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Two and half years after its ambitious launch, Qatar's universal health insurance scheme Seha lies in ruins. In the noble pursuit of ensuring quality healthcare for all, the country has had to learn some expensive lessons, the hard way. In our cover story this issue, we peek behind the inner workings of the scheme, and the company that ran it, to diagnose what may have gone wrong and understand the road to recovery.
Not unlike thinking back on past relationships with the added benefit of hindsight, in retrospect the signs were all there that Seha was just not going to work out. The entire population, both nationals and expats, were supposed to have been covered by at least the end of 2015. But instead, the scheme was barely halfway into the roll-out when the suspension was announced. The first phase, launched in July 2013, included Qatari females aged 12 and above. The second phase was then launched on April 30, 2014 to include all Qatari citizens. The National Health Insurance Company (NHIC), the fully government-owned entity that funded and operated Seha, was convinced that full implementation, though delayed, was definitely around the corner. More data had to be gathered, it said. Private healthcare providers were overwhelmed, it said at another point. Then reports started trickling in of fraud, abuse and gross overspending. Counterclaims were issued and erring providers were suspended, and all the while, the murmur of dissatisfaction among private insurance companies continued to grow. As late as October of last year, the NHIC had said that the next phase will begin in 2016 and the final phase, which included coverage for all blue-collar expats, will also be completed, coinciding with the opening of new hospitals planned for single workers this year.
Beyond funding
Health insurance is everything but insurance, Bourel says. "Health insurance relies on two pillars, one of which is funding. The other is provision of an appropriate level of qualitative and quantitative care. Both have to be managed in parallel. In that regard, it's probably fortuitous that the scheme hadn't been extended to blue-collar workers before the completion of the proposed hospitals. Because if you make a big share of the population solvent without ensuring that there is supply, it'll be a disaster."
And then there is also prevention. Obesity and related illnesses are a very big issue in the region. So in this case, just paying the bills at the end of the food chain is a very short-term view. "Daman has worldwide expertise in managing these. We have data and experience that we can draw upon and adapt to Qatar to be sure that we take care of improving health indicators like life expectancy, infant mortality, deaths after heart attack or transplant, etc," he says. Health insurance is more health than insurance. Focusing only on managing cash flows is a big mistake. It's insight like this that Daman and companies like it can bring to the table. That's what we must want for this country.
And then, out of the blue one week before the new year, Qatar News Agency carried a brief and terse announcement, nestled in between other minutes of a weekly cabinet meeting, that Seha will be suspended effective from December 31, 2015. "In support to the private sector, the cabinet decided instead to rely on private insurance companies with experience in the field to provide health insurance services," the report went on to say. The Supreme Council of Health (SCH) released a statement saying it would begin the tender process for private insurance companies to bid to join the new system in February, 2016 which will be rolled out on June 1. Assessment of bids, selection of the company or companies and signing of contracts will be done in May, and the cabinet will set up a special committee to oversee the work. The Minister of Public Health was later replaced in a major cabinet reshuffle. And then, radio silence.
"Medical costs applied by NHIC are defined by the SCH and not by service providers. The price schedule has been prepared by two independent advisory bodies that are recognised internationally."
Dr Faleh Mohamed Hussein Ali
Acting CEO, National Health Insurance Company
Assistant Secretary General for Policy Affairs, Supreme Council of Health
Scouring this information void for answers has been challenging. Anything in the way of clarification from the government was not going to be forthcoming. None the less, we wrote to NHIC to ask them: Can you please rank the following points in the order in which you consider them to have impacted Seha's suspension? a. Falling government revenue due to low oil prices; b. Increased insurance fraud; c. Pressure from private insurance companies; d. Hasty implementation of the scheme, or; e. Other (please specify). At the time of going to press, we were still waiting to hear from them.
