Health insurers have been bound these past six years in healthcare procurement by the Regulations on Transparency of the Healthcare Procurement Process under the Healthcare Insurance Act (the “Healthcare Procurement Regulations”). The Dutch Healthcare Authority (“NZa”) supervises compliance with these mandatory rules that govern the healthcare procurement process under the Healthcare Insurance Act. The NZa recently published a new version of the Healthcare Procurement Regulations. That version governs the healthcare procurement process in 2022 with regard to healthcare contracts that commence on or after 1 January 2023. In this blog we outline the relevant changes for healthcare providers. We also address the NZa’s role in enforcing the Healthcare Procurement Regulations, while calling on the NZa to use its existing powers to more effectively supervise compliance with the Healthcare Procurement Regulations and to stop applying double standards in supervising healthcare providers and health insurers.
Changes to the NZa Healthcare Procurement Regulations
The Healthcare Procurement Regulations consisted (and consists) of only ten articles. That remains the same in the new Healthcare Procurement Regulations. The changes per article are addressed below.
- Article 4.4: publication of procurement policy
Article 4 of the Healthcare Procurement Regulations relates to the publication of the healthcare procurement policy and the healthcare procurement procedure. Health insurers must publish their healthcare procurement policy and the relevant procedure no later than 1 April before the calendar year (or years) to which the healthcare procurement relates. Paragraph 4 provides that that publication must in any event set out “the minimum requirements that care providers must meet in order to be eligible for a specific contract.” Compared with the previous Healthcare Procurement Regulations, the NZa has therefore added the word “specific” to paragraph 4. That word makes it clear that several contract variants are possible within one care sector. It must be clear to the care provider beforehand which contract variant is being offered.
- Article 4.6: additional healthcare procurement
Article 4.6 of the Healthcare Procurement Regulations is new compared with the Healthcare Procurement Regulations that applied until 2022 (and former paragraph 6 is now paragraph 7). Article 4.6 of the Healthcare Procurement Regulations provides that the 2023 procurement policy must state how the health insurer deals with “additional healthcare procurement”. The health insurer must state in the procurement policy (i.e. by 1 April at the latest) how it deals with the following aspects regarding additional healthcare procurement: (i) the response deadlines; (ii) the manner in which a provider must submit a request for additional healthcare procurement; and (iii) the minimum requirements that such a request for additional healthcare procurement of providers must meet. That will make it clear to a care provider beforehand what the minimum additional healthcare procurement requirements are. In the explanatory notes to paragraph 6, the NZa states that it may not become clear until after 1 April that additional healthcare procurement agreements must be made in a certain sector. In that case the NZa allows a health insurer not to publish its additional healthcare procurement policy until after 1 April. The procurement policy and the additional procurement procedure must then be changed in accordance with Article 7 of the Healthcare Procurement Regulations. This is explained in more detail below.
- Article 6: reasonable period for reviewing contract proposal
Article 6 of the Healthcare Procurement Regulations concerns the reasonable period within which healthcare providers must review a contract proposal from the health insurer. Article 6.2 emphasises that, unless otherwise agreed, that reasonable period is at least four weeks. In the previous regulations, the NZa wrote that the health insurer must allow reasonable periods for healthcare providers to review the “initial contract” and to ask questions. In the new version, this has been replaced by the “contract proposal”. According to the NZa explanatory notes, this change means that the article also applies to, for instance, additional healthcare procurement agreements or an amendment to a long-term agreement. That is a welcome addition. Until now, Article 6.2 of the Healthcare Procurement Regulations was interpreted very narrowly by healthcare insurers. They argued that only brand new contracts were covered by that article. The NZa confirms that the reasonable period of at least four weeks therefore also applies to other contract proposals from health insurers.
- Article 7: changes in the procurement policy
Article 7 of the Healthcare Procurement Regulations concerns the announcement of changes in the procurement policy after 1 April. The article was worded as follows: “If the health insurer makes any change to the healthcare procurement policy and the healthcare procurement procedure, it must announce the change in good time and in the same manner in which the earlier information was announced.” The word “and” in the first sentence of this article has been replaced by “and/or”. By making that change, the NZa clarifies that both (material) changes in the healthcare procurement policy and changes in the healthcare procurement procedure must be announced (i) in a timely manner and (ii) in the same manner as the procurement policy itself, and (iii) that reasons must be given for the change.
