Rationalizing of purchasing process. Lessons from Romania

Dr.Aurora Dragomiristeanu

Historical background

Romania has had a long tradition of organized health care. Between the First and the Second World Wars there was a social insurance system based on the Bismarckian sickness fund model. Workers from industrial enterprises, merchants, employers and their families as well as the self-employed were insured. However, this represented only 5% of the population. Income-related contributions were paid in equal proportions by employers and employees.

In 1949, the Law on Health Organization of the State was passed and there was a gradual transition to a Semashko health system. This was based on the principles of universal coverage and free access at the point of delivery. The main features of the Romanian health care system during these four decades were: government financing, central planning, rigid management and a state monopoly over health services.

Between 1990 and 1995, the government and the Ministry of Health issued a series of decrees and orders which over time have led to many changes. None of these changes questioned the right to health care, which is enshrined in Article 33 of the Romanian Constitution.

Starting in 1995, important laws concerning the structure and organization of the Romanian health care system were passed. Most importantly, these were Law 74/1995 concerning the organization of the College of Physicians , Law 145/1997 on Social Health Insurance, Law 100/1998 on Public Health and the Law 146/1999 on Hospital Organization. The new regulations practically changed the entire structure of the health care system and established the legal framework for the shift from an integrated, centralized, state owned and controlled tax-based system to a more decentralized and pluralistic social health insurance system, with contractual relationships between health insurance funds as purchasers and health care providers. In the area of pharmaceuticals, the most important new regulation is the Emergency ordinance 152/14.10.1999 regarding pharmaceutical products for human use.

The Romanian health care system is in a transition phase from a situation in which it was almost entirely state-owned and coordinated by the Ministry of Health through 41 district health directorates and the Bucharest Health Directorate, towards a situation in which the relationships are more complex and the number of actors involved is bigger.

Since 1999, the main actors involved in the health care system are:

the Ministry of Health and the district public health directorates

the National and the district health insurance funds

the Romanian and the district colleges of physicians

the health care providers.

Health care finance and expenditure. Main system of finance and coverage

Until 1997, the main source of funding for the centralized health care system in Romania was general revenues, mainly through the state budget. Administered by the Ministry of Health and other ministries with health service provider networks, the budget was the only source of funding until 1991. In the early 1990s, the move toward diversifying the sources of funding gained support within Romania as a way of increasing public resources for the health sector. As part of this trend, the government introduced partial reimbursement of drugs prescribed in outpatient care in 1992. The move was accompanied by the establishment of the Special Health Fund, based mainly on a 2% payroll tax but also including funds from small taxes on tobacco and alcohol sales and advertising. In 1993, responsibility for funding material (other than drugs), utilities and current maintenance was transferred from the state to local budgets.

In 1997, the Health Insurance Law transformed the Romanian health care system from a Semashko state financed model to an insurance based system. Key provisions of the law are regulating health sector revenue generation as well as redistribution and allocation of funds.

The law made insurance membership mandatory and linked it to employment; contributions depend on income and are paid in even shares by the insured and the employer. Since then, earmarked payroll contributions are the main sources of health sector funding.

The new funding system was phased in 1998, when employers and employees each paid a 5% payroll tax and pensioners contributed 4% of their pensions. These contributions did not affect net income by much, because they were deducted after pensions and benefits increased by 4%. The 10% contribution rate of 1998 was increased to 14% since 1999 (7% from employers and 7% from employees). The self-employed, farmers, pensioners, and the unemployed pay a 7% contribution to fund health insurance.

Children and young people, the handicapped and war veterans with no income, and dependants of an insured person without their own income (wife, husband, parents and grandparents) have free access to health insurance.

For conscripted soldiers and people serving prison sentences, insurance contributions are paid by the budgets of the Ministry of Defence and Ministry of Justice.

The Ministry of Finance, the Ministry of Health and district health authorities carried out the functions of insurance bodies during the transitional year 1998 (the transition period was extended until the end of March 1999 by Ordinance No. 125/98). During this period, the DHIF function of payment of providers was performed by the district health directorates, the Ministry of Health acted as the National Health Insurance Fund and the structures under the authority of the Ministry of Finance carried out the function of revenue collection. Insurance funds (National and district) were set up as independent bodies on the 1 January 1999 and took over the actual administration of funds in April 1999. The boards of insurance funds are nominated by trade unions, employers' associations and Government (at national level) or local councils (at district level).

All the funds are collected locally by the 42 district health insurance funds (DHIFs, one each for the 41 districts plus one for Bucharest ). The DHIFs contract services from public and private providers. The money is administrated by one autonomous health insurance fund in each district and by a national health insurance fund. In addition to the 42 DHIFs, there are two countrywide funds: one from the Ministry of Transportation and one from the ministries and institutions related to national security (Ministry of Interior, Ministry of Defence, Ministry of Justice, Intelligence Agencies).

Fixed percentages of the collected revenues are allocated to certain activities. According to an amendment of the law, up to 25% of funds must be set aside for redistribution among districts which is carried out by the National Health Insurance Fund. In addition, 20% of all funds in 1998, and 5% thereafter, have to be set aside as reserves. No more than 5% of funding can be spent on administrative costs.

Primary health care

Primary health care reform began on a pilot basis in eight districts (out of 41) in 1994 with a new way of financing, a shift in responsibility from hospitals to the district health directorate (DHD) and the introduction of contracts between DHDs and general practitioners (as individuals or groups).

The reforms assigned general practitioners a gatekeeping role and introduced competitive elements through patient choice and new forms of payment. The wage system for general practitioners was replaced with a mix of weighted capitation and fee-for-service payments. Patients were granted the right to choose their general practitioner and given the possibility of changing after three months to another general practitioner.

Access to outpatient clinic and hospital specialty services now officially requires a referral by the family practitioner, but since 1989, the referral system has increasingly been bypassed and the frequency of primary health care consultation has declined. On average, patients now consult primary health care doctors 2.3 times a year (in 1998, which is down from 2.7 in 1996), accounting for only a third of all ambulatory care contacts. Including specialist contacts, Romanian outpatient contact numbers are about average if compared to other European countries.

Secondary care

At present most of secondary care services are provided in private medical office with a single or group practice, Centers for diagnosis and treatment (CDT) and integrate ambulatory services of hospitals (former policlinics).

Centers for diagnosis and treatment (CDT) are public or private.

Integrate ambulatory services of hospitals usually are located into the hospital or very close to a hospital, and the specialists are also working in the respective hospital. The remuneration of polyclinic specialists is based on salaries they get from the hospital.

In primary and ambulatory care, the drugs are provided per prescriptions, and the patients have to buy them in the private pharmacies. The drugs that are considered essential drugs and are in the List of compensated drugs, is covered 100%, 75% or 50%. The patients should pay out of pocket as co-payment for the differences between the desk price and the reference price.

The reimbursements for ambulatory services from HIH are done according to the catalogue of services for his discipline and according to the point value.

Because the limited financial allocation for specialized ambulatory services (including investigation for diagnosis and monitoring of diseases), for all services is allowed to have a waiting list.

Outside of the services contract with the insurance house, the services could be access by full out-of-pocket payment, although the patient will pay them to the respective specialist directly.