2.8. Regulation

In terms of regulation, the main actors in the Slovak health system are the parliament, the central government, and the Ministry of Health and its subsidiary organizations, as well as the SGRs. The parliament as a legislative body passes the acts. The legal environment in health care is significantly influenced by general acts, including the Commercial Code, the Civil Code and the Labour Code. As executive bodies, the government and the Ministry of Health enact secondary legislation (regulations, decrees, rulings, measures, guidelines) with different legal liability and law enforcement. The HCSA is responsible for monitoring health insurance, health care purchasing and health care providers, and also enforces the regulatory framework. The role of the HICs in system regulation results from their competences as purchasers of health care services. This includes maintaining the conditions of selective contracting and flexible pricing.

The Constitutional Court of the Slovak Republic rules on whether or not laws conflict with constitutionally established rights. The Constitution of Slovakia stipulates that every person shall have the right to protect his or her health. Through medical insurance the citizens have the right to free health care and medical equipment under the terms provided by law. The law sets the scope of free health care in general, and subordinate legislation defines specific proceedings (see section 2.2).

Fig2.2 schematically depicts the regulatory framework in Slovakia, which will be elaborated upon in the following sections.

Fig2.2

2.8.1. Regulation and governance of third-party payers

HICs providing SHI have the role of third-party payers in the Slovak health system. They operate under private law and must be established as joint-stock companies. HICs are responsible for collecting contributions and purchasing health care. All HICs must operate nationwide, although their market shares show significant regional variation. This results in regional differences between HICs in negotiating positions vis-à-vis health care providers.

The HCSA issues licences for HICs. Legal conditions for issuing a licence include an issued share capital in a minimum of €16.6 million and transparent staff relations. Their owners appoint the members of the board of directors and the board of trustees. Regulations apply to the shareholders’ structure, staffing, and purchasing policy, as well as to the financial management of the HIC itself. The HCSA enforces these regulations and may impose sanctions. This may happen, for example, in cases of poor economic performance, if the HIC becomes seriously indebted or insolvent, or in cases of failure to comply with the public interest. Examples of these sanctions include imposing penalties, placing the company under forced management and revoking the operating licence.

HICs, like all other joint-stock companies, are obliged to undergo an audit of their accounting records. The HIC can propose an auditor but the HCSA may refuse this and assign another one. The HCSA submits biannual reports on the financial administration of HICs, as well as an annual budget proposal to the Ministry of Finance and the Ministry of Health. All HICs must submit their business plans to the HCSA and must publish annual reports via the Commercial Register. The HICs must publish all contracts with health care providers on their websites and also on the central register of contracts.

The (central) government plays an important role in regulating HICs. The government can dismiss the chair of the HCSA if the performance of the health insurance sector does not meet expectations. Furthermore, during the preparatory process of the state budget, the government also decides on additional financial sources for the system through changing the contribution rate for the state insured. Through the Ministry of Health, it defines the (minimum) benefits package, the minimum provider network, reimbursement policies for drugs, medical devices and dietetic food, whether user fees apply and maximum waiting lists. Lastly, the Ministry of Health is the only shareholder in the largest HIC, the GHIC. This enables the Ministry of Health to influence the company’s operating and purchasing policies. Moreover, due to its size the GHIC has strong influence over the entire health insurance market.

In the 2004 health reforms the hitherto existing public health insurance funds (operated by the state or industrial sector) were transformed into joint-stock companies, allowed to make profits and pay dividends to shareholders. The HICs must meet all the health care needs of their insured before being allowed to pay out profits to shareholders. During the three years after the reform two profit-oriented HICs entered the market, two companies merged to consolidate their portfolios, and one ceased operations as a reaction to the changed regulatory framework from 2008. From the beginning of that year HICs have been obliged to use all profits for purchasing health care in the following year (ban on profit). The possibility of making a profit from public health insurance was reintroduced in 2011 after a ruling of the Constitutional Court. In 2012 the Dutch HIC Achmea, owner of Union Health Insurance Company, won an international arbitration against Slovakia. According to this, Slovakia must pay €25.5 million in damages to Achmea as a result of the profit ban between 2008 and 2011 (see section 6.2).

After two more mergers, the market (as of 2015) consists of one state-owned HIC and two privately owned HICs (see Fig2.3). The total market share of the state-owned company GHIC dropped from 76% in 2005 to 64% in 2015.

