Po-Chang Lee Joyce Tsung-Hsi Wang Tzu-Yu Chen Chia-Hui Peng *Editors*

# Digital Health Care in Taiwan

Innovations of National Health Insurance

Digital Health Care in Taiwan

Po-Chang Lee • Joyce Tsung-Hsi Wang Tzu-Yu Chen • Chia-Hui Peng Editors

# Digital Health Care in Taiwan

Innovations of National Health Insurance

*Editors* Po-Chang Lee National Health Insurance Administration Ministry of Health and Welfare, Taiwan Taipei, Taiwan

Tzu-Yu Chen National Health Insurance Administration Ministry of Health and Welfare, Taiwan Taipei, Taiwan

Joyce Tsung-Hsi Wang National Health Insurance Administration Ministry of Health and Welfare, Taiwan Taipei, Taiwan

Chia-Hui Peng National Health Insurance Administration Ministry of Health and Welfare, Taiwan Taipei, Taiwan

This book is an open access publication.

ISBN 978-3-031-05159-3 ISBN 978-3-031-05160-9 (eBook) https://doi.org/10.1007/978-3-031-05160-9

© National Health Insurance Administration, Ministry of Health and Welfare, Taiwan 2022

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### **Foreword**

### **Investing in the National Health Insurance Is Investing in Health**

The *Reform Diary 2.0* published by the National Health Insurance Administration (NHIA) in May 2021 has attracted attention from the medical sector and the general public. It was a wonderful channel for readers to understand the reforms that the NHIA has made in the past few years and the improvements that it plans to make. Now, the newly released *Digital Health Care in Taiwan: Innovations of National Health Insurance* introduces the operation of the National Health Insurance (NHI) and how Taiwan utilises information and communication technology to improve health care in detail.

In Taiwan, because of universal healthcare coverage, citizens can enjoy high accessibility and quality health care as the strongest backing for preventing and controlling pandemic outbreaks. All confrmed COVID-19 cases in Taiwan can obtain comprehensive medical care provided by dedicated healthcare providers and covered by the national budget. Therefore, the pandemic was fairly effectively controlled. However, owing to the advancement of medical technology and the ageing population, the annual expenditures of the NHI have been constantly higher than the growth of income. The safety reserve accumulated in the past few years will not be enough to cover the defcits in the future. Therefore, under the National Health Insurance's principle of income–expenditure linkage, the Executive Yuan approved the Ministry of Health and Welfare's proposal to adjust the premium rate for the NHI from 4.69% to 5.17% at the end of 2020. It is hoped that by cross-sharing the fnancial burden, we can stabilise the funding of the National Health Insurance and continue to provide high-quality medical services. The National Health Insurance was made possible by contributions from all nationals, and it has become the strongest backing for everyone in Taiwan.

However, to maintain the sustainability of the NHI, in addition to balancing income and expenditure, we have to update its systems and relevant measures to keep pace with modern trends. The NHIA should review policies that reduce unnecessary medical services, promote fair burden and improve the quality of care. Necessary measures and reform plans have been initiated to strengthen these efforts. Among them are the rights and responsibilities of citizens travelling overseas, fair calculation of the supplementary premium and the co-payment of medical costs. Moreover, the NHIA should reduce waste by integrating medical resources for effective utilisation, sharing medical information through the NHI MediCloud system and suppressing improper consumption of medical resources. In addition, a 4 to 6-year long- to mid-term reform plan should be implemented to reform the health insurance coverage, as well as payment and healthcare systems. It is aimed to integrate the public health system and resources from the NHI to comprehensively improve the quality of medical care for all citizens.

Article 1 of the National Health Insurance Law declares clearly that the NHI was enacted to promote the health of all nationals. Therefore, improving the health of every individual in Taiwan is its ultimate goal . As the statutory insurer of the NHI, the NHIA shoulders heavy responsibilities to achieve this goal. It is hoped that through the publication of this book, the public can have a better understanding of the purpose of the NHI. Furthermore, it is hoped that through the efforts of the NHIA, all nationals can realise that investing in the NHI is an investment in health. With support from all sectors of society for the NHI, we can work together to build a sustainable healthcare system that benefts all people. Finally, for the NHIA, the burden is heavy and the road is long.

