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European Observatory on Health Systems and Policies

Cyprus


Health Systems in Transition (HiT) profile of Cyprus

6. Principal health care reforms

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ccession to the EU led to many reforms in the health system, particularly in terms of policy, regulation and the provision of services. Major challenges include reducing the rising costs of health care, addressing inequalities in access to health care services and improving the quality of services and financing of the health system. Reforms in these areas will help to maintain the progress achieved in controlling communicable diseases, to reduce the incidence of chronic diseases and to maintain the environment in a way that safeguards quality of life.

Prior to EU accession, the parliament approved a law that called for a new health system based on the principles of solidarity, justice and universality. The General Health Insurance System (GHIS) is designed to provide universal coverage within a comprehensive health system. However, the starting date of the GHIS has been repeatedly postponed due to three main reasons: (a) government concerns over costs, (b) the negative impact of the financial crisis on the fiscal revenues, and (c) the time-consuming tender procedures associated with the introduction of the new system. At this time, while there have been many discussions and policy papers written, the only tangible progress has been the creation of the HIO, which has been appointed as the body responsible for implementation of the new system. Reorganization and restructuring of the public health care sector and the Ministry of Health, along with decentralization of health services, are key priorities, which will only be fully realized after the implementation of the GHIS.

6.1 Analysis of recent reforms

Accession to the EU led to many reforms in the Cyprus health system, particularly in terms of policy, regulation and the provision of services. With the re-launch of the Lisbon Strategy in 2005, the EU and its member states committed themselves to a new partnership and to undertake reforms in a coordinated manner. Within this framework, in 2006 the government issued its “Strategic Plan for 2007 – 2013”, which highlighted reforms of the organizational and financial structures of the health system as priorities (Ministry of Health, 2006; Revised National Lisbon Reform Programme of Cyprus for the period 2008 – 2010, 2008).

Prior to EU accession, the parliament passed Law 89(1) 2001 “for the introduction of a General Health System”, which called for a new health system based on the principles of solidarity, justice and universality (see section 2.2 for further historical background). However, the start date of the GHIS has been repeatedly postponed for three main reasons: (a) government concerns over costs, (b) the negative impact of the financial crisis on the fiscal revenues, and (c) the time-consuming tender procedures associated with the introduction of the new system (Cyprus National Reform Programme, 2011). Currently, while there have been many discussions and policy papers written, the only tangible progress has been the creation of the HIO, which has been appointed as the body responsible for implementation of the new system.

In 2007, the HIO introduced thematic work teams. With the guidance of an international consultancy firm, the teams have created policy papers and documents that describe the basic principles of operation of the new health system. Specifically, these documents describe the current system and highlight challenges for the transition to the new health system, including how health care service providers will interact and be compensated under the new system. These documents form the basis of negotiations with stakeholders (Cyprus National Reform Programme, 2011). In addition, HIO has designed the operational processes in the context of the new IT system.

In 2011 the Ministry of Health established the Purchasing and Supply Directorate in order to:

  • be more flexible in decision-making and prompt the launch of procedures for ensuring supplies and medical equipment for the needs of public hospitals;
  • strengthen the bargaining power of the management and secure lower prices for achieving economies of scale;
  • use public money effectively;
  • strengthen risk control and avoid fraud.

A list of reforms that the Ministry of Health has already taken is shown in Box 6.1.

Other major reforms include the implementation of “The Safeguarding and Protection of the Patients’ Rights Law”, 2004, which addresses issues regarding patient rights (see section 2.9), as well as pharmaceutical pricing reforms between 2003 and 2009 (see section 2.8.4).

6.2 Future developments

As discussed, the major future reform is the GHIS. The introduction of the GHIS is by far the most important planned health reform in Cyprus, and will provide universal coverage within a comprehensive health system. In general, the new system is expected to:

  • be based on contributions from employers, employees (as well as pensioners and rentiers) and state general revenues;
  • provide universal coverage;
  • encourage competition between and among providers in both the public and private sectors;
  • encourage a primary care-driven referral system by paying GPs based on capitation and performance indicators; specialists will be paid on a FFS basis under a global budget by specialty;
  • remunerate inpatient care using DRGs.