Fig2.3

Despite this, in 2015 the health insurance market is very concentrated, with a Herfindahl-Hirschmann index of 0.49. This indicator measures the amount of competition among firms in an existing market in relation to their sizes. As such, it can range from 0 to 1.0, moving from a huge number of very small firms to a single monopolistic producer (see Table2.2). Above 0.25 a market is seen as highly concentrated.

Table2.2

Timely access to health care is regulated by the law. In general, waiting lists should not exceed 12 months. Empirical findings indicate considerable differences in the length of waiting lists between different HICs. Subordinate legislation issued by the Ministry of Health regulates only three types of waiting list (implantations of artificial joints, implantations of artificial lenses and heart interventions). This prevents the HCSA from monitoring overall waiting times.

2.8.2. Regulation and governance of providers

Regulating provided care (also for quality aspects) focuses on three components: structure, processes and results. The first component, regulation of structure, is most clearly defined. The Ministry of Health sets minimum criteria for material and technical equipment as well as qualifications and personal criteria. The following conditions need to be met by a health care facility to provide health care in Slovakia: (1) a permit to operate the facility and (2) a licence from the relevant professional chamber for the various professionals working in the facility. Both can be requested if material, technical, staff and qualification requirements are met.

The permits for almost all in- and outpatient facilities are issued by the relevant SGR. Disputes are settled by the Ministry of Health. The Ministry of Health also issues permits for providers of emergency medical services, specialized hospitals, facilities for biomedical research, tissue units, biological banks and reference laboratories. Providers willing to act in several SGRs also fall under the competences of the Ministry of Health.

Permits are granted for an indefinite period of time, during which the provider is obliged to observe the legal conditions of their entry to the market. The facilities of emergency medical services are an exception; they can only obtain a permit from the Ministry of Health for a period of six years based on a tender. After winning a tender, financing from HICs and an identified operating territory are secured.

Independent health care professionals who do not operate in any health care facility but function as entrepreneurs may provide health care services based only on their licence to perform in an independent medical practice.

Almost all GPs and the vast majority of specialized physicians provide health care services in private medical practices. The state is the owner of the largest (mostly university and teaching) hospitals, almost all of which are contributory organizations. Five state-owned health care facilities were transformed into joint stock-companies by the 2004 health reform.

Irrespective of their legal form, all providers need to compete for contracts with HICs based on quality criteria and prices. By delegating the competences to establish a network of providers from the Ministry of Health to HICs, selective contracting was enabled in the Slovak health system. To guarantee accessibility of providers, a minimum network requirement is set by the government to influence capacity planning. This network is based on calculations of the minimum number of physicians’ posts in outpatient care and a minimum number of hospital beds for each of the eight SGRs. Minimum capacities are calculated per capita, but they do not consider the specific health care needs of the population and the effective use of resources.

HICs are responsible for maintaining the minimum network. Both selective contracting and market demands motivate health care providers to adapt to changes in demand. The government can adapt the minimum network requirement and by doing so direct the planning of the health sector. In 2016 a total of 36 state hospitals, specialized institutions and medical institutions are part of this legally set minimum network.

The Ministry of Health also regulates natural healing spas, natural healing resources and natural mineral waters through the State Balneal Committee.

The second quality component, regulation of processes, is very general. The Ministry of Health requires providers to have written documentation concerning their quality system, in order to reduce shortcomings in health care provision. However, the Ministry of Health has so far not enforced this requirement. It only issues guidelines, which are neither legally binding nor enforceable. Therefore, health care providers are not required to undergo external monitoring, or to publish their financial results or quality indicators publicly, thus reducing quality systems in health care to a mere formality.

The third quality component, regulation of results, is limited to issuing quality indicators on health care providers, which serve as criteria for selective contracting. Quality indicators are published yearly and are developed by the Ministry of Health in cooperation with professional organizations, HICs and the HCSA. According to the HCSA’s own statement, the data collected by health care providers have low validity, which results in the low credibility of the providers’ ranking.

Suspicions of malpractice are investigated by the HCSA. If malpractice is confirmed, the HCSA can impose sanctions on the health care provider in cooperation with the SGR and the Ministry of Health. In case of a suspected crime, the HCSA files a motion to bring a contested issue before a court for decision. Such incidents are published by the HCSA in case report summaries.

2.8.3. Registration and planning of human resources

Each health professional is obliged to register in the relevant professional chamber and regularly update their occupational and educational activities. Upon completion of a university education and having been issued a licence, graduated physicians are authorized to practise as physicians. Health care professionals can be providers themselves (as entrepreneurs) or employees of a provider. As providers they need both a permit and a licence, but as employees they need only a registration from the professional chamber. A licence is also issued by the professional chamber and provides proof of qualification (education and years of practice).