Shih-Chung Chen, D.D.S. Minister of Health and Welfare, Taiwan , Taipei, Taiwan

### **Preface**

### **Thoughts on Reforming the National Health Insurance**

During the past 3 years, the National Health Insurance Administration (NHIA) has published two books, *National Health Insurance Reform Diary 1.0* and *National Health Insurance Reform Diary 2.0*. We now honorably present *Digital Health Care in Taiwan: Innovations of National Health Insurance*, a tangible result of the NHIA welcoming more than 500 global visitors each year to exchange health-related policies and implementation struggles. By publishing this book, we hope to offer a better understanding of the healthcare system in Taiwan to offcials at health departments worldwide. The following fgure depicts the reform framework using National Health Insurance (NHI) core values.

**Reform consistent with NHI core values**

As the Director General of the NHIA, I have been thinking a lot about the expense increases we negotiate with the medical profession every year. Each relative value unit (RVU) never equals New Taiwan dollar (NTD) 1, and the medical profession has always been quite unpleased by the relatively fat growth in medical payments. However, the fundamental problem of increasing RVUs is the number of medical visits. For example, Western medicine medical visits have grown by nearly six million visits per year. As long as medical visits do not decrease, the "sweat hospital" issue (discussed later) will remain unsolved. However, for hospitals, more medical visits mean a greater chance to provide self-paid medical services. Looking through fnancial reports from hospitals with 2018 revenues of more than NTD 200 million reveals that 23.48% of their revenue comes from registration fees and self-payments. For clinics, a major revenue source is registration fees not covered by the NHI. Therefore, reducing medical visits is a diffcult problem not only because of public behavior but also because of doctors' mindsets, which can be even tougher to deal with.

The core of this improvement plan is the promotion of "rising co-payment." I believe that increased co-payments can change the behavior of both patients and doctors. The number of those who have thoughts of "hospital shopping" will be expected to drop, leading to fewer medical visits. Subsequently, the value of the RVU will grow, and medical professionals will be able to earn more reasonable pay from the same effort.

The second highlight of my improvement plan is the "digital transformation of the healthcare system." The NHI MediCloud System was originally built to share individuals' medication and examination reports, and this system received high praise from the medical profession. Both the NHI MediCloud System and the "NHI card" played important roles in providing information about "TOCC" (travel, occupation, cluster, and contact) and the "Name-Based Medical Mask Distribution System" in the battle against COVID-19 in 2020.

With technological developments and innovation breakthroughs, a wave of artifcial intelligence (AI) has swept the world. The most noteworthy of these in medicine has been using big data and medical images from the NHI system to stimulate AI application development and transform care services for disease. Various innovations and applications have been incubated concurrently with the development of the NHI database and "My Health Bank," further fostering healthcare and medical solutions that beneft all people in Taiwan.

I would like to mention "telemedicine" in particular. Taiwan's strong, solid information technology industry creates a smart telemedicine model through information and communication network technology, so medical care is no longer limited by distance. In addition, "home-based medical care" is a new medical trend in which we encourage medical professionals to participate in teams. With new technology, we advance the "NHI card" to the "virtual NHI card" and apply for "homebased medical care." I hope to establish a new era of the NHI medical service model as soon as possible.

Preface

The third key point of my reform plan is "leading medical care to a new economic model." Driven by advancements in cancer treatment, the proper use of optimal medication through precision medicine in oncology has become a trend. Compared with traditional medical care, when undergoing targeted therapy and immunotherapy, patients are treated with the most effective medicine according to their individual biomarkers to achieve the goal of "prescribing the right medicine." This eliminates the cost of ineffective medication and also reduces the risk of patient side effects. Because of the inseparable relationship between NHI and medical care, the introduction of new medicines, medical devices, and medical technologies into the system also indirectly helps Taiwan's biotechnology and medicine industry fnd its own path.

The fnal point of my reform plan focuses on the "outdated NHI fee schedule and system." Medical technology and equipment have made great progress over the past two decades, and patients' clinical conditions have become more complicated. The human and material resources invested in treatment are relatively greater and more professional. Therefore, we must deal with the outdated NHI fee schedule and system more pragmatically. In addition to responding to the contributions of medical professionals, we must facilitate the balanced development of the medical system. We will continue to review the reasonableness of the NHI fee schedule and provide the public with high-quality medical services.

I started as a surgery professor, then became a hospital director, and now I am Director General of the NHIA. I have seen changes that need to be made in the NHI system. But it takes time to improve. After all, procedures must be followed to ensure effective and lasting systematic reform. I take my job seriously, planning out blueprints and implementing policies. My colleagues and I at the NHIA will actively work with partners in the medical profession to do our part for the people. This book includes many insights and a reformation focus, and we welcome all kinds of advice for further improvements.

Taipei, Taiwan Po-Chang Lee, M.D., M.T.L.

