowed (such as emergencies, lack of intensive care units in public hospitals etc).

Utilization of the Health Care System by Non-affording Individuals: In scope of the Law on Social Insurance and UHI, two systems – premium and non-premium – run under the UHI. 12,5% copay is charged for public and private sector workmen, civil servants, contracted civil servants and self-employees in the premium system while 7,5% copay is charged for employers.

Those, who are eligible to benefit from the non-premium system, are identified by the Ministry of Family and Social Policies. Almost all of the non-premium system users are the former beneficiaries of the Green Card System.

The Green Card System was introduced in 1992 by the Law No. 3816 which aimed to provide health service access for people who could not afford. Later, by the Law on Social Insurance and Universal Health Insurance No.5510, which came into effect in June 2006, separate social security agencies were merged, the social security system became simplified, unified and more effective, and plans and efforts were made to provide all citizens with quality health care services. According to the new national health care system designed by the UHI reform, it is planned that every citizen pays a certain amount of premium in proportion with his income and receives quality health care services regardless of the amount of premiums he has paid for. In scope of the UHI reform, it was planned to take back the authority to implement the Green Card System from the MoH, which had been responsible for the implementation since 2005, and to devolve it to the SSI. By the Law on Social Insurance and Universal Health Insurance No. 5510, which was adopted in 2006, delegation of authority was scheduled for the year 2010, however, devolution was postponed to the date of 01.01.2012 by the Law Dated 16.06.2010 and No. 5997. Necessary studies were conducted for the system infrastructure and applications could be questioned via the Social Assistance and Solidarity Foundation and Social Assistance Information System.

Income tests have been performed via the Social Assistance Information System by the Social Assistance and Solidarity Foundation since 01.01.2012, as ordered by the Regulation on Rules and Principles for Income Identifying, Registering and Monitoring under the UHI which was issued in November 2011.

Assets and incomes of applicants, which are recorded in central data bases, are inspected in the system. In addition to the information collected from the system, social assistance and inspection officers also visit the applying households for household surveys.

Foundation Boards of Trustees identify monthly average incomes of households by using the outcomes obtained from the system inspections and household visits. In line with the decisions made by the Foundation Boards of Trustees, the SSI perform necessary procedures for individuals relevant to UHI registration, notification and premium collection. Afterward, the SSI decides whether premiums would be paid by the government depending on monthly income of individuals. The amounts of premiums that will not be covered by the government are notified to individuals for payment.

As a result of the Household Income Tests performed by the the Social Assistance and Solidarity Foundation from 01.01.2012 to 31.12.2012, 14,8 million applicants were interviewed and 11,357 million citizens were covered by social security. 11.357.306 citizens were interviewed and assessed in scope of the Household Income Tests as of 31.12.2012. Today, social security premiums are paid by the government for total 7.558.821 citizens who can not afford social security premiums (income level G0). The tests found out that 3.798.485 citizens can afford social security premiums (income level G1, G2 and G3) and these people were covered by social security on condition that they paid for premiums depending on their income.

In 2006, an electronic control and payment management system was established for procedures Income

Codes Monthly Income per Capita Income Intervals* Status of Premium Payment

G0 Below 1/3 of gross minimum wage 0 TRY- 340,50 TRY To be paid by the government. G1 1/3 of gross minimum wage to minimum wage 340,50 TRY – 1.021,50 TRY To be paid by the individual. Amount of premiums:

340,50x12%=40,86 TRY G2 Gross minimum wage to 2- fold minimum wage 1.021,50 TRY – 2.043 TRY To be paid by the individual. Amount of premiums:

1.021,50x12%=122,58 TRY G3 Above 2-fold gross minimum wage 2.043 TRY and above To be paid by the individual. Amount of premiums:

2.043x12%=245,16 TRY

Table 32. Data Used for Identifying Premium Affordability of Individuals Interviewed for Income Tests (2013)

*Premiums were calculated by the rate of minimum wage in July-December 2013. Source: SSI

The first change in this direction was taken in 2005, when SSK gave up its provision function to the Ministry of Health. Transfer of the Green Card program to the SSI was planned under the Social Security and UHI Law. Following devolution of the SSK-affiliated health care facilities to the MoH in February 2005, social security agencies withdrew from health service provision. Payment of Medical Expenses of Traffic Victims: In this period, another important step taken in the field of health financing was that medical expenses occurring from injuries in road traffic accidents be paid by the Social Security Institution.