In order to operate an outpatient practice, a physician must submit their licence to the chief physician of the relevant SGR, together with an application for a permit to operate an outpatient practice. Upon fulfilling certain requirements for qualification and medical equipment (technical and personnel criteria established by law), a physician is authorized to run their own practice. There is no system of recertification of licences in the Slovak health system. Furthermore, there is no mechanism for regulating the number of health workers in each category and specialization according to the population’s needs.

A lack of regulation is evident in long-term human resource planning. Decisions concerning the numbers of students and graduates at medical faculties are made by the university, funded by the educational sector, and are not linked to health sector needs. The EU accession has strengthened the mobility of health professionals and has resulted in shortages in specialists in certain areas. Expanding emergency medical services by requiring them to employ anaesthesiologists has led to a decrease in the number of hospital-based anaesthesiologists. The rigid territorial planning of GPs until 2004, which made the profession unattractive for new entrants, combined with the ageing of the workforce, has led to significant shortages in the sector (see section 4.2).

Residency programme

The Strategic Framework for Health 2014–2030 tackles the planning of human resources in Slovakia. Firstly, it addresses the ageing workforce, and should reduce the average age of GPs from current 54 to 40 years by 2030. Key to achieving this goal is a newly established residency programme, which aims to (1) reduce the average age of GPs and paediatricians, (2) improve education in general medicine for adults, children and adolescents, and (3) improve the quality and accessibility of health care in primary care.

The pilot project began in the school year 2014/2015, and graduates of medical schools can apply immediately after graduation. Other graduates of medical faculties must meet these conditions: age up to 36 years and the non-inclusion of any specialized study, or already enrolled for the specialized study, which is scheduled to terminate at the earliest at the end of October 2015. The programme should also raise general awareness of quality and gatekeeping in primary care and improve accessibility of health care.

Hand in hand with decreasing the age of the workforce, performance indicators are also to be improved. Firstly, the gatekeeping role of GPs is to be strengthened, so that the number of patients sent to specialists or hospitals decreases from the current 80% to 30% in 2030. Secondly, consultations per capita are to decrease from 11.3 in 2014 to 6.4 in 2030 (Strategic Framework for Health 2014–2030) (see section 6.2).

2.8.4. Regulation and governance of pharmaceuticals

Before entering the market in Slovakia, pharmaceuticals must have an authorization from the European Medicines Agency (EMA), or the national-level State Institute for Drug Control (SIDC). The SIDC closely monitors the safety of drugs in Slovakia and is the national competent body responsible for pharmacovigilance. Monitoring includes reporting of adverse reactions, requiring reports from pharmaceutical companies as well as pharmaceutical quality. Reports on adverse effects are submitted to the Centre of Adverse Effects Follow Up in the SIDC. The prescribing physician is obliged to report any adverse effects. The number of reports peaked in the 1980s and the 1990s with over 2000 reports annually. In the late 1990s the number of reports fell below 500 per year but has been well above that number in the early 2000s. In 2015 there were 1171 reports (SIDC, 2016).

Market authorization holders are also obliged to report adverse effects of drugs. Each market authorization holder appoints a person responsible for pharmacovigilance. In addition to physicians, the reporting of adverse effects applies to pharmacists and nurses as well as patients. The SIDC has the right to suspend distribution of a pharmaceutical or withdraw a pharmaceutical from the market, and in more serious cases can suspend the registration for 90 days or terminate the registration.

General public advertisement is permitted for drugs free of dazing and psychotropic effects, and OTC drugs not covered by health insurance. Advertisements aimed at physicians and pharmacists have no such limitations. Vaccination campaigns, with the permission of the Ministry of Health, are another exception. The content of general public advertisement may not give the impression that medical examination is not necessary or that pharmaceutical effects are guaranteed. The description of a diagnosis should not mislead patients, and result in self-diagnostics; it should avoid exuberant, ugly and misleading expressions. The advertisement should not compare a drug to food, cosmetic products or consumer goods. It must be clear that the information is an advertisement, containing clear information on proper use. The SIDC is in charge of advertising standards.

Based on European legislation, as well as the recommendation of the EMA to improve the knowledge of patients, the SIDC has created a patient portal on the website www.sukl.sk. This portal publishes a list of patient organizations. However, it has not been updated since 2007, which may reflect a rather formal approach to the patients’ agenda.

