2.7. Regulation

2.7.1. Regulation and governance of third-party payers

HIFs operate as quasi-public, self-governing bodies that collect SHI contributions and purchase health services. The state, through MZČR and MFČR, plays key roles in the regulation and governance of HIFs. Both ministries also have representation on the boards of trustees (správní rada) of HIFs and so have a say in managerial decisions.

HIFs are not permitted to make profits and are open to any applicant who is legally entitled to health insurance in Czechia; risk selection and cream-skimming are not permitted. Although all HIFs fundamentally serve the same purpose, there is a special law establishing and governing VZP (Act no. 551/1991 Coll.), while establishment of all other HIFs is from a different law (Act no. 280/1992 Coll.). VZP differs from the others regarding its role as an insurer of the last resort (in case of a HIF’s bankruptcy or insolvency) and because its solvency is explicitly guaranteed by the state.

VZP also differs from other HIFs in terms of its organizational structure and governance. There is a legal requirement to have 14 VZP regional branches, one in and for each Czech region. Though other HIFs are smaller in population share and/or geographical presence, they are free to expand if they so choose; most general practitioners (GPs), outpatient specialists and hospitals contract with all HIFs relevant in their region. The smallest HIF is the Škoda Employee Insurance Fund (Zaměstnanecká pojišťovna Škoda), insuring around 1.4% of the Czech population (nearly 150 000 members and open to all).

HIFs are managed by directors, who in turn are appointed by trustee boards. The boards provide oversight of their respective directors and the decisions they make, which can include calling on directors to change decisions or limiting their managerial authority. Furthermore, certain directorial decisions explicitly require prior board consent, as defined by law. In the case of VZP, the board has 30 members, 10 of whom are nominated by MZČR and appointed by the government; the other 20 are elected by the Chamber of Deputies in proportion to the parliamentary parties’ strength. Members of the board are not personally liable for decisions made by the board as a whole or for VZP’s performance.

For other HIFs, board compositions are based on a system of tripartite representation. One-third of board members are appointed by the government; another third of members are elected among employers contributing the largest shares of the given HIF’s collected contributions (usually from industry, but in some cases also from civil service); and the remaining third of the board members are elected representatives from the HIF’s insured members, usually from labour unions at firms with significant employer contributors to the respective HIF. The election procedures for the latter two groups legally changed in 2020, broadening the eligibility for employers to nominate candidates and for more participation for insured members outside labour unions, respectively. Altogether, these HIFs have 15 board members. Like their VZP counterparts, board members bear no personal liability for board decisions or for the HIF’s performance.

All HIFs also have supervisory boards (dozorčí rada) as their highest level of governance; the narrow scope of regulatory oversight means, however, that their roles are rather limited. Their main tasks are to ensure that HIFs follow internal rules and adhere to a set financial and operating plan. VZP’s supervisory board consists of 13 members, with MZČR, MFČR and the Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí, MPSV) each nominating one member to be appointed by the government, while the other 10 are elected by the Chamber of Deputies, again using a proportional method based on parliamentary representation. The supervisory boards of the other HIFs consist of nine members and are based on a system of tripartite representation similar to that used to constitute the trustee board. MZČR, MFČR and MPSV each nominate one member to be appointed by the government.

To ensure that HIFs are held accountable for their performance, they are obliged to submit their financial and operating plan for the next year every autumn, including the outlook for next two years ahead. After the plan is approved by a HIF’s board, it is submitted to MZČR, which reviews the document in collaboration with MFČR. Subsequently, the plan is sent for governmental approval and then submitted for final approval to the Chamber of Deputies. If the plan is not approved before the start of the following year, a HIF acts according to the submitted plan. A similar procedure is used for approving the final accounts and annual reports of HIFs. However, plan approval is rarely withheld, nor are they often amended, so main oversight and de facto approval lie with MZČR and MFČR.

