3.3. Overview of the statutory financing system

3.3.1. Coverage

Breadth: who is covered?

According to the Health Insurance Act (1998), all Bulgarian citizens are compulsorily insured. In addition, the following groups are covered: Bulgarian citizens who are also citizens of another country but permanently live in Bulgaria; foreign citizens or individuals without citizenship but with a long-term residence permit; and individuals with a refugee or humanitarian status or those granted the right of asylum.

There is, however, a significant number of de facto uninsured individuals. The problem became evident in 2003 when an electronic system, which allowed health care providers to check the insurance status of patients upon care delivery, was introduced and the NHIF withdrew coverage for uninsured persons. In 2003, people without insurance accounted for more than 2 million individuals. Some attempts have been made to reduce this number, such as changes in regulations on insurance rights restoration. Nevertheless, the problem persists. According to the NRA, 2 037 273 people (27.5%) were uninsured as of the end of 2016, 68.4% of whom have been registered by GPs (EAMA, 2017). In some districts, uninsured people accounted for more than 25% of the total population (27.5% in Kardzhali, 25.7% in Razgrad, 25.4% in Dobrich), whereas in other districts their share was much lower (13.5% in Sofia city, 14.5% in Sofia district and 14.6% in Smolyan; EAMA, 2017).

Precise data on uninsured individuals are lacking. Some official sources suggest that around 50% of the uninsured are Bulgarian citizens who live abroad; and nearly 25% are permanently unemployed, who experience financial difficulties in paying SHI contributions. The remaining quarter of uninsured could afford to pay SHI contributions but choose not to for a variety of reasons, such as distrust in the SHI system. The latter pay SHI contributions (and so renew their insurance status) only in cases of serious health problems, most often when they need hospital care (Ministry of Finance, 2014).

People lose their SHI coverage if they have failed to pay more than three monthly contributions in the previous 36 months. To restore their health insurance rights, citizens have to settle all contributions for the last 60 months.

There is no official data on the exact number of those insured by the state. However, pensioners and children, who are insured by the state by law, form a significant share of the total population. Pensioners accounted for 30.6% of the population and children up to 19 years of age made up 18.4% in 2016 (National Insurance Institute, 2017). Combined they present around 60%[5] of the insured population in 2016. It is worth noting that some pensioners continue to work either on a labour contract or as self-employed, therefore they are not insured by the state but by themselves or their employers. In addition, children over 18 years of age who do not study are responsible for paying health insurance contributions.

Scope: what is covered?

The SHI system covers a broad range of health services and goods, which form the basic benefit package of the NHIF. As stipulated by the Health Insurance Act, the NHIF pays for prophylaxis, screening, health promotion, outpatient and inpatient diagnosis and treatment, long-term and rehabilitation services, dental care, medicines for home treatment and medical devices used in hospital treatment, home-based medical services, and transportation on medical reasons.

The basic benefit package is specified by three legislative acts of the MoH:

• Ordinance on the basic benefit package of the NHIF (No. 3/ 20 March 2018);
• Ordinance on prophylactic examinations and dispanserization services[6] (No. 8/ 3 November 2016); and
• Ordinance on the criteria for determining the diseases for which the NHIF pays fully or partially for medicinal products, medical devices and dietary foods for special medical purposes (No. 7/ 6 November 2015).

The exact services included in the basic benefit package are specified by type and scope, by medical specialties, by diseases or groups of diseases through another ordinance issued by the MoH. It is important to note that prophylactic examinations and dispansery services included in the basic benefit package are separately dealt with by a MoH ordinance.

