3.7. Payment mechanisms

3.7.1. Paying for health services

The main provider groups and corresponding payment methods are shown in Table3.8. FFS is the dominant method of provider payment in Switzerland. For inpatient care, DRGs have replaced per diems as the most important payment mechanism; for long-term care a system of care-level adjusted per diem payments exists. Public health activities are mostly paid for on the basis of lump sum contracts or FFS.

Table3.8

Ambulatory care

FFS is the dominant payment mechanism in the ambulatory sector. Volume limits on the number of billable services do not exist.

All medical doctors (GPs and specialists) with a practice authorization are reimbursed for MHI-covered services (and also for services reimbursed by other SI or households) on the basis of the nationally uniform FFS system TARMED (derived from tarif médical). TARMED is a relative value scale, and weights for each service item (locally referred to as “tax points”) consist of two parts: (1) the medical part for physicians; and (2) the technical part for technical and nursing staff, equipment and overheads. The medical part was calculated based on estimates of experts (representatives of specialist associations) about the necessary physician time for providing the services and an annual reference income of Sw.fr.207 000 (with adjustments for specialty and additional qualifications). TARMED tax points are converted into monetary values by multiplication with the negotiated cantonal point value. This value varied in 2014 between Sw.fr.0.82 in the cantons of Lucerne, Schwyz, Valais and Zug, and Sw.fr.0.97 in Jura. For more information about negotiations about point values, see section 3.3.4.

TARMED was introduced in 2004 as the basis of reimbursement for MHI-covered services after it had already been used by other social insurers since mid-2003. The aim of TARMED was to harmonize reimbursement of providers working in different cantons and different settings in order to remove some of the perverse incentives, which distorted the choice of care setting, i.e. shifting ambulatory patients between hospital outpatient departments and physicians’ practices. In addition, the introduction of TARMED aimed to improve reimbursement for GP services by giving greater weight to non-technical services than to technical services, and incentivizing less resource-intensive forms of care. Nevertheless, the problem of comparatively low reimbursement for GPs has remained on the political agenda. TARMED is regularly updated by the corporatist institution TARMED Suisse (see section 2.3.6). However, in June 2014, when payers and providers represented within TARMED failed to agree on a revision of the fee schedule, the Federal Council mandated a change to TARMED, resulting in increased reimbursement for primary care physicians (FOPH, 2014l). This was the first intervention of the Confederation on the basis of a new subsidiary competence (Art. 43, 5bis KVG/LAMal) received as a result of a reform in January 2013 (see section 7.5.1).

Although FFS is the dominant payment mechanism, capitation payments are gaining increasing importance. In 2012, about 10% of the MHI costs of GPs and 9% of specialists were reimbursed in the form of “capitation-type” payments (SASIS, 2014). These were made to HMOs or networks of physicians providing services in the context of managed care type insurance contracts. Under these contracts, a global budget based on risk-adjusted capitations (with adjustments for age, sex and other characteristics of the insured population) is usually agreed between an MHI company and providers carry at least partial budget responsibility for their subscribed patients.

Hospital outpatient acute care is also paid FFS on the basis of TARMED points and the negotiated cantonal point values. Point values are different for physicians in ambulatory practice.

Other MHI-covered ambulatory services provided by non-medics, such as physiotherapists, (psychological) psychotherapists working in physicians’ practices, laboratory and other paramedical personnel, are also paid for on a FFS basis. All professions in the ambulatory care sector have a nationally agreed fee schedule, which is negotiated between the relevant professional association and the association of MHI companies (or other social insurers such as UV/AA, MV/AM, AHV/AVS and IV/AI).

Home care (Spitex) services are reimbursed by MHI with Sw.fr.54.60 per hour for basic care services; Sw.fr.65.40 per hour for assessment and treatment; and Sw.fr.79.80 per hour for health checks, counselling and coordination. The maximum MHI contribution per patient is Sw.fr.79.80 per day, and patients have to cover up to Sw.fr.15.95 per day, with any remaining costs covered by the cantons or municipalities.

Services not covered by MHI are financed by VHI or by direct payments of patients on a FFS basis. Actors are – in principle – free to negotiate fees for services. For example, providers can add a certain percentage increase to the normal TARMED fee schedule. For services that are not specified by TARMED (e.g. alternative medicine), fee levels are determined freely by providers.