Final days
Over the course of the last few months of 2015, the former Minister of Public Health Abdullah bin Khalid Al Qahtani and Acting CEO of NHIC and Assistant Secretary General for Policy Affairs at the SCH, Dr Faleh Mohamed Hussein Ali, held several meetings with the press to put to rest many of the rumours swirling around Seha and they were reported in detail by the Qatar News Agency. It was revealed that the value of medical bills from the private sector for Qatari citizens within Seha was QR1.285 billion from July 2013 until October 21, 2015, and not QR10 billion as it had been reported. The minister also revealed that the NHIC has refused to pay invoices amounting to QR317 million from the private health sector since the introduction of the insurance system, while the amount of recoverable funds totaled QR103 million, pointing out that the NHIC applies controls in paying bills to prevent service providers from unjustified repeated visits and the unnecessary assignment to other disciplines. There is also a detailed and manual audit, he said, for all the claims made by the service providers, as well as checking of medical files. The minister spoke about cases of fraud and forgery in the bills, noting that two residents had recently been arrested after they used citizens' personal cards to benefit from treatment in private hospitals under the health insurance system. Work was also suspended with a certain health service provider because of false invoices and the amount of QR5 million had been recovered.
Dr Ali went to great lengths to explain the mechanism in place to prevent fraud. He noted that the audit system in the company is very strict; bills are subject to audit before and after payment, pointing to the existence of some cases of fraud. He added that medical costs applied by NHIC are defined by the SCH and not by service providers. The price schedule has been prepared by two independent advisory bodies that are recognised internationally. The companies worked closely with the SCH through a study that took nearly a year to be completed. He noted that the price schedule is being revised periodically in coordination with the SCH on the basis of the data received through the claims and expectations and changes in the prices of services in the sector in order to achieve a fair price for all parties. Furthermore, each disease is subjected to a particular package of expenses, and each treatment under the insurance system is offered with the same price in all hospitals and clinics joining the insurance system, and therefore the bills cannot be manipulated as each package of treatments or illnesses has a specific price in advance.
The many faces of fraud
"Fraud in healthcare can take multiple dimensions. At the simplest level, it's when you pretend to be providing services while you are not. It's an extreme case, and not very prevalent. Another fraud is when you substitute a patient who is covered with someone who isn't. The most common type of fraud is, however, coding up or super coding. It's when you do a certain procedure that has a certain billing cost but you use a similar code factor that pays more. For example, you are admitted at a hospital for a normal appendicitis procedure, but the provider bills your insurance for a severe or infected appendicitis and hence gets paid more. This is particularly hard to detect because you need someone present at time of procedure to observe this." - Bitar
Clearly, in the months preceding the announcement, a lot of stress had been placed on how the private sector was using Seha to "loot" the government. In June last year, a member of the Shura Council pointed out how private hospitals had increased prices manyfold since the introduction of Seha and called for urgent action. And going by public sentiment after the suspension of Seha, it would appear that many do blame fraud and abuse for the current predicament. But insurance fraud is as old as the industry itself. You can minimise fraud, abuse and waste but never eliminate them and it is necessary to build them into the cost of your operations, as many companies actually do. So what was unique about Qatar? Was the prevalence of fraud so bad and widespread that it crippled the whole system? How can we safeguard the future models against these issues? These were the questions we set out to ask. And the answers surprised us.
"It's difficult to guess what may have gone wrong with Seha; it was a closed system that was not transparent. But I believe that if there is no incentive for the payer, providers and patients to be careful with the resources, it is set to fail."
Herve Bourel
Chief Executive Officer
Daman Qatar
Autopsy
"Could failure in fraud detection have brought down Seha? Frankly, I don't think so," says Jad Bitar, Partner and Managing Director at Boston Consulting Group. "Fraud is one component of healthcare costs. It doesn't fully explain the cost increase. Most insurers and third party administrators (TPA) have fraud detection and control mechanisms in place. For example, software that can flag anomalies and profile providers who have larger tendencies to fraud. I don't think fraud is a larger problem in Qatar than in any other private healthcare system. In the US, Medicare prosecutes providers for fraud all the time. It happens in every healthcare system." But he does point out that the fee-for-service model which Seha was using to fund private providers is more prone to abuse. In funding healthcare the "how" is just as, if not more, important that the "who".
"The fee-for-service model adopted by Seha was a mistake and I believe it rushed into this without fully asesessing the consequences of this model. It was expected that it would lead to increase in service availability and also an explosion of healthcare costs. And this is exactly what happened," says Bitar.
One advantage of this model is that it motivates providers to increase services, he adds. "In a supply-
constrained market, where there aren't enough doctors, hospital beds or other health services, fee-for-service is a great tool to incentivise investors to offer more services but you end up wasting a lot of money."
