- Latest Updates:
- 20/03/2021: Update on (Re)introduction of measures: Additional funding to the EHIF by Andres Vork, Kaija Kasekamp, Kristiina Kahur, Kristina Köhler , Marge Reinap, Triin Habicht
- 07/12/2020: Update on Methodology for additional payments by Andres Vork, Kaija Kasekamp, Kristiina Kahur, Kristina Köhler , Marge Reinap, Triin Habicht
- 17/11/2020: Update on Health financing by Andres Vork, Kaija Kasekamp, Kristiina Kahur, Marge Reinap, Triin Habicht, Kristina Köhler
4. Paying for services
Adequate funding for health is important to manage the excess demands on the health system. This section considers how countries are PAYING FOR COVID-19 SERVICES. Health financing describes how much is spent on health and the distribution of health spending across different service areas. The section also describes who is covered for COVID-19 testing and treatment, whether there are any notable gaps (in population coverage and service coverage), and how much people pay (if at all) for those services out-of-pocket.
4.1 Health financing
On the 19th of November, the government decided to allocate an additional 8M EUR to the health insurance fund to ensure the provision and reorganisation of health care. 6.9M EUR is for specialist and emergency care, 900,000 EUR is for family medicine and 200,000 EUR is for nursing care. The EHIF intends to use these funds to cover the additional costs that health care providers faced from September to December. The EHIF has already requested an additional 20M EUR from the government reserve to cover expected additional costs in the first quarter of 2021.
The total 2021 EHIF budget is expected to increase 5.4% compared to 2020 and 20.0% compared to 2019. EHIF continues to focus on usual activities to improve the access to health care services by increasing the number of cases funded and introducing new services.
The overall nominal increase in government sector spending in 2021 is predicted to be 2.3% compared to 2020 and 4.5% compared to 2019, with a prioritization on the health budget compared to other sectors. In 2021 the expenditure on health care services is expected to increase by 12.4% (compared to 2020), 8.2% in pharmaceuticals, and 12.4% on temporary sickness benefits.
In primary care, financing increased due to the substitution system for family doctor care and the growth of home nursing services in health centers. In specialist care, a 2% increase in the number of health care cases is predicted. There is also a predicted increase of 15% in the expenditure of dental care, 2% in ambulance services, 33% in health promotion.
The increase in spending on temporary sickness benefits is due to the temporarily increased coverage of sick leave days by EHIF between 01.01.2021 and 30.04.2021. The coalition agreement of the new government (from January 2021) stipulates that the temporary regulation of sickness benefits, where the employer pays the benefit from the second to the fifth day and the health insurance fund from the sixth day, will continue until the end of 2021.
On 10 March 2021, the government approved the draft legislation for the temporary regulation of sickness benefits and sent it to the parliament The draft legislation would extend the sickness benefits where the employer pays the benefit from the second to the fifth day and the health insurance fund pays from the sixth day until the end of 2021.
EHIF funds COVID-19 related health care expenditure to health care providers (PPE, tests, health care services) and sickness temporary benefits to employees. In 2021, COVID-19 related expenditure is predicted to be about EUR 76 million or 4.4% of the EHIF budget. The largest COVID-19 related costs are expenditure on PPE (EUR 39 million), additional temporary sickness benefits (EUR 5 million), and reserve for potential additional costs (EUR 32 million).
In addition to funding from EHIF, several other ministries finance spending on COVID-19 related health care costs. The Ministry of Social Affairs finances the COVID-19 vaccination (predicted cost for 2021 is EUR 44 million) and testing (up to EUR 100 million in 2021). In addition, a part of PPE is centrally procured and financed from the central government budget. COVID-19 related research or monitoring projects are funded by the Ministry of Education and Research.