Dentists providing outpatient dental care services in Switzerland are financed almost 90% from OOP payments from patients, with the rest coming from private insurances (VHI) and from SI (MHI, UV/AA, IV/AI, MV/AM). If paid by SI, the invoices are calculated based on a national dental FFS system (called dentist tariff SSO), which is also a relative value scale specifying a certain weight (points) for 500 service items. The point value paid by social insurers is the same for all dentists in Switzerland, i.e. Sw.fr.3.10 in 2015. If patients or VHI cover the costs, dentists can increase (or decrease) the point value up to Sw.fr.5.80 (and there is no bottom limit).

Hospital inpatient care

Since January 2012, acute care hospitals are paid on the basis of the national SwissDRG system. Cantons bear between 51% and 55% of the costs of each inpatient admission in 2015, and their share will increase to at least 55% in all cantons by 2017. MHI companies pay for the rest. Actual hospital payment still varies considerably across cantons and may also vary across hospitals within cantons (e.g. university versus other hospitals), depending on the individual hospital base rates (for an overview of base rates, see GDK/CDS, 2015b). If patients choose to be treated in a hospital in another canton with a base rate that is higher than the base rate that would have been paid in the canton of residence for the same service (the reference rate), the difference may have to be covered by patients out of pocket or by VHI (see section 5.4).

DRG-based hospital payment was introduced in Switzerland as a result of a revision of the KVG/LAMal adopted by Parliament in 2007 (see section 6.1.2). The aim was to harmonize hospital payment across cantons (as well as for public and private hospitals) and to improve transparency and efficiency. Previously, large differences had existed in hospital payments for similar services across cantons, with hospitals in some cantons being paid on the basis of per diems and in others on the basis of DRGs, and with public (or subsidized hospitals) receiving direct cantonal funding for investments and education (and possibly deficits). Harmonizing hospital payments across cantons was an important step towards improving choice of hospital for patients seeking care in a canton other than their canton of residence.

The SwissDRG system has been developed by SwissDRG SA (see section 2.3.6) on the basis of the German DRG (G-DRG) system and data collected from an increasingly large sample of Swiss hospitals: 39 hospitals contributed data in 2007 (accounting for about 60% of hospital activity) and this number increased to 112 hospitals in 2014. The G-DRG system was adjusted to the Swiss context (amongst others to the Swiss Procedure Classification System, CHOP). National DRG weights, which are indicators of the relative costs of treating patients in one DRG when compared to the average costs of treatment of all patients, are calculated based on Swiss cost data. Investment costs are included in DRG-based payments since 2012 (by adjusting the base rate), and DRG weights include investment costs since 2015 (see section 4.1.1). Costs for research, university-level education and the costs of ensuring geographic availability of hospital capacity are excluded (Fischer, 2014).

Mental health (psychiatric) and rehabilitation hospitals are not yet paid on the basis of casemix systems (similar to DRGs). They continue to operate under a per-diem system. Originally, it was intended that psychiatric and rehabilitation hospitals would also transfer to a casemix-based payment system by January 2012 (as prescribed by the law). However, because these systems had to be developed from scratch (as international systems were unavailable), the new payment systems are still in the pilot stages (Caminada et al., 2015). It is currently envisaged that both psychiatry and rehabilitation will transfer to a new payment system in 2018 for the entire country.

Pharmacies (outside hospitals)

In 2001, the remuneration of pharmacies was changed from a simple proportional mark-up scheme to a mixed payment system consisting of a regressive mark-up included in the retail price of pharmaceuticals, which is specified in the positive list (see section 2.8.4), and a small number of fees for certain services. Most importantly, there is a basic fee of Sw.fr.3.25 (in 2015) per patient contact and a fee per dispensed prescription of Sw.fr.4.30. In addition, fees exist for specialized services, e.g. for a polymedication check (for patients taking more than four medications at the same time); for monitored medication intake; for methadone replacement therapy; and for substituting an original brand drug with a cheaper generic. The latter is reimbursed with an amount that depends on the price difference between the branded drug and the generic (capped at a maximum of Sw.fr.21.50).

