Most supplementary VHI policies aim to widen subscribers’ choice of provid-er, allowing subscribers to consult doctors working in the private as well as the public sector. Complementary and substitutive VHI policies may also give sub-scribers a wider choice of provider.
The extent to which choice is restricted through the use of preferred pro-vider networks (PPNs) or as a result of integration of insurers and provid-ers varies considerably among member states. On the whole, preferred pro-vider networks and integrated care still play a minor role in most member
Section 2 The market for VHI in the European Union
states, although there is a tendency towards some forms of vertical integra-tion among the largest insurers in some member states, notably BUPA and PPP Healthcare in the United Kingdom and SANITAS in Spain ( acquired by BUPA in the early 1990s), where insurers have traditionally been providers as well. Vertical integration takes place to some extent in France and Bel-gium, but is actually precluded by legislation in the Netherlands , at least for the time being (Ministry of Health, Welfare and Sport, 2000a). In recent years the three largest voluntary health insurers in Portugal have made significant investments in the creation and development of PPNs (Oliveira, 2001). PPNs also exist in Italy.
The transition from indemnity insurance to integrated care is possible in countries with large VHI markets, such as the United States. It is much hard-er to effect in smallhard-er markets such as the European Union, whhard-ere covhard-erage is voluntary, double coverage is a possibility and subscribers may object to any restriction in choice. The experience of SANITAS in Spain suggests that insurers have had to strike a delicate balance between limiting preferred pro-viders and maintaining subscriber choice. SANITAS owns and manages two major hospitals in Madrid; it also contracts services from about 450 private and public hospitals and clinics and 15 000 private practitioners. The compa-ny recently piloted a scheme offering lower premiums in return for more lim-ited choice of provider, but this had to be discontinued for lack of profitabil-ity.
Policy holders of the largest insurer in the United Kingdom are discouraged from using services outside the insurer’s preferred network of providers (that is, their own consultants and hospitals) by having to pay co-payments ranging from about €103 for a minor operation to €913 for a major operation. However, following complaints of anticompetitive practice, primarily from private con-sultants and hospitals, the competition watchdog in the United Kingdom (OFT) launched an enquiry into the two largest insurers’ development of preferred provider networks, vertical integration and negotiation of hospital charges. Al-though the OFT did not uphold the complaints, it did conclude that it would closely monitor any further moves towards vertical integration (OFT, 1999). It also demanded greater transparency in hospital selection procedures, suggest-ing that subscribers should be fully informed as to their rights to receive treat-ment from particular hospitals or consultants. At the same time the OFT rec-ommended that the British Medical Association and the private medical sector should develop a Code of Practice on charging, a recommendation that it had first made in 1996 (CareHealth, 2000).
Larger voluntary health insurers in France are trying to establish a network of preferred providers, but there is no general tendency towards vertical inte-gration, partly due to the public’s negative perception of American-style health maintenance organizations (HMOs). In Belgium recent experiments with
inte-85 grated care systems for specific medical treatments in mutual associations have met with limited success (Stevens et al., 1998).
Restrictions
VHI subscribers in some member states may be subject to a referral system or require prior authorization for treatment. Subscribers in the United Kingdom need a general practitioner’s referral before they can consult a specialist or re-ceive inpatient treatment. In the Netherlands , too, many voluntary health in-surers stipulate that patients obtain a letter of referral from their general prac-titioner before seeing a specialist (Maarse, 2001), but there is some evidence to suggest that on the whole this is not a practical requirement, as few insur-ers conduct checks before reimbursing subscribinsur-ers (Kulu-Glasgow, Delnois, de Bakker, 1998). Insurers in most member states do not require general practi-tioner referrals.
Some insurers in the United Kingdom encourage subscribers to obtain per-mission prior to undergoing treatment, while others insist that subscribers con-tact them first to check that they are covered for the treatment they plan to un-dergo (ABI, 2000). Insurers can use this as an opportunity to guide a subscriber to their preferred network of providers. In most member states, however, prior authorization can only be required for treatment abroad.
2.3.3 Insurers’ relationship with providers Methods of paying providers
Voluntary health insurers usually pay providers on a fee-for-service basis, al-though there is deviation from this norm in some member states. For example, a small number of providers in Spain are paid on a capitation basis; in France and Greece providers employed in insurers’ own facilities may be paid a sala-ry or a combination of salasala-ry and fees for service, insurers in Ireland pay hos-pitals according to a fixed rate per diem; some insurers in the Netherlands fix budgets for hospitals; and in Austria fee-for-service payment may be supple-mented by lump sums.
In some member states, fees for service are paid on the basis of a fixed fee schedule (Luxembourg and France) or reference prices (Portugal), while provid-ers in other member states may be able to charge higher rates than the sched-ule (some doctors in France and doctors in Germany, the Netherlands and Swe-den). From the insurers’ perspective, allowing providers to charge higher rates is likely to have cost implications. From the perspective of public policy, allow-ing providers to charge higher rates may have equity and efficiency implica-tions. For example, German doctors are allowed to charge VHI patients 1.7 or 2.3 times the reimbursement values set in the fee schedule for private medical services issued by the Federal Ministry for Health (and sometimes even more) Section 2 The market for VHI in the European Union
(Busse, 2000a). Charging extra may reduce access for some patients, although German providers are no longer permitted to charge more than 1.7 times ex-tra for individuals with the standard tariff (see section 2.1.1) (Bundesaufsich-tsamt für das Versicherungswesen, 2001). Furthermore, over the last 10 years, expenditure for individuals with substitutive VHI in Germany has increased on average by 40% more than expenditure for those in the statutory health insur-ance scheme, and by almost two or three times for ambulatory care, dental care and pharmaceuticals (Busse, 2000a).