copy the linklink copied!Chapter 2. Reforming the Paraguayan health system

The Paraguayan health system is faced with major challenges to achieve universal health coverage. To respond to the double burden of disease among the population, it needs to secure sustainable funding, ensure it is run more efficiently and strengthen its stewardship. The country has undertaken a series of reforms to modernise the system, laying the foundations for a new approach to health care based on primary care. However, it has not significantly altered the foundations of the health system and its fragmentation into multiple subsystems.

The third phase of the Multi-dimensional Review aims to bridge the gap between the recommendations made in Volume 2 of the review and the implementation of those recommendations through a series of participatory activities to generate an action plan and a series of monitoring instruments. A high-level meeting with Paraguayan authorities discussed various aspects of health policy and a potential reform and identified four key areas in which work may begin: (i) securing sustainable funding for the system; (ii) reducing fragmentation by integrating service delivery and improving the system of payment to suppliers; (iii) defining a package of health benefits; and (iv) making the public procurement of medicines and medical supplies more efficient. This chapter also presents a series of conceptual tools with the objective of supporting the government for decision making and restructuring of the health system in these key areas.

    

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The Paraguayan health system is faced with major challenges in achieving universal coverage. Today, the health system is highly fragmented, and it does not have the capacity to meet the double burden of disease in the population. The weight of non-communicable diseases is growing, fuelled by longer lives but also less healthy lifestyles. At the same time, unresolved issues related to communicable, maternal, neonatal and nutritional diseases remain. To rise to the challenge, the Paraguayan health system needs to strengthen its governance, secure sustainable funding and ensure it is run more efficiently (OECD, 2018[1]).

The third phase of the Multi-dimensional Review (MDCR) of Paraguay, From analysis to action, is supporting the Paraguayan government as it takes its first steps towards a new health system. The third and final phase of the MDCR aims to bridge the gap between the recommendations made in Volume 2 of the review (OECD, 2018[1]) and the implementation of those recommendations. In a series of participatory activities in the context of phase III of the MDCR, the policy recommendations for the health sector were discussed, and action plans were drawn up as proposed initial actions for reform.

The government identified four policy priorities for the health sector to address in the medium term. Following an in-depth analysis of the health system, the second phase of the MDCR identified a series of policy recommendations with a view to achieving universal health coverage in Paraguay. In the third phase, the OECD team, working with various Paraguayan authorities, identified the most pressing recommendations that the current administration should work on in the medium term, but concluded that, ultimately, the system needed to undergo structural reform. The medium-term work addressing the four key areas identified would lay the foundations for much deeper reforms further down the line. The four key areas in which work may begin are: (i) securing sustainable funding for the system; (ii) reducing fragmentation by integrating service delivery and improving the system of payment to suppliers; (iii) defining a package of health benefits; and (iv) making the public procurement of medicines and medical supplies more efficient.

The discussion on policy priorities for the health sector within the framework of the Multi-dimensional Review of Paraguay pulled together the opinions of a number of stakeholders. The first workshop for phase III, “Reforms for better health in Paraguay”, took place in Asunción on 14 March 2019. The workshop’s aims were to (i) identify areas of agreement and disagreement among stakeholders on key dimensions for the medium-term health-sector agenda; (ii) support a change in thinking among health-sector stakeholders in order to move towards implementing reforms to the system; and (iii) draw up action plans outlining the steps required to implement priority reforms. The workshop followed the governmental learning methodology (Blindenbacher and Nashat, 2010[2]), which was tailored specifically for multi-dimensional reviews.

The participants included representatives from various key institutions in the health system and high-level authorities of the Government of Paraguay. The carefully selected participants represented the positions of stakeholders in the health reform in Paraguay, especially in drawing up and applying possible reforms, as well as people with accredited knowledge of the health sector in Paraguay. They were accompanied by OECD experts and other international experts with experience in health-sector reforms.

During the workshop, the participants divided themselves into working groups focusing on each of the four key areas defined in conjunction with the government. Each group discussed and defined the main medium- and long-term objectives in Paraguay. They also evaluated the actions, stakeholders and possible timetable for carrying out the reforms or the necessary changes. The working groups presented the results of the session, which were debated in the plenary and compared with the priorities identified.

Next, this chapter presents a brief recapitulation of the analysis and policy recommendations presented in Volume 2 of the review, as well as a brief summary of the main institutional priorities and policy orientations of the health system at present, including both the actions of the Ministry of Public Health and Social Wellbeing (MSPBS) as of the Institute of Social Security (IPS). Then, the analysis is deepened and some conceptual tools are provided following a restructuring of the recommendations presented in Figure 2.1. In the following sections, the need for long-term structural reform of the Paraguayan health system, the importance of ensuring sufficient and sustainable financing, the need to strengthen the governance of the system, and the importance of achieving a system operate more efficiently are addressed. Throughout these sections, the discussion and the action plans prepared jointly with the government are presented (only for the four recommendations identified as priorities in the medium-term agenda).

copy the linklink copied!Policy orientations in the health sector in Paraguay

Paraguay has set ambitious goals to improve the health of its citizens. Rising to the challenge faced by its health system, Paraguay has undertaken a series of reforms that have set the stage for a new approach to health care based on primary care. It has also improved the health of its citizens, especially in relation to communicable, maternal, neonatal and nutritional diseases. Its efforts, however, have not significantly altered the foundations of the health system or its fragmentation into multiple subsystems. To achieve its ambitious goals, Paraguay will need to redouble its efforts and strategise to successfully remodel its national health system (OECD, 2018[1]).

The country has made considerable headway in working towards its objectives, but much stronger policy actions are needed to achieve universal coverage. In 2015, the government defined the National Health Policy for 2015–30, and the state portfolio currently addresses seven key lines of action. For its part, the Social Security Institute (Instituto de Previsión Social, IPS) has drawn up a series of clear, strategic medium-term objectives (see Box 2.1). However, the efforts in terms of public finance that sustained progress in the period 2005-15 would be difficult to replicate in the current context (see Figure 2.2). Eventually, without significant reform efforts, Paraguay would fall short of achieving universal coverage.

The Multi-dimensional Review of Paraguay has identified a series of strategic policy recommendations for the health sector. Some of those recommendations target short-term changes to be included in the medium-term agenda. Various other recommendations, however, require structural changes to the system and are therefore put forward for the long-term agenda. Nevertheless, if the medium-term agenda were to be successfully implemented, it would lay the foundations for the structural transformations that the country needs in the long run. To achieve universal coverage, the Paraguayan health system must secure sufficient and sustainable sources of funding, strengthen its governance and operate more efficiently and effectively (see Figure 2.1).

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Figure 2.1. Policy recommendations for the Paraguayan health system
Figure 2.1. Policy recommendations for the Paraguayan health system

Note: The recommendations marked with a star were identified as priorities for this phase of the MDCR, in agreement with the Government of Paraguay. Throughout this chapter, these recommendations are analysed in greater depth than the rest.

Source: OECD (2018[1]), Multi-dimensional Review of Paraguay. Volume 2: In-depth Analysis and Recommendations.

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Box 2.1. Institutional priorities in the health sector in Paraguay

The National Health Policy to 2030 establishes seven lines of action to move towards universal access and coverage. It outlines seven key strategies to move towards universal access and coverage in health care, including (i) strengthening stewardship and governance; (ii) strengthening primary care delivered through integrated networks; (iii) strengthening inter-sectoral and inter-agency actions to address the social determinants of health; (iv) making the health system more efficient by increasing resources, optimising their use and preserving them properly; (v) strengthening healthcare talent management; (vi) developing and strengthening public health at the borders; and (vii) ensuring guarantees regarding the accessibility, safety, efficacy and rational use of medicines, as well as promoting access to health technology and innovation (MSPBS, 2015[3]).

The health services portfolio of the MSPBS has three priority goals that were set by the current administration. As part of the action plan for universal health coverage, the MSPBS has defined three main goals in its current policy agenda: to enhance the integrated and comprehensive health networks (redes integradas e integrales de salud), to digitise information systems and to improve the administrative setup.

  • Enhancing the integrated and comprehensive health networks. This line of action focuses on enhancing primary care. Specifically, it seeks to enhance the country’s Family Health Units (Unidades de Salud de la Familia). The government’s key goals for this line of action are to improve the existing infrastructure, build new infrastructure, improve resources and facilities, improve the care provided, strengthen regulatory centres and human resources, and rearrange the organisational structure.

  • Promoting the digitisation of the health information system. The current policy agenda identifies technology as a pressing need across the entire health system. The government prioritises action to improve connectivity, adopt telemedicine, improve the capacity of human resources specialised in information and communication technologies, integrate data management systems and allow online administrative tasks and access to information. As part of the initiative to strengthen telemedicine mechanisms, the MSPBS intends to create electronic records that will allow greater efficiency in the provision of health services.

  • Improving the administrative setup. As it seeks to improve how the system operates, the government’s has prioritised measures to improve how medicines are purchased and distributed, increase transparency, strengthen anti-corruption mechanisms, raise its capacity to conduct checks, and tighten standards and regulations.

The MSPBS has identified several priority lines of treatment geared towards Paraguay’s disease burden. Currently, these include maternal and child health, chronic non-communicable diseases (especially diabetes and hypertension), cervical and breast cancer, communicable diseases, tropical diseases, HIV, tuberculosis, and sexual and reproductive health.

The Social Security Institute (Instituto de Previsión Social, IPS) is carrying out several initiatives in line with the policy recommendations identified by the OECD’s Multi-dimensional Review of Paraguay. In particular, the IPS is currently driving several initiatives to support integration in the delivery of services with the MSPBS. The actions include (i) drawing up a list of minimum services for different levels of care (levels 1, 2 and 3); (ii) selecting the services that will be unified; (iii) setting up a unified information system; (iv) drawing up a list of medicines and supplies associated with the unified services; and (v) setting system-wide prices for health services and compensation models.

