European Observatory on Health Systems and Policies


Health Systems in Transition (HiT) profile of Latvia

3.4 Out of pocket payments

OOP payments are the second most important source of revenue for the Latvian health system. Since the recession in 2008, when the government cut spending and increased user charges, the share of OOP payments as a percentage of total health expenditure has been constantly increasing, reaching 41.8% in 2017, according to OECD data (see Table3.1).

Two main categories of OOP payments exist in Latvia. In the first, patients pay user charges for statutorily financed care provided by NHS-contracted providers and for care provided within MoH-financed health programmes (see section 3.4.1 for details). In the second, patients make direct payments for non-statutorily financed care (non-contracted care) provided by NHS-contracted providers and for all care provided by non-contracted providers (see section 3.4.2); for example, private practitioners.

In 2010, the average monthly OOP spending per household member was €14.7, contributing to 5.9% of total household expenditure. Since 2010, OOP spending per household member has increased steadily both in absolute numbers and as percentage of total expenditure, reaching almost €22 in 2016, accounting for 6.6% of total household expenditure. About 60% of OOP spending paid for medical goods (mostly pharmaceuticals, including OTC drugs), while outpatient care services accounted for another 30%, according to CSB information. Higher income groups spend higher amounts in absolute terms but these constitute a lower share of their income. According to data reported to the NHS by contracted providers, total revenue earned from user charges for state financed outpatient and inpatient services totalled €55 million in 2017. Of this total, €32 million were paid by patients while €23 million were paid by the state for patients exempted from payment. However, these figures reflect only part of all OOP payments since they do not include OOP payments for pharmaceuticals and direct payments for services.

3.4.1 Cost sharing (user charges)

Several types of user charges exist in Latvia. One is co-payments – a fixed amount (flat rate) to be paid, for example, per GP visit, hospital stay, inpatient surgical intervention or prescription drug with 100% reimbursement level. Another is co-insurance – a fixed proportion of the cost of a prescription drug or medical device (25% or 50%). All user charges are regulated by Regulation No. 555 and No. 899, Procedures for the Reimbursement of Expenditures for the Acquisition of Medicinal Products and Medical Devices Intended for the Outpatient Medical Treatment. However, it is important to note some ambiguity in the Latvian cost-sharing terminology. The co-payments for outpatient and inpatient services are locally referred to as “patient fees” (pacienta iemaksa in Latvian). However, when the co-payment is charged for an inpatient surgical intervention, it is locally referred to as a “co-payment” (pacienta līdzmaksājums in Latvian).

When first introduced in 1996, user charges were formally declared as a means of encouraging consumer responsibility over personal health, reducing inappropriate demand and increasing resources for health care. However, the government recognizes the need to reduce the burden of user charges on the population while maintaining their role in reducing excessive use of health care services.

Co-payments apply to almost all types and levels of statutorily financed health services, as well as outpatient prescription pharmaceuticals (Table3.2). The current fee catalogue was introduced in 2009 and was only modified slightly in 2010.

Cost-sharing for pharmaceuticals has existed since the 1990s. Currently, the Procedures for the Reimbursement of Expenditures for the Acquisition of Medicinal Products and Medical Devices Intended for the Outpatient Medical Treatment lists all health conditions (diagnoses) for which patients can receive pharmaceuticals and medical devices reimbursed by the NHS. It classifies the conditions (diagnoses) into three groups with different levels of co-insurance (100%, 75% or 50% are covered by the NHS) depending on the degree of severity of the condition.

Several mechanisms exist to protect the population from catastrophic health expenditures or underuse of services, which could result from user charges. These include exemption mechanisms for certain groups and low-income households, and a cap on user charges (Table3.2).

The cap on user charges applies to the entire population. All co-payments for outpatient and inpatient health care services per person per year must not exceed €570 in the year 2019. In addition, they must not exceed €355 per one hospitalization episode. If a patient can prove to their NHS branch office that they have reached the cap, the NHS will issue a certificate and reimburse providers directly for all patient user charges exceeding the cap. However, the cap does not apply to co-payments and co-insurance for pharmaceuticals or medical devices. The cap also does not apply to privately paid services, pharmaceuticals or medical devices.

Children under the age of 18 are exempted by law from payment of any fees for all services included in the statutory list of services. But in reality, due to long waiting lists for some services, parents often choose to pay out of pocket for services for their children, to ensure timely service provision. Other exempt groups include pregnant women and women up to 42 days after childbirth, disabled people, mentally ill patients under treatment, and others.

In addition, persons below the poverty threshold, according to the Regulation of the Cabinet of Ministers No. 299, with average income below €128.06 per month per family member (in 2019) and some other conditions (absence of real estate or cash savings, etc.) are exempted from user charges.

For all patients exempted from user charges, the NHS (or the MoH for ministry-financed programmes) reimburses providers for the co-payments and co-insurance that would otherwise have to be covered by patients. User charges can be covered by VHI for insured persons.

3.4.2 Direct payments

Direct payments are frequent in Latvia and tariffs are freely determined by providers. Direct payments occur in three instances. 1) Patients have to pay for services or goods that are not included in the statutorily financed benefit basket. This includes, for example, dental care for adults, psychotherapy, most of the available rehabilitation and physiotherapy services and an important section of pharmaceuticals, which are excluded from NHS coverage. 2) Patients have to make direct payments for NHS-covered services or goods if they prefer to receive these services outside the standard patient pathway. For example, if a patient goes to a gastroenterologist for a regular check-up (a service which is included in the basic benefit package) without a GP’s referral, it requires OOP payments. Similarly, patients have to make direct payments if they want to jump waiting lists for non-prioritized NHS-covered services. The NHS monitors direct payments made to contracted providers and may terminate a contract if it finds that the provider deliberately defers treatment in order to be able to charge direct payments. 3) Patients have to pay directly for all services received from providers outside of the NHS, regardless of whether the services are included in the benefits basket.

3.4.3 Informal payments

Informal payments include all unofficial payments for goods and services that are supposed to be free and funded from pooled revenue, as well as all official payments for which providers do not give a receipt. There is no reliable source of information on informal payments in Latvia. In 2017, the Special Eurobarometer Report on Corruption indicated that 8% of respondents in Latvia who had visited a public health care provider in the previous 12 months reported they had to make an extra payment or give a valuable gift to a nurse or doctor, or donate to the hospital (in comparison with an EU28 average of 4% and an EU13 average of 9%) (European Commission, 2017).