Additionally, the Dôvera HIC started its own e-health project, “Safe drugs”, for its 1.4 million insured individuals. This is an online service which links doctors, patients, pharmacists and the company itself more directly. The main goal of the project is to increase patient safety and decrease the risk of polypharmacy for complex patients.

Reimbursement decision

The decision as to whether a pharmaceutical will be covered by SHI is the competence of the Ministry of Health and its reimbursement committee. The decision is made after an assessment of the pharmaceutical (see Fig2.4). A similar process is used for medical devices and dietary products. The Ministry of Health centrally regulates the scope of health care services provided by health insurance by defining the list of fully, partially or non-reimbursed drugs, medical devices and dietary products, and also by defining the list of priority and non-priority diseases, as well as by definition of co-payments and user fees.

Fig2.4

First, the marketing authorization holder must submit comparative data on the pharmaceutical, including effectiveness, safety and pharmacoeconomic data. In line with recommendations from the Ministry of Health, the pharmaceutical is assessed using cost-minimization, cost-effectiveness and cost–utility analysis. The discount rate for benefits and costs was set at 5%. The recommended threshold of a cost-effective new technology was set at 24x the average monthly wage from two previous years per unit of health state improvement (€20 592 in 2016), and thus pharmaceuticals with lower costs per QALY are considered cost-effective. In contrast, pharmaceuticals that exceed 35x of the average monthly wage from two previous years per unit of health state improvement (€30 030/QALY in 2016) are not considered cost-effective. Pharmaceuticals whose QALY range lies between €20 591 and €30 030 per QALY in 2016 will undergo further evaluation.

Second, each pharmaceutical is evaluated according to its anatomic and therapeutic classification by one of the 22 specialist working groups. The working groups evaluate the effectiveness, safety and importance of each pharmaceutical. One working group evaluates the pharmacoeconomic properties of the pharmaceutical. The results produced by the specialist working groups serve as the context for the decisions of the Reimbursement Committee for Medicinal Products. The Committee has 11 members, of whom three are representatives of the Ministry of Health, five are representatives of the HICs and three are representatives of the professional public.

Lastly, the Reimbursement Committee puts forward proposals for inclusion, non-inclusion, exclusion or change in the status in the benefits package, along with proposals for reimbursement level, co-payment and conditions for reimbursement. The results of their decisions are published on the webpage of the Ministry of Health after every meeting of the Reimbursement Committee. The applicant receives written information on the results of the reimbursement decision, and may appeal the decision.

The process of reimbursement decision-making for drugs is updated and published once a month. Requests for inclusion in the official price list may be submitted at any time. Price changes and the inclusion of medicinal products shall be published each month, according to the actual timetable of the entire assessment process.

The frequency of revising the reimbursements is four times a year. These revisions become enforceable always on the first day of the calendar quarter (1 January, 1 April, 1 July and 1 October).

For the summary of changes in pharmaceutical reimbursement and categorization, see Table2.4.

Table 2.4

Pricing decision

Slovakia operates a reference pricing system for pharmaceuticals. SHI reimbursement is set as the maximum price for a standard daily dose in the reference group of the pharmaceuticals. The definition of a given reference group is very narrow. All pharmaceuticals included in the reference group contain the same active substance and are administered uniformly. In certain cases the Reimbursement Committee may decide to form a separate reference group for pharmaceuticals with different administering form and a different amount of active substance per dose. The prices of pharmaceuticals covered by SHI are regulated, both in the ambulatory and inpatient sectors. After obtaining an authorization to enter the market, the ex-factory price of the pharmaceutical is determined by the Ministry of Health through external reference pricing. The ex-factory price may not exceed the average of the three lowest prices of the same pharmaceutical sold in all 28 EU countries. The prices of OTC pharmaceuticals and prescription pharmaceuticals not covered by health insurance have been deregulated (Table2.3).

Table2.3

A degressive margin for pharmaceuticals and dietary foods was first introduced in Slovakia in 2004. Initially, the margins were set as a fixed percentage from the pharmaceutical price (11% for the distributor and 21% for the pharmacy). In 2004 a lower margin (10%) was established (4% for the distributor and 6% for the pharmacy) for so-called financially demanding pharmaceuticals, i.e. certain high-priced pharmaceuticals that put pressure on the budget. However, exactly what constituted a financially demanding pharmaceutical was never precisely defined. The decision to include a pharmaceutical in this category was made by the Reimbursement Committee during the reimbursement decision. Since 2008, however, a more elaborate degressive system has been in place, which sets margins separately for distributors and pharmacies based on the ex-factory price (Table2.5).