The Paraguayan government’s current health policy agenda includes several lines of action for the coming years. Through the National Health Policy for 2015-30 and the current portfolio of services of the Ministry of Public Health and Social Welfare (MSBPS), the government is working on several lines of action that address several policy priorities identified by the ministry. Its health agenda focuses mainly on improving governance (recommendation 3) and ensuring that the system is run efficiently (recommendation 4). Additionally, the government has established several priority lines of treatment for the system based on the country’s disease burden. The IPS and the MSPBS are currently carrying out several initiatives to integrate their service delivery further (see Box 2.1).

The medium-term policy agenda can lay the foundations for the structural reform that Paraguay needs. Building on existing efforts to develop health networks around primary care, Paraguay should establish the conditions for the emergence of a more integrated health system by making inter-agency agreements the norm, moving towards the separation of stewardship, purchasing and service-provision functions (MSPBS), and developing the necessary public institutions in the health sector. Within the framework of the Multi-dimensional Review of Paraguay, the government identified four key lines of action for its medium-term agenda to allow the country to move towards achieving the health objectives. These lines of action seek to: (i) secure sustainable funding for health care; (ii) make the system run more efficiently and provide integrated service delivery thanks to new and better inter-agency agreements and payment systems; (iii) define a package of health benefits; and (iv) centralise the public procurement of medicines and medical supplies. The work carried out under these lines of action will help lay the foundations for the major transformations of Paraguay needs to implement in the long run.

Delivering quality health services is a global imperative for universal health coverage

Achieving quality health services is possible in all societies, regardless of their income level. Quality healthcare is often perceived as a luxury that only rich countries can afford. However, what building quality health services requires is a culture of transparency, engagement, and openness about results, which are possible in all societies, regardless of their income level. High-quality health services involve the right care, at the right time, responding to the service users’ needs and preferences, while minimising harm and resource waste. Quality health care increases the likelihood of desired health outcomes and is consistent with seven measurable characteristics: effectiveness, safety, people-centeredness, timeliness, equity, integration of care and efficiency (WHO/OECD/WB, 2018[4]).

Quality interventions can have a significant impact on specific health services delivered and on the health system at large. Understanding the types of commonly deployed interventions and the knowledge of the evidence regarding their use and effectiveness can allow for more informed choices about which interventions to select in countries. The nature of health care challenges in different health systems across the world is actually quite similar, despite the different contexts of population health needs, financing, and workforce capacity. Whilst priorities may differ – communicable versus non-communicable disease, care needs of later life versus treatment of mothers and children – the same quality goals are pursued everywhere: (i) reducing harm to patients, (ii) improving clinical effectiveness of the health services delivered, (iii) engaging and empower patients, families and communities, (iv) building systemic capacity for ongoing quality improvement activities, and (v) strengthening governance and accountability (WHO/OECD/WB, 2018[4]).

Paraguay already has defined healthcare quality policy guidelines and must allocate sufficient resources for its effective application. The MSPBS recently defined the National Health Quality Policy (NHQP) 2017 - 2030 (MSPBS/PAHO/WHO, 2017[5]). The NHQP seeks to promote excellence in health care focused on people and their needs, supporting health personnel in the promotion of clinical excellence and also in the adoption of good practices based on the best scientific knowledge available. It has six strategic lines: (i) the stewardship and institutional development, (ii) the quality culture oriented to the development of good practices in health care, (iii) the systematic and permanent improvement of the quality of health care, (iv) the patient safety, (v) the citizen participation in the monitoring of the quality of health care, and (vi) the development of the operational framework to promote the execution and valuation of health quality actions (MSPBS/PAHO/WHO, 2017[5]). Paraguay has taken an important step towards the improvement of health care by defining is NHQP. Sufficient resources, both financial and human, must be allocated for its effective implementation.

copy the linklink copied!Paraguay needs to agree on a vision for its future health system as it works towards a structural reform (recommendation 1)

A national dialogue is needed to reach agreement on a vision for the future of the Paraguayan health system. To achieve universal health coverage, Paraguay needs a clear future vision for its health system so that it can implement structural reform. That future vision must be based on an in-depth analysis of the country’s needs and unique features. Each country adapts its health model to its own particular needs and situation, so each country has a different model. Various cultural factors, such as a society’s values, also influence the most suitable model chosen (WHO, 2010[6]).

A national dialogue is needed to determine the most suitable funding model for Paraguay. Paraguay must choose between an insurance-based model, in which coverage for those unable to pay is subsidised by the public purse, and a national health service, in which all citizens receive a pre-determined package of health benefits. In either model, a unique fund of health resources should be formed and a common package of health services defined for the entire population. In addition, if considered necessary, the various segments that make up the system today can co-exist, in a more integrated fashion, from the administrative, clinical and financial perspectives, where the stewardship of the MSPBS would be central (OECD, 2018[1]).

Increasing resources from the treasury on the same scale that enabled the coverage gains of the last 15 years would not be possible in the current fiscal framework. Since 2003, Paraguay has made major budgetary efforts to support the health sector, with spending increasing from 5.1% of current expenditure in 2003 to 9.4% in 2017. Continuing the increase in health spending at the same rate while improving the system’s equity and efficiency would be extremely challenging. The introduction of the Fiscal Responsibility Act, 2015, which states that “the annual increase in primary current expenditure by the public sector may not exceed the annual rate of inflation plus 4%” (Republic of Paraguay, 2015[7]), makes it even more difficult for Paraguay to repeat the budgetary efforts of the past (see Figure 2.2). The Paraguayan government is currently promoting a tax reform bill that, if approved, would provide additional resources to the system (MH, 2019[8]). The additional resources raised by this reform would be allocated to the development of infrastructure and human capital (in particular to social protection, health and education programmes). In any case, the system must be reformed so that the limited resources are used more efficiently and private resources are mobilised through prepayment mechanisms in the form of insurance premiums, fiscal contributions or parafiscal contributions.

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Figure 2.2. Repeating the increase in public spending on health that was introduced in the 2000s would be impossible in the current fiscal framework
Figure 2.2. Repeating the increase in public spending on health that was introduced in the 2000s would be impossible in the current fiscal framework

Note: Panel A: Series are executed budget expenditure excluding investment in physical capital (according to the definition of current expenditure of national health accounts). Current expenditure of local tax revenue by decentralised entities, such as property tax (impuesto inmobiliario), is not included. Panel C: Act No. 5098 on Fiscal Responsibility (Republic of Paraguay, 2015[7]).

Source: Panel A: BOOST database (Ministerio de Hacienda de Paraguay, (2018[9])). Panel B and C: MSPBS (Based on National Health Accounts). Inflation series (Panel C) are from BCP (Central Bank of Paraguay).

 StatLink http://dx.doi.org/10.1787/888933983433

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Box 2.2. Basic principles to ensure the success of a reform

Implementing a reform is complex and involves considering a wide range of political economy issues, some specific to the country in question, others applicable to any country. A recent OECD analysis examined the political economy of 20 case studies of reforms in ten member countries and assessed the conditions that make reform possible (Tompson, 2009[10]; 2010[11]). Building on earlier OECD work, the analysis suggests a number of basic principles that have proven successful:

  1. 1. Governments need to have an electoral mandate for reform. Reform “by stealth” has severe limits: unless governments first seek public approval, reforms tend to succeed only when they generate visible short-term benefits, which is almost impossible for far-reaching reforms. While crises can create opportunities for reforms, sustainability is essential for there to be a real impact.

  2. 2. Effective communication by the government is important. Far-reaching reforms usually require co-ordinated efforts to persuade voters and stakeholders that they are needed, with special emphasis placed on the costs of not reforming. Where the costs of the status quo are opportunity costs, they tend to be politically “invisible”, making the challenge to “sell” these reforms all the greater.

  3. 3. Policy design should be underpinned by solid research and analysis. An objective, evidence-based reform proposal with a sound technical analysis serves both to improve the quality of public policy and to increase the chances that the reform will be adopted. Research that is presented by an impartial, authoritative institution and that inspires confidence across the entire political spectrum can have a definitive effect.

  4. 4. Successful structural reforms often take considerable time to implement. The more successful reforms in the case studies generally took over two years to adopt, and that does not include the preparation work: in many reform episodes, proposals are debated and studied for years before the authorities actually start formulating specific reforms.

  5. 5. Cohesion of the government is important. If the government undertaking a reform initiative is not united around the policy, it will send out mixed messages and opponents will exploit the initiative to create greater divisions; defeat is usually the result. The case studies suggest that cohesion matters more than other factors, such as the strength or unity of opposition parties or the government’s parliamentary strength.

  6. 6. Government leadership is essential. Reform progress may be facilitated by frequent discussions involving the government and its social partners (e.g. unions and private groups). However, firmness on the part of the government also seems to be a critical element of success. A co-operative approach is unlikely to succeed unless the government is in a position to reward co-operation by the social partners or to make a credible threat to proceed unilaterally if a concerted approach fails.

  7. 7. The previous condition of the policy intended to be reformed matters. The most successful reforms of firmly established policies often have been preceded by the “erosion” of the status quo through smaller piecemeal reforms or unsuccessful reform attempts. Where the existing arrangements are well institutionalised and popular, and there appears to be no imminent danger, reform is far more difficult to propose, explain, “sell” and implement.

  8. 8. Successful reform requires persistence. Previously blocked, reversed or very limited reforms need not be seen as failures: such experiences may illustrate the unsustainability of the status quo and set the stage for the same reform to be attempted at a later date.

The OECD case studies confirm the conclusions of earlier analytical work with respect to the facilitating effect of crises and sound public finances. Finally, the studies cast some doubt on the often-repeated claim that voters tend to punish reforming governments: the likelihood of subsequent re-election was about the same for those involved in the more and less successful reform episodes.

