Direct contracts in outpatient care - effects and the question of "safety" - an analysis from a competition perspective

The healthcare system in Germany is in an acute “financial crisis”. The financing gap is constantly increasing. Since the mid-1970s, health policy has been characterized by cost containment measures. Nevertheless, an increase in the contribution rate from 8.2 % in 1970 to - after 15.5 % - now 14.9 % could not be prevented. Every political intervention within the framework of a “health reform” has resulted in further interventions (intervention spiral) (see e.g. Oberender/Hebborn et al. 2006: 67ff.). A possible starting point for solving the financing and cost problems is the introduction of competitive elements. This competition can be strengthened in different interaction relationships. The following interaction levels can be identified as “basic relationships” in healthcare:
• Patient – service provider (treatment contract)
• Health insurance – insured person (insurance contract)
• Health insurance – service provider (care contract).
If you look at the service market in outpatient healthcare, it is characterized by a special feature: the associations of statutory health insurance physicians.

>> The statutory health insurance associations (KVen) take on the task of representing and protecting the interests of contracted doctors working in the outpatient sector vis-à-vis the statutory health insurance companies (GKVen) (cf. e.g. Hajen/Paetwo et al. 2000: 130). The core function is to negotiate the appropriate remuneration with the statutory health insurance companies (Luedtke 2007: 107).
Currently, the KVs are also responsible for ensuring outpatient care. The transfer of the task of ensuring security to the KVs in the area of outpatient care can only be explained by historical developments: the KVs were created as a countervailing force to the growing influence of the health insurance companies in the GKV system (cf. Herder-Dorneich 1994: 735). The increasing coverage of the population in the compulsory health insurance system of the GKV and the resulting increasing buyer power of the health insurance companies while at the same time there is an oversupply of doctors led to a loss in fees for doctors. In 1931, the Reich government issued an emergency decree which ordered the creation of associations of statutory health insurance physicians as coercive organizations under public law (cf. Oberender/Zerth 2005: 4). From this point on, price negotiations took place at association level and no longer directly between health insurance companies and doctors. At the same time, the control function from the supply contract was transferred to the KV organization; since then, contracts could only be concluded with the medical collective. The security mandate of the Association of Statutory Health Insurance Physicians can therefore be viewed as the consequence of the corporatist contract system and not as the original legitimation.
The importance of the security function in the healthcare system is also recognized by the current federal government. It was already stated in the coalition agreement that ensuring this is a “central health policy concern (…)” that “(…) is becoming increasingly important with regard to demographic and social development.” (CDU/CSU/FDP 2009: 80). However, no direct statements are made about the form in which security should be guaranteed and what role contract competition plays in this.
Contract competition and direct contracts
in the current system
Direct contracts between health insurance companies and doctors are only used to a limited extent in the current system. From 2009, the remuneration and remuneration system for medical services was further centralized. The point value is negotiated and determined nationwide as a reference value between the National Association of Statutory Health Insurance Physicians (KBV) and the National Association of Statutory Health Insurance Funds (Section 87 Paragraph 2e SGB V). “The general contracting partners at the state level were obliged to conclude joint and uniform fee agreements” (Graf 2009: 36). Direct contracts, as contractual agreements between cost bearers and individual service providers or groups of service providers for the benefit of a defined group of insured people and patients, have been increasingly made possible by the legislature in the past. Nevertheless, model projects (§§ 63-65 SGB V), structural contracts (§ 73a SGB V), family doctor-centered care (§ 73b SGB V), special outpatient medical care according to § 73c SGB V, DMPs (§ 137f SGB V) and contracts play a role about integrated care (§§140a ff. SGB V) has so far played a subordinate role.
So were e.g. B. In 2008, 6,047 IV contracts were reported to the Joint Registration Office to support the implementation of Section 140d SGB V. The expenditure volume of these contracts was estimated at 811 million euros for 2008, while the GKV's expenditure on medical practices was 27,739 million euros (Grothaus 2009: 8, Federal Statistical Office 2010: 43). The share of the expenditure volume for IV contracts is therefore less than 3 % of the total expenditure volume for medical practices.
Principles of a competitive
health system
The core of a liberalized healthcare system is, first of all, the fundamental freedom of contract and cooperation between payers and service providers (Obernder/Zerth 2007: 398).
The corporatist structure outlined above must therefore be rejected from a market economy and regulatory perspective. The corporate negotiation solution de facto represents a bilateral monopoly, as only one negotiating party faces each other on both the supply side (KVen) and the demand side (health insurance companies “joint and uniform”). There is a strategic game between both negotiating parties, which, in addition to high time and transaction costs, is not able to react flexibly to changes in the supply situation. Competition, with the incentive to offer better solutions than competitors, but also the necessary freedom of contract and cooperation, both on the part of doctors and on the part of health insurance companies, are not permitted. It is precisely these freedoms that must be established in a competitive healthcare system.
In order to avoid (regional) market power in a system with contractual competition and direct contracts, general competition law (antitrust law) must inevitably also apply. The problem faced by doctors that led to the founding of the KVen was the lack of competitive control over the purchasing power of the health insurance companies. The problem of power asymmetry is of little importance if antitrust law is consistently applied (cf. Oberender/Fibelkorn 1997: 66). However, in order to protect patients and the economically weak, further fundamental regulations must also apply: compulsory insurance for all citizens and a requirement for health insurance companies to contract, ie a ban on health insurance companies from rejecting certain insured persons (“bad risks”). The legislature must define a catalog of standard services that is financed on a solidarity basis. In order to protect economically weak people who are charged insurance premiums that are risk-equivalent and funded, meaning the premiums must also cover the expected expenses, the state must provide transfer payments (insurance money).