### **Acknowledgments**

First, I especially wish to thank President Tsai Ing-wen, Vice President Lai Ching-Te, Former Vice President Chen Jian-Ren, Senior Advisor to the President Li Ming-Liang, Minister of Ministry of Health and Welfare Chen Shih-Chung, and Former Minister of Health and Welfare Lin Zou-Yan, who appointed me to be the Director General of the National Health Insurance Administration, which I am honored to be a part of. Thank you for letting me serve and continue the reform project of the National Health Insurance.

This book is part of the 2021 Technology Development Project—Provision of Sustainable Quality Healthcare, funded by the Ministry of Health and Welfare, Taiwan.

I extend my gratitude to my brother, Dr. Lee Po-Huang, who has been extremely supportive throughout my career.

I would like to thank the dedicated reviewers, whose feedback and commentary have helped me immensely. I would also like to thank my peers and team at the National Health Insurance Administration—without the experiences and support I have received from them, this book would not be published.

### *Information Management Division:*

Kuo-Lung Lee, Hau-Chuen Sun, Mei-Chu Wang, Chi-Shun Chen, Chun-Yu Pang, Hsiu-Lan Chen, Shu-Ling Huang, Ruey-yuh Duh, Tzu-Yu Chen, Shun-Liang Tang, Hui-Ping Weng, Yi-Ming Ho, Zi-Fang Chen

### *Medical Affairs Division:*

Chia-Pin Wu, Tso-Chen Chang, Pei-Shuan Han, Hsiu-Wen Yang, Yi-Chieh Chen, Tsui-Chen Tsai, Li-Li Liu, Yu-Chi Hung, Lin-Yi Liu, Chin-Mei Lin, Yu-Ying Huang, Yu-Chen Yang, Chia-Pei Teng, Yu-Fen Chang, Tzu-Yen Lu, You-Jun Lin, Yu-Fen Lin, Chang-Chi Wei, You-Jun Lin, Huey-Jen You

### *Financial Analysis Division:*

Yi-Lin Lai, Hsiao-Chuan Yang, Ya-Huei Yang, Huang-Chen Chang

### *Enrollment Division:*

Chien-Chiang Huang, Chien-Hui Yu, Jen-Hui Lee, Pei-Chun Hsish, Jia-Rou Ferng

### *Medical Review and Pharmaceutical Benefts Division:*

Ming-Tzu Hsu, Yu-Fen Lin, Hao-Hsuan Kao, Ruby Yu-Wen Huang, Hui-Ping Chang, Heng-Jung Lien, Yi-Chieh Lin, Hui-Wen Lo, Shih-Ting Liu, Chang-Jr Chen, Ruo-Han Yeh, Hsiao-Feng Ho, Yu-Neng Lin, Shu-Ya Chang, Chu-Chun Tu, Chi-Chang Lin, Shu-Lien Chien, Ju-Hsun Chang, Wen-Fuh Tseng, Yin-Ting Pan, Shu-Yi Chen, Chiung-Hsuan Huang, Ya-An Tsai, Pei-Shin Lo

### *Press Room:* Chien Fu Chan

# *Taipei Division:*

Ming Hsin Liao, Pei-Chi Wang, Tsuey-Lan Moh, Pao-Fong Lin, Jong-Yih Sheu

### *Planning Division:*

Wei-Ying Chen, Wei- Siang Jhao, Pi-Yun Sun, Chen-Yin Kuo, Shin-Yi Chuang, Yen-Hsiu Liu, Yuan-Ting Tsai, Wei-Lun Lo, You-Xin Liao Chia-Hui Peng

*Kaoping Division:* Hui-Ting Hsieh

### *Ministry of Health and Welfare:* Fu-Chung Wang, Lin-Chih Chang

Finally, I would like to dedicate this book to all the healthcare professionals in Taiwan, safeguarding the health and well-being of the island's 23 million citizens.

Po-Chang Lee, M.D., M.T.L.

### **Contents**

### **About the Contributors**

**Wen-Wen Chang, M.S.** has served as a government offcial in Taiwan after graduating from the Department of Insurance of Feng Chia University in 1988. She also earned a master's degree in 2006 from the Institute of Medical Management of Chang Gung University. In the beginning, she served in the Department of Medical Affairs in the Bureau of Labor Insurance from 1989 to 1994. She has been planning and implementing the NHI in Taiwan for more than 27 years. Since 1994, she has been responsible for planning and building the medical claims system in the NHI Preparation Offce. After the implementation of NHI, she was in charge of medical claims in outpatient settings. As one of the section chiefs in the Medical Affairs Division (MAD), she pushed forward the Global Budget (GB) System Program in 2002. During 16 years of service, she participated in GB negotiation, and she also assisted in dealing with several urgent events. She managed the hospital fnancial crisis due to SARS in 2003, and she monitored and succored the 627 dust explosion victims. In 2018, she left MAD for the Financial Analysis Division to oversee the planning of fnancial sustainability. She was assigned to the National Health Insurance Administration Northern Division and served as deputy director in 2019. Then, she was promoted to director in 2020. Wen-Wen not only transferred from planning to frst-line execution but also became a leader and will dedicate herself to achieving the goal of helping people to "live longer, better and healthier lives" in the future.

