Impact of the PhilHealth Z Benefit Package Implementation

Financial Impact of the PhilHealth Z Benefit Package Implementation in Two DOH-Retained Hospitals

Author

Alvin S. Concha, MD

Co-author

Jaryll Gerard L. Ampog

INTRODUCTION

Topic background

One of the strategic thrusts of the Department of Health is “financial risk protection through expansion in National Health Insurance Program enrollment and benefit delivery (DOH, 2010). Philippine Health Insurance Corporation (PhilHealth) is the duly mandated government-owned corporation to administer the National Health Insurance Act, which is aimed to provide universal financial access to health services among Filipinos (RA 7875).

In September 2011, PhilHealth started to implement new case-based payment (CBP) schemes for 12 surgical and 11 medical cases. A no-balance-billing policy was also imposed on all government hospitals for implementation among PhilHealth members from sponsored programs, mainly comprised of indigent people (PhilHealth, 2011).

In June 2012, PhilHealth created another set of benefit packages with CBP schemes called the PhilHealth Z Benefit Packages (PZBP). Four conditions that are considered medically and financially catastrophic were initially included in the list of conditions with Z benefit packages (PhilHealth, 2012b). Another five conditions were added in 2013 (PhilHealth, 2013a; PhilHealth, 2013b) and two more conditions were added in 2014 (PhilHealth 2014a; PhilHealth, 2014b) to the list. A fixed reimbursement rate was set by PhilHealth for each of the conditions included in the PZBP list. PhilHealth also set a fixed co-pay amount for each condition. The implementing health facility can collect the allowed fixed co-pay amount from non-sponsored members and their qualified dependents. The no-balance-billing (NBB) policy is applied to all sponsored members and their dependents. Table 1 shows the list of conditions with Z benefit packages and corresponding specifications as of September 2014.

Table 1. List of conditions with Z benefit packages and corresponding specifications as of September 2014.

Abbreviations: ALL– acute lyphocytic (lymphoblastic) leukemia; CABG– Coronary artery bypass graft surgery, standard risk; Cervical cancer A– Chemoradiation with cobalt and low-dose brachytherapy or primary surgery for Stage IA1, IA2-IIA1; Cervical cancer B– Chemoradiation with linear accelerator and high-dose brachytherapy; PD First– Peritoneal Dialysis First; PHC– PhilHealth Circular; TOF– Total correction of Tetralogy of Fallot (for children); VSD– Closure of ventricular septal defect (for children); Z MORPH– Mobility, Orthosis, Rehabilitation and Prosthesis Help.

Review of related literature

Provider payment schemes

A provider payment mechanism is the scheme of transferring funds from the health care service purchaser to the health care provider (Cashin et al, 2005). When an individual who has paid premiums for health insurance needs to access health care services covered by the insurance, the insurance company funds the health care services and pays the health care provider according to a pre-defined provider payment mechanism (GIZ, 2011a). Fee-for-service (FFS), case-based payment (CBP), line item budget ant capitation are all examples of a provider payment mechanism (GIZ, 2011b).Aside from the transfer of funds, provider payment mechanisms also facilitate the attainment of health policy objectives by creating incentives, supporting information systems and purchaser provider accountability mechanisms that affect health care resource allocation service delivery (Cashinet al, 2005; Econex, 2010).

Fee-for-service scheme

Prior to September 2011, to fund almost all treatments and procedures, PhilHealth paid health care providers of its members using a fee-for-service scheme. Under this scheme, the health service providers are paid for each reported service input, activity or use of items towards treatment of diseases or performance of procedures (Sutherland, 2011). The fees for health care in this scheme are not fixed (Langenbrunner et al, 2009). The greater the volume of activities or use of items, the higher the healthcare providers’ revenues are (ACHE, n.d.).

Case-based payment scheme

In a case-based payment mechanism, such as the PhilHealth Z Benefit Package, health service providers are paid a pre-determined fixed amount (case rate) per case or episode of care (GIZ, 2011b; Langenbrunner et al, 2009). The payment is intended to cover all inputs and activities within the entire episode of care (Reinke, 2007). Because the payment is fixed, limited and prospectively set, health care providers face greater financial risk in CBP than in FFS (GIZ, 2011b; Langenbrunner et al, 2009; Maciera, 1998).

Trade-offs between FFS and CBP

Financial risk for providers and health care purchasers, as well as stakeholder incentives, paperwork and system efficiency all vary among different provider payment mechanisms (Cashin et al, 2005; Mihalik et al, 1998). Implementing or shifting from one provider payment mechanism to another can also involve various difficulties (Mathauer et al, 2013).