Since 2017, the Estonian government has transferred additional funds to the Estonian Health Insurance Fund on behalf of pensioners. When introduced in 2017, the transfers covered only 1.3% of total expenditure, but by 2021 it is forecasted that it will be already 11%. The economic and health care crisis caused by COVID-19 has required additional transfers from the state budget. These transfers made up about 8% of total health expenditure in 2021, to compensate for a decline in earmarked social tax revenues and an increase in expenditure on temporary incapacity benefits and COVID-related health care services. As the general budget has more mixed sources of revenue, then implicitly the revenues for the health budget have become more mixed.
In addition, the government has approved a proposal for the distribution of the European Union's Recovery and Resilience Facility and REACT-EU funds, of which EUR 523 million will be directed to health care. More than EUR 88 million of REACT-EU funding is requested for health, including COVID-19 vaccination, coronavirus testing, hospital crisis preparedness and surveillance research for 2021. EUR 380 million is requested from the Rehabilitation and Durability Facility for the construction of Tallinn Hospital until 2026.
Despite the transfers on behalf of pensioners, long-term sustainability of the health system is still challenging as the overall health revenues as a percentage of GDP is not expected to substantially increase. A recent study commissioned by the Foresight Centre (Arenguseire Keskus), a think tank at the Estonian parliament, concluded that by 2035, the shortage in EHIF revenues will reach up to 900 million EUR (about 24% of total expenditure, or 1.8% of GDP) if the access to health care services would remain at the current level.
The Estonian Health Insurance Fund’s (EHIF) management board approved the methodology and provider contract amendments to cover the additional costs related to the COVID-19 crisis. This methodology is based on the Government Act defining the list of costs that are covered during the emergency situation and 60 days after the end of the emergency situation (https://www.riigiteataja.ee/en/eli/524042020001/consolide). Extension of these additional payments will be decided based on actual need.
All additional payments are accounted separately to track the emergency-related expenditures and the EHIF has a right to audit the submitted information. The EHIF only covers additional costs for EHIF contracted providers and EHIF covered care provision. In March, additional payments constituted around EUR 20M and the expected amount in April is approximately EUR 35M.
Loss of revenues due to the postponement of elective care
The fixed costs of the EHIF contracted specialist care, nursing care and dental care providers will be covered as a fixed cost share of the non-implemented contract amount. In other words, each provider will use the value of the non-implemented contract as a basis for calculations, and multiply this by the fixed cost share. The fixed cost share is calculated based on the EHIF’s health services pricing methodology and actual service use in 2019 by hospital types as a weighted average across hospital types. Fixed costs include the medical and non-medical professionals’ salary and facility maintenance costs as they are defined in health service prices. The calculated fixed cost share for a regional hospital is 51%, for a central hospital is 57% and for general and rehabilitation hospital is 72% of total cost. This indicates that the fixed cost share is higher for smaller and lower-level hospitals and they are more vulnerable to the decrease in volume of care. No additional payment will be allocated to the Hiiumaa hospital, which is financed using a global budget.
The fixed cost share is lower, at 37%, for providers who do not belong to the hospital network but are contracted by the EHIF through the selection (public procurement) process. This lower coefficient takes into account that private providers are eligible for salary loss compensation through the Unemployment Fund as they had to stop the delivery of non-emergency care due to the emergency situation.
The additional payment is calculated on a monthly basis based on the non-implemented contract amount by multiplying it with the fixed cost coefficient.
Primary health care providers are funded via capitation payments which also guarantees stable revenues during the outbreak and they are not eligible to additional compensation.
Personal protective equipment (PPEs)
PPEs are procured centrally and also providers are conducting their own procurements. In both cases, the EHIF covers the costs of PPEs. In the case of central procurement, the procurement agency receives the PPE (first central procurements were done by the North Estonian Medical Center and the Health Board, next ones by the Ministry of Finance) and in the second case, these are shipped directly to the provider.