The basic benefit package covers:

• Primary outpatient medical care, which includes health promotion and prophylaxis, health risk assessment, dispanserization services, immunization, diagnostic and treatment services specified by type, home visits and medical expertise;
• Specialized outpatient medical care, including consultations, prophylactic examinations, ambulatory dispanserization services, medical expertise services and 64 predefined highly specialized activities;
• Outpatient diagnostic services, the benefit package that includes 184 tests in eight specialties (clinical laboratory, clinical microbiology, medical parasitology, virology, imaging diagnostics, general and clinical pathology, clinical immunology and immunohaematology);
• Outpatient dental care, embracing 17 services: (primary, specialized and surgical) for children up to 18 years of age, eight services (primary and surgical) for people above 18 years of age, and one additional service for children with mental diseases; and
• Inpatient services, which include 267 clinical pathways (hospital stay no less than 48 hours), four clinical procedures (length of stay up to 24 hours), and 42 ambulatory procedures, which do not require hospitalization. In addition to the services provided by hospitals, the NHIF pays for medicines for hospital treatment of oncological diseases.

The basic benefit package does not cover long-term nursing care; long-term care for elderly people; spa treatment; occupational health care and prevention; alternative therapy; elective cosmetic surgery; elective termination of pregnancy; and contraception.

The NHIF’s Supervisory Board issues a list of the specific diseases for which the NHIF pays fully or partially medicinal products, medical devices and dietary foods for special medical purposes based on the MoH’s Ordinance on the criteria for determining those diseases. The latest list includes 133 diseases with 377 International Classification of Diseases (ICD) codes (NHIF, 2016). Drugs intended for treatment of those diseases, which are fully or partially paid by the NHIF, are specified in the PDL, which is maintained by the NCPRMP. The list comprised 1744 drugs in December 2017 (NCPRMP, 2017). The NCPRMP maintains the PDL based on an ordinance issued with a Decree of the CoM and the MoH’s ordinance on HTA (CoM, 2011; MoH, 2015a).

In addition, health services and medicinal products beyond the scope of the basic benefit package are funded through transfers from the MoH’s budget to the NHIF. These services and products include compulsory vaccines and vaccinations, outpatient treatment of dermato-venereal diseases, intensive care for uninsured individuals, and prophylaxis, diagnostics and maternity services for uninsured women.

Emergency care, inpatient mental health care, transfusion haematology, in vitro fertilization and transplantations are covered by the state budget or specially established funds.

Depth: how much of benefit cost is covered?

The cost of medical services included in the basic benefit package is covered by the NHIF. However, user fees apply for each outpatient visit, laboratory test and hospital stay covered by SHI to all patients with few exceptions (such as children, pregnant women, individuals with income below a certain threshold, patients with chronic illness and some other groups). Pensioners pay reduced fees (see subsection 3.4.1 Cost-sharing (user charges)).

The cost of dental services included in the basic benefit package is only partially covered for patients above 18 years of age. Co-payments apply for 11 of the 17 dental services provided to children up to 18 years of age. Users pay less than 20% of the total price for most of the dental services. The NHIF covers fully dental services for some – rather small – categories of insured individuals such as children and adults living in specialized institutions and children with mental disorders.

There are co-payments for hospital treatment when medical devices are applied. Some medical devices are partially or not covered at all by the NHIF. In such cases, in addition to the cost of treatment services (cost of the clinical pathway) the patients have to pay for the medical devices themselves. Some medical devices and dietary foods for outpatient treatment are covered up to a certain level, which is usually lower than the market price.

The depth of coverage for medicines depends on multiple criteria, such as the purpose of the product (essential, preventive, palliative, symptomatic, or for maintenance therapy), the social significance of the condition under treatment, expected expenditure and budgetary capacity.

The PDL defines exact patient co-payments and reimbursement levels covered by the NHIF. The NCPRMP defines the reimbursement level of each “International Nonproprietary Name” group based on criteria listed in the Ordinance of the CoM on regulation and registration of pharmaceutical prices, conditions, rules and criteria for inclusion, changes and/or exclusion of PDL drugs:

• 100% reimbursement level contains drugs intended for long-lasting treatment of chronic diseases leading to severe impacts on quality of life or disability;
• 75% reimbursement level applies to drugs intended for the treatment of widespread chronic diseases; and
• the rest of the drugs included in the PDL – up to 50%.

The Council can adjust the reimbursement level once a year. Reimbursement rates for drugs for hospital treatment, drugs for HIV, infectious diseases, vaccines for compulsory vaccination and some others are always 100%, based on the Health Case Establishments Act and the Law on Health.