While an FFS scheme involves low financial risk to health care providers, health funders such as insurance companies may face high financial risk in this payment mechanism (GIZ, 2011b). This scheme encourages great volumes of services, sometimes beyond what is called for (Cashin et al, 2005). This involves high costs for health funders and yield high revenues for providers, but it does not promote high quality and efficient health services (Langenbrunner et al, 2009; Reinke, 2007; Sutherland, 2011).

On the other hand, a CBP mechanism creates incentives for health care providers to be efficient (i.e., minimize service input) and to increase the number of cases (Langenbrunner et al, 2009; Maciera, 1998). Efficient providers profit from the difference between the case rate and the actual cost of care (Sutherland, 2011). CBP is also associated with a decrease in the average length of stay of patients in the health care facility (Langenbrunner et al, 2009; Sutherland, 2011), but has not been shown to decrease the quality of care. Yet, there has been mixed evidence for a lower cost of health care per episode within a CBP scheme (Sutherland, 2011).

In a CBP scheme, the adequacy of the prospectively set payment, which is usually determined through statistical modeling and stakeholder consultations, may also be prone to arguments. Because of the fixed nature of the payments, inaccurate estimation of case rates may put health care providers to a serious disadvantage (Mihalik, 1998).

Greater goals of health policy

There is no single provider payment mechanism that will work for any kind of health system (GIZ, 2011b). It is every health system’s challenge to work out payment mechanisms that contribute towards the greater goals of health policy, most importantly, those that pertain to access to high quality health care services, reduction of financial risks and efficient use of health care resources (Cashin et al, 2005; PhilHealth, 2012a).

Research question/s

The study aims to assess the financial impact of PhilHealth Z Package implementation in two DOH-retained hospitals namely; Southern Philippines Medical Center and Davao Regional Hospital.

Significance of the study

The PZBP is a CBP mechanism for conditions that are medically and financially catastrophic. Under the CBP scheme, a fixed provider payment is set for a particular case or diagnosis. The fixed provider fee is the amount reimbursed by PhilHealth to the health facility for treating an active PhilHealth member. The reimbursement amount is fixed, regardless of the actual costs that accrue during the course of treatment. In instances wherein the actual treatment cost is less than the fixed reimbursement fee, the health facility gains income. When the actual treatment cost is higher than the reimbursement fee, the health facility loses income. This provider payment scheme is supposed to encourage health facilities to employ cost-efficient approaches to treatment. The complex nature of the medical conditions included in the Z benefit package list, however, makes it difficult for insurance agencies and health care providers to predict the actual cost of care that each treatment entails.

To date, we do not know whether the Z benefit package scheme efficiently reimburses the health care provider with the actual cost of care. There is a need to determine the financial impact of the PhilHealth Z benefit package in institutions that have implemented it. Financial gain through the scheme affirms the provision not only of financial risk protection to PhilHealth members, but also of efficient therapeutic approaches taken by the health care provider. A positive net income also leaves the health care provider with adequate funds to improve its services. On the other hand, an experience of income loss from the implementation of the scheme can eventually affect the finances and operations of the health care provider.

A good assessment of the financial impact of the scheme will facilitate the planning and implementation of measures within the health facility that will make its therapeutic approaches more efficient. The assessment will also inform PhilHealth of the adequacy of the initially set reimbursement rate of each of the conditions in the Z benefit package list. Most importantly, the assessment will enable us to gauge whether or not the PZBP affords financial risk protection to PhilHealth members who avail of it.

Objective/s

The main objective of this study is to determine the financial impact of the implementation of the PhilHealth Z Benefit Package in Davao Regional Hospital and Southern Philippines Medical Center.

METHODOLOGY

Research design

This study will utilize a descriptive design.

Setting

This study will be conducted in two DOH-retained hospitals. Davao Regional Hospital is a 200-bed tertiary care training hospital in Tagum City. Southern Philippines Medical Center is a 1200-bed tertiary care training hospital in Davao City. The two institutions are 60 km apart.

Participants

All PhilHealth patients from DRH and SPMC who have availed of the PZBP since the start of each package implementation will be included in this study, and will constitute the first half of the study sample. An equal number of PhilHealth patients admitted right before the implementation of the PZBP with the same diagnoses as those in the first half, but who were billed on a fee-for-service basis, will be chosen from among the patients in the same hospitals. This latter group of patients will serve as the second half of the study sample and comparison group.