On a quarterly basis, HIFs submit their financial reports and other requested information to MZČR and MFČR for review; they also carry out regular inspections and spot checks. If irregularities or errors are identified, MZČR may call for correction. In very serious cases, MZČR can place a HIF under forced administration or, as a measure of last resort, can revoke its operating licence. This may happen, for example, in cases of poor economic performance, if a HIF is in serious debt or cannot meet its liabilities, or because of failure to comply with the public interest. Members of a HIF whose licence has been revoked are automatically switched to VZP. Since the 1990s, there has been only one example of forced administration; VZP was put under forced administration for almost six months due to poor economic performance and large debts in 2005.

With regard to the HIFs’ internal accounting systems, MFČR publishes a directive that (1) specifies the different accounts that HIFs must create, and (2) limits transfers between these accounts so that, for instance, only a certain percentage of revenues can be spent on operating expenses. Examples of internal accounts include a reserve account; an account for financing health promotion programmes; an account for financing investments; an account to cover operating expenses; and, of course, an account for reimbursing providers for services. Health promotion accounts are used to reimburse members, such as for non-SHI-covered vaccinations and sporting activities, though this may differ among HIFs (see section 3.3.1).

Finally, to create a new HIF, applicants must apply for a licence from MZČR. During the licensing process, the application is reviewed by MZČR and MFČR. Both may request to review additional information or supporting documents. MZČR must decide on the application within 180 days of receiving it. If all conditions are fulfilled, the applicant is legally entitled to a licence; only legal entities residing in Czechia may apply. Applicants are required to set aside financial reserves (in the reserve account described previously) before being licensed; after a HIF is established, the reserve should function as a financial buffer in case of a temporary liquidity shortage. Within one year of establishment, a new HIF must prove that it has at least 50 000 insured members. Mergers of HIFs have to be approved by MZČR, which assesses that the merger is not disadvantageous to the existing system. Mergers occurred in the past either if one faced financial difficulties or in order to benefit from shared structures and increased efficiency; the last merger took place in 2012.

2.7.2. Regulation and governance of provision

The regional authorities are responsible for authorizing health service provision for outpatient providers as well as inpatient providers that are not directly subordinated to any ministry or region. That said, apart from teaching hospitals and state-owned specialized inpatient facilities, and regional hospitals that were not transformed into commercial companies (regional hospitals that remained directly subordinated, so-called budgetary organizations of a region), all other providers must be authorized by their respective regional authority in order to provide services (see Table2.1).

Table2.1

As part of the authorization process, the type and scale of services that providers are permitted to provide are defined. Since 2012, the minimal staffing and technical requirements are legally defined and binding for all providers (Health Service Act, 2011); providers must also comply with hygiene requirements, among others. Any changes to the information provided during the authorization process, including a change in professional staff, must be reported to the respective regional authority. In addition, providers must report any change that occurs regarding the scope of their authorization to the National Register of Healthcare Providers (for example, places of provision or operating hours).

Upon completing the authorization process, a provider may either (1) start its operations thereafter by taking out-of-pocket (OOP) payments (seen in dental care or cosmetic surgery) or (2) try to conclude a contract with HIFs under the condition that a mandatory selection process, organized by MZČR for inpatient providers and by the regions for outpatient providers, establishes a proof of need for the new provider or for the extended services of an existing provider. Concluded contracts may not always be identical to a provider’s full range of authorized services, meaning that providers may offer other (but authorized) services for OOP payments. Additionally, a contract with one HIF does not guarantee contracts with all HIFs. HIFs cannot sign new contracts without the above-mentioned selection procedure taking place and establishing the proof of need.

MZČR is also responsible for licensing health professionals, including physicians, dentists, nurses, pharmacists and paramedics. Licensing procedures consider applicants’ professional qualifications along with performance on standardized state licensing examinations (státní atestační zkouška). For more information on training and licensing of health professionals, see section 4.2. To open a private practice, licensed physicians must apply for authorization from their respective regional authority, as described above.

All inpatient providers are legally obliged to have an internal system in place for monitoring quality, though no external authority collects or reviews the results. MZČR offers some guidance regarding the scope and organization of internal quality monitoring, but providers are free to choose how to do it.