Payment of medical expenses and grievances related to treatment process caused by traffic accident injuries became a big suffering for individuals in Turkey. For this reason, a Guarantee Fund was established by the Regulation on Road Traffic Funds Dated 03.05.1997. The Fund was in charge of meeting treatment expenses of traffic accident victims. However, treatment and payment procedures were not managed properly and not only patients but also health care facilities were adversely affected. The Revolving Funds Administration for Traffic Services was founded under the MoH in 1999 so that both payment/collection and treatment procedures could be better monitored and regulated. The Administration collected the bills of treatment issued in the MoH-affiliated health care facilities from the Guarantee Fund. However, the Fund turned out to be inadequate later in terms of functioning and timeliness, leading to the aboslihment of the Fund and its replacement by the Regulation on Road Traffic Insurance that was issued in the Official Gazette Dated 03 July 2002 and No. 24804. Increased number of accidents and patients under treatment, deepening damnification of patients, many parties’ getting involved in procedures relevant to the payment of hospital bills, untimely and improper functioning of the system all contributed to the necessity to set up a new system. So, the Government resolved that all medical expenses of traffic accident victims be paid by the Social Security Institution and enacted the Amending Law No.6111 which was issued in the Official Gazette Dated 25.02.2011 and No. 27857. Accordingly, costs of medical treatment at university hospitals, private hospitals and Ministry of Health hospitals for traffic accident victims would be paid by the Social Security Institution. In addition, the accounts of the Revolving Funds Administration for Traffic Services would be closed down in 6 months.

Treatment costs were paid by transferring 15% of the premiums previously collected by insurance companies and co-pays collected by the guarantee fund to the SSI. So, gaps in payment to health care facilities were removed and payment schedules and procedures were standardized in the context of a single reimbursement agency. Apart from all these, the Regulation on Collection of Medical Bills Relevant to Traffic Acidents was issued in the Official Gazette Dated 27.08.2011 and No. 28038, bringing a detailed and comprehensive explaination to the functioning of this new and dynamic system.

Council for Economic Coordination for Health: Establishment of the Council for Economic Coordination for Health, through which all decisions that could create economic impacts in health financing were taken, proved to be another significant reform in health financing in 2003-2013 period. The council, which makes decisicons on health and social security in the name of the government, is headed by the Deputy Prime Minister in charge of the Undersecretariat of Treasury and other members are the Minister of Health, the Minister of Finance, the Minister of Labor and Social Security, and the Minister of Development. The council convenes regularly, discusses health-related events, especially those pertaining to financing of the health care system, and takes measures, if necessary. Also respective bureaucrats and other officers join the council sessions and give briefings.

Health Expenditures Monitoring and Evaluation Committee: As per the Measure No. 10 stating that “measures will be taken in order to ensure effective and efficient use of public resources”, the Health Expenditures Monitoring and Evaluation Committee was established in 2009, under the Council for Economic Coordination for Health, for systematic monitoring and evaluation of health expenditures, and rapid identification of financial risks that are likely to occur. The Protocol on Establishment of Health Expenditures Monitoring and Evaluation Committee was signed on 8 October 2009 by relevant parties which are the Undersecretariat of State Planning Organization (SPO)*, Undersecretariat of Treasury, Ministry of Finance, Ministry of Health, Ministry of Labor and Social Security, the SSI and TurkStat. The committee is comprised of 4 members (2 permanent delegates and 2 substitute members) from each of these institutions and keeps records during all meetings and sessions. The committee is primarily charged with managing and presenting data on health expenditures, debriefing decision-makers by submitting reports that contain accurate information and objective analyses, and making recommendations for necessary strategies. So, the committee analyzes the changes in and progress of health expenditures and decision-makers design new policies, if necessary. To sum up, global budgeting, which helps to identify the MoH share in public spending for health, has been one of the most prominent reforms achieved in the field of health financing since 2006.