Table2.5

VAT on pharmaceuticals has changed several times since 1999. Until 1999 it was 6%, after which it rose to 10% in the period 2000–2002. In 2003 VAT increased to 14% and a flat rate of 19% VAT was introduced in 2004. On 1 January 2007 the new government reduced the VAT on pharmaceuticals to 10%. VAT on the pharmacy margin was introduced on 1 January 2004.

Generic substitution

Regulation in 2011 (Act no. 362/2011) amended the legal framework of 2005 on generic substitution. The change obliged doctors to prescribe the effective substance of a medicine. Furthermore, pharmacists were obliged to inform patients about cheaper alternatives (generics) when filling a prescription. If the physician did not provide any reason not to use the generic substitute, the patient may choose the less expensive option under the supervision and advice of a pharmacist.

Out of 4415 medicines reimbursed under health insurance during the first half of 2016, 2573 (i.e. 58%) were registered as generics. According to the OECD (2015), 72% of all medicines that were partially or fully reimbursed in 2013 were generics, which accounted for roughly 41% of total pharmaceutical sales in the country. These values are some of the highest among OECD member countries (see Fig2.5).

Fig2.5

2.8.5. Regulation of medical devices and aids

Medical devices and aids are assessed through a similar categorization process as described for pharmaceuticals. This includes the application by the marketing authorization holder of the medical device, evaluations by working groups and a reimbursement proposal prepared by the Reimbursement Committee.

The Ministry of Health acts as regulator, and defines the administratively defined price at which the medical device manufacturer or the importer is allowed to enter the Slovak market. This price is based on the reference pricing principle and is the average of three lowest prices across the 28 EU countries. The Ministry of Health started the process of price referencing for 586 medical devices in January 2016 and implementation was expected in July 2016. According to preliminary reports, a 23.5% reduction in the prices of the 586 medical devices is expected (Černěnko & Haluš, 2015).

The Ministry of Health also sets the maximum margin for the distributor (8.5%) and the retailer (11.5%), which together should not exceed 20%. On average, HICs pay 92% of the price, and the rest is paid by the patient in the form of a co-payment (Černěnko & Haluš, 2015).

2.8.6. Regulation of capital investment

The centrally organized capital budget of the Ministry of Health was largely abolished in 2003 to secure greater transparency in hospital capital modernization. Investment planning was not based on transparent relevant economic or health indicators resulting in unpredictable allocation of funds. Funds are now redistributed to HICs to be included in their payments to providers and cover fully for capital investments. Thus, in theory capital renovation of hospital infrastructure has been financed by the health insurance funds through reimbursement of hospital services.

Providers, however, do not see these revenues as sufficient and often invest additional money into their health facilities and usually bear the investment costs in these hospitals and outpatient centres. The Ministry of Health provides only occasional capital grants, the average value of which is up to €10 million per year. Planning and coordination of resource utilization from the EU structural funds to this day suffer from the same problem. From 2004 onwards, the vast majority of funds for capital investment were allocated to HICs so that they could include amortization in their payments to providers. A programme called “Operation Programme Healthcare (“Operačný Program Zdravotníctvo”) was launched for the period of 2007–2015 to tackle investment gaps in health service provision. The programme, worth €193 million for updating hospital infrastructure and €34 million co-financing from other national sources, only marginally contributed to urgently needed capital (KPMG, 2013). A new Operation Programme for 2014–2020, called the Integrated Regional Operation Programme, which has a budget of €300 million for the capital demands of in- and outpatient providers of care, may have a similarly small impact.

The technical infrastructure of hospitals in Slovakia is often outdated. According to a comprehensive Ministry of Health investigation from 2004, Slovak state hospitals had an average age of 34.5 years. Since then, only one new hospital has been built (St Michael’s Hospital, built by the Ministry of Interior for €50 million). An update by the Ministry of Health had seen a further increase of the average age to 42 years in 2013 (MoH, 2013a). A study by HPI confirmed an insufficient capital formation in Slovak health care (Pažitný et al., 2014). Slovak capital formation in health care was found to be only 59.3% of that of the Czech Republic and 30.8% of that of Austria. Estimates of investments needed to converge with EU15 averages range from €3.9 billion by the Ministry of Health (MoH, 2013a) up to €8.3 billion, in the worst case scenario, by HPI (Pažitný et al., 2014).

It was also discovered that hospitals in Slovakia do not reach international standards in terms of their built-up areas. The majority of hospitals occupy large areas of land with numerous buildings scattered around the area. General hospitals have an average of 30 buildings per hospital; some hospitals have up to 81 buildings.