3.7. Payment mechanisms

3.7.1. Paying for health services

The system of paying for health services combines several payment mechanisms, mainly capitation, capped FFS payments, case payments based on DRGs and activity-based prospective budgets. These are all financed by HIFs. Table3.5 provides an overview of payment mechanisms. HIFs provide monthly advance payments to providers and the final billing takes place the following year; the monthly advance payments equal one twelfth of annual payments from two years before, multiplied by a coefficient. The coefficient is supposed to capture the estimated increase in costs and volume of health services for a given provider.

Table3.5

Payments to providers are based on the Reimbursement Directive, issued by MZČR annually for the following calendar year, or on individual agreements between providers and HIFs. Yearly Reimbursement Directives should reflect agreements reached after negotiations between HIFs and representatives of a particular provider type; if no agreement is reached, MZČR ultimately sets the rules for reimbursement in the directive by itself (see section 3.3.4). In 2020 and 2021, an exceptional so-called Compensation Directive was approved legislatively to compensate providers for income losses and higher costs for treating COVID-19 patients during those two years; this was exceptional in that the Reimbursement Directives require issuance before the year begins.

Public health services are provided by state authorities and paid for by the state budget via the budget chapter of MZČR (see section 5.1).

Payment of GPs and outpatient specialists

For GPs, a system of age-based risk-adjusted capitation payment per registered patient is in place. In certain areas (with low population density or geographically remote), GPs may receive higher capitations if the number of patients registered with them is below the 70% of a given HIF’s average. All HIFs also offer a bonification system for GPs who offer office hours throughout the week of at least 25 hours over five days, if patients are able to choose the time of their appointment. More than 70% of independent GP offices reached the highest bonification level in capitation payments in 2019 (Medical Tribune, 2019). In addition, selected primary care services are paid via FFS. These mainly concern preventive examinations, vaccinations, screenings and visits to patients’ homes. In 2008, FFS payments to GPs accounted for approximately 30% of their income (Bryndová et al., 2009). This share has increased in recent years, reaching 37% of GPs’ reimbursement income in 2021 (MZČR, 2022a). This development reflects MZČR’s priority to promote primary care services and strengthen GP competences, particularly the primary care reform launched in 2018, and new FFS payments for GPs have been introduced since then (see sections 5.3 and 6.1). Along with existing capitation payments, a new FFS payment was introduced in 2020 for each GP-performed clinical examination to reflect high care demands for multimorbid patients; this payment replaced the capped compensation payment to GPs that was introduced in 2015 after user-fee abolishment. Primary care reform is also one of the specific goals of Health 2030.

Outpatient care, outpatient laboratories and radiodiagnostic services are reimbursed using a capped FFS scheme. Care is reimbursed via FFS, according to the LHS, up to a predefined limit (usually based on historical volumes, but adjustments are made to it based on individual or collective mutual agreements).

Reimbursement mechanisms for acute care hospitals have seen a substantial development in recent years, with the introduction of CZ DRG as the base payment mechanism in 2021 (see Table3.6 and section 6.1). In 2019, only 7% of payments for inpatient care were case-based DRG payments (international refined (IR) DRG classification; deliveries and neonatal care and transplantations only). Individual contracts were mainly used to settle bundled payments for new treatment methods. The rest of inpatient care was reimbursed by budget-like payments, which were activity-based and measured by the IR-DRG classification.

Table3.6

Originally (starting in 2007), the DRG classification used in Czechia was based on the IR-DRG classification. In the late 2000s, attempts to adapt it to local conditions were led by the National Reference Centre (a supportive organization established by the HIFs), which started to publish relative weights and base rates annually, which were based on data from 12 representative hospitals. Different hospitals had, for historical reasons, different base rates and multiple coefficients were being applied, causing strong internal opposition to the whole system. In 2015, the project “DRG Restart” was launched by ÚZIS, aiming to develop a localized (CZ) DRG classification (ÚZIS, 2022a).

In 2020, the CZ DRG classification was introduced for reimbursements in a pilot programme for selected inpatient cases (that is, highly specialized care and oncology invasive therapy), though these accounted for a mere 0.5% of hospitals’ revenue from HIFs. The IR-DRG classification remained the mechanism to measure the volume of the rest of provided inpatient care, paid for by activity-based prospective budgets with volume targets measured by the IR-DRG case-mix.

In 2021, a major change in DRG classification occurred when all case-based DRG payments and the volume measurement switched to the CZ DRG classification. Roughly 44% of inpatient care was reimbursed by CZ DRG case payments; the rest was reimbursed through a budget-like reimbursement mechanism (namely, activity-based budgets newly using the CZ DRG classification to measure provided care volume). In 2021, a unified basic DRG rate was applied to the CZ DRG-classified inpatient care of 2020 and psychiatric care (2% of payments), while individual basic rates were applied to the rest of the case-based reimbursed care (42%) with the possibility of individual base rates converging over a period of three years; a process that has already slowed down in 2022.