The aim of this new reimbursement was to improve cost-effectiveness in the use of medicines and to overcome unintended consequences of a link between the payment of pharmacists and the financial volume of dispensed medicines (Vaucher & Rohrer, 2015). In 2010, the system was slightly updated.

Public health services

Public health services (prevention measures against alcohol, tobacco and drug abuse, infectious disease control and accident prevention, as well as food quality control and school health programmes, etc.) are often contracted out by cantons or municipalities to non-profit organizations, which receive a lump sum for a set of prevention measures specified in a contract. Payment of MHI companies (e.g. for vaccinations) and direct payments by private households are mainly FFS. Donations and bequests to non-profit organizations may be linked with specific requests of the funding organization.

Institutional long-term care

Since January 2011 (see section 6.1.4), medically indicated care provided at nursing homes is paid by MHI in the form of a flat rate of Sw.fr.9.00 per day and per care level, which is determined by the degree of dependency (see section 5.8). The maximum daily MHI contribution (for care level 12) is Sw.fr.108 and is fixed by the federal government (Federal Council). If the amount reimbursed by MHI does not cover the total medical costs, patients pay up to 20% of the maximum MHI contribution, i.e. a maximum patient contribution of Sw.fr.21.60 per day or Sw.fr.7884 per year, for institutional long-term care. These patient payments are usually made in the form of flat rates per day, depending on the degree of dependency. Any remaining costs are financed by the canton or municipality (see section 5.8.2 for the distribution of costs across payers).

For nursing homes that are publicly co-financed or subsidized, the public (cantonal or municipal) contribution is usually linked with a contract that specifies certain requirements (e.g. the provision of high-quality care). However, the details of these contracts can be manifold (deficit guarantees, infrastructure investments, etc.) and requirements are often relatively unspecific. Patient contributions for assistance and housing are usually lower in publicly co-financed or subsidized institutions compared with private institutions.

3.7.2. Paying health workers

Physicians

The income of doctors in independent practice is directly determined by the payment system as described in section 3.7.1. In some cantons, these doctors are allowed to run a practice pharmacy, which can generate an important share of the total income (see section 5.6.2). The annual median income of physicians in independent practice was around Sw.fr.190 500 in 2009, with considerable variation across regions (Sw.fr.181 100 in Zurich and Sw.fr.244 050 in Central Switzerland) and specialties (Sw.fr.107 400 for child and adolescent psychiatrists and Sw.fr.374 400 for gastroenterologists) (Kraft & Laffranchi, 2012). For comparison, the annual median income across all sectors of the economy was Sw.fr.77 268 in 2012 (FSO, 2015b).

In insurance-owned HMOs (see section 5.3), doctors are employed and receive a salary. In doctor-owned HMOs, doctors normally receive performance-related payments as well as a guaranteed minimum income.

Most physicians working in hospitals are employed and receive a salary, independently of whether they work in inpatient or outpatient departments. The average annual salary of assistant doctors (in specialization training) was estimated to be around Sw.fr.101 000 in 2010, while that of specialist doctors was Sw.fr.163 000 (Künzi, Strub & Stocker, 2011). Salaries of managing doctors were at Sw.fr.293 000 and chief physicians earned Sw.fr.419 000, with considerable parts of their salaries (about 42% of the salary of chief physicians) determined by bonuses. Bonuses are generated mostly through the provision of services to inpatients with VHI, and they are increasingly redistributed by hospitals across employed physicians.

Other professionals in ambulatory settings

Most professionals in an ambulatory setting – pharmacists, chiropractors, physiotherapists, ergotherapists, dentists, nurses, midwives, speech therapists and nutrition advisers – are either in independent practice or members of the staff in independent practices. Therefore, their income is directly determined by the payment system as described in section 3.7.1.

Nurses and midwives in hospitals or nursing homes

Nurses, midwives and assistant nurses working in hospitals and nursing homes are almost always employed and receive a salary. There is relatively little information available on salary levels of nurses. According to pflege-berufe.ch, the average salary of nurses in the Canton of Zurich was between Sw.fr.62 600 and Sw.fr.74 400, depending on the type of education (University of Applied Sciences or College of Professional Education and Training).