The (textual) amendment of Article 7 therefore appears to be limited. In contrast to the article itself, the explanatory notes to Article 7 have been significantly supplemented and clarified. In the Healthcare Procurement Regulations that applied until 2022, it was explained that Article 7 applied in particular to changes caused by external factors (such as changing regulations) that necessitated changes in the procurement policy. It follows from the explanatory notes to Article 7 of the new Healthcare Procurement Regulations that changes in the procurement policy may still be due to external factors, but also to internal factors at the health insurer. The explanatory notes are therefore now more in line with the NZa’s enforcement practice, in which the NZa has for some time already allowed that changes need not be the result of reasons external to the health insurer.
In the explanatory notes, the NZa also explains how, in practice, it assesses the three criteria that changes to the procurement policy must meet under Article 7 of the Health Procurement Regulations. These are (i) the timeliness of the change; (ii) the correct manner of announcement; and (iii) the reasons for the change. The NZa has clarified, for instance, that the question whether a change is “timely” depends on the moment in the healthcare procurement process at which the change is made. The NZa has also confirmed that health insurers may of course inform healthcare providers of a change in the procurement policy by means of a newsletter, but that that information must also always be available in the place where the original procurement policy was published (by 1 April at the latest). According to the NZa, a change “caused by or resulting from circumstances” is furthermore insufficiently reasoned. The NZa emphasises that the essential question is ultimately whether the healthcare procurement process is transparent. Healthcare providers must therefore always have the proposed information required for the decision-making process at their disposal during the healthcare contracting. In other words, the healthcare provider must know beforehand where it stands in the healthcare procurement process under the Healthcare Insurance Act.
More effective enforcement of Healthcare Procurement Regulations calls for higher NZa fines
In many cases, health insurers have a (very) strong position in healthcare contracting compared with the healthcare providers. When the NZa’s Good Contracting Practices (non-mandatory rules) were of no avail, the NZa was forced in 2016 to introduce the Healthcare Procurement Regulations (mandatory rules) under Article 45 of the Wet marktordening gezondheidszorg (Healthcare (Market Regulation) Act). Six years later, the question is no longer whether mandatory rules are and will remain necessary: the question is whether the enforcement of the rules is sufficiently effective.
The NZa has warned Menzis, DSW, VGZ (several times) and Zorg en Zekerheid about violations of the Healthcare Procurement Regulations. In the summer of 2021, the NZa also issued a formal warning to EUCARE. In late 2021, DSW reoffended and was again given a warning by the NZa for violating the Healthcare Procurement Regulations. In the past, the NZa fined De Friesland (now a division of ZK) and VGZ for violating the Healthcare Procurement Regulations; see also this blog. More recently, the NZa imposed four fines of €9,500 on four health insurers belonging to the VGZ group. Fines in the same amount were also imposed on health insurers Univé, IZA and UMC, all of which belong to the VGZ group. The reason for those fines was that, contrary to the Healthcare Procurement Regulations, they had failed to publish changes in the speech therapy procurement policy in a timely manner. The VGZ group thereby violated Article 7 of the Healthcare Procurement Regulations. These measures and fines followed the annual inspection by the NZa to check whether health insurers publish their procurement policies correctly. In sum, health insurers can no longer successfully claim to be unfamiliar with the Healthcare Procurement Regulations.
It remains to be seen whether health insurers are sufficiently concerned about violating the Healthcare Procurement Regulations in practice. First, for various reasons, not all violations are reported to the NZa: complaining about a health insurer while the healthcare provider is financially dependent on it involves risks. Second, the fines imposed by the NZa to date appear to be symbolic rather than a deterrent. The turnover of the VGZ group in 2020 was almost €12 billion. The fine recently imposed on VGZ (in 2021) amounted to €38,000 for the entire VGZ group. Although the NZa fine imposed on VGZ in 2020 amounted to €100,000, that was also a mere fraction of the VGZ group turnover. Above all, the €100,000 NZa fine, which followed several warnings, did not prevent VGZ from violating the Healthcare Procurement Regulations again. It seems unlikely that the fines imposed by the NZa will serve as a deterrent – also for other health insurers. But it should also be noted that healthcare providers have, however, successfully argued violation of the Healthcare Procurement Regulations in civil cases. That is explained in this blog.