Payment of hospitals

Individual contracts are still possible, though they are no longer significantly used. Previously, individual contracts were mainly used for bundled payments to pay for new treatment methods; these methods are now part of the CZ DRG classification, so special bundled payments are no longer necessary.

3.7.2. Paying health workers

When it comes to paying health workers in Czechia, there are two main groups. The first group comprises self-employed outpatient care physicians and dentists, while the second group features salaried and wage-based health workers (mostly in hospitals).

Self-employed physicians and dentists constitute the majority of those in private outpatient settings. They are reimbursed by HIFs for the care they provide (capped FFS payments and capitations in the case of physicians). They may also receive direct payments from patients for services not covered by SHI – corresponding prices are set by the physicians. Notable prices following the Reimbursement Directive in this setting are for services rendered to citizens of EU countries, services in case of emergency care for non-EU nationals and services demanded by a court or the police. OOP payments are most common and frequent for dentists – these prices are regulated by the annually issued price regulation directive (cenový předpis). Self-employed physicians must cover all expenses from their income, including for remuneration of other employees (for example, nurses), rent and equipment.

Remuneration of employed health staff depends on whether they work in the so-called budgetary organizations that are subsidiary to state and regional authorities (staff remunerated by salaries) or in facilities with a legal form according to Act no. 90/2012 Coll. (staff remunerated by wages). The first group comprises state-owned hospitals and some regional hospitals (as a result of the 2003 reform), while the second group consists of the remaining regional hospitals and private facilities.

Salaries are negotiated between the budgetary organizations and unions (or employees), and are ultimately set by providers in accordance with legal prerequisites (tariff intervals), usually on an annual basis. The tariff intervals of budgetary organizations also feature the upper limits, as opposed to Act no. 90/2012 Coll., where only the minimum guaranteed wage by profession has to be observed. Salaries in public institutions are generally divided into 16 tariff levels in Czechia. Physicians fall into levels 11 to 16, but nurses and midwives fall into levels 9 to 12, based on their title. The salary tables are separate for each of these professions, securing physicians higher salaries than those of highly specialized nurses even though the tariff levels can be the same. Moreover, within each tariff level, the salary depends on the number of years of experience.

In 2022, the gross monthly basic salary tariff of a physician with 10 years of experience employed in a position that falls into tariff level 14 was approximately CZK 56 670. The gross salary tariff is increased annually based on governmental decision. After not keeping pace with inflation in 2019 and 2020, there was a 10% year-on-year rise in 2021 and 6% in 2022 (for the above-described physician), appreciating physicians’ work during the pandemic (Governmental Regulation no. 341/2017 Coll.).

For most health workers in hospitals (especially physicians) personal evaluation add-ons, premiums and overtime bonuses constitute a substantial part of total income. In 2020, the average monthly gross salary of physicians (and dentists) employed in inpatient facilities that are budgetary organizations subsidiary to state and regional authorities reached approximately CZK 93 658 (a 10.4% increase from 2019). This was CZK 53 500 for nurses (a 15.8% increase from 2019) (ÚZIS, 2022b).

Employee wages in facilities with a legal form according to the Business Corporations Act (Act no. 90/2012 Coll.) are in general negotiated within the legal limits (minimum guaranteed wage by profession) between providers and employees (or unions) and set by the provider, usually at intervals of one year. In 2020, the average gross monthly wage of physicians and dentists reached CZK 85 891 (up 11.9% from 2019) and CZK 44 983 for general nurses and midwives (up 18.4% from 2019) (ÚZIS, 2022b). It should be noted that the difference in average salaries and wages cannot simply be attributed to remuneration mechanisms but also to the demographics and experience levels of the two groups of employees. Moreover, the significant year-on-year increases in remuneration are to a large extent given by bonuses and increases in reimbursement during the COVID-19 pandemic.

The average remuneration across all economic sectors in Czechia was CZK 35 611 in 2020 (ČSÚ, 2021e). Thus, in 2020, employed physicians’ average salary and wages represented approximately 263% and 241% of the average remuneration in Czechia, respectively, and employed nurses’ average salary and wages represented approximately 150% and 126%, respectively. That is a considerable improvement since 2010, when the protest movement called “Thank you, we’re leaving” (Děkujeme, odcházíme) was organized by publicly employed physicians complaining about the poor financial and organizational conditions in the Czech health system. Then, employed physicians’ average salary represented approximately 210% of the average remuneration in Czechia, and employed nurses’ average salary 115% (ČSÚ, 2011; ÚZIS, 2011).