**Yu-Hsuan Chang, B.A., M.A., M.S., Ph.D.** is the counselor of the Ministry of Health and Welfare and the director of the offce of Congressional Liaison. She is responsible for communication between the Ministry and the Legislative Yuan to assist the passage of relevant bills and budget in the Congress. She is also an assistant professor at National Taipei University of Nursing and Health Sciences. She graduated from the College of Law at National Taiwan University, and holds three master's degrees from National Taiwan University in the Institute of Health Policy & Management, the Institute of Political Science, and the Institute of Library and Information Management respectively, as well as a Ph.D. from National Taiwan Normal University. She has been serving in the feld of health management in the public sector since 1994. She has been engaged in the revision of the health insurance law since she served as the section chief of Legal Affairs of the NHIA. She has more than 25 years of practical experience in the NHI and has served as the director of the Planning Division of the NHIA since 2013. She is committed to the application and discussion of NHI big data. She focuses on multiple health and welfare areas, such as Taiwan's COVID-19 epidemic prevention work, long-term care services, national health promotion, public hygiene, mental wellness, and social security affairs.

**Yu-Pin Chang, M.P.H.** is the director of the Medical Affairs Division of the NHIA, and oversees the implementation of the reimbursement and payment scheme and related policies of Taiwan's NHI system. 93% of Taiwan's medical and healthcare institutions are covered by this system. Director Chang has worked at NHIA for more than 20 years. He is one of the initial designers for developing the health insurance Integrated Circuit (IC) card system. More than 99% of residents, accounting for over 23 million health insurance IC cards, have been distributed in Taiwan. Health data are uploaded to the NHIA database nationwide through the IC card. The health database has become one of the largest in the world.Director Chang has extensive experience in the health sector, specializing in public health, digital health, and medical tourism. Before joining the NHIA, he served as section chief in the Department of Medical Affairs of the Ministry of Health and Welfare from 2014 to 2017. He earned his MPH degree at National Yang-Ming University and bachelor's degree in public health at China Medical University.

**Mei-Hsin Chen, L.L.M.** holds a master's degree in law from National Chengchi University. She is currently the director of the Financial Analysis Division, NHIA, Ministry of Health and Welfare. She has worked in the NHIA since the launch of the NHI in 1995 and worked as section chief of the Legal Affairs Section, Planning Division, senior executive offcer of the Planning Division, and deputy director of the Financial Analysis Division.

**Shu-Ching Chiang, B.S.** holds a bachelor's degree in insurance from Tamkang University. She is currently the director of the Enrollment Division, NHIA, Ministry of Health and Welfare, and previously worked as deputy director and senior executive offcer of the Enrollment Division, chief of Taipei Division, NHIA, Ministry of Health and Welfare. Her expertise focuses on NHI enrollment regulation and policy, premium collection planning, the NHI card and enrollment data management, and enrollment-relevant research and analysis. Based on a solid foundation in the feld of enrollment for over 20 years, she is dedicated to improving the equality of enrollment policy and refning the reasonableness of the enrollment operation of the NHI.

**Chih-Hsing Ho, L.L.M., J.S.M., Ph.D.** is an Associate Research Fellow/Associate Professor at the Institute of European and American Studies, and the Research Center for Information Technology Innovation (joint appointment), Academia Sinica, Taiwan. Her research focuses on the nexus of law and medicine in general, with particular attention to the governance of genomics and newly emerging technologies, such as biobanks, big data, and artifcial intelligence (AI). She serves as a Member of the NHIA's Legal Advisory and AI Data Access Committees. She has also been appointed to the Taiwan Ministry of Health and Welfare's Biobank Ethics and Governance Council, and the Consultation and Review Board at the National Biobank Consortium of Taiwan. She holds a Ph.D. in law from the London School of Economics, where she was an Olive Stone Scholar and an awardee of the Morris Finer Memorial Scholarship. She obtained her frst law degree from Taiwan and later received her LLM from Columbia Law School and a JSM from Stanford Law School. Before moving back to Taipei in 2014, she worked at the Centre for Medical Ethics and Law at the University of Hong Kong. Her works appear in many renowned international journals, such as *Nature Genetics*, *BMC Medical Ethics*, *Computer Law & Security Review*, and *Medical Law International*. Since 2016, she has served as an Associate Editor for ELSI in Science and Genetics-Frontiers.