Inclusion criteria

Patients who have partially availed of case-based PhilHealth reimbursement (i.e., any of the 23 medical and surgical conditions covered in the initial PhilHealth case rates of 2011) (PhilHealth 2011) for a diagnosis similar to the conditions in the PBZB list, but at a time when PBZP was not yet implemented, will be considered to have availed of a fee-for-service PhilHealth reimbursement. An example for this is a patient who was diagnosed to have breast cancer in 2011 (prior to PBZP implementation), who availed of the case rate provider payment mechanism for modified radical mastectomy, but who paid for or availed of PhilHealth benefits for the subsequent chemotherapy on a fee-for-service basis. For purposes of this study, such patient would be classified into the fee-for service group.

Exclusion criteria

Patients with incomplete billing data will be excluded from this study.

Sampling procedures*

Not applicable on this study

Interventions and comparisons*

Not applicable on this study

Randomization*

Not applicable on this study

Data gathering

Secondary data from patients’ hospital records will be the main source of data for this study. No direct patient interviews or interaction will happen. The list of patients who received Z package benefits (PZBP group) will come from the PhilHealth Office of each hospital, which keeps a log of PhilHealth members who have availed of the Z benefits since start of PZBP implementation. The list of PhilHealth patients who were admitted right before the PBZP implementation with the same diagnoses as those who have availed of the Z benefits, but who were billed on a fee-for-service basis (FFS group) will come from the Medical Records Section of each hospital. All the hospital bills will come from the Billing Section of each hospital, and all the official receipts, guarantee letters, notes and PhilHealth reimbursement records will come from the Accounting Section of each hospital. Table 2 shows the list of hospital records needed for this study and the corresponding offices in the hospital where the records will be obtained.

Table 2. Hospital records needed for this study and the corresponding offices in the hospital where the records will be obtained.

Independent variables

The hospital records will be reviewed to obtain the data reflected in the case report form (Appendix A).For each institution (DRH, SPMC), the following outcomes, as operationally defined, will be computed per condition per provider payment mechanism (fee-for-service scheme prior to PZBP implementation; case-based scheme during PBZP implementation) for reporting:

Mean actual total bill – this is the average amount of actual total bill reflected in the summary of charges in individual patient bills. The actual total bill represents the total cost of health care for a patient with a particular condition.

Mean out-of-pocket payments – this is the average amount of health care cost that is paid by the patient and/or other sources and is not reimbursed by PhilHealth. The individual patient’s out-of-pocket payment is inclusive of the actual amount paid by patient as reflected in the official receipts and the actual amount paid by other sources like PCSO, PDAF, MHCAP, etc. Under the PZBP scheme, the out-of-pocket fee is termed “fixed co-pay”, because PhilHealth has set a ceiling amount, beyond which health care providers are not allowed to charge patients.

Mean PhilHealth reimbursement – this is the average amount of reimbursement received by the hospital from PhilHealth for treating a patient with a particular condition. The individual patient reimbursements are expected to vary in a fee-for-service scheme. In a case-based scheme such as PZBP, the PhilHealth reimbursement amount is fixed and predetermined.

Main outcome measures and other dependent variables

Mean hospital subsidy – this is the average amount of the portion in the actual total bill that is not paid back to the hospital. The amount is positive if the actual total bill is greater than the PhilHealth reimbursement amount plus the out-of-pocket fee. The hospital subsidy for individual patients is inclusive of discounts, the unpaid balance and the amount slashed by PhilHealth (if applicable). The hospital subsidy may also be called “negative income”.

Mean net gain – this is the average amount of positive income. This amount is positive if the actual total bill is lesser than the PhilHealth reimbursement amount. In such instance, no out-of-pocket payment is charged, the hospital does not subsidize any amount to cover part of the health care cost and the hospital actually gains income.

Sample size computation*

Not applicable on this study

Data handling and analysis

Data for this study will be encoded in a spreadsheet and analyzed using Epi Info 7. Continuous variables will be summarized using means ± standard deviation. Categorical variables will be summarized using frequencies and percentages.

Ethical considerations

Ethics review

The protocol of this research will be submitted for approval to the Department of Health XI Cluster Ethics Review Committee (DOH XI CERC).

Confidentiality

Patient data will be retrieved using hospital case numbers and name initials provided by the respective PhilHealth Sections and Medical Sections of Davao Regional Hospital and Southern Philippines Medical Center. Anonymized patient data, devoid of personally-identifiable information like addresses, phone numbers, or e-mails, will be requested from the Billing Sections and Accounting Sections of the two hospitals. The data will be in both hardcopies and softcopies. Only the investigators and study staff will have access to the raw data. Hardcopies will be destroyed upon study closure. Softcopies will be kept by the principal investigator in a computer in a password-protected file. The full study report will not contain patient names or any personally-identifiable information.