Exasperating this situation was the fact that there was no incentive for any of the stakeholders to limit consumption. The way the system was designed was flawed and was a disaster in the making. Herve Bourel, the Chief Executive Officer of Daman Qatar, made the same observation. "It's difficult to guess what may have gone wrong; it was a closed system that was not transparent. But I believe that if there is no incentive for the payer, providers and patients to be careful with the resources, it is set to fail. On the patient level, there is no co-pay system. Going to the clinic doesn't cost you any money, so why should you bother. I heard an anecdote about someone who went to the hospital to get an MRI not because something was wrong with him but because he had never had one and wanted to experience it," Bourel laughs. "This is what we call 'shopping' for medical services. You don't behave like a patient anymore but like a consumer." Additionally, not only were the providers given access to a big box of money, but the payers, i.e., the NHIC, were facing challenges managing risk. "It's not enough to just process the flows; you also have to manage it," he says.
The news about Seha came as a surprise to some regional industry experts like Laila Al Jassmi, Founder and CEO of Health Beyond Borders, a Dubai-based healthcare consultancy firm. Before starting her own company, she worked for two decades in the policy and strategy department of the Dubai Health Authority (DHA) and so has an interesting vantage point. "When we started formulating the mandatory health insurance model in Dubai, we had studied what Qatar was doing and thought they would be quicker to achieve full implementation. Qatar was the only GCC country that had a national health account, something that we started in Dubai in 2012 in order to benefit from Qatar's experience," she says. (This, ironically, backfired in Qatar's case. Citizens didn't have to apply for an insurance card but could use their existing health card. This made it easier for people to benefit from the scheme.) According to Al Jassmi, it all comes down to lack of preparation. "The universal health insurance model should not be rolled out without proper research into the market and a lot of stakeholder engagement. Looking at this from the outside, I would say that there wasn't enough interaction between the regulator, policymakers and the market."
"The fee-for-service model adopted by Seha was a mistake and I believe it rushed into this without fully asesessing the consequences of this model. It was expected that it would lead to increase in service availability and also an explosion of healthcare costs. And this is exactly what happened"
Jad Bitar
Partner and Managing Director
Boston Consulting Group
The market. Here is a segment that was less than happy with Seha. A story that begins with "Once upon a time there was a monopoly" rarely has a happy ending. In insisting that all nationals and expats must be insured for basic services through the NHIC, the government was freezing the market and leaving private insurance companies out in the cold. Back in April last year, dire predictions were made in these very pages about the direction in which Seha was heading. "The NHIC should be complementary to the private sector in every sense of the word and not a replacement. Otherwise, it would be drying the market and simply forcing private health insurers out," Elias Chedid, the COO and Deputy CEO at SEIB Insurance, had said.
"Ultimately, while you will see benefits in the short term of having a single insurer, in the long term we run the risk of complacency underpinned by a lack of innovation due to lack of competition." This sentiment was echoed by Ali Saleh Al Fadala, Senior Deputy Group President and CEO, Qatar Insurance Group. "The NHIC is now aiming at prohibiting all public entities in the country from using private insurance, virtually ending any sort of competitive environment and removing the private sector. This is a step backwards in my opinion," he said, adding that costs of the project are already running over budget. "Given current declines in oil prices, we doubt the scheme will be able to cover all expatriate residents in the country as originally intended." And this came to pass within a few months.
Daman is a company that has been on both sides of the equation. Partly owned by the Abu Dhabi government, Daman is fully in charge of insuring its nationals, and has a majority market share in the Emirate. Daman Qatar, however, began operations just as Seha was being announced. They were at risk of being squeezed out of the small but growing two-million-plus market. Had NHIC rolled out subsequent phases as they had planned, Daman and other private insurance companies in Qatar would have had to compete for a significantly tiny market of insuring services not covered by Seha's basic package and also coverage abroad. In no scenario would this have been sustainable. So in a way this is good news for Daman and its competitors.
"I understand the rationale behind wanting to have tighter control over the insurance for your nationals. You'd obviously want to ensure the best quality of services for your citizens and also be able to control that. I can't imagine, for example, that the German government would allow the privatisation of their social health system by international companies. So it's fully understandable and fair that the Qatari government tries to restrict that space," Bourel says. But the expat market should be fair game, he adds.
