Coordinating benefits with private insurance with kill JKN
The Jakarta Post
Last month, the Social Security Management Agency (BPJS) exchanged a coordination of benefits (COB) draft agreement with private-insurance associations.
This was mandated by a presidential decree to cover benefits otherwise not covered under the regular national health insurance (JKN) program, such as ward upgrade, better-quality glasses, expensive patented drugs and supplements, which are otherwise uncovered.
However, JKN officials announced that the current COB scheme would also provide access to private hospitals currently not included in the JKN network.
But it will harm JKN hospital's business and access not to mention the quality of the JKN program. Benefits under COB should instead be applicable to all JKN hospitals and not to out-of network hospitals.
A social insurance system like JKN pools risk from all individuals in Indonesia: healthy people with low cost to sicker people with higher cost. There is neither premium difference nor restrictions for the elderly and people with pre-existing illness.
It pays a fixed amount to hospitals: inpatient and outpatient under a standardized coding mechanism called the Indonesia Case Based Groups (INA-CBGs).
Every disease group and procedure has an INA-CBG code that corresponds to a nominal payment. For example, the caesarean code O-6-10-I corresponds to Rp 4.4 million (US$380). Similarly, circumcision code V-1-15-I corresponds to Rp 3.4 million in payment.
As inferred from the examples, some codes have a high profit margin; while others have low or negative profit margin. Since 2009, hospitals using INA-CBGs have been able to sustain their expenditure by making a cross-subsidy between profitable codes and unprofitable codes.
Further, within the same code, some patients see higher costs associated with their use of drugs and services. Similarly, hospitals are able to sustain their expenditure because the cost of many patients averages out the reimbursement nominal.
Unlike JKN, which includes all beneficiaries regardless of their disease status, private insurance companies can screen their beneficiaries to cherry pick the profitable cases.
If, for example, cancer and cardiovascular codes are unprofitable, insurance companies can reject people with a history of these diseases. Similarly, insurance companies can put an age restriction to their enrollment criteria.
Now back to our problem with the current COB scheme: access to out-of-network hospitals.
When private insurance companies move profitable patients to their affiliated hospitals, JKN hospitals will now care a sicker, less profitable set of population.
They will not be able to cross-subsidy between codes, thus, will not be able to sustain a profitable business with JKN. Once their business become unprofitable, private hospitals will drop out from JKN network, reducing access to JKN beneficiaries.
Further, public hospitals will operate unprofitably. They will either have to be constantly bailed out or reduce their service quality.
A similar case happened in Chile in 1981. Chileans were allowed to purchase private insurance on top of their national health insurance program FONASA (equivalent to JKN). Private insurers rejected pre-existing conditions and older beneficiaries; leaving the old, the poor and the sick in FONASA while picking the profitable patients to their private system.
This causes a transfer of funds from the public system to the private system, creating a deficit.
Allowing the current COB scheme to continue will result in the Indonesian health system becoming somewhat similar to Chile's FONASA program, which is low quality and only used by people who cannot afford private insurance. This is not what we want for JKN.
COB should instead be applied to all JKN hospitals and not to out-of network hospitals. This will reflect the primary function of COB while still preventing insurance companies from moving profitable patients across institutions, allowing JKN hospitals to have a sustainable business, and keeping the quality of our healthcare services.
The writer is a Harvard School of Public Health student in health policy in Cambridge, Massachusetts, the US, and a former employee of the Health Ministry, dealing with healthcare reform.
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