**Chun-Fu Lee, M.S.** has been the director of the Central Division of the NHIA, Ministry of Health and Welfare from October 2020 to the present. Before this, director Lee served as director of the Medical Affairs Division (MAD) from September 2017 to October 2020. She was Senior Executive Offcer in the Taipei division of the NHIA from January 2016 to September 2017. In January 2005, she became the section director of payment schemes in the MAD, Bureau of National Health Insurance (now NHIA). She adopted the NHI payment system (e.g., TW-DRGS, Capitation, GB, ICD-10-CM/PCS coding system). She was promoted to Senior Executive Offcer in March 2011 and served as deputy director in January 2014. From 2002 through 2005, she served as the director of Medical Administration in Taipei Municipal Hospital. In this position, she led efforts to develop a health information system for hospital management. From 1994 through 2000, she served as the staff of the Performance Management Section in Taipei Veteran General Hospital, where she designed an indicator to monitor hospital performance. From 1991 through 1994, she served as the Department of Labor Insurance staff, Council of Labor Affairs Executive Yuan, setting the fee schedule that the labor insurance pays the provider. She graduated from Yang-Ming Medical University with a master's degree in Health Administration in 1991.

**Min-Yu Lee, M.P.A.** graduated from Tunghai University in Taichung and earned a master's degree in public administration from National Dong Hwa University in Hualien County. She has been the director of the Eastern Division of NHIA Ministry of Health and Welfare since March 2010. Since the Bureau was launched in 1995, she has been an employee of the Eastern Brunch for more than 27 years. She is familiar with the work and has accumulated rich work experience. She is enthusiastic about serving insured units and cares about the quality of health care around Hualien and Taitung County.

**Po-Chang Lee, M.D., M.T.L.** has served as a surgeon and professor in the Taoyuan Provincial Hospital and National Cheng Kung University Hospital after graduating from the Department of Medicine of Taipei Medical College in 1979. He has been involved in the clinical and research felds of organ transplantation for more than 40 years. He has received teacher honors many times and has assisted more than a thousand patients receiving kidney transplants.In 2011, he took over as the chairman of the Taiwan Organ Registry and Sharing Center. During his term as chairman, he was dedicated to promoting the paired exchange of living donor kidney transplantation between nonrelatives, and prioritizing the third-degree relatives and spouses of organ donors in the waiting list. As a result of his enthusiastic promotion, the concept of "willingness to share" took root in people's hearts, and the number of domestic donors has reached new heights.Since May 2016, when he took over the position as the Director General of the NHIA, he has integrated his medical and legal expertise to implement various NHI system reforms, including promoting a named dual-review system to reduce disparity; safeguarding vulnerable people and unlocking the link between owing arrears and medical treatment; gradually relaxing payment conditions for new all-oral drugs to implement the hepatitis C eradication policy; promoting a tiered medical care system and implementation of two-way referral; improving "NHI MediCloud System" and allowing "My Health Bank" to be combined with the health management industry, NHI database, and AI applications, which made outstanding contributions to Taiwan's digital healthcare development. In August 2019, the "APEC Conference on Enhancing Medical and Disease Management" was hosted. About 40 people from 13 economies and foreign guests were invited to Taiwan. The event was unprecedented and greatly improved the visibility of universal health insurance in the international community. During his term as Director General of the NHIA, he made great contributions to the perseverance and system improvement of the NHI system. The public's satisfaction with the NHI increased from 81.7% in 2016 to 90.2% in 2020, hitting record highs, making the NHI one of the most popular public policies.

**Chun-Mei Lin, Ph.D.** is a senior director at the NHIA. She has a PhD degree in information and industrial management at National Cheng Kung University. She has over 20 years of experience in health insurance management. Her main responsibilities are to control southern region health expenditure within the annual budget, to analyze variation in clinical practice and delivery of healthcare services to improve quality of care, and to integrate the research fndings concerning the knowledge procurement from claims data and practice, particularly healthcare fraud detection via data mining and information disclosures.