Source: OECD (2013[12]), Getting it Right: Strategic Agenda for Reforms in Mexico, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264190320-en.

In the medium term, significant progress can be made in creating a national health system that is more integrated and better co-ordinated. The current situation, in which the health system is fragmented into a prepaid private subsystem, a general budget-based public subsystem, and an insurance-based social security system, is a significant hurdle to ensuring that stewardship is effective, coverage is equitable and the system is run efficiently (OECD, 2018[1]). Independently of the model chosen for the future, Paraguay should work to move towards integrated health provision networks based on primary care as a cost-effective path to universal health coverage (OECD, 2018[1]). The MSPBS and IPS are working towards integrating service provision although experiences have so far been limited in scope. The country should also set the framework conditions that will pave the way for new inter-agency agreements and the unification of care provision at the point of delivery, building on past experiences.

copy the linklink copied!The health funding strategy must be sustainable and must secure sufficient resources (recommendation 2)

Despite ongoing efforts to increase public spending on health, funding remains insufficient and inequitable. Financial flows largely mirror the fragmentation of the health service provision system. Revenues for the care of different population groups are raised through separate systems, including public funding, social security contributions, prepaid health plans, and out-of-pocket expenditure. Funds are held in separate pools, with little or no potential for pooling risk and cross-subsidies across segments. Given that out-of-pocket expenditure represents a primary source of funding, a significant portion of the population in Paraguay is at risk of catastrophic health expenditure (OECD, 2018[1]).

Diversifying the sources of funding for health would help ensure the sustainability of health funding (recommendation 2.1). The expansion of social insurance might contribute to securing funds, but will need to be complemented by funding through general taxation. Possibilities to be considered in the case of Paraguay include increasing taxes on goods that generate risks or costs for public health, especially tobacco and alcohol, and earmarking part of the revenue from these taxes for health funding (OECD, 2018[1]). According to the World Health Organization, “raising tobacco taxes to more than 75% of the retail price is one of the most effective and cost-effective tobacco control interventions (WHO, 2015[13]). In this regard, the Paraguayan government is currently promoting a tax reform (MH, 2019[8]) that includes an increase in taxes on tobacco and alcoholic and sugary beverages. The additional resources raised by this reform would be allocated to the development of infrastructure and human capital (in particular to social protection, health, and education programmes).

Paraguay should consider diverse mechanisms to reduce the share of out-of-pocket expenditure in total health expenditure (recommendation 2.2). This step is critical in sustaining health funding and in moving towards universal health coverage in a way that is fairer and more efficient. Increasing the current levels of insurance coverage is important in this respect. Voluntary enrolment leads to self-selection and is ineffective. Making enrolment mandatory is a critical step, but must be accompanied by the design of a contribution system that ensures contributions are paid from the public purse for those unable to pay and appropriate means are available for those with the ability to pay to contribute. Reform is also needed in the contributory systems to better adapt to the circumstances of independent workers (see Chapter 3). Furthermore, the system could also consider offering partly or fully subsidised health insurance (through a means-tested subsidy) for those unable to pay (OECD, 2018[1]). To reduce out-of-pocket expenses, some other key steps are strengthening regulation on the rational use of medicines, increasing public financing, and the gradual improvement in the quality of public spending on health.

Paraguay should implement funding mechanisms that pool funds to cover key contingencies (recommendation 2.3). The fragmentation of finance pools leads to unequal financing of health needs. Risk pooling ensures equity and protects individuals from the financial risk associated with their healthcare needs (OECD, 2018[1]). A single national fund would allow spreading the financial burden between high and low-risk individuals, and between high and low-income individuals. In Paraguay, certain contingencies are not sufficiently covered by the existing insurance pools (such as highly complex and expensive treatments), resulting in high residual costs for the MSPBS and IPS. In the medium term, a system that pools and channels funds to ensure care for those conditions would be a step in the right direction. One possibility would be the effective implementation of the National Fund of Solidarity Resources for Health (Fondo Nacional de Recursos Solidarios para la Salud, FONARESS), as a pooled fund for highly complex treatment that would cover a specific set of conditions for all citizens, along the lines of Chile’s experience (see Box 2.3) which would require reforming its statute. In the long run, Paraguay could consider options to merge risk pools or create a system that allows for transfers across risk pools (OECD, 2018[1]).

Civil servants and employees of the state should be gradually incorporated into a social insurance scheme for their health provision (recommendation 2.4). At present, the IPS can only cover civil servants under special regimes, which exist for teachers in the Ministry of Education and Culture and for personnel of the Office of the Public Prosecutor. Most civil servants are currently covered by private insurance. The current system limits fund pooling, which leads to efficiency losses and, potentially, a shortfall in funds for investment. Civil servants could be incorporated in the IPS or in a separate social insurance scheme in the first instance. If incorporated into the IPS, the capacity of the IPS to provide service would have to be significantly expanded, since a significantly larger fraction of the population would be under its responsibility. To that end, the transition could be gradual and be accompanied by the relevant contribution transfers. On the other hand, the health benefits of public officials must be reviewed and clearly defined in order to achieve more austere, efficient and fair spending of health resources.

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Box 2.3. Covering high-cost treatments in Chile: the Ricarte Soto Law

Since its introduction in 2015, the Financial Protection Law for High Cost Health Diagnoses and Treatments (Ley de Protección Financiera para Diagnósticos y Tratamientos de Alto Costo en Salud), known as the Ricarte Soto Law, provides an economic aid for oncological, immunological and rare or infrequent diseases for all beneficiaries of the country's health systems that have diagnoses and pathologies that strongly impact family budgets. The fund created by this law is financed with direct tax contributions.

This law seeks to avoid the impoverishment of families as a result of the catastrophic expenses in high-cost health treatments. According to the law, the treatment means those medicines, medical devices or foods associated with diseases or health conditions, as well as indispensable services for their diagnostic confirmation and monitoring. These treatments’ prices impede affording them and/or cause a severe negative impact on households’ incomes. If the treatment exceeds 40% of the average family income, discounting basic subsistence expenses (i.e. catastrophic illnesses), there is coverage.

This law proposed progressive coverage. In the first decree, all high-cost and infrequent treatments financed by the social security system (FONASA) were incorporated, extending financial protection to the beneficiaries of the Armed Forces and private insurers, who did not have access. In 2017, coverage was further expanded to cover a total of 14 illnesses. An estimated 7 104 people received treatment under the law by November 2017. The majority of beneficiaries (81%) are concentrated in three diseases: HER2 gene breast cancer (1 667), refractory rheumatoid arthritis (1 643) and respiratory syncytial virus in premature infants (1 164).

Source: Ministry of Health of Chile (2019[14]), Law 20.850 “Ricarte Soto” and OECD (2019[15]), OECD Reviews of Public Health: Chile: A Healthier Tomorrow, OECD Publishing, Paris, https://doi.org/10.1787/9789264309593-en.

Drawing up a funding strategy

Every country must decide which sources to use and to what extent. Broadly speaking, a health system can be funded by taxes, social insurance, private insurance, or alternative funding mechanisms (i.e. community financing) (Roberts et al., 2003[16]). Each country chooses a combination of these sources, usually based on a series of country-specific features, such as its level of socio-economic development, its fiscal capacity, its policy implementability and its political accountability. The blend used depends, and to a large extent must depend, on each country’s social and political values (Roberts et al., 2003[16]).

Each method places a different level of demand on a country’s infrastructure and its public and private management capabilities. The relative size of a country’s informal economy is undoubtedly a decisive factor, since it affects how much the state can collect through its social security system (Roberts et al., 2003[16]). Implementability is, therefore, another decisive factor, since not all countries have the same capacity to raise money through the different mechanisms. The choice of method is also shaped by the country’s socio-economic structure and levels of inequality, since the health system should ideally cover those people who do not have the means to access such services on their own (Roberts et al., 2003[16]).

Paraguay needs to find the combination of funding sources that are best suited to its particular needs. The starting point for most countries looking to adopt universal coverage shows that the sources of income and the way it is managed are fragmented. Far from being considered a limitation, this fragmentation should be seen as a challenge that will make a decisive contribution to universal coverage. Three key population segments define coverage patterns: the poor and vulnerable, the informal sector and the formal sector (Cotlear et al., 2015[17]). Health ministries are generally involved in providing coverage to the first two segments, while compulsory social security models cover the formal sector.

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Figure 2.3. The decision-making process for healthcare funding
Figure 2.3. The decision-making process for healthcare funding

Source: WHO (2010[6]), The World Health Report: Health Systems Financing: The Path to Universal Coverage.

Generally, countries moving towards universal coverage start out by assessing inequality levels and look to improve access for the poorest people. This implies an approach that is tailored to different sectors of the population. Cotlear et al. (2015[17]) show how 24 countries have moved towards universal coverage using one of two main approaches: supply-side or demand-side. The supply-side approach aims to invest in raising and improving capacities and to allocate more resources to inputs to make health care more accessible. The demand-side approach aims to devote resources to activities and services for the most vulnerable sectors of society. The main purpose is to expand public health programmes.

Most countries focus initially on improving access for the poorest people, then on the informal sector (Cotlear et al., 2015[17]). Doing so requires having extra fiscal resources for the poorest people, as well as finding contributory and non-contributory formulas for the informal sector, according to how much tax is collected. In a social-insurance model (contributory), for instance, employers’ and employees’ contributions are deducted from wages. Non-contributory formulas include co-payments, which are out-of-pocket payments made at the time the service is delivered. Half of the countries in the aforementioned study applied co-payments collected primarily by the suppliers and not placed in a common fund. Although this generated revenue, it meant that the revenue was not redistributed through a pooled fund.