Impact of direct contracts -
Direct contracts and security
Based on the reference base of the competitive healthcare system presented above, more contractual competition in outpatient care must be demanded and introduced. In principle, both doctors and health insurance companies must have the right to negotiate with the other party and conclude individual contracts. Of course, within the framework of antitrust and competition regulations, cooperation and mergers between individual doctors and health insurance companies must be possible.
The previous remuneration function of the KVen, the KBV and the Federal Association of Statutory Health Insurance Funds, will be replaced by the individual negotiation of prices between service providers and health insurance companies. This means that the price can take on its information and control function and provide incentives for the behavior of suppliers and buyers (cf. Oberender/Fleischmann 2002: 49). As part of security, this means that requirements planning no longer takes place in the traditional sense and that doctors generally have freedom of establishment. Where there is already an oversupply of doctors, setting up a branch will only make sense if the doctor can offer his services at a higher quality or at a lower price. The location of the branch thus becomes an individual business decision of the doctor.
With free market allocation, however, the consequence is that quantity and capacity planning is carried out via contract competition and direct contracts, which will result in regional differences. The task of ensuring security then generally lies with the contractual partners (doctors and health insurance companies).
The core of the regulatory debate on security is the question of what an institutional and organizational solution must look like if, due to insufficient demand, the capacity of medical services is not (sufficiently) maintained. The question of comprehensive coverage is a normative determination that prescribes the availability, accessibility and, if necessary, the quality of the service.
In a first step, this goal can be achieved by fundamentally prohibiting and thus excluding refusal of treatment in an emergency, regardless of any contracts concluded. Nevertheless, the extent of access and the scope of financing must be regulated. The state must determine the desired availability and further normative determinations in public discussion. If these limits are not met in a region, a public tendering process must be initiated in which the relevant actors can take part. Further details of ensuring this, such as the specific design for achieving the prescribed minimum accessibility or minimum assistance periods as well as prices and financing, are left to the actors as part of the contract competition. After a certain period of time, the examination of the undersupply is repeated and, if necessary, a new tendering process is started. This approach makes it possible to secure security while abolishing collective agreements.
Direct contracts and quality
In addition to the price, the content of direct contracts also includes the type, scope and quality of the service. The health insurance companies also have the opportunity to exclude service providers who do not provide the desired quality, so that these service providers are no longer allowed to treat insured persons at the expense of the health insurance company. In order to be considered as a contractual partner of the health insurance companies, the service providers have the incentive to strive for a higher quality of processes and results. Since direct contracts also have an impact on the insured in that the free choice of doctor is restricted, the action parameter quality will gain in importance. Restricting the choice of doctor will mean that, on the one hand, health insurance companies will compete for insured people with attractive, high-quality direct contracts. On the other hand, the insured person will also formulate corresponding expectations of the performance of the offer in order to limit his freedom of choice. This will lead to a significantly stronger focus on quality than before.
Direct contracts and impact on KVs
If the effects of direct contracts on the KVs are summarized, it can be seen that the previous main tasks (remuneration and security function) of the KVs will no longer apply with the consistent introduction and implementation of direct contracts. Requirements planning, which was previously carried out by the KVs, will also be done decentrally in the future and would therefore also fall out of the KVs' range of tasks.
In an initial analysis, the conclusion can be drawn that the KVs are obsolete in a system with continuous direct contracts. However, this statement falls short. It can be assumed that the KVs will continue to exist in such a system, but will have to take on a different role than before. In the 80 years of their existence, the KVs have been able to acquire expertise in the outpatient sector that is otherwise not comparable. The KVs can contribute this knowledge as part of a system with direct contracts. As service providers and consultants, a redefinition of the KVs' task is necessary. The first steps in this direction were already taken with the founding of “KV-Consults” (e.g. KVWL Consult in 2003 or KVNordrhein Consult 2004, in Bavaria this is carried out by the KVB’s subsidiary “Gedikom”). In the future, the KVs can also position themselves as companies that demonstrate the quality of medical services by issuing certificates.
Contract competition and direct contracts:
More opportunities than risks!
The outlined competitive model for fulfilling the security task through contract competition and direct contracts also implies modifications and adjustments in the context of inpatient healthcare and hospital planning. The task of ensuring this must be viewed across sectors and the provision of inpatient health services must also be included in the model.
The introduction of comprehensive contract competition poses risks, especially for service providers who were previously able to participate in care despite inadequate quality or cost-effectiveness due to limited competition and monopoly position. Such players will come under increasing pressure and a market shakeout will take place, which will increase the quality of the overall system.
Since the setting of uniform prices (point values) always requires regulations on quality and their control, contracts in which, in addition to the price component, the quality of the service is also the subject of the contract, promote an increase in transparency with regard to quality and thus increase quality competition.
A contract competition increases the personal responsibility of all participants (doctors, health insurance companies and patients/insured persons), but also freedom of decision and choice. The insured have the opportunity to put together an individual insurance package and can choose from different health insurance policies and, if necessary, care models. The health insurance companies are free to choose the service providers with whom they want to ensure health care for their insured persons. Doctors are also free to decide with whom they want to enter into a contractual relationship and whether they look for opportunities in the market alone or, if necessary, in a group.
The KVs face the greatest challenge when fully implementing a system with direct contracts. For KVs, a paradigm shift means a new definition of their tasks and goals. KVs are then no longer the representatives of the interests of doctors who negotiate as monopolists in a corporatist system, but rather as active companies they must offer services that offer added value for their customers (practiced doctors). This change of role requires the insight into self-change and active and targeted change management. Which services and which concepts will prevail will become apparent in the competition, including between KVs.
A system with direct contracts and contract competition knows no standstill and no unassailable vested rights. Market positions, forms of service provision, supply and demand structures are in constant change due to competitive advances. Competition as a search and discovery process leads to the necessary new and innovative solutions. <<