Providers can submit invoices in the EHIF calculated maximum limits based on actual costs. The EHIF calculated limits take into account the number of visits and bed-days of particular provider, and estimated cost of PPEs depending on the type of visit and bed-day. The EHIF follows the PPE standards developed by the Health Board for different service providers. For example, one appointment uses an average of 2.5 surgical masks (including a mask for the patient) and 1.5 gloves with a total cost of EUR 1.76. In comparison, the price of a specialist visit without additional PPE costs is EUR 25.18. The maximum cost of PPEs for bed days varies by type: EUR 2.16 in general ward, EUR 59.91 in COVID-19 general ward and EUR 315.96 in COVID-19 intensive care ward. Providers must also submit the proof of payment when they submit their invoice to the EHIF.
The cost ceiling for sanitizers is calculated as a 0.5% of the provider’s monthly contract amount.
The maximum cost ceiling for PPEs for ambulance trips is EUR 63.78 and EUR 43.28 for three- and two-member teams respectively and the maximum cost of sanitizers is EUR 3 per trip.
Health professionals’ salary compensation in COVID-19 and emergency departments
The majority of hospital network hospitals have established separate departments for COVID-19 patients. In these departments there has to be one doctor per 10 patients during the day and per 20 patients during the night; one nurse per 6 patients and one caregiver per 10 patients. The EHIF pays the EUR 2834 preparedness fee every month for each established COVID-19 bed and an extra EUR 233,71 per each internal medicine bed day fee (otherwise EUR 125,65) if the patient is hospitalized in the COVID-19 general ward. This approach allows EHIF to pay reimbursements which are twice as high with the bed occupancy rate at 50% and three times as high with the bed occupancy rate at 100%.
In intensive care wards, the EHIF pays a EUR 8655 preparedness fee every month for each established COVID-19 bed and an extra EUR 807,24 per each intensive care bed day fee (otherwise EUR 1076,32) if patient is hospitalized in the COVID-19 intensive care ward. In emergency departments, an additional preparedness payment of 41% is added to the usual preparedness fee which enables 50% higher salaries on average for the emergency department staff.
Cost of equipment and facility redesign
Hospitals have made additional investments to readjust their facilities for COVID-19 patients. The ventilators are partly procured by the Health Board and therefore the cost varies by hospitals. Most of the additional equipment (lab equipment, ultrasound machines etc.) can be used afterwards in regular care and therefore will be covered via service prices. The EHIF covers a one-time additional cost of EUR 8000 for each newly established COVID-19 ward.
Hospitals can also apply for a one-time compensation of 1.5% of outpatient care contract annual amount (totalling EUR 290 000 across all hospitals) to scale up their capacity to deliver remote consultations. Providers can apply for this payment if at least 20% of visits (compared to the number of visits during the same period of time last year) were done remotely and at least 20% of remote visits were done as video consultations.
Additional costs of ambulance care providers
Ambulance teams dedicated to COVID-19 patients receive twice their normal salary and other teams receive 1.5 their normal compensation. The EHIF also covers additional costs related to the establishment of decontamination chambers.
Additional costs of primary health care (PHC) providers
PHC providers receive additional payments for providing services to these patients who have no insurance coverage or who are not listed to that particular PHC doctor. In these cases, the EHIF applies the usual fee for a specialist visit.
The PHC centers which are open out-of-hours during the emergency phase are paid by using the already existing fee for out-of-hours PHC. If approved by the Health Board, payment for additional nurses and doctors is covered by using the pre-existing PHC fees for second nurse and additional doctor. PHC centers receive centrally procured PPEs but also additional monthly EUR 150 per listed patient to cover the potential extra costs. This payment is higher – EUR 500 – for those PHC centers which are open out-of-hours.
As described in section 1.5 – Testing, in April, the Health Board conducted a closed procurement procedure to outsource testing capacity to two private sector providers, which organize testing in 14 different locations across the country. The total amount of the contract is EUR 1,734,384 and the contract is effective until May 14. The majority of tests are currently done by these private providers. Hospitals use their own laboratories to test their patients by using the existing fees for laboratory services. The fee for the PCR test is EUR 67,04.
Hospitals that provide care to COVID-19 patients have existing contracts with the Estonian Health Insurance Fund (EHIF) and are reimbursed under these contracts. Negotiations with providers to introduce special terms for the emergency period are ongoing.