Pooling alleviates the negative effects of fragmentation and contributes to greater equity. If contributory resources are fragmented, costs need to be optimised by gradually integrating funding sources and the management of those sources in order to reduce administrative costs. It is not unusual to find multiple funds for different segments of the population. When universal coverage is considered, the redistributive role of the risk pool is optimal if there is a single fund for the entire population. Paraguay has tried to create a pool of funds in the past (in particular through Law 1032/96), but in practice, this fund was established only as a financing policy-making body.

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Box 2.4. Financing models affect key factors differently

When choosing the right mix of funding mechanisms, policy decision-makers should consider the potential implications on a range of factors, including:

Equity.1 The funding mechanism directly affects how the cost of medical care is shared out. Countries must, therefore, identify who has the means to bear the financial burden and who will actually bear it. Furthermore, since the way funds are used directly affects how medical care is distributed, it is vital to look at who the beneficiaries will be. Equity criteria should consider both geographic factors (ensuring access in remote regions) and socio-economic factors (ensuring access regardless of income levels).

Risk pooling. The extent to which health risks can be pooled varies greatly depending on the method used to raise funds. With general tax revenue, risks are pooled if the revenue is used to provide health services that are accessible to all or to subsidise high-risk groups. Compulsory social insurance may provide some level of risk pooling, provided that coverage is almost universal. Private insurance only pools health risks within a certain group, such as the staff at a particular company or those with a certain occupation. Finally, out-of-pocket payments by patients offer no shared risk whatsoever.

The economic effects. Each funding mechanism has different levels of impact in terms of deterring or encouraging investment and in terms of the job opportunities available and the labour supply. This affects both the make-up and the strength of economic activity in the short and long term.

1. When referring to equity, both vertical equity and horizontal equity are included. Vertical equity implies that the individual financial contributions to the system are according to ability to pay: greater resources, higher contributions (e.g. a progressive tax). Horizontal equity implies that health benefits are delivered according to individual needs, regardless of income level, race, gender, place of residence, etc. (Smith et al., 2010[33]).

Source: Roberts et al., (2003[16]), Getting health reform right: a guide to improving performance and equity.

In social insurance systems, the limited room for manoeuvre as a result of the tension between the funding required and the economic impacts means that governments look to top up funding through taxation. In social-insurance systems, contributions are tied to wages, with workers obliged to pay a certain percentage, up to a maximum amount. All workers contribute to the fund based on the same conditions, irrespective of their risk of falling ill. The amount collected from contributions, however, is dependent on demographic, economic and labour developments, and increases in the proportion of income that workers must contribute can affect the competitiveness of the economy. Since contributions also fund pensions (and sometimes unemployment benefits) in addition to health care, tensions develop in the medium term between the various factors that affect the cost of contributions. That is why some social insurance-based systems, such as the one in Spain (see Box 2.5) have needed state contributions or have had to become more dependent on tax revenue.

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Box 2.5. Health funding: the case of Spain

In 1986, the General Health Act (Ley General de Sanidad) created the National Health System (Sistema Nacional de Salud), which was financed by taxes and guaranteed universal coverage. The reform was a landmark moment for health policy in Spain, and it remains in force today, albeit with a few changes.

Decentralising the way health care is run and funded has been crucial. Responsibility for healthcare provision was gradually transferred to the 17 autonomous communities (regions), ending in 2002. The process took place due to political and financial reasons. On the financial side, decentralisation occurred at the same time that general taxation overtook social security as the main source of funding. The evolution of the economy also shaped these changes. The 1993 economic crisis, in particular, had a strong impact on the process, as a result of which, social security contributions gradually lost ground to taxes in terms of their share of the overall health budget. Eliminating social security’s contribution to the healthcare budget also freed up funds to cover the rising cost of pensions, which was one of the objectives pursued.

Health care is paid for out of the general budget of the autonomous communities. A reform passed in 2009 gave the autonomous regions greater fiscal capacity and fiscal space. The share that taxes contributed to the budget increased and funding was redistributed towards four specific funds: guaranteed delivery of essential public services, co-operation, competitiveness and fiscal equalisation (suficiencia). Today, the autonomous communities are considered to have a great responsibility in executing expenditure but limited space to generate revenue. This situation has created tensions, but efforts at reforming the system have been repeatedly postponed. Due to differences in how each autonomous community is funded, spending per capita across the autonomous communities ranged from EUR 1 110 to EUR 1 669 in 2016, averaging out at EUR 1 332. The autonomous communities fund their healthcare provision from two sources: transfers from the general state budget and revenue from various devolved taxes, in part or in full. Transfers from central government aim to ensure that the same level of service is provided in every autonomous community and are determined on the basis of allocation criteria that distribute resources from several different funds. The second source of funding is from the autonomous communities’ own taxes. The administration and collection of certain taxes were transferred entirely to the autonomous communities, giving them the scope to establish and assign credits and allocations according to their own criteria. Each autonomous community can set its own tax rate for the portion of income tax that it receives.

A broad range of benefits is covered by the national health system. In 2006, a list regulated which common benefits were covered, albeit with some benefits defined in greater detail than others. Patient services include public health, primary health care, specialist health care, emergency treatment, pharmaceutical services, prosthetic and orthotic treatment, dietary products and patient transport. In addition to the common services, the autonomous communities can offer additional services, for which they must provide additional funding. In addition to defining the portfolio of services, the regulation also introduces mechanisms to update them over time. This requires an assessment of health technologies to take into account the provision of services in the publicly funded portfolio.

The reforms have created a system in which decisions on funding and how services are organised are highly decentralised. The Ministry of Health, Consumer Affairs and Social Welfare still has a role in co-ordinating the health system as a whole and ensuring that health care is delivered in an equitable manner in all parts of the country. The central government is also responsible for matters relating to public health, global health and research, as well as for regulating training for physicians. Municipalities and local government are involved in public health policies, the environment and health promotion. The consensus reached in 1986 on the national health system was broad in scope and led to excellent results. Today, however, the system needs to be reviewed for a number of reasons. Although public funding for universal health services was and is a key principle, policy priorities include the need to address equitable access to services properly.

Discussion and action plan: Sustainable funding

During the workshop "Reforms for better health in Paraguay", the participants discussed the implication and potential next steps for defining a sustainable financing strategy for the Paraguayan health system. Discussions included:

  • It is urgent and vital to define a vision for the future of the Paraguayan system. The discussion on funding mechanisms for the system focused on what the most appropriate course would be for the system to follow. The participants stressed the need to determine what proportion of the system would be funded by taxes collected by the Ministry of Finance (with a public health system in mind) and what proportion would be funded by contributions to the social security system collected by the IPS. They also noted that drawing up an action plan was difficult, since it was first necessary to determine what kind of model the country wanted.

  • Participants discussed the possibility of a tax reform, which would require tax morale to be strengthened in the country. Tax morale is at the heart of state-building and the citizen-state relationship, because it measures taxpayer perceptions and attitudes towards paying and evading taxes (OECD, 2013[18]). The working group on funding health care did reach an agreement on the suitability of taxing the consumption of goods that were harmful to people’s health, the purpose being to reduce consumption rather than to raise taxes. Several participants, however, stressed that it would first be necessary to strengthen tax morale to make tax increases more legitimate. Strengthening and clarifying the links between revenue and expenditure, building taxpayer profiles, understanding the informal sector better, increasing the transparency of tax policymaking, modernising tax administration procedures and aligning efforts to avoid negative interactions among the drivers of compliance are some of the key efforts governments can do to improve tax morale and tax compliance in a country (OECD, 2013[18]).

  • Participants also discussed the pertinence of activating funds such as FONARESS. Some sectors suggested these special funds may generate political conflicts and become a target for the private sector and pharmaceutical companies, which would look to take advantage of the resources built up in the fund. Regulations, therefore, need to be put in place to prevent the fund from becoming a bottomless pit, and there needs to be a committee with the power to authorise using the funds.1 This could be particularly useful in the case of catastrophic illnesses.

Participants also identified some key actions for the implementation of policy recommendations in this field, as well as the actors involved in the change process. They assigned priority levels to each of the recommendations, according to the needs of the country (see Table 2.1).

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Table 2.1. Action plan for securing health funding from sustainable sources

Policy recommendations

Stakeholders

Actions for implementation

Priority

Defining the vision of the Paraguayan health system

Define a clear vision for the Paraguayan health system

MSPBS

Ministry of Finance

IPS

Presidency

1. Conduct an in-depth analysis of the country’s specific needs and possible sources of funding

2. Propose a vision for the system

3. Organise a participatory process to reach a consensus among the system’s stakeholders

1

Diversifying sources of health funding

Evaluate raising current levels of taxation on goods that are harmful to people’s health, such as tobacco and sugar and alcoholic beverages

Ministry of Finance

MSPBS

National Congress

Private sector

1. Manage an increase in taxation on tobacco, alcohol and sugary drinks

2. Study whether it is feasible and desirable to pre-assign to the health sector budget allocations from tax collected1

1 (As a public health policy)

3 (As a source of funding)

Implement strategies to reduce out-of-pocket health expenditure

Make enrolment in health insurance mandatory, offering mechanisms that are adapted to self-employed workers

IPS

Ministry of Finance

National Congress

1. Look into mechanisms that would allow self-employed workers to join the social security scheme

2. Create a legal framework that makes social security compulsory for self-employed workers

1

Reform contributory systems for independent workers to better adapt them to their circumstances

IPS

Ministry of Finance

National Congress

1. Identify possible mechanisms for contributions to the IPS that are adapted to the realities of self-employed workers

2. Work out the cost of including self-employed workers in the social security scheme (IPS)

1

Offer means-tested subsidies partly or fully covering the cost of health insurance for those unable to pay the full amount

IPS

Ministry of Finance

Ministry of Social Development

MSPBS

1. Implement a system identifying persons subject to state contributions

2. Strengthen a system that promotes equity

1

Establishing pooled funds to cover key contingencies

Evaluate the introduction of pooling and collection to fund high-cost treatments

IPS 

MSPBS

1. Implement individual authorisation, better protocols and expert opinions

Note: Italics are used for notes made by workshop participants. (1) The Paraguayan government is currently promoting a tax reform (MH, 2019[8]) that includes an increase in taxes on tobacco and alcoholic and sugary beverages. The additional resources raised by this reform are pre-allocated to the development of infrastructure and human capital (in particular to social protection, health and education programmes).