There is no system-wide compulsory accreditation system for quality standards. Accreditation process for providers is voluntary. However, it can only be performed by an accredited third party that fulfils the legal requirements of independence and professional background and staffing; MZČR grants these third-party accreditations. Any organization fulfilling the accreditation requirements can apply; these criteria were created over the past decade to standardize accreditation organizations.

To define networks that ensure the delivery, accessibility, proper utilization and staffing of specialized treatment, MZČR can assign inpatient providers the status of being highly specialized health care centres; this procedure is described in law (Health Service Act, 2011). MZČR publishes the list of highly specialized centres for each selected medical specialty in its decrees (see section 5.4.3). Centres are subject to quality indicator reporting and regular monitoring of their compliance with centre requirements as defined in the application process (Bryndová et al., 2021).

Since 2015, the Agency for Health Care Research of Czechia, a state agency directly subordinated to MZČR, is responsible for the development of clinical guidelines. The project is currently in its pilot phase, with 19 clinical guidelines developed and approved as of May 2022 and 24 more being prepared or consulted (KDP, 2022).

2.7.3. Regulation of services and goods

Basic benefits package

The range of benefits covered by SHI in Czechia is very broad (see section 3.3.1). A combination of means is used to define the basic benefits package; the most important of them is legislation, namely the Health Insurance Act (1997). Any changes in defining the benefits package, or to the positive and negative lists of benefits, require an approval from parliament and the president. Proposals are usually submitted by the government, though regions and members of both parliamentary chambers can propose new legislation or amendments. The five annexes to the Health Insurance Act define (1) negative lists (namely, explicitly excluded services) and (2) positive lists on pharmaceutical substances, MDA, dental aids and procedures, and a spa treatment indication list.

The principle of a basic benefits package being defined by law was put forward in a 2013 court decision abolishing the above-standard care co-payments (Alexa et al., 2015). Although the ruling found a system of above-standard procedures was legally sound in principle, the court took the view that a list of them must be specified by law and not, as was the case, only by governmental decree (Constitutional Court of the Czech Republic, 2013).

SÚKL is responsible for determining the list of pharmaceuticals covered by SHI and the depth of their coverage, which is done via reference pricing and Anatomic Therapeutic Chemical (ATC) groups for prescription pharmaceuticals (see section 2.7.4).

Benefits are also rationed by the LHS, a fee schedule known as the List of Health Services (Seznam zdravotních výkonů) that is issued as a directive from MZČR. The LHS is primarily intended for reimbursement purposes, but for everyday practice it serves as a positive list of benefits. The LHS is updated annually based on decisions taken within the Health Services Working Group; any stakeholder can propose modifications. In addition to the applicant who requests a change, the Working Group includes representatives of MZČR, ČLS JEP, the outpatient and inpatient providers’ associations (including for physicians and nurses), representatives of HIFs and a patient representative. The group meets on a continuous basis throughout the year and decides, based on a consensus procedure, which LHS items will be added, removed or modified. At the end of each year, the updated LHS is issued as a directive by MZČR. The last amendment to date, which amended MZČR Directive no. 134/1998 Coll., on the List of Health Services and Point Values (MZČR, 1998), resulted in the LHS containing 3995 items for 2022 (MZČR, 2021a).

Health technology assessment

There is no public body systematically conducting comprehensive analyses of gathered information to enable evidence-based policy approaches.

In 2021, health technology assessment was not used systematically in SHI coverage or reimbursement decisions, except for pharmaceuticals. Only some evidence-based criteria are taken into consideration when there are requests to change the LHS. For instance, applicants are required to submit a range of evidence that includes an assessment of efficacy, a comparison with existing treatments (if possible), a projection of expected costs to the SHI system, and a description of the mechanisms of reimbursement employed in foreign countries.

For the process of setting reimbursement rates for pharmaceuticals, SÚKL requires applicants to supply evidence of the clinical effectiveness and cost-effectiveness of a pharmaceutical as well as an analysis of the impact a positive reimbursement decision would have on the SHI system (SÚKL, 2020).