Hospitals were advised on 16 March to limit the amount of scheduled work, to be prepared for the potential increase in patient admissions, and to adjust beds for the treatment of infected patients.
On 25 March, the government decided that it will provide the EHIF with at least EUR 200 million to cover the extraordinary costs of coronavirus. The extra money will cover the extraordinary expenses of hospitals, ambulances and general practitioners from the beginning of March to the end of May. The largest part (EUR 150 million) of the extraordinary costs in the health system will be used to fund hospitals and specialist care over the next three months, primarily linked to the provision of intensive care. This includes both additional staff costs and medical expenses.
In addition, over EUR 20 million was earmarked for the purchase of personal protective equipment, respirators and coronavirus testing capabilities.
The government will also allocate EUR 7 million to the EHIF to cover the first three days of sick leave. From 13 March until the end of the emergency situation, the EHIF will pay the first three days of sickness benefit. Under the current legislation, the first three days of sick leave are not compensated, the employer pays for 4-8 days, and the EHIF pays from the 9th day of sickness. The EHIF will start payments in May, after necessary legislation is approved.
Sources: https://www.haigekassa.ee/uudised/haigekassa-hakkab-eriolukorras-tasuma-esimeste-haiguspaevade-eest; https://www.valitsus.ee/et/uudised/valitsus-eraldab-tervishoiu-erakorraliste-kulude-katmiseks-ule-220-miljoni-euro
The EHIF introduced a fee for distance outpatient specialist consultations as of 16 March to provide an alternative for usual office visits. The health care provider has to inform the patient in advance whether the remote channel will be phone, video call or text messages. The EHIF advised all service providers to use remote appointments as of 24 March to replace physical outpatient admission. The EHIF does not pay for the costs of organizational changes and administrative contacts such as contacting the patient to book, change or cancel an appointment.
On 19 March 2020, the government approved amendments, agreed already before the crisis, to regulate the list of services financed by the EHIF. Part of these amendments include incentives for family doctors to work in rural areas by providing additional payment. Starting 1 April 2020, the distance payment for family doctors will more than double and the number of recipients will increase. Under the new agreement, a family doctor working more than 40 kilometres from the nearest hospital or on an island will be paid a monthly grant of EUR 1646.82 instead of the current EUR 563.15. Family doctors working outside Tallinn and Tartu and the neighbouring rural municipalities will be paid a monthly supplement in the amount of EUR 823.41 instead of the previous EUR 196.55. The purpose of the payment is to ensure the availability of family doctors outside of cities. The distance allowance also covers additional location costs to further motivate doctors to work in rural areas.
According to the collective agreement signed on 30 November 2018 (effective 2019-2020), the salary component of healthcare professionals will be increased for all EHIF-funded services starting 1 April 2020. The gross salary increased about 7.4%, but due to the peculiarities of the Estonian income tax scheme, the relative increase of after-tax wages is highest for doctors (ca 7.3%) and smallest for nurses (5.8%).
On 15 April, the parliament adopted amendments to the Health Services Organisation Act. These amendments create a legal basis that would allow for the Estonian Health Insurance Fund to use the state budget to pay for the benefits of persons in need on more favourable terms than in the Health Insurance Act during a state of emergency. In addition, the amendment enables the Estonian Health Insurance Fund to finance additional measures during an emergency situation, state of emergency or war. The payment of benefits and services is limited to these narrow situations and the measures may be applied for a maximum of 60 days after the end of the emergency situation, state of emergency or martial law.