"With mandatory insurance, you need to localise any implementation. There is no universal solution, even among the GCC countries. Every Emirate has its own population mix and regulatory and market requirements."
Dr Saif Al Jaibeji
Regional General Manager
United Health Group, Middle East & Africa
Friends, family and neighbours
Across the GCC, the traditional welfare state model is under tremendous pressure and several governments have been testing the waters of mandatory health insurance. A rapidly growing population that is growing obese and more prone to chronic and non-communicable ailments such as diabetes and heart disease and an extraordinary rise in the percentage of elderly citizens have demanded the implementation of innovative schemes that not only ease pressure on the public health systems but also increase quality by encouraging competition between the public and private sector. So patients get a choice between providers. And it serves to attract new investment in healthcare. Until recently, Qatar was thought to have been running a reasonably functional model. But now that we are going back to the drawing board, it behooves us to consider how our neighbours are handling this mammoth challenge. Dubai, Abu Dhabi, Saudi Arabia, Kuwait and Oman all have drastically different models, and most people we spoke to were divided in their opinion of which one could be called a proven success. The fact is that it's probably too early to make that call, considering many of them, like Seha was, are in the middle of roll-out.
Abu Dhabi's universal health insurance model could be considered the closest to Qatar's (still with significant fundamental differences). Daman was created towards the end of 2006 and was a joint venture between the government of Abu Dhabi, which owns 80% of the company, and Munich Re. Beginning 2006, they started rolling out mandatory insurance, almost in parallel, for nationals and residents. Daman is the exclusive insurer for the 700,000 nationals under the Thiqa programme and also the basic package for all residents who earn less than $1,300 a month. Both these schemes are funded and subsidised by the government, respectively. For the expat market there is free competition between the various private insurers (including Daman, which has a considerable privilege). While Abu Dhabi also has adopted the fee-for-service payment model (which according to Bitar continues to be a major headache for the government, because of the subsequent increase in costs) it also started introducing strong mechanisms focused on prevention, data analytics and disease management. On blueprint, Abu Dhabi was meant to go the Seha route with Daman poised to exclusively handle even the expat market, Bourel reveals. But they eventually decided against it. "We saw competition as an encouragement and motivation to be better and it also dramatically improved the services in the market."
"When we started formulating the mandatory health insurance model in Dubai, we had studied what Qatar was doing. Qatar was the only GCC country that had a national health account, something that we started in Dubai in 2012 in order to benefit from
their experience."
Laila Al Jassmi
Founder and CEO
Health Beyond Borders
Dr Saif Al Jaibeji is the Regional General Manager UnitedHealth Group in Middle East & Africa, a diversified healthcare company which offers solutions to regional governments, health insurance companies and healthcare providers. So Dr Al Jaibeji has deep knowledge of the healthcare systems in Abu Dhabi, Dubai and even Seha, on account of the work they did with SCH on health policy, insurance policy and capacity development. While he is not allowed to talk directly about Seha, he tells us about his time working with the Dubai government back in 2007-8, when they were planning to launch the mandatory health insurance programme. "Eventually it had to be delayed because the financial crisis had a negative impact on commercial businesses and the scheme would push cost of healthcare to employers, placing be an additional economic burden on businesses back then. However once the economy recovered DHA launched the scheme. It's implemented in phases and soon everyone in Dubai will be covered by mandatory private insurance. The Dubai model allowed private health insurance companies to provide mandatory health coverage - once they match the regulatory requirements. Today, the government has licensed about nine insurance companies to compete in the market. Any new player who wants a slice of the market needs to meet certain criteria to ensure the best quality of services for the customers and apply for permission to provide insurance. For example, they have to be local or have local presence, a minimum number of employees, a particular claims management system, etc.," he says. So the government is a purely regulatory body; it doesn't fund anything and there isn't any subsidy for private market. The roll-out is due to be completed in June this year and Al Jassmi predicts that in three to five years the market will be opened to companies beyond the nine that are now licensed. She says in the beginning it was only restricted to three insurance companies and there was a revision because industry feedback indicated that the market is big enough and can be shared. So it grew from six to eight to nine, allowing even a few Islamic Takaful companies to participate. This is why she emphasizes the need for constant dialogue between healthcare providers, policymakers and health insurance association representatives, and for trying to understand every stakeholder's perspective.