Source: “Reforms for better health in Paraguay” workshop.

copy the linklink copied!Strengthening governance is necessary to steer the health system towards universal coverage (recommendation 3)

Competent and effective governance is essential to achieve universal coverage in a health system. Governance seeks to balance the full set of competing interests, influences and demands within a health system. The governing entity must work effectively with other sectors, including the private sector and civil society, to promote and maintain the health of the population. It must also manage international co-operation resources in ways that promote national leadership and ensure those resources contribute to the achievement of agreed policy goals (WHO, 2019[19]). The government is currently making efforts to strengthen the leadership capacity of the MSPBS. The National Health Policy for 2015-30 makes strengthening stewardship and governance the first objective on the policy agenda (see Box 2.1).

Governance includes a series of functions related to managing the system and creating standards. The policies and rules of governance seek to steer the system so that it achieves the aims of the national health policy, which are essential to achieve universal health coverage. The typical functions include maintaining the strategic direction of policy development and implementation; detecting and correcting undesirable trends and market distortions; regulating the behaviour of relevant actors; and establishing effective and transparent accountability mechanisms (WHO, 2019[19]).

In Paraguay, it is crucial to strengthen the stewardship capacity of the MSPBS (recommendation 3). The organisation and functions of the MSPBS are very broad, which can contribute to diluting its leadership. The MSPBS’s primary function is to provide stewardship for the national health policy. In practice, however, social welfare and public utilities also fall under its remit. These stem from a holistic view of public health, but in practice result in the MSPBS undertaking functions that overlap with those of other institutions or functions that could be located elsewhere in the executive, allowing the MSPBS to concentrate on the difficult task of managing a fragmented system involving many different organisations. The marked fragmentation of the health system, with different modalities for funding, regulation, enrolment, and service delivery, makes stewardship particularly challenging (OECD, 2018[1]).

To strengthen its governing entities, Paraguay needs to pursue the effective implementation of the governance framework of the health system (recommendation 3.2). Although there is already a legal framework that gives the MSPBS stewardship capacity (i.e. law 1032/96), its implementation and the consolidation of the governing capacity have not been achieved in practice. Efforts should go beyond the legal, to ensure actual implementation of the law. The establishment of bodies to fulfil critical institutional roles, such as the National Health Fund, Medical Directorates, and Health Technology Assessment body, is crucial. Legal and regulatory bodies in the health sector need to be bolstered and streamlined to (i) ensure regulations apply to all relevant actors, (ii) eliminate inconsistencies, and (iii) update or revoke obsolete legislation (recommendation 3.1). The stewardship capacity could also be strengthened through technical and organisational aspects, among others (OECD, 2018[1]).

Separating stewardship, purchasing and health service provision functions (MSPBS) could help to establish a system in which there is more pooling of funds and risk, better accountability and stronger governing capacity (recommendation 3.1). This reform would imply that when a unit provides a service to an individual, it would receive payment from the corresponding system: the public system if the individual is uninsured, or a social or private insurer if the service is covered by insurance. This payment system would also work within institutions, creating tools and incentives for cost control and management. On the other hand, the stewardship capacity is also diminished because the MSPBS undertakes functions of service provision. In the long term, the separation of functions could help the MSPBS to focus on the strengthening of its stewardship capacity.

Supervisory institutions need to be given sufficient autonomy, financial resources and human resources (recommendation 3.2). Supervisory institutions often face budgetary restrictions that limit their effectiveness. In particular, the Superintendence of Health (Superintendencia de Salud) has scarce economic and human resources and little autonomy to undertake its role. The oversight that the Superintendence of Health exercises over private and public service providers is weak, resulting in asymmetries in the quality of services provided and arbitrary limits on coverage on the part of certain actors (Giménez Caballero, 2013[20]). In particular, with regards to the regulation capacity over public providers of the system, strengthening the independence from the MSPBS is essential. The Superintendence must strengthen its capacity to enforce the regulation to all the actors in the system, including both private and public health service providers.

Defining a package of health benefits is essential to move strategically towards progress towards universal coverage (recommendation 3.3). At present, the public subsystem does not have a list of priority medicines and medical supplies that are guaranteed, so rationing is determined by contingent factors, leading to inefficient and non-strategic use of resources. The Paraguayan government has made drawing up a package of health benefits one of its priority policies and began working on such a package during the third phase of the Multi-dimensional Review of Paraguay.

Paraguay needs to invest more in developing information systems for the health system to deliver better statistical information and to support continuity of care (recommendation 3.4). The actions needed include (i) continuing efforts to improve the accuracy of vital statistics; (ii) unifying systems within institutions and, where relevant, across the public, private and mixed subsystems; (iii) improving the capacity of stewardship bodies to generate health statistics for the entire system, with the support of the National Statistical Office (DGEEC); and (iv) developing a system for monitoring medical records and accessing them in order to ensure continuity of care (OECD, 2018[1]). The current portfolio of services of the MSPBS prioritises digitising the health information system, promoting connectivity, offering telemedicine, improving the capacity of staff specialising in information and communication technologies, integrating data management systems and allowing online administrative tasks (see Box 2.1). The development and institutionalisation of population surveys that provide information on the state of health, the burden of diseases and out-of-pocket expenses of Paraguayans is also a fundamental aspect in this regard.

Defining a package of health benefits (recommendation 3.3)

Currently, Paraguay’s health system operates predominantly under an implicit rationing scheme. Rationing is an inescapable reality in any country, since health resources are always finite. Nevertheless, it can be done explicitly or implicitly, using either positive or negative lists, or a combination of the two. Under Paraguay’s implicit rationing scheme, the health authorities assume neither a commitment nor a clear position on the services provided to the population. The services that reach the population, therefore, depend on contingent and discretionary factors such as the availability of medicines and/or medical supplies at the time that the medical care is provided (IDB, 2014[21]).

Explicit rationing improves resource allocation and social welfare, since it involves strategic prioritisation beforehand. Unlike implicit rationing, an explicit health benefits plan involves significant technical and political effort to define and periodically adapt a set of services (IDB, 2014[21]). Whether a medicine or medical supply is included on excluded on a list normally depends on the country’s health goals, allowing resources to be used much more strategically, since medicines and medical supplies that have been deemed essential are prioritised. Countries will face pressures from various stakeholders to implement or adapt a health benefit plan in a certain way. These stakeholders include civil society, health professionals, pharmaceutical companies and patient groups (IDB, 2014[21]). It is important to reach a consensus in defining a package of health benefits.

Differences in the benefits package hinder integration at the point of delivery. The IPS and the Ministry of Health have both drawn up their own lists of the essential drugs that they provide free of cost. They also manage separate stocks, even when service provision is unified through inter-agency agreements. Integrating service will require defining and unifying benefit packages, ideally by identifying a common basic package that can be gradually extended over time.

Learning from international experience and adopting best practices could ensure better results in the implementation of a benefit package

Achieving legitimacy throughout the process of implementing a benefits package can ensure it is successful. It is important for the government to ensure that the implementation process is transparent and participatory, so access to information is a key tool. Decisions should be documented and made publicly accessible (OAS, 2013[22]). The way services that are excluded from the package are managed is also decisive. The decision to prioritise or exclude certain drugs and medical supplies must be supported by explicit technical criteria (IDB, 2014[21]) (see Figure 2.4).

The methods for defining and adapting the package should be explicit and transparent. It is essential for the government to have all the information required to define a benefits package. In particular, it needs to know what the cost of providing the services included in the package would be, so that it can calculate their budgetary impact (IDB, 2014[21]) (see Figure 2.4).

Once a benefit package has been defined, it is necessary to ensure that a series of conditions are met that guarantee the package’s sustainability and effectiveness. Enabling factors ensure that what is prioritised in the benefit plan does not remain a mere statement of services, but instead becomes effective coverage of prioritised services (IDB, 2014[21]). The package needs to have sufficient resources and sustainable sources of funding. In addition, it is important to give publicity to the benefits package both within the health system and among users. Finally, it is important to implement mechanisms for monitoring and evaluating the processes involved in implementing a health benefits package (HBP) to ensure that lessons are learned and future improvements are made (see Figure 2.4). Paraguay should gradually develop its capacity to carry out health technology assessment for decision-making. As the Chilean experience has shown, such a measure has high and positive health and financial impact (see Box 2.6) (Auraaen et al., 2016[23]).

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Figure 2.4. Building blocks for best practices in defining a health benefit package
Figure 2.4. Building blocks for best practices in defining a health benefit package

Source: IDB (2014[21]), Health Benefit Plans in Latin America: A Regional Comparison.

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Box 2.6. Explicit Health Guarantees in Chile

In Chile, the Explicit Health Guarantees (Garantías Explícitas en Salud, GES) are a series of legal guarantees regarding certain health benefits. Both the public health insurance scheme, known as the National Health Fund (FONASA) (the social security subsystem), and the private Social Security Institutions (private subsystem) must provide those guarantees to their beneficiaries (Superintendencia de Salud de Chile, 2019[24]). In addition to a list of covered services, the four guarantees introduced are:

  • Access: mandatory provision of the benefits covered by the GES.

  • Timeliness: maximum waiting times for the benefits covered by the GES.

  • Quality: delivery of the health benefits only by health providers that are accredited by the Superintendence of Health.

  • Financial coverage: a cap on the co-payment made by users equal to 20% of the value determined by the regime’s fee schedule, with no co-payments for low-income beneficiaries.