Global Budget: The period of transition to global budgeting and its stages should be known well so that the structural changes made in health financing in Turkey are fully understood. In pre-2006 period, the public health care facilities in Turkey, which were affiliated with the MoH and approximately one thousand in number, had to submit service bills to the reimbursement agencies in line with the Budget Execution Directive (the official price list for health care services announced by the MoF before the SSI became entitled) in order to collect their receivables. However, it was quite a complex, costly and dysfunctional method for billing and collection in many aspects. The reimbursement agencies had difficulty in paying for their debts which created a financial bottleneck for the MoH. The problem was discussed in details in the negotiations which were held on 27 December 2005 for the budget 2006 and it was concluded that the method was not sustainable for the MoH anymore.

On 27 December 2005, the Paragraph “c” was inserted to the Article 31 of the Law on Central Government Budget for 2006 No. 5437 which stated that “for individuals who are covered by the Presidency of Social Insurance Organization and General Directorate of BAG-KUR, and subject to the Law Dated 18.6.1992 and No.3816, all of the service bills, which were issued by the MoH health care facilities and remained unpaid as of 31.12.2005, will be cancelled by this Law and the Ministry of Finance is entitled to perform necessary procedures”. Following the enactment of this Law, receivables of the MoH health care facilities from the SSK, BAG-KUR and the Green Card System, which amounted to 3,5 billion TRY and could not be collected as of 2005 and before, were cancelled. The concealment, for which the consent of the MoH was not taken prior to its execution, inspired the MoH to a new method of collection.

In the meanwhile, the MoH had more difficulties in ensuring financial sustainability for its affiliated health care facilities following the enforcement of this rule. Concurrently with this problem, some media published news alleging that the national health care system collapsed, patients were in trouble at hospitals, hospitals became bankrupt and insolvent and did not manage to provide medicines and medical supplies for patients.

Upon the objections by the MoH to the Government, the date of cancelment was changed to 31.12.2004 by the Law Dated 07 March 2006 and No. 5471 and the MoH receivables from the reimbursement agencies were cancelled for 2004 and before. However, the MoH adopted global budgeting later with the aim of finding a permanent solution to these problems and ensuring financial sustainability of health expenditures without prejudice to service quality and patient satisfaction with health care services.

Global budget, which is determined by the Council for Economic Coordination for Health at the end of long and comprehensive efforts, refers to the amount of progressive payment to be received in return for services which will be provided during a fiscal year that is the cap and target for spending by taking the expenditures of MoH-affiliated institutions and agencies into account. Capping total amount of money to be spent for health care services, global budget aims at keeping health spending under control.

Prior to the Global Budget: Service financing was based on billing. People covered by a social security scheme could visit primary care facilities with their health certificates and a medical visit form or a patient referral paper. Green Card holders, on the other hand, were expected to visit primary health care facilities with their Green Cards. People with no social security coverage had to pay for their treatment costs out of their pockets in order to receive primary care services.

As a result of the consultations performed in the primary health care facilities, each of the consultation request forms displayed the consultations and tests performed, patient referral forms and health certificates used to be photocopied and kept in the health care facilities while the originals used to be submitted to the provincial health directorates on a monthly basis. The provincial health directorates used to classify these papers, which were submitted by the primary health care facilities, individually and by reimbursement agencies, and used to make out invoices per person and by reimbursement agencies, accordingly. The provincial health directorates used to keep two separate files: one including the original invoices made out by the reimbursement agencies and the other including just the photocopies. In addition, these invoices and their attachments used to be mailed to the reimbursement agencies. Procedures were even more complex in secondary and tertiary health care facilities. Each of the consultation request forms displaying the consultations and tests, patient referral forms and health certificates used to be photocopied and kept in the health care facilities while the originals used to be submitted to the reimbursement agencies in the accompany of the hospital bills. The bills submitted to the reimbursement agencies were examined (by thousands of employees mostly selected from the health care personnel) and - if deemed to have been properly issued - reimbursement was made in line with the capacity of the budget. Yet, some of the bills were not issued properly and therefore some health care facilities could receive full reimbursement while some others could not receive even the half.

Apart from this, the reimbursement agencies were required to keep the records of these