At the 11th annual Healthcare Insurance Forum which was held in Dubai in January, the impact of mandatory healthcare insurance dominated discussions throughout. Dr Al Jaibeji, who led a panel and a workshop at the event, says, "The conclusion from the forum was that with mandatory insurance, you need to localise any implementation. There is no universal solution, even among the GCC countries. You can't just copy what another city is doing. Every Emirate has its own population mix and regulatory and market requirements."
But there are some common issues all GCC countries are grappling with; pricing, for instance. "Both providers and insurance companies in the region can benefit from transparency in costing structure. While costing, or in other words, premium calculation, is usually based on actuarial analysis and previous claims.
Under Seha's reimbursement scheme in Qatar, every hospital gets paid a package amount. This was necessary step to roll the scheme and encourage private hospitals to join the network. However it was not a surprise that cost went high and there was no incentive to introduce quality and efficiency gains. In Dubai every provider has a different price list for different insurances, cash payments, etc., but they are not built on transparency."
"We don't have legacy systems in the region, and we don't have to wait for years until the current system fails - there is a golden opportunity for regulators, and equally, for stakeholders, to consider innovative approaches to introduce sustainable health systems; like the ACO, or accountable care organisation, model.
When evaluated for local implementation, it shows a lot of potential in terms of creating meaningful partnership between hospitals and payers. There is no loss or profit, everyone is paid fairly but those who achieve better outcomes will be paid more. So there is no pressuer on providers and they have an incentive to be better. This is disruptive and many mature markets like the US and UK are adopting or looking to adopt this," says Dr Al Jaibeji.
Moving on
For the market in Qatar, drastic and constant changes are not good. Not only does it throw providers off balance, it is also very disruptive to people's lives. "When it comes to healthcare, you want to ensure predictability. You are dealing with people's lives and the last thing you want are surprises and major shifts in policy," says Bitar. "The way Seha was suspended - abruptly and in the middle of December - does not bode well for the NHS. Something as fundamental and major happening in this manner was not how NHS planned the evolution of the healthcare system in Qatar. If you look at the strategy, there was a roadmap with specific implementation milestones and Seha's elimination is not part of this plan. I am still trying to assimilate and make sense of what's going to happen," he says. His best hope is that the government will go back to the NHS and start from there.
For insurance companies too, the announcement dramatically changes their long-term plans in the country, not even three years after they were forced to reevaluate their strategies in the wake of Seha. Is there a certain fatigue, we ask Roger Phillips, partner at Pinsent Masons, which counts many insurance companies among its clients. "I am not sure 'fatigue' is the right word. Insurers undoubtedly want more predictability and too much change is damaging but the private insurers in Qatar have been lobbying for some time now in efforts to get more access. So they will feel positive the government is listening. Having said that, in respect of the suspension, the private sector will be concerned to know more details on the new arrangements including benefits and pricing model. Another significant interest for the insurers is the continuing investment and development in respect of new hospitals and healthcare facilities, private and public. This will obviously be key to growth and quality healthcare insurance in Qatar," says Phillips.
He also asks insurance companies to expect a fundamental rework of the regulatory framework this year.
"The Qatar Central Bank will be supervising and while the new Insurance Instructions are not yet final, the regulations which are out 'for consultation' are extremely onerous in terms of prudential requirements, internal controls as well as conduct of business and servicing. This will be a challenge for the new QCB supervisory teams and for insurers to comply with. There will be significant increases in compliance costs and changes will take years to bed in," he warns, adding that the new regulations are likely to be in force around March. Yet he is seeing a lot of active planning among these companies. "Even with transition periods for some rules, it requires further early investment in systems and controls. Also, there are increasing signs of collaboration and 'partnering' between local and international insurers to provide more compelling propositions. TPA arrangements are also being assessed very closely with the likelihood of new participants and improved offerings. Advanced systems capability for analytics and disease management as well as claims will be a considerable advantage and key to Qatar's plans for improvements in healthcare," he says.
Currently the whole system is in limbo. Citizens are no longer sure if they are still insured, providers are wondering if they are getting paid and the industry is waiting for some sort of sign of what's coming next but the silence from the government is deafening.