Explicitly guaranteeing certain benefits without explicitly denying others is a politically attractive strategy. Chile’s starting point was the total absence of any explicit health priorities and a list of certain medical benefits excluded from the plan. For FONASA, Chile decided to maintain an implicit rationing system for benefits excluded from GES and to prioritise the subset of benefits included in the plan.

Gradually incorporating health problems into GES facilitated the approval and implementation of a health reform. This strategy simplified the funding requirements of a reform, which in turn dampened the fiscal impact and reduced the implementation challenges. In 2005, when GES was introduced, only 25 health problems were included in the list of benefits, but now there are 80 illnesses covered.

GES institutionalised two vital processes used to determine the setup of a Basic Health Package: costing, and identifying social priorities. Chile chose to include only a subset of health problems in GES targeting around 60% of the country’s disease burden. It was, therefore, necessary to develop an institutionalised process for identifying social priorities. Before the GES was formulated, there was an extensive public consultation process with expert groups; interest groups; public, municipal and private workers; and the general public. With respect to costs, any modification to the content of the GES must first be subjected to a rigorous actuarial study. In recent years, Health Technology Assessment (ETESA) has been introduced, which has complemented these processes and contributed substantively to decision-making, for example, through effectiveness and cost-effectiveness studies on assessed interventions.

Source: IDB (2014[21]), Health Benefit Plans in Latin America: A Regional Comparison and Superintendencia de Salud de Chile (2019[24]).

OECD countries use different approaches to define the range of benefits that are covered and funded collectively. While OECD countries have organised health care coverage in very different ways, most of them have defined, at a central level, a range of benefits covered by residence-based public health systems schemes or compulsory health insurance (Auraaen et al., 2016[23]). This definition is done:

  • Explicitly, through itemised lists of goods or services covered (e.g. a list of reimbursed medicines or surgical procedures), or implicitly, by reference to a broad category of services (e.g. primary care services);

  • Positively, by referring to what is covered, or negatively, assuming that everything which is not explicitly excluded from coverage (broad categories or specific items) is covered.

Each approach is partly influenced by the way the health system is organised in each country. In the OECD countries, positive lists are the norm for pharmaceutical products, but they are not for services (medical procedures and devices) (see Figure 2.5).

Countries with health insurance systems generally use positive lists to define the range of services covered. Countries with single-payer health insurance systems generally use positive lists to define the range of services covered. Countries with multiple health insurers and automatic enrolment (i.e. no choice of insurer) have generally defined a single, uniform package of health benefits. Countries with multiple competing health insurers often define the benefits covered at the national level using positive lists. However, in certain countries with multiple insurers, such as Chile and Mexico, the range of benefits covered is defined by each insurer and varies based on each insurance plan (Auraaen et al., 2016[23]).

All but four OECD countries use positive lists drawn up centrally to determine which medicines are covered. The OECD countries have different ways of organising healthcare coverage, but almost all of them draw up positive lists of pharmaceuticals at the central level. Some of those countries (Austria, Belgium and France, for instance) use positive lists for both inpatient and outpatient care, whereas others (Finland, for instance) use them only for medicines used in outpatient care, with hospitals drawing up their own formularies. Some countries use positive and negative lists simultaneously (Iceland, Italy and Spain, for instance). Spain, for instance, produces a negative list of pharmaceuticals that are of low therapeutic value, referring to drugs which have not proven to have an adequate incremental cost-effectiveness ratio (Auraaen et al., 2016[23]).

All OECD countries have created an explicit process for making decisions on coverage. Most have a two-step process that involves central-government institutions. One organisation assesses and evaluates new technologies and issues recommendations, and another makes the decision on coverage (Le Polain et al., 2010[25]). The evaluation organisations (step 1) often involve a wide range of stakeholders in the process, while the decision-making organisations (step 2) tend to be less inclusive, with the health minister often having the final say on coverage decisions. Some countries only have one organisation responsible not only for the analysis and evaluation but also for making the final decision. Two-thirds of OECD countries have a fully centralised process, since the range of benefits that they cover is determined at the central level. In countries with decentralised health systems, assessment and decision-making take place at different levels (Auraaen et al., 2016[23]).

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Figure 2.5. The use of positive and/or negative lists to define benefit packages in the health systems of OECD countries
Figure 2.5. The use of positive and/or negative lists to define benefit packages in the health systems of OECD countries

Source: Auraaen et al. (2016[23]), “How OECD health systems define the range of goods and services to be financed collectively”, OECD Health Working Paper, OECD Publishing, Paris.

Discussion and action plan: Defining a package of health benefits

During the workshop "Reforms for better health in Paraguay", the participants discussed the implications and potential next steps for defining a package of health benefits in Paraguay. Key discussion points included:

  • Paraguay needs an explicit package of health benefits for all Paraguayans. The MSPBS is currently defining a package of health benefits with a gender and life cycle focus, which leaves some segments of the population without guaranteed benefits. The workshop participants stated that the main priority is to define a package of services with a gender-based and cultural focus in which treatment and provision are effectively guaranteed to the entire population in each point in their life cycle. This package would prioritise the lines of care defined by the MSPBS, based on the draft portfolio of services that the IPS and the MSPBS are currently defining.

The participants also identified some key actions for the implementation of policy recommendations in this field, as well as the actors involved in the change process. They assigned priority levels to each of the recommendations, according to the needs of the country (see Table 2.2).

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Table 2.2. Action plan for defining a package of health benefits

Policy recommendations

Stakeholders

Actions for implementation

Priority

Move towards universal health coverage by expanding health services and insurance coverage, increasing financial protection, and ensuring the delivery of a well-defined benefit package

Define a set of guaranteed services that can be provided to the population effectively. Prioritise lines of care based on the portfolio of services already jointly put together by the MSPBS and the IPS

IPS

MSPBS

Police and military health

Private sector

Superintendence of Health

National University of Asunción

1. Form an inter-agency team to analyse and evaluate services for each line of care.

2. Conduct studies on the health situation (disease burden, social preferences) for each line of care.

3. Review and analyse the current legal framework for the MSPBS and the IPS

4. Study the cost of the benefits for those care lines.

5. Analyse the basic benefits (already begun by the MSPBS and the IPS) with the other main stakeholders.

6. Set the criteria for including or excluding benefits (social, economic, scientific).

1

Note: Italics are used for notes made by workshop participants.

Source: “Reforms for better health in Paraguay” workshop.

copy the linklink copied!To improve how the resources are used, the health system needs to become more efficient (recommendation 4)

At a time when coverage is expanding in terms of the number of people covered and the benefits available, it is essential to deliver services more efficiently. To move towards universal health coverage, incentives and payment systems need to be adapted to the new situation.

Since health funding is limited, a much more efficient system needs to be designed to take full advantage of the resources available (recommendation 4). The pace at which health funding has grown in recent decades will not be sustainable in the future. Consequently, in addition to finding new sources of funding, it will be necessary to make the system run more efficiently in order to do more with the same resources. The fragmentation of the health system creates problems for pooling risk and resources and it results in inefficiencies in the purchase and delivery of health services. The government can promote measures such as more and better inter-agency agreements to integrate the system further in terms of service delivery, thus making better use of the system’s installed capacity.

Improving the administrative order and enhancing the integrated and comprehensive health networks are among the current priority objectives of the MSPBS service portfolio. The government’s current priority measures are to improve how medicines are purchased and distributed, increase transparency, strengthen anti-corruption mechanisms, raise monitoring and control capacities, and strengthen standards and regulations within the system. The MSPBS is focusing its current efforts on enhancing the integrated and comprehensive health networks, especially primary care. In this regard, the current objectives include improving and expanding infrastructure, improving resources and facilities, improving the care provided, strengthening regulatory centres and human resources, and rearranging the organisational structure (see Box 2.1).

For the system to become more efficient, it needs to become less fragmented and to create payment systems more strategically. The system’s high fragmentation is one of the main sources of inefficiencies (OECD, 2018[1]). Inter-agency agreements pave the way for medium-term progress towards more integrated service delivery. It is, therefore, necessary to review existing agreements and set up a framework for creating new and better agreements (recommendation 4.1). Payment systems, procurement and competition (where it exists) can be used to model the behaviour of the various parties involved in a health system. More strategic incentives can be used to model the behaviour of organisations, changing what needs to be done to obtain resources.

The purchase and procurement of health services must be designed strategically, taking into account the incentives generated in each case (recommendation 4.2). Purchasing and procuring health services helps countries advance more quickly towards universal coverage (WHO, 2010[6]). It must be done strategically, however, to ensure that private and public suppliers are given the right incentives to offer efficient, equitable, good-quality services. In this regard, Paraguay needs to re-evaluate its current purchasing and procurement mechanisms to ensure that it creates the most strategic incentives for each case.

High prices for medicines and medical supplies inflate the health system’s operating costs. Paraguay does not currently have an established strategy for purchasing medicines and medical supplies centrally or for regulating prices. As a result, it pays high prices for medicines, which not only considerably inflates the system’s operating costs, but also directly affects citizens and threatens their financial protection. Implementing strategies for purchasing and regulating medicines and supplies could help to reduce operating costs (recommendation 4.3). The National Health Policy for 2015-30 includes establishing guarantees regarding the accessibility, quality, safety, efficacy and rational use of medicines among the priorities in the health-sector policy agenda (see Box 2.1).

The government needs to boost efforts to direct the national health system towards integrated networks based on primary health care (recommendation 4.4). However, estimations suggest that Paraguay needs around 1 400 Family Health Units (Ríos, 2014[26]), which points to the sizeable gap that needs to be addressed in the coming years. In terms of financial resources, the share of the health budget distributed to regions for primary health care has been almost stagnant. In 2006, it accounted for 26% of the total budget of the MSPBS, but in 2014 it had increased only very slightly to 27% (MH, 2018[9]). First, the Family Health Units (Unidades de Salud de la Familia, USF) need to be strengthened by being given adequate human and financial resources. Also, Paraguay needs to step up the pace of expansion of the USFs to deliver on the objectives of universal coverage.