NZa not effectively tackling repeated violation of the Healthcare Procurement Regulations
Until recently, the chance of a formal NZa warning for violation of the Healthcare Procurement Regulations resulting in an NZa fine being imposed on a health insurer was small, due to the NZa’s own policy. The warnings issued by the NZa in respect of the Healthcare Procurement Regulations were often unnecessarily limited in terms of their scope. Only if the same article of the Healthcare Procurement Regulation is violated again within a certain period of time does the NZa impose a fine for that new violation. In practice, a separate procurement policy is published for each type of care. Health insurers can therefore continue to violate the various articles of the Healthcare Procurement Regulations for the various types of care, without that constituting a repeated violation. Although the recent warning that the NZa gave to DSW did not mention that a violation in respect of the same type of care and a violation of the same article of the Healthcare Procurement Regulations must always be involved, that warning is still limited in terms of time: the NZa warning given to DSW applies for a period of two years. If the violation of the Healthcare Procurement Regulations occurs after that period, the counter is reset for DSW. This means that health insurers within one group can continue to violate the Healthcare Procurement Regulations on a regular basis, without that constituting a repeated violation and without a sufficiently deterrent fine being imposed by the NZa.
This is unnecessary and the NZa could have prevented this long ago, since the law and the Policy Rules on Administrative Fines under the Healthcare (Market Regulation) Act (the “NZa Fine Policy Rules”) have allowed the NZa for many years already to impose more appropriate and sufficiently deterrent fines. Violation of the Healthcare Procurement Regulations falls within the scope of Article 85 of the Healthcare (Market Regulation) Act, since the Healthcare Procurement Regulations were adopted under Article 45 of that Act. Article 85 of the Healthcare (Market Regulation) Act grants the power to impose a fine of up to €500,000 for a violation of Article 45 of the Healthcare (Market Regulation) Act. If 10% of the health insurer’s turnover in the Netherlands is higher than that amount, the fine may also be imposed on that basis. The NZa has a margin of discretion in this respect. The NZa has drawn up the NZa Fine Policy Rules to implement that margin. Article 4.1 of the NZa Fine Policy Rules provides that the NZa must set an administrative fine at such a level that:
- with a view to special prevention, the fine serves as a deterrent to reoffending; and
- with a view to general prevention, the fine serves as a deterrent to potential other offenders.
In Article 6.3 of the NZa Fine Policy Rules, the NZa distinguishes three main categories of violations: very serious, serious and less serious. It follows from the appendix to the NZa Fine Policy Rules that a violation of the Healthcare Procurement Regulations is classified as a very serious violation. According to the NZa, such a violation directly harms the core values of the Healthcare (Market Regulation) Act. In Article 6.4 of the NZa Fine Policy Rules, the NZa itself states that a fine base of 2.5% to 0.3% of the turnover is appropriate for a health insurer that violates the Healthcare Procurement Regulations. It depends on the health insurer’s turnover which percentage is applied. Considering VGZ’s group turnover, the maximum fine would then be 0.3% of €12 billion: in the case of VGZ, that would amount to approximately €36 million. The NZa fine of €38,000 recently imposed on VGZ contrasts sharply with this. Since the NZa classifies a violation of the Healthcare Procurement Regulations as very serious, it is remarkable that it then very drastically mitigates the fine – all the more so when an earlier NZa fine of €100,000 that was imposed on VGZ, as well as two earlier NZa warnings for violation of the Healthcare Procurement Regulations, did not prevent VGZ from again violating those regulations.
NZa need not be a toothless tiger: enforcement of Healthcare Procurement Regulations can and must be more effective
In practice, effective enforcement by the NZa is being hampered by the NZa’s own choices. Although a violation of the Healthcare Procurement Regulations is classified as a very serious violation of the Healthcare (Market Regulation) Act, the NZa regularly opts to merely issue a warning in response. This gives rise to the following problem in the event of a repeat offence. The NZa is of the opinion that no repeat offence has been committed if a health insurer was given a warning for violation of the Healthcare Procurement Regulations and subsequently violates those regulations again. A repeat offence is a fine-increasing circumstance under the NZa Fine Policy Rules. The NZa regards its warning as an informal enforcement instrument that is not a decision within the meaning of the Algemene wet bestuursrecht (General Administrative Law Act). The NZa is therefore of the opinion that earlier formal warnings should not be taken into account in determining whether a repeat offence has been committed as defined in the NZa Fine Policy Rules. In its 2020 VGZ fine decision, for instance, the NZa therefore did not consider the fact that VGZ had been formally warned several times (see here and here) about an established violation of Article 7 of the Healthcare Procurement Regulations to be a repeat offence or a fine-increasing circumstance. VGZ was fined again in 2021 for a violation of the Healthcare Procurement Regulations, but also in that NZa decision the fine was not increased on the grounds of it being a repeat offence.