2.7.4. Regulation and governance of pharmaceuticals

Regulation of pharmaceutical products

MZČR, the Ministry of Environment, SÚKL and SÚJB are responsible for the regulation and governance of pharmaceuticals.

MZČR approves and controls specific treatment programmes; regulates the use of non-registered pharmaceuticals (for example, within specific treatment programmes or in case of a threat to public health (Act no. 378/2007 Coll.)); takes part in the preparation of the European pharmacopoeia; defines the Czech pharmacopoeia that describes the parameters of pharmaceuticals production and manipulation; and controls and makes publicly available lists of individuals authorized to dispose of unused or expired pharmaceuticals.

The Ministry of Environment assesses pharmaceuticals containing genetically modified organisms and assesses impacts of pharmaceuticals on the environment. In the case of radiopharmaceuticals, SÚJB also takes part in the registration and clinical assessment.

SÚKL is the main regulatory body for pharmaceuticals. It is responsible for the supervision of properties of medicinal products for humans. SÚKL’s activities relate to monitoring of quality, safety and efficacy of pharmaceuticals in all stages of development, sale and use. For this purpose, SÚKL uses a system of preliminary reporting, authorization procedures, inspections, laboratory controls and monitoring of practical use of medicines. SÚKL is entitled to act when a risk to public health arises, to impose penalties and to request necessary documentation. Furthermore, SÚKL authorizes access for pharmaceuticals before their entry onto the Czech market. The market authorization procedure includes an assessment of a dossier, in which a prospective authorization holder describes the safety, efficacy and quality of the product. The indications, contraindications, dosage of the product, general classification for supply, and the package patient leaflet are also assessed. During the registration process, SÚKL classifies pharmaceuticals into one of the four categories: prescription only, prescription only with restriction (for example, opioids, cannabis for therapeutic purposes, abortion pills), without prescription and without prescription with restriction (for example, pseudoephedrine – restriction on quantity).

For prescription pharmaceuticals and those with restrictions, an electronic system from SÚKL is in place. Since January 2018, it is obligatory for all providers to issue prescriptions in electronic form. Since mid-2020, full patient records on prescribed pharmaceuticals are available to attending physicians and to pharmacists; a patient can deny access to their individual record for a particular provider or to all, or selectively allow access for some providers. The system also allows for polypharmacy checks and control of potential duplicate prescriptions.

SÚKL also identifies and sanctions illegal conduct; the European regulation on counterfeit pharmaceuticals, including the unique-per-package barcode monitoring, is fully established in Czechia. Activities requiring effective authorization and supervision by SÚKL include manufacturing, import, distribution, supply or sale, preparation and parallel import, performing clinical trials and reference laboratory activities.

In 2013, the surveillance activities of SÚKL were extended to narcotic and psychotropic substances. SÚKL is also charged with the surveillance of quality and safety of human tissues and cells intended for use in humans.

Regulation of wholesalers and pharmacies

Wholesalers need permission from SÚKL to distribute pharmaceuticals; SÚKL may fine them or suspend or cancel their permission to distribute pharmaceuticals. All pharmacies have to be registered by SÚKL and meet certain requirements on staff education and training. There is no limit on the number of pharmacies.

Generic substitution has been allowed in pharmacies since 2008, conditional upon the same active substance and the same mode of administration.

Mail-order and Internet pharmacies have to be listed by SÚKL, and sales are limited to over-the-counter pharmaceuticals without volume or frequency restrictions; pharmacies are responsible for ensuring safe delivery and providing pharmacists for consultations during office hours. At the time of writing, extending mail-order pharmacies to cover prescription pharmaceuticals has been under expert discussion, though not yet under serious legislative consideration.

System for pricing prescription pharmaceuticals

Since 2008, SÚKL has been responsible for determining the maximum prices of pharmaceuticals and for determining the level and conditions of reimbursement. Only the prices of pharmaceuticals covered by SHI are regulated and the price regulation is based on two mechanisms: (1) the maximum end-customer price – this is the average of the three lowest prices in the EU; and (2) a maximum trade margin determined by the so-called Price Decree from MZČR (usually a certain proportion of the ex-factory price).