Many details of the proposed GHIS are still not determined. The new system is expected to improve the performance of health care provision by:

  • decentralizing managerial responsibilities from the Ministry of Health to public hospitals, whereby the Ministry of Health will gradually be transformed to a policy-making body regulating public and private sector providers;
  • reforming the financial management system through the introduction of modern cost accounting systems;
  • establishing rules and regulations to ensure minimum standards for the quality of health services;
  • promoting greater continuity of care for patients through the development of a robust GP system.

At the same time, it is expected that the introduction of the GHIS will lead to savings due to:

  • bulk purchasing of drugs and establishing a drugs list
  • bulk purchasing of diagnostic tests and cost-based pricing
  • reductions in provider payments
  • better regulation and capacity planning for human resources and medical equipment
  • the establishment of an IT system to improve transparency and collection of health data.

However, there are a number of reasons why costs could increase. For example, by reducing OOP costs at the point of service, utilization may increase. At the same time, while GPs (for these purposes including paediatricians and gynaecologists) will have referral power, it may still be possible for patients to bypass them and visit specialists directly, limiting their gate-keeping role. Additionally, employee and employer insurance contributions will place additional burden on household incomes.

To be able to adapt to the anticipated challenges, exercise effective cost-control on health care spending and improve the quality of health care provision, the Ministry of Health aims to implement a system of more effective autonomy for public hospitals. This entails reinforcing managerial structures, allocating budgets to each hospital and each clinic and creating hospital clusters between neighbouring districts. Draft legislation was prepared to serve as a basis for continuing dialogue with relevant stakeholders. However, the process has been delayed because of uncertainties over how and whether to alter the employment status of employees in public hospitals, who are currently civil servants but who would probably be remunerated differently under the new system. A team of consultants has been appointed, and under their guidance 11 working groups have been set up at the Ministry of Health to prepare action plans and discuss the next steps.

Predictions about when the GHIS will be implemented are futile because of the economic recession and the political situation. Presidential elections will take place in early 2013 and negotiations regarding unification of Cyprus are at a critical point. All political parties unanimously agree that the sooner the GHIS is implemented the better but in view of the presidential elections in early 2013, no predictions can be made as to when the GHIS will be implemented.

Although there is no time frame for implementation, other future health reforms include:

  • improving care for older people and expansion of nursing home care
  • creation of new health centres
  • upgrade of neurology care in the public sector
  • establishment of a radiotherapy unit in Limassol and a second one in Nicosia
  • upgrade of rehabilitation units
  • community nursing
  • reorganization of pharmaceutical services and the introduction of an independent Cyprus Medicines Agency
  • establishment of a Food Safety Authority
  • update and implementation of the National Drug Strategy
  • development of a Cardiovascular Surgical Unit at Limassol Hospital.

While the procedures for the administrative and financial autonomy of public hospitals are in progress, there is a deadlock on the front of hospitals and doctors of the private sector with regard to the conditions under which they will join the new system. Although much needs to be done to enable the new healthcare system to begin providing primary health care services to all beneficiaries from 1/6/2019, both the Cyprus Medical Association (PIS) and the Cyprus Association of Private Hospitals (PASIN) decided to stop their dialogue with the Health Insurance Organization, since no common ground was found to meet their demands. The Cyprus Medical Association, which is the trade union body of all doctors of the public and private sector, demands higher fees for private doctors as well as the right to practice private medicine within the new public system for additional income. The demand for higher fees was rejected by the President of the Republic, calling on physicians to disclose their incomes they have declared to the tax office over the past 7 years, and if these are higher than those proposed under the new system, then the necessary corrections will be made. Τhe second demand for the right to exercise private medicine within the NHS was rejected without any discussion, since it is inconsistent with the principles and philosophy of the new system as unanimously voted by the Parliament. After that, the Cyprus Medical Association took a step further by calling doctors to refuse the cooperation with the upcoming new system. The president of the PIS, in a particularly harsh and aggressive letter, to all doctors, called those who would eventually decide otherwise to join the new system "traitors".