3.3.2. Collection

Contributions pooled by the NHIF

SHI contributions are collected by the NRA through its 28 divisions at the district level and transferred to the NHIF on a daily basis. SHI contributions are earmarked for health and can be used only for provision of health services and medical goods to the insured individuals. The contribution rate is 8% (defined by law) of an individual’s income. There are minimum and maximum thresholds to determine the income base for health insurance contribution calculation. The minimum insurance income for employed and self-employed individuals is defined annually by the Law on the State Social Security Budget and depends on the industry and individual position. The minimum insurance income for non-insured individuals was raised from BGN 420 (€215) in 2012–2016 to BGN 460 (€235) in 2017. The maximum insurance income is BGN 2600 (€1329) in 2015–2017.

The SHI contributions are paid by employees (40%) and employers (60%) individually at full rate or by the state (see Table3.4). For some insured, such as individuals receiving compensation for temporary incapacity to work due to illness, pregnancy, childbirth or maternity leave, the contributions are paid only by the employer. In these cases, contribution is equal to the employer’s due part of the contribution, calculated on the minimum insurance base.

Table3.4

The state budget covers health insurance for more than 3.5 million individuals, including pensioners; children up to 18 years of age and school students up to 22 years of age, full-time university students up to 26 years of age and PhD students; parents or spouses who take care of a disabled person with lost labour capacity of over 90% and who needs permanent help; individuals and members of families entitled to social welfare and support for underage orphans; war veterans and disabled military service personnel; individuals who have become disabled in defending their country or fulfilling their official duty; individuals applying for refugee status or asylum; prison inmates; individuals without income who are accommodated in homes for children and youth or social care establishments; individuals receiving unemployment benefits; people with low income entitled to social support; and civil servants. However, the state does not pay the full size of the contribution (see Table3.4). Until 2016, the contribution rate was 8% up to half of the minimum insurance income. Thus, despite the fact that the state covers SHI for around 60% of insured individuals (see subsection 3.3.1. Coverage, Breadth: who is covered?), it contributes only one third of the SHI revenue (see section 3.2 Sources of revenue and financial flows). Starting from 2016, the contribution base was increased to 55% of the minimum insurance income and by five percentage points each subsequent year until reaching the full amount of the minimum insurance income for self-insured persons.

Single entrepreneurs, individuals who have established limited liability companies, partners in trade companies, freelance practitioners and individuals who work without legal terms of employment or are unemployed are personally responsible for paying the full contribution rate of 8% of their insurance income up to the maximum insurance income. People who have not declared income and who are not insured on another base have to pay SHI contributions on their own at least to the amount of 8% of half of the minimum insurance income (BGN 460, €235 in 2017).

General government budget

In 2015, €341.71 million generated by general taxation (excluding transfers on behalf of specific groups) were allocated to the health system. This represents 9.2% of the total health expenditure in 2015 (Eurostat, 2018).

General taxation is non-earmarked revenue, flowing to the MoH budget from the central budget (see also section 3.2 Sources of revenue and financial flows). The amount of the tax revenue allocated for health is not fixed and is estimated annually as part of the State Budget Act. The NRA and its 28 divisions on the district level have administrated tax collection since 2006. The NRA was set up in accordance with the proposal of the International Monetary Fund and as part of a wider project to improve revenue collection, including income tax, value added tax (VAT), patent taxes and corporate taxes, as well as health insurance and pension contributions.

Also in 2017, 2.9% of the state tax revenue was allocated to the MoH and municipalities, and an additional 6.0% was allocated to the NHIF, mainly to cover SHI contributions for people insured by the state. The transfer from the state budget to the municipalities earmarked for health activities was 20.7% of the overall amount of the tax revenue allocated for health in 2017 (in the State Budget Act). In addition to this transfer, the municipalities use local tax revenue to finance health activities. Municipalities themselves estimate the share of the municipal budget allocated to health care annually, although this share is usually insubstantial. Municipal budget tax revenue accumulates from some local taxes such as waste charges, building tax and asset purchase tax, and is collected by municipalities directly.