It is furthermore remarkable that in both VGZ fine decisions the NZa combined several violations of the Healthcare Procurement Regulations into one single fine decision. Apparently, according to NZa, no repeat offence can occur in that manner. That also leads to a remarkable outcome. To date, the NZa has warned VGZ twice and fined it twice for violating the Healthcare Procurement Regulations. Four instances of violation of the Healthcare Procurement Regulations therefore appear to have occurred. In actual fact, the NZa found that VGZ had violated the Healthcare Procurement Regulations in seven (not four) healthcare procurement procedures. The NZa warnings given to VGZ related to the purchase of oral care and the purchase of orthopaedic devices. In the first NZa fine for VGZ, the NZa combined several violations by VGZ into one fine decision. The violations related to the procurement of (i) oral care, (ii) medical devices and (iii) pharmaceutical care. In the second NZa fine, the NZa again combined violations by VGZ, this time in relation to medical devices and speech therapy, into one single fine decision. As a result, only two fine decisions were imposed on VGZ, despite multiple consecutive violations of the Healthcare Procurement Regulations. The first fine of €100,000 imposed on VGZ was an insufficiently deterrent to prevent VGZ from violating the Healthcare Procurement Regulations again.
With this approach, the NZa appears to remain a toothless tiger in the supervision of the contracting process for an unnecessarily long time. This is remarkable, because the NZa knows that observance of the Healthcare Procurement Regulations by health insurers is of great importance to providers, year in year out. Many healthcare providers, especially in the primary care sector, are usually forced to sign on the dotted line. For them and other healthcare providers, it is essential that health insurers observe the Healthcare Procurement Regulations, to ensure that they are not faced with unpleasant financial or organisational surprises when contracting care. If health insurers can continue to ignore the Healthcare Procurement Regulations without any major consequences, the transparent procurement process intended by these compulsory NZa rules will never come about. The Healthcare Procurement Regulations were violated by several insurers also in 2021. The fact that, according to the NZa, VGZ violated the Healthcare Procurement Regulations seven times in less than four years demonstrates that the enforcement is insufficiently effective. It is therefore time for the NZa to take a different approach, to ensure that, six years after the introduction of the Healthcare Procurement Regulations, a change of culture takes place at all health insurers and that they proactively comply with the Healthcare Procurement Regulations when purchasing healthcare under the Healthcare Insurance Act.
NZa: stop applying double standards in the supervision of healthcare providers and health insurers
It is obvious that the warnings and fines that the NZa has used to date in response to violations of the Healthcare Procurement Regulations have not yet led to the general and special prevention that the NZa is aiming for in Article 4.1 of the NZa Fine Policy Rules. This is due to the fact that the NZa is not making use of the statutory scope for imposing sufficiently deterrent fines for violations of the Healthcare Procurement Regulations. As a result, violations of the Healthcare Procurement Regulations by health insurers are not being eradicated and healthcare providers are still not receiving the protection in the healthcare procurement process that is required according to the NZa. And there is another reason why the NZa needs to change its approach. For years, NZa has been using its discretionary power to impose deterrent fines on healthcare providers. The NZa has imposed, for instance, fines of €270,000 and €400,000 on healthcare providers. A provider of district nursing was fined €150,000 by the NZa. Each of these three cases involved violations that the NZa classified as “very serious” in its NZa Fine Policy Rules, just like violation of the Healthcare Procurement Regulations. The fines imposed on healthcare providers for a very serious violation are therefore considerably higher than those imposed on a health insurer that equally committed a “very serious” violation of the Healthcare (Market Regulation) Act in respect of the Healthcare Procurement Regulations. This confirms the impression that the NZa is still applying double standards: the NZa is taking stricter action against healthcare providers than against health insurers. It is high time to change this. Not only in order to make the Healthcare Procurement Regulations and their enforcement more effective and to ensure that healthcare providers enjoy the protection in the healthcare procurement process that the Healthcare Procurement Regulations aim to offer them, but also to protect the NZa’s authority. If healthcare providers and third parties get the impression that the NZa is the “Dutch Health Insurers’ Authority”, that would be detrimental to the NZa’s supervision and the effectiveness of that supervision. If the impression is created that complaining to the NZa has little or no effect, healthcare providers and their trade association or professional association will no longer do so either. That would be the deathblow to the NZa’s supervision. As explained in this blog, the NZa has the necessary powers to change course and, by enforcing the Healthcare Procurement Regulations (the new version), to demonstrate that it does not apply double standards.
More information on the rights of healthcare providers and the duties of healthcare insurers can be found at zorgcontractering.com.
