3.7. Payment mechanisms

A capped annual budget for health care programmes at the national level allocated through the General Agreement results in capped payments for providers contracted by ZZZS. Specific services, their volumes and payment mechanisms are regulated based on contracts between ZZZS and health care providers (see sections 2.7.2 and 3.3.4), though some programmes, including childbirth, oncology, dialysis, organ transplants and some specialist services, are not limited in volume.

Table3.4 summarizes the payment mechanisms used to pay the different providers operating in the health system.

Table3.4

3.7.1. Paying for health services

Primary care

Since 2001, primary care services provided by personal physicians (e.g. family medicine physicians, primary-level paediatricians and gynaecologists) (see section 5.3) in CPHCs are financed through a combined system of capitation and FFS payments. The volume of services payable by ZZZS is outlined in prospectively determined annual contracts with providers, with half of the programme value paid on a per capita basis for patients on the physician’s list and the other half paid by FFS. Other primary health care services are paid flat-rate (e.g., mental health and health promotion services), while dentistry, physiotherapy and community nursing services are paid exclusively on a (capped) FFS basis.

Several financial incentives have been introduced to reduce the number of specialist referrals and strengthen primary care (see section 7.2). In 2003, additional payments were offered to primary care providers whose referral numbers were below the national average. Conversely, ZZZS is authorized to reduce payment by 2.0–4.0% of the total value of the agreed programme if a provider’s level of referrals to specialists is above the national average. Between 2001 and 2011, ZZZS made performing preventive services for cardiovascular diseases (CVD) among adults registered with a family physician a condition of receiving 4% of the health centre’s income.

Moreover, in 2011, flat-based payments were introduced for a new model of care, known as “reference or family medicine model practices”, which expanded family medicine teams with a part-time graduate nurse to strengthen prevention for selected chronic diseases and unburden family practitioners by shifting specific tasks in the management of chronic patients (Marušič, 2011) (see sections 5.3 and 7.4). Since May 2019, payment correlates to the number of services provided: one graduate nurse is obliged to provide at least 1200 services per year (in 2019, one service was worth around €25).

The main issues with paying for services in primary care seem to be the lack of adequate age-weighting for capitation payments (as it is not based on current utilization or cost data) and the limited incentives to provide more services and enhance quality of care (EOHSP/WHO/NIJZ, 2015).

Outpatient specialist care

Secondary level outpatient specialist services provided by hospitals are remunerated by FFS payments according to ZZZS’ classification of services, colloquially called the “Green Book”. The volume of services that are reimbursable is outlined in the contracts and measured by a point system. The financial valuation of services for a standardized care team takes into account calculation elements concerning length of time services take, salaries, proportions and amounts of material expenses, technology depreciation, consumption funds and a flat sum for health information systems and digitalization. The total amount divided by the number of points represents the price of one point in each standardized specialty.

The fee catalogue of services is updated periodically, and involves simplifying codes associated with services (i.e. joining codes into wider categories). Recent changes have occurred in several care areas (e.g. dermatology, rheumatology and ophthalmology),) and there are reforms underway in otorhinolaryngology, pulmonology, cardiology, neurology, diabetology and nephrology.

Several problems with the billing of services on the basis of the Green Book need to be highlighted. Classifications of outpatient services are not updated and are unclear, which can lead to creative billing practices and complicate monitoring processes by ZZZS. Fee levels of outpatient services also do not adequately reflect the costs of service provision with some undervalued and others overvalued. While the whole system is built on the price of one point, it is unclear what the number of points for a service is based on. Fee levels for similar services vary substantially by provider group because points do not have the same values within and across the specialties. Finally, incentives for improving care access are inappropriate and the structure of the fee catalogue can lead to excessive referrals and does not incentivize quality and safety improvement.

Inpatient care

Since 2003, a case payment model based on DRGs has been gradually introduced and integrated into the annual budgets negotiated between ZZZS and each provider.

The DRG model classifies patients in groups that are comparable according to diagnosis or standard types of care and accounts for the whole care procedure for a particular patient. Thus, for different cases, different payments are ensured that are proportional to expected costs. The complexity of each case is determined by clinical diagnosis, procedures undertaken and length of treatment. This type of payment model is administratively and operationally demanding and depends on access to data on clinical procedures and costs. Since 2005, the Slovene classification system contains 653 DRGs (excluding certain services such as dialysis and transplantation). The cost weights[6] used are based on the Australian DRG system for the public sector from the National Hospital Cost Data Collection Round 6 for 2001–2002 (v4.2). In 2013, a newer version of the Australian DRG model (v6.0) was imported and is used for the classification of patients. The model is used to calculate the DRG budget for each provider, according to provided services, and benchmark between the current budgets of each provider of acute inpatient care services and the DRG budget(s). This results in reallocation of resources among the providers, within the limits of a maximum possible loss compared with the current budget for acute inpatient health care. Since 2013, the price of one DRG weight is determined at national level and used across all providers. In 2018, eight providers were included in a cost analysis showing that the actual provider costs are on average higher than currently defined, with some services undervalued, while others are overvalued. However, the cost analysis was performed only for a few providers, and cannot be a basis for new national weight.