Over the past few days, there have been more and more voices in support of the health reforms, namely by former presidents of the Cyprus Medical Association and well-known doctors of the private sector; it is currently difficult to assess to what extent the whole effort towards the implementation of the NHS will be successful. In any case, and because the contract with the Health Insurance Organization depends exclusively on each doctor's decision, it is expected that a number of doctors and hospitals of the private sector will ultimately join with the new system. Τhe first indication of how the new system will be implemented will be seen within the next month when physicians are asked to register with the system, thus showing their will to join the new system, starting on 21 January 2019, and will remain open for one month. Registrations for family doctors and pediatricians begin on 21 January 2019 and will remain open for one month. However, the government stresses that the reform will proceed as provided for by the law, within the specified timetable, providing from 1/6/2019 primary care services to all beneficiaries and from 1/6/2020, when the system is in full operation, all other services including hospital care.

Despite challenges in implementing the new NHS, particularly because private providers are still in negotiations with the Health Insurance Organization about their remuneration to participate in the new health system, the reforms continue to move forward. Here are the most important dates-milestones to its full implementation.

December 2018: Start the signing of contracts for family doctors and pediatricians with the Health Insurance Organization.

January 2019: Start the signing of contracts for the specialist doctors with the Health Insurance Organization.

1 March 2019: Start of "partial" payment of health contributions by beneficiaries for the upcoming provision of outpatient care services (family doctor, pediatrician, specialist, laboratory tests, medicines). For example, pensioners and salaried workers will initially pay 1.7% of their incomes, eventually contributing 2.7% when the full system is implemented.

1 June 2019: Start of the new outpatient care system

1 March 2020: Start of full payment of the health contributions by beneficiaries

1 June 2020: Full operation of the system

The Cabinet approved the appointment of the eight member Board of Directors of the newly established Organization of State Health Services (Okyy) which will be chaired by Sir David Nicholson, former Chief Executive of NHS England. Okyy will be tasked with the management, control, supervision and development of public hospitals and primary care centres. The Board of Directors will also oversee the implementation of administrative and financial autonomy in public hospitals. Hospital autonomy is the first step toward the implementation of the new NHS.

After several months of discussions and delays, the House of Representatives voted on June 16, 2017 in favour of the two pending NHS bills, paving the way for the implementation of the new Health Care System, estimated to be fully completed in 2020.

The purpose of the first bill is to create the public law agency, which will take charge of the operation of all public hospitals and primary care units. More specifically, the bill provides that all public hospitals should have administrative and financial autonomy in order to be competitive with private hospitals and financially viable in the new environment that will be created within the NHS. According to the provisions of this law, for a transitional period of 5 years any deficits of the public hospitals will be covered by the state budget. Beyond this five-year period, all public hospitals should be financially sustainable and competitive with the private sector. This kind of state protection in the first years of the NHS was considered necessary in view of possible large flows of patients from the public to the private sector and the fact that public hospitals would provide unprofitable services (eg hemodialysis services), which will not be offered by the private sector.

The second bill sets the level of contributions to be paid to the single health fund for financing the system. It was decided that contributions will be linked to the NHS implementation process and since all citizens from the 1st of June 2019 will be able to access primary care services, contributions will begin to be paid by the 1st of March 2019. The percentages of the contributions were set for employees and pensioners at 1.7% of their income, for employers 1.85%, self-employed 2.55% and the State 1.65%. Contributions will increase to their normal and agreed levelsf rom March 2020 reaching 2.65% for employees and pensioners, 2.9% for employers, 4% for self-employed and 4.7% for the State, since it is expected that from the 1st of June 2020, the NHS will be fully implemented and all beneficiaries will have access to health care services. The ceiling for income in order to estimate contributions was set at €180,000.