Meanwhile, Bourel is cautiously optimistic. "This rethinking of the insurance model in Qatar is good news for us if we are allowed fair access to this market. Is it going to be restricted to players who are, for example, QFC-registered or listed on the Qatar Stock Exchange? We are all waiting to see the tender conditions. My recommendation is that the government put the expat business on the open market so that they can profit from the competitiveness, external expertise and international exchange. Companies can also position themselves depending on the segments and quality of service they want to deliver."
But it's going to be a tough few months for everyone going ahead. "I am hearing that there is intent to introduce some mechanisms like co-pay, co-insurance, deductibles, limits, etc. But it will be painful to implement because over the last few months the population has been used to getting anything they wanted for free. This is understandable from their perspective; this is why it is necessary to, and I use this word cautiously, educate the public. I hope the government will consider this and try to communicate on that. It takes time. I don't expect the savings and improvement that the government is hoping for (and has the right to hope for) will happen overnight," says Bourel.
The maladies of monopoly
In a monopoly, the insurance provider fixes the price and the providers have to accept whatever is on offer.
Abuse should be avoided from both sides, Bourel says, and providers should be paid fairly for their services.
"They should be paid for investing in developing capabilities, expertise and specialties. Paying bare minimum prices might be seen by the government at first glance as a positive because it reduces costs but that is a very short-term view. Because you are creating the risk of hospitals not investing anymore because they are cutting costs everywhere, or there is cost-shifting, or focus only on services where good margins can be found. Two years down the line, we don't want Qataris to have to fly to Dubai for a procedure that isn't available in the country. Data collection and quality also suffers in a monopoly. It is better than building something that is too big for one entity to handle, leading to unhappy providers, declining quality and unsatisfied patients."
Just opening up to the private sector is not some sort of panacea. "Will this solve the problem of fraud? Increased cost? Medical inflation?" Bitar asks. "All you are doing is moving administration of the insurance and distributing it among private insurance companies. First, I don't believe the market size can support so many companies; they will be below scale and will increase risk to the economy." So what is the problem we should be trying to address? "One is accessibility. There isn't the kind of capacity to provide the kind of quality care that the population expects. Services and quality have to be built across the public and private sectors and can be done in a complementary manner. For example, Hamad Medical Corporation and Sidra, when it opens, can handle tertiary care (across the GCC, the public sector is better prepared to handle heavy cases) while primary and secondary care can be handled by the Primary Health Care Corporation and the private sector." With the expats making up the majority in of the population in most GCC countries, the challenge is to provide nationals with quality healthcare while avoiding subsidized care for the expat population. That's a tough balance, he says.
But maybe it's not necessary to start from scratch. There are some advantages of the self-funded scheme that NHIC had adopted. "In a self-funded scheme, you can control the benefits and costs," says Dr Al Jaibeiji. "Yes, when you are fully insured you are transferring all the risk to one company but the problem is when, for whatever reason, you have to change the insurance company, you'll have to change benefits, costs, providers, cards... So self-funding is good from primarily a customer experience perspective. Some insurance companies will mandate that premiums are paid at certain times of the year; if you are self-funded you can be more flexible. In the Gulf, the population thins out during the summer months and there are fewer claims to process, meaning you can control your financials." So NHIC definitely had some sound mechanisms in place; it remains to be seen what it will retain and what will be thrown out.
It is obvious how complex the insurance landscape in Qatar and the GCC is. No one yet knows all the answers and mistakes are inevitable. It's possible that, had the oil prices shown some recovery, the government might have decided to power through with Seha and attempt to iron out the kinks on the go. By not being afforded that luxury (and this is expected to happen often till the oil prices pick up) means the SCH has had to bin the whole thing and start again. What the result of this will be is still largely a mystery but with almost three years' worth of lessons to draw upon, the coming iteration will definitely be Seha's better-evolved sibling. Qatar, meanwhile, should be proud of what has been achieved. Universal health insurance is worth striving for and we got pretty close. More importantly still, Seha has managed to create awareness about the benefits of medical insurance that had previously been severely lacking. The public that will be introduced to Seha 2.0 is a better informed one with higher aspirations. And that can never be a bad thing.
© Qatar Today 2016