3.3.3. Pooling of funds

The NRA pools the revenue from general state taxation (including general income tax, corporate taxes, VAT, patent tax), health insurance contributions and social security contributions and the National Customs Agency pools excises and customs duties. Both agencies are subordinate to the Ministry of Finance.

Compulsory health insurance contributions are collected by the 28 territorial directorates of the NRA, which transfer them on a daily basis to the NRA’s pooling account. Funds received by the NRA are then allocated daily to the accumulation account of the NHIF. Transfers from the NRA to the NHIF usually happen once a month for administrative and technical reasons. Since 2013 all contributions (social, health and others) are pooled to a single account of the NRA, which requires more time to be distributed and allocated to the accounts of the different agents (such as the NHIF) (Ministry of Finance and the NHIF, 2013).

The NHIF distributes the funds to its 28 RHIFs. The NHIF budget allocation is based on population numbers and age in each district, historical allocations and estimates of future district health-related needs. The process is standardized across the country.

To contain costs and control expenditure, the budgets of RHIFs are prospective and disaggregated by line-items with monthly and annual expenditure limits that are approved by the NHIF. As a result, RHIF budgets are spent in accordance with these prospectively approved line-items and, in practice, RHIFs manage only their administrative expenditure. However, reallocation of funds according to line-items, or requesting additional funding for a certain budgetary line within the approved period (one fiscal year) is possible, but subject to NHIF approval.

The state budget is allocated to various ministries depending on previously approved annual budgets. Funds for health from the state budget are allocated to the MoH and other ministries running parallel health systems. The municipalities receive earmarked health funds from the state budget, depending on the size of the municipality and according to the State Budget Act.

Other transfers exist between the State Budget and the NHIF and between the MoH and the NHIF. The NHIF receives monthly health insurance contributions for those groups of the population that are insured by the state. The MoH pools funds to the NHIF intended for compulsory vaccines, provision of special services for some uninsured groups of the population (for example, intensive care, delivery care for uninsured women), and co-payment of the reduced consumer fees for pensioners, which the NHIF pays to health care providers for each patient visit (see subsection 3.4.1 Cost-sharing (user charges)).

3.3.4. Purchasing and purchaser–provider relations

The organizational relations between purchasers and providers are regulated through the 1998 Health Insurance Act for both the public and private health care sectors (for purchasing and purchaser–provider relations in the field of VHI, see section 3.5 Voluntary health insurance). In the public sector, the relationship between the purchaser (NHIF) and health care providers is based on a contract model. Both public and private providers may receive payments from the NHIF after signing a contract with the fund through its district branches. The NHIF and the professional associations of physicians and dentists sign an NFC for medical and dental services, respectively. The NFCs regulate health care providers, the scope of health services, the payment methods, the price of services, the health care quality indicators and the mechanisms for the monitoring and enforcement of contractual agreements. Each RHIF contracts providers in the district, as long as they satisfy the requirements of the NFC. An attempt to introduce selective contracting between the RHIFs and health care providers based on the National Health Map was made in 2015–2016 with legislative changes, which were repealed by the Supreme Administrative Court in 2017 (Dimova, 2016a; Dimova & Rohova, 2017b).

Individual contracts between the RHIFs and health care providers cannot include services that are not included or that contain less advantageous provisions than those stipulated in the NFC. Individual contracts provide a limitation on the volume of activities for which the health care provider will be reimbursed by the RHIF.

In 2016, 13 434 individual contracts for outpatient medical and dental care and 365 contracts for hospital care were signed between provider organizations and RHIFs (NHIF, 2017a). Contracts for hospital care were signed with 311 hospitals, 42 outpatient care providers and 12 dialysis centres. The number of contracted hospitals has increased by 22 for 2014–2016.

The RHIFs sign individual contracts with pharmacies based on rules and conditions developed by the NHIF and the Bulgarian Pharmaceutical Union. The number of pharmacies that signed contracts with the NHIF/RHIF was 2475 in 2016 (NHIF, 2017a).