**Shu-Hwa Lin, M.P.H.** is director of NHIA-Kaoping Division, Ministry of Health and Welfare. She holds a master's degree in public health from National Taiwan University in Taipei, Taiwan. Before taking a job at the NHIA, Ms. Lin served as a supervisor at the Kaohsiung Municipal Min-Sheng Hospital, dedicated to medical record management, information system development, and medical

management-related businesses. Ms. Lin has been working for the National Health Insurance Department since the establishment of the Bureau of National Health Insurance in 1995 and has experienced various positions during that period. It is worth mentioning that during her tenure as the director of the NHIA-Southern Division, she supervised the relevant emergency response operations after the Tainan earthquake in 2016 with outstanding performance. Now, she will continue to contribute her knowledge and pass on her years of work experience to the younger generation.

**Yu-Chuan Liu, M.P.H.** holds a master's degree in Institute of Health Policy and Management from National Taiwan University. She is currently the director of the NHIA-Taipei Division. Before this, director Liu served as deputy head of the MAD and the Taipei Division from December 2017 to March 2020. She was senior researcher of the Health Promotion Administration, Ministry of Health and Welfare from January 2016 to December 2017. In July 2010, she became the chief of Emergency Care Section, Department of Medical Affairs, Ministry of Health and Welfare. Taipei Division serves more than one-third of the population in Taiwan, ranking its service volume frst among the six divisions of the NHIA. The service targets of Taipei Division include nearly 10,000 NHI-contracted hospital and clinics and more than 360,000 insured units. Because of the high density of medical centers in the area, the medical expenses that Taipei Division oversees reached more than NTD 251.1 billion, which accounts for one-third of the amount of Taiwan, and the insurance premium income it collects reaches more than NTD 230 billion. It is particularly worth mentioning that her dedication to work has won her an Exemplary Civil Service Award twice during her career. She is committed to passing on her extensive work experience and knowledge to the younger generation.

**Hsueh-Yung (Mary) Tai, M.S.** is the director of Medical Review and Pharmaceutical Benefts Division, the NHIA of the Ministry of Health and Welfare, Taiwan. She is a pharmacist, graduating from National Taiwan University with a master's degree in pharmacology. Hsueh-Yung frst worked as a medical journalist on *China Times* and then began working in the government. In the 1990s, she was elected to join training programs for the NHI in Canada and the USA. From 1991 to 2017, Hsueh-Yung oversaw the management and regulation of pharmaceuticals, including drug safety assessment, generic products, and regulatory affairs. She got promoted to the deputy director of the Division of Medicinal Products, Taiwan Food and Drug Administration (TFDA) and further served as the director of the Division of Planning and Research Development in the TFDA. Hsueh-Yung joined the NHIA in 2017 and has served as the Director of Medical Review and Pharmaceutical Benefts Division. She was more than glad to return to the feld of NHI once again 2 decades after she frst got in touch with this feld. Dedicating herself to pharmaceutical reimbursement and medical review, she fnds it very meaningful to ensure the rational allocation of medical resources and bring the greatest benefts to people in Taiwan.

**Yu-Yun Tung, L.L.M.** is the deputy director of the Provider Inspection Unit of the NHIA. She holds a master's degree in law from National Taiwan Ocean University and obtained a lawyer's license in 2006. She has 20 years of experience in the feld of law and is profcient in the laws and regulations of the NHI. Her main responsibilities in the NHIA are to detect fraudulent medical expenses, resolve violations, and refer persons involved in criminal offense to the court.

**Joyce Tsung-Hsi Wang, M.D., M.P.H., Ph.D.** holds a medical degree from Taipei Medical University, a master's degree in management of healthcare organization and administration, an Executive MBA, and a PhD degree in occupational medicine and industrial hygiene from National Taiwan University. She is also a gynecologist specializing in healthcare administration and management, healthcare industry development, crisis communication and response, healthcare quality and patient safety, and occupational medicine. Dr. Wang is currently the director of the Planning Division of the NHIA, overseeing the implementation of the virtual NHI card and the health-related aspects of the Smart Government. Prior to that, she was the Director-General of Public Health Bureau in Hsinchu City, Taiwan, and led the planning, coordination, and execution of a wide-range of health policies. She personally engaged in COVID-19 prevention at its onset and the resilient healthcare system constructed by her successfully prevented COVID-19 from spreading in Hsinchu City. From 2018 to 2019, she served as the representative of the Taiwan Ministry of Health and Welfare in Washington D.C. in the United States and successfully facilitated bilateral health and welfare cooperation and communication between high-level offcials. The Memorandum of Understanding on health between the two countries was initiated in her tenure. As the frst female secretary general of the Ministry of Health and Welfare from 2016 to 2018, she supervised and oversaw important national policies.