On 15 April, the parliament adopted the Supplementary State Budget that allocated EUR 213.2 million to the Estonian Health Insurance Fund (about 13% of the planned budget for 2020). The government had previously decided on this allocation on 25 March, as reported earlier. Of this, EUR 40.7 million is allocated to provide individuals with additional sickness benefits, and the remaining EUR 172.5 million is granted to ensure the provision of health care services in the emergency situation. Health care providers with existing contracts with the EHIF are reimbursed for the costs of additional personnel and communication, servicing non-listed patients or providing emergency assistance to uninsured persons, acquiring personal protective equipment, disinfection and waste management, providing services arising from the patient's condition, and implementing remote services. In addition, special care providers are compensated for the additional costs of acquiring hospital medicines, reorganizing the work of medical departments, increasing the capacity of intensive care and necessary inventory, and maintaining the financial sustainability of the service provider in connection with the cancellation of scheduled treatments.
The EHIF can use the funding for sickness benefits only during the period when the country has declared a state of emergency. The funds may be used 60 days after the end of the declared emergency period for covering the costs of health service providers. If the funds are not used up by that time, they will be transferred to EHIFs reserves.
The Supplementary State Budget forecasts a reduction of the Estonian Health Insurance Fund’s revenues by EUR 178 million, mostly due to the projected reduction of the social tax revenues in the Ministry of Finance’s spring economic forecast.
On 24 April, the government approved a decree establishing the conditions for reimbursement of the first days of sick leave during the emergency situation. Once the decree is implemented, the EHIF will start reimbursing the first three days of sick leave retroactively no later than 4 May.
Estonia has not made any long-term changes to the funding of its health system as a result of the COVID-19 crisis, as the temporary increase in expenditures is provided by the Supplementary State Budget as described above.
Regarding dental care, the EHIF has decided that it will compensate contractual partners for additional personal protective equipment (PPE), required during the emergency situation, if the service itself is compensated by the EHIF. The EHIF's contractual partners may not ask patients to cover the costs of PPE in that case. The list of services covered by the EHIF includes children's dental care, some orthodontic services for children, emergency care, dental care for the disabled, and a few dental care services for adults if these are covered by the annual dental care benefits for adults. (The dental care benefits are EUR 40 per year for adults, and EUR 85 for women who are pregnant or have a child less than one year old).
In the case of other services or if dental offices do not have a contract with the EHIF, the patient pays for PPE. According to the EHIF's calculations, the protective equipment needed to serve one customer costs about EUR 20-41.
The EHIF has released statistics on the expenditure of the additional EUR 213.2 million budget transfer that they received with the Supplementary State Budget (adopted on 15 April) for COVID-19 response related costs and that were meant to be spent during the emergency situation (from 12 March till 18 May) and up to 60 days after the situation.
As the COVID-19 health crisis in spring was less severe than expected, the additional expenditure of EHIF constituted only EUR 94.7 million (or 44% of the additionally allocated funds). Of this, EUR 19.8 million (budgeted at 40.7 million, so only 49% of the planned expenditure was spent) was allocated to provide individuals with additional sickness benefits and the remaining EUR 74.9 million (budgeted at 172.5 million, so 43% of the additionally allocated funds was spent) was used to ensure the provision of health care services. The majority of the latter amount was expenditure on PPE (EUR 30 mln) and reimbursement of the fixed costs of hospitals (EUR 21.5 million). Within the categories of health care provision the need for extra funds was very different compared to the initial predictions. Primary care providers spent 11.6%, nursing care 24.5%, specialist health care and stationary care 44% and ambulance services 102% of initially planned extra funds. One fifth (21.9%) of additional funds for medicines were spent. According to the current legislation, EHIF is not allowed to use the left-over funds, because the transfer is legally tied to the emergency situation (and 60 days following the emergency situation). The EHIF could only use the state budget transfer if a new emergency would be declared.
As regular health care provision was limited in the first half of 2020, the total expenditure of EHIF on health care services, including COVID-related services, was EUR 19 mln (or 3.2%) less compared to the total budget. The largest gap was in disease prevention (-15% compared to the initial budget) and dental care (-12%). In specialist care, primary care and nursing care 95-96% of funds were used. Expenditure on ambulance services was 23% larger than planned.
On the 10th of November, Estonia allocated an additional 4.8M EUR to CoV-SARS-2 tests, including 2.3M for Antigen tests and 2.5M for PCR tests.