The conditions for reimbursement are also regulated. Prices for prescription pharmaceuticals usually consist of SHI reimbursement and patient co-payment (which may be zero). A system of reference groups is in place, each group consisting of pharmaceuticals with similar effects and safety levels (considered substitutable at the beginning of treatment); generally, the reference groups are broader than ATC groups. According to the law, there must be at least one fully reimbursed pharmaceutical in each of the 195 existing groups. In case of need, SÚKL re-evaluates prices, and thus also reimbursement level, of prescription pharmaceuticals. For the process of setting reimbursement rates, SÚKL requires applicants to supply evidence of the clinical effectiveness and cost-effectiveness of a pharmaceutical, as well as an analysis of the impact a positive reimbursement decision would have on the SHI system (SÚKL, 2020)

There are annual limits on pharmaceutical co-payments for prescription pharmaceuticals, the actual price of which exceeds the reference price in a particular pharmaceutical group (however, not all co-payments count into the limit, only the level of co-payment of the least expensive alternative with the same active substance and the same mode of administration counts). Limits differ by groups of people, reflecting their socioeconomic vulnerability, and patients are reimbursed automatically on a quarterly basis by their HIF after reaching the annual limit (see section 3.4.1).

Since January 2022, changes to reimbursements of innovative medicines and orphan drugs have been implemented, opening up access to and availability of these products for Czech patients. For highly innovative medical products, the temporary reimbursement period has been extended from two years to three years for the first temporary reimbursement and from one year to two years for the second temporary reimbursement. However, the market authorization holder is obliged to reimburse HIFs for costs exceeding those indicated in the budget impact analysis that served as the basis of SÚKL’s decision and there is a follow-up treatment obligation in case the product is not accepted for permanent reimbursement after the five-year period. For orphan drugs, a new pathway gives registered patient organizations and medical societies a voice in the administrative procedure to set prices and reimbursement rates (see sections 2.8 and 7.1). Social impact and benefits have been newly added to extend the scope of evaluation criteria. In the case of orphan drugs, HIFs can also initiate reimbursement setting procedures; in these cases, market authorization holders are not obliged to pay back costs exceeding the budget impact analysis on which SÚKL based its issuance of the temporary reimbursement decision.

2.7.5. Regulation of medical devices and aids

In line with Regulation (EU) 2017/745 on MDA, which came into effect in May 2021, the process of entering the Czech market has changed substantially. The EU regulation, plus a new national law (Act no. 89/2021 Coll.), replaced the two regulations related to the previous European Directives (90/385/EEC and 93/42/EEC). SÚKL is the regulatory body for MDA, with MZČR handling all related appeals. SÚKL began managing Czechia’s MDA Registry in 2015; its task portfolio was broadened in 2021 to also include administrative procedures of new applications to the registry, which is a necessary condition for a product to enter the market. The law allows for two types of temporary exemptions for a non-marketed product to be used: (1) for a specific patient based on MZČR approval; and (2) for a general exemption based on SÚKL approval for public health protection or for patient safety and health reasons.

Coverage of MDA is defined at the national level and adjustments to SHI reimbursements came into effect in 2019 with an amendment to the Health Insurance Act (1997). The amendment’s annex specifies the categorization of MDA for reimbursement (including prescription, indication, volume and reimbursement limits). SHI reimbursement levels can now only be changed through amendment to the law or temporarily when interchangeable MDA appear. In such cases, SÚKL defines the reference group of interchangeable MDA in an administrative procedure and organizes a bidding procedure. Alternatively, the level of reimbursement can be defined by an agreement on the highest price between a producer (distributor) and at least one HIF. For marketed MDA, SÚKL assigns an MDA to a particular reimbursement category based on the producer’s or distributor’s application, and administrative procedure is only initiated if SÚKL finds the application to be faulty and there is a risk of its rejection. For MDA needing a new categorization group, exemptions from the 2018 amendment exist in cases where risk-sharing contracts are signed with all HIFs or via MZČR approval.