**Shwu-Huey Wu, M.S.** is the director of the Information Management Division of the NHIA, and she oversees the development of the information systems and related IT policies of Taiwan's National Health Insurance system. Director Wu has worked at the NHIA for more than 27 years. She has participated in many NHI programs since its launch date and was in charge of designing the medical claim electronic data fle format and maintaining medical payment-related computer software systems from 1995 to 2001. She was also in charge of implementing the frst generation of the NHIA's enterprise data warehouse system in 1997. When the NHIA changed the NHI paper card into the NHI IC card, she acted as the main IT contact window of the healthcare smart card project, coordinating IT-related issues from 2002 to 2004. With the development of health insurance policies at various stages and the advancement of information technology, she led the IT team to develop various information systems to improve operational effciency. During the COVID-19 outbreak in 2020, the TOCC information system was used to help the CECC quickly share the epidemic information with all medical providers. She earned her master's degree at the State University of New York at Binghamton and a bachelor's degree at National Taiwan University.

### **About the Editors**

**Po-Chang Lee, M.D., M.T.L.** is the director general of the National Health Insurance Administration at the Ministry of Health and Welfare, Taiwan, in Taipei, Taiwan.

**Joyce Tsung-Hsi Wang, M.D., M.P.H., Ph.D.** is the director of the Planning Division, National Health Insurance Administration, at the Ministry of Health and Welfare, Taiwan, in Taipei, Taiwan.

**Tzu-Yu Chen, M.S.** is the associate researcher of the Information Management Division, National Health Insurance Administration, at the Ministry of Health and Welfare, Taiwan, in Taipei, Taiwan.

**Chia-Hui Peng, M.P.H.** is the specialist of the Planning Division, National Health Insurance Administration, at the Ministry of Health and Welfare, Taiwan, in Taipei, Taiwan.

### **Abbreviations**

### **Chapter 1 Introduction to the National Health Insurance of Taiwan**

**Po-Chang Lee**

### **The Core Concepts of Taiwan's National Health Insurance**

Taiwan's National Health Insurance (NHI) programme was launched on 1 March 1995 to provide healthcare insurance for all residents. Over 23 million people are living in Taiwan, and over 16% of the population is over the age of 65. The Gross Domestic Product (GDP) per capita of Taiwan exceeded US\$ 28,000 in 2020, and the total health expenditure was 6.54% of GDP in 2019. The life expectancy in Taiwan was 84.7 years for women and 78.1 years for men in 2020 (Table 1.1).

Prior to the implementation of the NHI, Taiwan had 13 social insurance schemes, such as labour, government employees' health insurance and farmers insurance, which provided composite social security benefts, including healthcare coverage, to specifc groups (Fig. 1.1). However, only 59% of the population was covered by these insurance plans in 1994.

Since the NHI was established, the health component of the aforementioned insurances' healthcare plans was consolidated into the NHI to provide nationwide health protection to Taiwan's citizens and international residents. To improve the quality of health care, ensure the soundness of fnance and encourage public participation, 'the second-generation NHI' was launched on 1 January 2013.

P.-C. Lee (\*)

National Health Insurance Administration, Ministry of Health and Welfare, Taiwan, Taipei, Taiwan e-mail<EMAIL_ADDRESS>
**Table 1.1** Profle of Taiwan

**Fig. 1.1** Taiwan's major social insurance programmes

### **The Organisational Structure and History of the National Health Insurance Administration**

The National Health Insurance Administration (NHIA) was previously known as the 'Bureau of National Health Insurance, Department of Health, Executive Yuan'. When the Bureau was merged in 1995, only approximately 59% of the citizens were eligible to participate in the three major occupation-based medical insurance systems—labour insurance, farmers' insurance and government employee health insurance. In line with the principles of fnancial sustainability and caring for the disadvantaged, these insurance systems were merged and enlarged to become a social insurance system to cover everyone. The Bureau of NHI was repositioned in 2010 as an 'administrative agency' and renamed the NHIA in 2013.

The NHI is a government-run social insurance scheme and is governed by the Ministry of Health and Welfare (MOHW). The MOHW established the NHI Committee to assist with the planning of NHI policies and supervise the implementation of insurance matters. It also established the NHI Mediation Committee to handle disputes concerning health insurance. As the insurer, the NHIA bears responsibility for NHI operations, healthcare quality and information management, research and development as well as personnel training. Administrative funding is provided by the central government through a budgetary process.

To effectively promote various NHI services, in addition to establishing specialised departments and offces for various services and policy promotions, the NHIA has also established six regional divisions throughout Taiwan, which directly handle underwriting, insurance premium collection, medical expense review and approval as well as the management of contracted medical institutions. Moreover, the NHIA has established 22 contact offces to serve the local residents. As of 30 June 2020, the NHIA had 3125 employees (Fig.1.2).