Human-resource policies in the system also need to adapt in terms of regulations and wages. Demand for professionals will need to adapt to supply-side strategies that meet the expected growth in demand, which will put a strain on relations between the public and the private sector. It is important for Paraguay to start closing the gap that exists between the working conditions offered by the public, private and social security health subsectors. Currently, the working conditions on offer in the public sector are clearly inferior to those offered in the private sector, and this difference constitutes one of the main barriers to an integrated system. Likewise, the wage gap between primary healthcare centres and more complex care centres must be narrowed. The National Health Policy for 2015-30 includes strengthening healthcare talent management among the priorities in the health-sector policy agenda (see Box 2.1). The development of a professional career specialised in primary healthcare is paramount in this regard.

Allocating resources to disease prevention and health promotion programmes is more cost-effective than waiting to treat diseases (recommendation 4.5). Investments in public health can improve health outcomes at a relatively low cost (OECD, 2016[27]). One of the key strategies to achieve sustainable universal health coverage is to invest more in health promotion and disease prevention.

Reducing fragmentation through more and better inter-agency agreements (recommendation 4.1)

Establishing inter-agency agreements reduces the level of fragmentation and enables better use of the system’s installed capacity. Inter-agency service contracts and agreements can fill gaps in installed service-delivery capacity with infrastructure from other subsystems (Liu et al., 2004[28]). Contracting out health services among subsystems can improve the performance of service delivery by increasing access to underserved populations, improving quality of care, reducing costs, and increasing the productivity and efficiency of the system as a whole (Liu et al., 2004[28]). Reducing the fragmentation of the system will contribute to reducing the asymmetries in the benefits and treatments offered across the different subsystems. This must be well specified in the agreements and contracts and monitored in practice. In addition, contracts can provide a more detailed and flexible set of incentives than a payment system, since they combine the coerciveness of a regulatory scheme with the incentive effects of a payment system (Roberts et al., 2003[16]).

Contracting helps clarify the roles, responsibilities and relationships between purchasers and suppliers. Purchasers are responsible for funding and for the macro-allocation of health resources, while suppliers are responsible for the provision and micro-allocation of health resources. Such agreements allow governments to focus less on service delivery and more on other roles that they are uniquely placed to provide, such as large-scale planning, standard setting, funding and regulation (Liu et al., 2004[28]).

Some health services are easier to contract out than others, which impacts how likely the agreements are to succeed. When a service is contracted out, it is essential to assess (i) whether the quantity and quality of the service can easily be specified or measured; (ii) whether the service can be observed or monitored at a low cost; and (iii) whether it can create competition by allowing new service providers to enter the market (Liu et al., 2004[28]) (see Table 2.3).

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Table 2.3. Types of services by their level of contractibility

Types of services

More contractible

Less contractible

Single services vs. multiple services

Single services (e.g. educating a mother to prepare for oral rehydration therapy) and services for the prevention and treatment of single diseases (e.g. HIV/AIDS)

Multiple services dealing with multiple diseases, especially when the services and disease are not specified

Services with a clear or unclear level of need

Services for which the needed quantity can be well defined (e.g., immunisations, cancer screening, antenatal care, growth monitoring)

Services for which the required amount cannot be defined (e.g. outpatient visits and drug therapy for the treatment of hypertension and arthritis)

Services the utilisation of which has or has no close correlation with outcomes

Services for which there is a close association between observable outcomes (e.g. education of a mother to prepare for oral rehydration therapy)

Services for which both actual delivery and the outcome of delivery are difficult to observe

Services for the prevention and treatment of a disease with or without practice guidelines

Services with a clear and standardised protocol for provision (e.g. directly observed treatment for tuberculosis)

Services with no clear and standardised protocol for provision due to either variation in severity or too many acceptable options

Technical complexity of services (simple or complex)

Services that are technically simple are more contractible because of their high contestability

Services that are technically complex are less contractible because of their low contestability

Source: Liu et al. (2004[28]), Contracting for Primary Health Services: Evidence on Its Effects and Framework for Evaluation.

The definition of a framework agreement would facilitate the creation of more and better inter-agency agreements in the Paraguayan health system. A framework agreement (FA) is an agreement with one or more health operators for the supply of goods, services and labour force, the purpose of which is to establish the terms governing contracts to be awarded by one or more contracting authorities during a given period, in particular with regard to maximum price, minimum technical specifications and quantities envisaged (OECD, 2014[29]). The establishment of a framework agreement, especially between the MSPBS and the IPS, is a fundamental step to facilitate the integration of the system and generate complementarities that allow increasing the total coverage of the system.

Creating the right incentives through more strategic payment systems (recommendation 4.2)

The system of economic incentives is a fundamental determinant of how organisations and individuals behave in a health system. Payment mechanisms can determine the behaviour of buyers and sellers. Before adjusting payment mechanisms, it is important to consider how they affect the level of financial risk and reward and the distribution of risk and reward between the payer and the supplier, as well as the impact on the supplier’s incentives (Roberts et al., 2003[16]).

The payment mechanisms chosen have various effects on different variables in the system. Empirical evidence shows that some of the main factors affecting how the system operates are: 1) the kinds of medical care provided to patients (medical treatment vs. surgical treatment); 2) the types and amounts of drugs prescribed; 3) the quantity of services provided per visit or per day in hospital; 4) the length of stay in hospital; 5) the proportion of inpatients vs. the proportion of outpatients for a given disease; 6) the labelling of diseases and their severity; and 7) the frequency with which patients are referred to specialists and given laboratory tests (Roberts et al., 2003[16]). In particular, supplier incentives influence the selection of healthier patients, the reported number of patients and services, and the reported severity of the disease, irrespective of whether payment is made to the hospital or directly to the health professional (see Table 2.4). The MSPBS is currently introducing a pilot of a pay-for-results system in primary care.

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Table 2.4. Financial risks and incentives of the main payment methods

Panel A. Payment to hospitals

Payment mechanism

Basket of paid services

Risk borne by:

Incentives to the supplier for:

Payer

Supplier

Increase no. of patients

Decrease no. of services per payment units

Increase reported illness severity

Select healthier patients

Fee for service

Every service item and consultation

All risk borne by payer

No risk borne by supplier

yes

no

yes

no

Case-mix adjusted per admission

Fees vary on case-by-case basis

Risk of no. of cases and case severity classification

Risk of cost of treatment for a given case

yes

yes

yes

yes

Per admission

Each entry

Risk of no. of admissions

Risk of no. of services per admission

yes

yes

no

yes

Per diem

Every patient-day

Risk of number of days to stay

Risk of cost of services within a given day

yes

yes

no

no

Capitation

All services delivered to a person over a given period of time

Amount above the stop-loss ceiling (max. loss for the provider)

All risks borne by supplier up to a given ceiling (stop-loss)

yes

yes

N/A

yes

Panel B. Payment to physicians and health professionals

Payment mechanism

Basket of paid services

Risk borne by:

Incentives to the supplier for:

Payer

Supplier

Increase no. of patients treated or registered

Decrease no. of services per units of care

Increase reported illness severity

Select healthier patients

Fee for service

Every element of service and consultation

All risk borne by payer

No risk borne by supplier

yes

no

yes

no

Salary

One week or one month of work

All risks

No risk borne by physician

no

N/A

N/A

no

Salary and bonus

Bonus based on no. of patients

Salary portion

Bonus portion

yes

N/A

N/A

yes

Capitation

All services delivered to a person over a given period of time

Amount above the stop-loss ceiling (max. loss for the supplier)

All risks borne by supplier up to a given ceiling (stop-loss)

yes

N/A

no

yes

Source: Roberts et al. (2003[16]), Getting health reform right: a guide to improving performance and equity.

Discussion and action plan: Integration in service delivery and mechanisms for paying suppliers

During the workshop “Reforms for better health in Paraguay”, the participants discussed the implications and potential next steps for reducing fragmentation, progression towards the integration in service delivery and redesigning the mechanisms for paying suppliers in Paraguay. Key discussion points included:

  • Currently, the best strategy in terms of creating a more integrated system is to do so only at the level of primary care. Although there are currently inter-institutional agreements at other levels of healthcare, participants considered that integration at the primary care level is a priority. Therefore, they focused their discussion around integrated service delivery only at the first level of care in the system. They proposed that, during the first stage, it would be much more feasible to integrate primary healthcare between the MSPBS and the IPS. Integration with the private subsystem could happen in the medium/long term, with an emphasis on higher levels of care.

  • Regulatory mechanisms and the role of private medical treatment need to be re-evaluated. Participants stressed that no regulatory scheme exists for the private subsystem and that no standards are in place regarding the coverage and cost of plans. Very often, the IPS and the MSPBS are forced to provide residual coverage of the private subsector, especially at the second and third levels of care and in the case of high-cost diseases. Participants added that it is important to reconsider whether there should be private health insurance schemes for certain public institutions in the country.

  • Paraguay needs more and better information. Participants also stressed that, to move towards integration, it is necessary to define a portfolio of basic care and services for citizens, an inventory of installed capacity (both IPS and MSPBS) and a model of the supply and demand of health in the country.

  • Primary care is a priority in the transition towards universal health coverage. Participants also discussed the role of primary care and inpatient care, in particular on their importance and relative weight. In recent years, the landscape and the boundary between primary and inpatient care have changed rapidly, since several health centres are able to provide both diagnosis and resolution. Moreover, some participants stressed that there should be mechanisms to ensure that private insurance responds at all levels of care, and not primarily in primary care, which is cheaper to operate.