ZZZS payments to providers are, however, based on the volume and value of programmes determined in the annual contract. The annual volume of services payable by ZZZS is prospectively limited, determined by the volume of activity in the previous year and measures to improve access to health services (especially to address long waiting times) and efficiency of providers. The volume of the programme in a contract is determined by the total number of cases and the total number of weighted cases (reflecting the complexity of cases). Specific DRGs for conditions with long waiting times are also determined prospectively in the programme.

There are separate payment mechanisms for certain types of inpatient services: payment is based on a prospectively determined number of bed-days for non-acute care; on a prospectively determined number of cases for psychiatric and rehabilitative care; and on an annual report on hospital activities in teaching, education, research and development, as well as complexity of treatments, for tertiary care (Table3.3).

Table3.3

Of note, since the early 2000s, there has been a policy shift from providing care in inpatient to outpatient settings (see section 4.1.1), which has been supported by several financial incentives, including the same price being paid for outpatient services as for inpatient procedures despite the lower costs.

Dental care and pharmaceutical services

Dental and pharmaceutical services provided by public or private providers in the public health care network are paid FFS. The volume payable by ZZZS is outlined in the annual contract and measured by a point system. The number of points for a specific service is recorded in a special book of services. As with outpatient specialist care, the financial valuation of care days and services considers calculation elements regarding the salaries, proportions and amounts of material expenses and depreciation.

Care in social institutions

Health care services provided by social institutions (or at home) in the context of LTC within the public health care network are paid for based on days of nursing care and FFS (see section 5.8). Social institutions are under the jurisdiction of the Ministry of Labour, Family and Social Affairs and Equal Opportunities and include nursing home and somatic and psychiatric rehabilitation facilities. The annual contract outlines the volume of nursing days (for four different categories according to complexity of care) and services (measured by the number of points according to a classification list determined by the ZZZS and providers). The financial valuation of care days and services considers calculation elements regarding the salaries, proportions and amounts of material expenses and depreciation.

A draft Act on Long-term Care (LTC Act), written in 2017, was introduced in 2020 and passed through government in June 2021. It is expected to be adopted by Parliament in late 2021 after going through inter-ministerial harmonization. Among other things, the proposal determines a uniform definition of LTC, sets criteria for eligibility across different categories of need as well as services structures and recommends compulsory insurance (see sections 5.8, 6.1 and 6.2). In terms of insurance, the law provides a new contribution for funding this model; however, the insurance part of the LTC Act (i.e. how exactly the insurance will be designed, who will contribute, what the contribution rates will be, etc.) is to be finally defined in 2024 and implemented in 2025, and it is unclear how – if at all – it will affect the financing model of LTC in Slovenia. In the meantime, the funding for new rights and services under the law will come from funds transferred from SHI, and disability and pension insurance. The remaining missing funds will be provided for from the state budget.

Health care in spas

Health care services provided by spas within the public health care network (see section 5.7) are paid for according to days of nonmedical care and FFS payments. The volume of days of nonmedical care and services (measured by the number of points) payable by the ZZZS is outlined in the contract. The number of points for specific services is recorded according to a classification list determined by the ZZZS and providers. The financial valuation of days of nonmedical care and services considers calculation elements concerning the salaries, proportions and amounts of material expenses and depreciation.

3.7.2. Paying health workers

Health care personnel in primary and secondary care practise based on an employment contract (as an employee of a public provider), by means of a concession (as a private provider within the public health care network) or as a private provider (outside the public health care network).

Health care personnel working for public providers are public servants and are salaried through payments from the ZZZS and VHI companies. Salary levels are negotiated between trade unions and the MoH and must adhere to the civil servant pay scale, which is considered inadequate for physicians and hampers the implementation of satisfactory arrangements for rewarding performance. Specialists are usually paid for fixed number of hours for a certain amount of work (e.g. a certain number of endoscopy assessments); however, a system of “equivalent hours” allows specialists who work quickly to receive payment for more hours of work than formally performed. While this system provides flexibility for local agreements and second job contracts, it is highly non-transparent, often leading to the absence of physicians from their primary workplace (Albreht et al., 2016).

Concessionaries are paid based on the type, volume and value of specific standardized health care programmes, as determined in their contracts with the ZZZS. It must be noted that the concession-granting system is not based on overall health system or public health goals and is characterized by a general lack of transparency, which undermines the ZZZS’ purchasing function. The issues connected with billing practices based on the Green Book (see section 3.7.1) also impact concessionaries.

Private providers without concessions are paid by OOP payments or by supplementary VHI. According to the Health Services Act (1992), the Medical Chamber is responsible for setting prices for services delivered by private providers outside the public health care network, which are then approved by the Minister of Health.