This bill also sets the level of co-payments for certain services. The annual co-payment cap per beneficiary was set to €300 and €75 for low-income pensioners and recipients of Minimum Guaranteed Income. This means that in those cases where the cap is reached within the year, the obligation to make co-payments stops for the rest of the year, protecting beneficiaries from catastrophic expenditures.

The timetable for implementation of the new NHS has not been met. The delay could be longer than a year and is mainly due to:
1) disagreement between the MoH and Health Insurance Organization about whether the system will be open to private insurance companies,
2) employee reactions to potential new working conditions in the autonomous public hospitals, and
3) delays in the supply and operation of the integrated information system that will support the new health system.
The new timetable is expected to be announced very soon, in consultation with Troika.

A team of WHO experts has been working with the MoH to advise on the implementation of the new NHS in accordance with the timetable set by the government and troika. The team is currently working on:

a) An assessment of a single-payer vs. multi-payer health insurance system, even though the draft law prepared for debate in the House provides that the new NHS will begin as a single-payer insurance system.   

b) Plans to provide more autonomy to public hospitals so that they can compete with the private sector.

In March 2013 a Memorandum of Understanding (MoU) was agreed between the Troika and the Cypriot government in return for a €10 billion bailout. In an updated version, the MoU makes special reference to the health care sector with the following recommendations:

a)     abolish the category of beneficiaries class "B" and all exemptions for access to free public health care,

b)     introduction of co-payments for patients/users,

c)     all civil servants and pensioners of the public have to pay acontribution of 1.5% of their gross salaries and pensions in order to be beneficiaries of the public health care sector,

d)     adopt a new decision by the Council of Ministers concerning a restructuring plan for public hospitals improving quality and optimizing costs and redesigning the organisational structure of the hospital management,

e)     assess and publish the potential risks and benefits of the planned introduction of the National Health System (NHS) in an updated actuarial study, taking into account possible proposals for implementing NHS in stages,

f)      make the award of the tender for the IT- infrastructure conditional upon the results of the study and the decision for implementing NHS,

g)     review income thresholds for free public health care in comparison to the eligibility criteria for social assistance,

h)     create protocols for laboratory tests and the prescription of pharmaceuticals,

i)      introduce a coherent regulatory framework for pricing and reimbursement of goods and services based on the actual level of costs,

j)      conduct an assessment of the basket of the top 4 publicly reimbursable healthcare products in terms of annual spending,

k)     start coding inpatient cases by the system of diagnosis-related groups (DRGs),

l)      establish working time in the Health Service, in conjunction with moving the starting time by half an hour (from 7.30 to 8.00) and extending the flexibility period from a half to one hour,

m)   define a basket of publicly reimbursable medical services based on objective, verifiable criteria including on cost-effectiveness criteria,

n)     establishing a system of family doctors acting as gate-keepers.

More information at: http://static.cyprus.com/troika_memo_final.pdf

Most of the above recommendations have been implemented, while experts from the World Bank and the WHO support the work of the Ministry.

Actions to be done are: Completion of the shadow budget for all outpatient and inpatient cases, approval by the Parliament of all required laws, approval of the Cabinet back up measures that would contain health expenditure and  the gradual implementation by July 2016 the NHS.

 

 

After 20 years of delays and postponements, the Government has decided to gradually implement the new Health Care System (GeSY), which will secure universal coverage. Crucial to this decision was the agreement with the Troika, as the GeSY is expected to control expenditure. Implementation will be gradual in three phases:

• Phase A (01/07/2015) - Primary Health Care Services (visits to family doctors and paediatricians).

• Phase II (01/01/2016) – Visits to specialists and additional outpatient services.

• Phase III (7/1/2016) - Full implementation of the GeSY- all secondary and tertiary health care services, laboratory and clinical tests, etc.