  • At the moment, the foundations can be laid for the future separation of the purchase and delivery of health services. Regarding the separation of the functions of stewardship and service delivery within the MSPBS, participants argued that for stewardship to be separated from delivery, it is first necessary to define how hospital and health centres will be paid for services provision. It is also necessary to design mechanisms for paying health professionals. Participants proposed that fixed salaries, which do nothing to encourage quality, should be replaced with a system that pays salaries in a way that creates an incentive to provide a good quality service.

Participants identified some key actions for the implementation of policy recommendations in this field, as well as the actors involved in the change process. They also assigned priority levels to each of the recommendations, according to the needs of the country (see Table 2.5). Although the discussion on mechanisms and systems of payments to the provision of health services is quite broad, during the workshop the participants focused their discussion on the payment of salary benefits and working conditions.

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Table 2.5. Action plan for progressing towards the integration in service delivery and systems for paying suppliers

Policy recommendations

Stakeholders

Actions for implementation

Priority

Reform the system for paying suppliers 

Design a payment system that offers incentives for quality service, cost control, and appropriate patient referral.

It is particularly urgent to re-evaluate the benefits gap between public officials at the IPS and the MSPBS

Congress

Professional guilds

IPS

MSPBS

1. Harmonise the salary benefits and working conditions of staff at the IPS and the MSPBS. Currently, the two institutions have very different working conditions.

2. Standardise guides for enabling infrastructure and standardise profiles for human resources and facilities. Standardisation would make IPS centres and MSPBS centres subject to the same requirements.

3. Conduct a regulatory review that allows the same health protocols to be used in both the IPS and the MSPBS.

4. Start creating career paths for the national health system.

2

Strengthen the orientation of the national health system towards integrated networks based on primary health care

Strengthen existing USFs by giving them adequate human and financial resources and increase the pace of their expansion

Professional guilds

IPS

MSPBS

Universities

1. Design a basic portfolio or basket of services for citizens.

2. Identify the system’s stock and installed capacity in order to carry out an in-depth analysis of the country’s supply and demand.

3. Strengthen information systems. It is essential to digitise clinical records.

4. Conduct a regulatory review of human resources.

5. Analyse the role of prepaid primary care (in the long run, private insurance policies would only kick in from the secondary level of care).

6. Implement a plan for communication and public participation.

1

Note: Italics are used for notes made by workshop participants.

Source: “Reforms for better health in Paraguay” workshop.

Ensuring that medicines are available, affordable and of good quality (recommendation 4.3)

The current procurement mechanisms of medicines and medical supplies affect both their prices and the logistics for their timely distribution. Currently, medicines are purchased in a decentralised manner at very uncompetitive prices. Overpriced medicines in Paraguay affect the sustainability of the system and the financial protections afforded to citizens. Proof of this is that the main cause of catastrophic health expenses in Paraguay is the purchase of medicines (OECD, 2018[1]). Many mechanisms exist to prevent medicines and medical supplies from being expensive, such as centralised purchasing and price regulation. Most notably, centralised public procurement can bring down the price of medicines and medical supplies and improve their effective availability and timeliness at health institutions. With regards to the latter, in fact, health units and hospitals often face drug shortages due to poor logistics management (Monroy Peralta et al., 2011[30]). The logistics for the distribution of medicines and medical supplies also needs to be improved to ensure sufficient and timely supplies in all health care centres. Towards both objectives, progress can be made through the implementation of an effective and centralised system of public purchases of medicines and medical supplies.

More efficient public procurement of medicines and medical supplies

Public procurement of medicines can help to ensure that essential medicines are available in sufficient quantities, at a reasonable price, and in line with certain quality standards. The centralised procurement of medicines pools together the relatively limited demand of each individual health unit in a country to create a single demand with a better negotiating position. This translates into lower prices and more favourable contractual terms (IDB, 2018[31]). Public procurement can also improve the way a system is organised so that delivery of medicines is more timely, thus avoiding shortages and stock-outs as a result of the failure of individual units to purchase sufficient stock (Management Sciences for Health, Inc., 2012[32]).

The total cost of medicines and medical supplies is comprised of several components, some of which are not obvious. It is important to remember that the prices of medicines are only part of the total cost of purchasing medicines. Other important components are the costs associated with holding stock, hidden costs (e.g. short expiry dates and poor quality), the costs of running the purchasing system, and extra costs incurred due to stock-outs (Management Sciences for Health, Inc., 2012[32]).

A centralised national procurement system must explicitly define the responsibilities of all stakeholders. In practice, an effective public procurement scheme involves a collaborative process between a public procurement office, which is in charge of operations, and technical and policy committees, which are responsible for deciding which medicines to buy, in what quantities and from which suppliers (see Box 2.5). The cycle of public procurement of medicines, which ideally should be standardised and institutionalised, includes almost all the decisions and actions that determine the quantities of medicines purchased, the prices paid and the quality of the medicines received (see Figure 2.6).

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Figure 2.6. The public procurement of medicines
Figure 2.6. The public procurement of medicines

Source: Management Sciences for Health, Inc. (2012[32]), Managing access to medicines and health technologies.

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Box 2.7. Stakeholders and responsibilities in a scheme for the public procurement of medicines

Offices for the public procurement of medicines

An office for the public procurement of medicines can either be part of the government or an independent agency. Such offices are normally responsible for (i) centralising information about the country’s medicine needs; (ii) developing a procurement list of medicines to acquire, based on customer demand; (iii) managing the tendering processes; (iv) managing and arranging supply contracts (unless there is a tender board); and (v) monitoring the performance of suppliers and clients.

The power to determine which products to purchase and which suppliers to use should not be centralised in this office. Such decisions should ideally be taken by committees that include representatives from other sectors. If the office operates independently, it is important for its operations to be supervised by a board.

Tender board

The rules of tendering and contract negotiations are generally established by a government tender board. Procurement offices normally draw up a list of requirements and the tender board monitors the tender process. The prime task of the tender board is to make the decision to award contracts. It may have absolute decision-making powers or it may be limited to making recommendations.

Medicine selection committee

The medicine selection committee should include experienced health professionals who evaluate the various pharmaceutical products on the market and select those that are essential to the system. Normally, the committee is led by an experienced physician. The committee reviews requests for medicines to be added to or removed from the procurement list. This committee must have access to current, impartial information on medicines.

Procurement/tender committee

The health system should set up a procurement/tender committee to make final decisions or to make recommendations to the tender board on medicine selection, procurement quantities and supplier selection. It should approve the exact specifications for product description, packaging and labelling, and compliance with quality standards. It should also review information on suppliers and determine which can participate in tenders and which can receive contracts. The committee should include senior government officials and representatives from health system facilities.

Source: Management Sciences for Health, Inc. (2012[32]), Managing access to medicines and health technologies.

Discussion and action plan: Public procurement of medicines and medical supplies

During the workshop “Reforms for better health in Paraguay”, the participants discussed the implications and potential next steps for consolidating mechanisms of public procurement of medicines and medical supplies in Paraguay. Key discussion points included:

  • In order to make progress in the public procurement of medicines and medical supplies, it is important to draw up a list of essential medicines, especially for the MSPBS. Workshop attendees also pointed out that the IPS is currently designing a pilot scheme for the procurement of medicines and basic supplies (i.e. gauze, alcohol and gloves).

  • Some participants noted that one of the biggest obstacles to the centralised procurement of medicines and medical supplies is the tender process, which is lengthy and cumbersome, irrespective of the size of the contract. Other participants, however, said that although the Procurement Act is cumbersome, it is also clear and ensures that tender processes are transparent. The legislation also deals with disputes between the buyer and supplier much more quickly than the justice system.

Participants identified some key actions for the implementation of policy recommendations in this field, as well as the actors involved in the change process. They assigned priority levels to each of the recommendations, according to the needs of the country (see Table 2.6).

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Table 2.6. Action plan for improving the public procurement of medicines and medical supplies

Policy recommendations

Stakeholders

Actions for implementation

Priority

Consider a reform to make the public procurement of health services and supplies more responsive

Implement a small-scale pilot scheme in which medicines and medical supplies are procured centrally. Initially, the programme would be small to ensure its success. In the medium to long term it could then be scaled up to cover the entire country.

DNCP

IPS

MSPBS

1. Define a restricted purchase list through an agreement between the IPS and the MSPBS. The list is restricted to guarantee that the medicines are successful and that the suppliers are available to fulfil the orders made.

2. Agree on the technical requirements that these medicines and medical supplies must meet (the list should ideally comprise low-complexity or tier-1 medicines).

3. Define the quantities required.

4. Agree on the requirements to be met by supplier companies.

5. Set purchase prices (in line with the price cap regulation).

6. Agree on payments (prioritising the MSPBS).

7. Draw up follow-up mechanisms.

1

Strengthen mechanisms to protect transparency and combat corruption

MSPBS

Health professionals

Suppliers

1. Support the issuing of prescriptions by active ingredient or International Classification of Diseases code (not by brand).

2. Implement an information system for prescriptions for the MSPBS (procedures are currently done manually).

3. Standardise protocols for prescribing and delivering medicines.

2

Strengthen regulations on price caps (important for the centralised procurement of medicines and medical supplies).

MSPBS

1. Change the current price-regulation system, which is based on production costs, to one based on international benchmarks.

3

Implement a pilot public-private partnership in the medium term in which a private body stores, distributes and delivers medicines and medical supplies.

 

1. Identify suppliers that have the capacity to supply the required functions.

3

Note: Italics are used for notes made by workshop participants.

Source: “Reforms for better health in Paraguay” workshop.

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Note

← 1. With respect to this point, Health Technology Assessment would be key. Before there is a committee, it is necessary that a technical team (as highly qualified as possible) can evaluate the different treatments to deliver that information to the decision makers, who will be able to rely on that evidence for their definitions. In addition, the participation of civil society (e.g. groupings of patients) becomes increasingly relevant (Auraaen et al., 2016[23]).

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Chapter 2. Reforming the Paraguayan health system