**Fig. 1.2** The headquarters of the National Health Insurance Administration (NHIA) in Taipei

**Fig. 1.3** Taiwan's healthcare delivery system

### **Characteristics of Taiwan's National Health Insurance**

Taiwan's healthcare system is dominated by the private sector. Hospitals adopt the closed-staff model, and physicians are primarily paid by hospitals (Fig. 1.3). There is no gatekeeper system to screen patients. Patients can go to any clinic or directly visit a hospital without a referral. Thus, the volume of hospital outpatient services is high. However, health care is usually provided promptly, and waiting time is negligible.

The NHI is a compulsory programme that all citizens and legal residents must join. The NHIA is the only agency authorised to administer the programme, which means that Taiwan's NHI is a single-payer system run by the government. The NHIA collects premiums from the insured, their employers and the government. Premiums comprise 89% of the NHI revenues, out of which the government share is 36% according to the NHI Act. Moreover, the insured make co-payments when using healthcare services and the healthcare providers fle claims with the NHIA for reimbursement (Fig. 1.4).

Although it is voluntary for healthcare providers to participate in this programme, about 93% of providers nationwide have joined the NHI. Providers are reimbursed according to plural payment programmes under the global budget payment system. Premium subsidies and co-payment waivers have been granted to the disadvantaged through different projects.

### *The Finance of the National Health Insurance in Taiwan*

As discussed in detail in Chap. 2, the NHI is primarily fnanced through premiums, including general and supplementary premiums.

Each person remits the general premium according to the premium formula or the fxed fgures. The insured are grouped into six categories and are subject to

**Fig. 1.4** The framework of the National Health Insurance

different premium calculation bases and contribution shares, depending on the category that they belong to. Most salaried employees have to pay 30% of their premiums, with their employers paying 60% and the government paying the remaining 10%. The government subsidises 100% of the premiums for low-income households and military conscripts. Inmates are also covered under the NHI, and their premiums are paid by the government.

In the frst decade of the twenty-frst century, salary income as a percentage of national income declined, making premium growth lag behind income growth, thereby leading to funding shortfalls. The introduction of the supplementary premium on various types of incomes, other than regular payroll, has alleviated the perennial fnancial problems. Since 2013, in addition to the general premium, a supplementary premium has also been collected. The insured are charged a supplementary premium of 2.11% on certain incomes they receive, including large bonuses, professional fees, part-time wages, stock dividends, interest income and rental income.

 Moreover, expensive health services, such as dialysis and organ transplants, are all covered.

The insured make co-payments for their outpatient care to avoid the unnecessary utilisation of medical resources. The co-payment is partially waived if the outpatient visit is arranged by a referral. To ensure that people who need health care are not denied access because of the cost-sharing mechanism, individuals who meet certain conditions are exempt from co-payments, such as patients with catastrophic diseases, child delivery, medical services offered in mountain areas or on offshore islands, low-income households, veterans, children under the age of 3, as well as those who are insured but are in areas with insuffcient medical resources.

If those insured have to stay in a hospital because of medical factors, they will be charged a co-insurance, and the rate varies depending on the length of stay. However, in 2021, this co-insurance was capped at around US\$ 1400 per stay for the same disease and an accumulated total of US\$ 2400, regardless of the disease.

### *Medical Utilisation of the National Health Insurance*

The average utilisation rate of the NHI outpatient services in 2020 was 14.2 visits per person (Fig. 1.5), including visits for dental care and traditional Chinese medicine. For inpatient care, the average utilisation rate was 14.12 admissions per 100 persons in 2020 (Fig. 1.6). The number of outpatient visits is substantially higher than that of many Organisation for Economic Cooperation and Development countries.

**Fig. 1.5** Outpatient visits per person

1 Introduction to the National Health Insurance of Taiwan

**Fig. 1.6** Number of hospital admissions per 100 persons

### *The Payment System of the National Health Insurance*

When the NHI system was initiated, it sought to quickly integrate the existing civil service, labour and farmers' insurance systems. The fee-for-service approach was adopted as the primary payment system. Moreover, using the government and labour insurance payment standards as the basis, the NHI's payment standards were revised, and the scope of reimbursements and recommendations of medical groups were adjusted. However, this system resulted in an uncontrolled increase in medical expenses and has affected the quality of care. The NHIA has followed the example of other leading countries by designing different payment methods based on the characteristics of different types of medical care. The NHIA built the global budget payment systems, including global budgets for dental care, Chinese medicine, clinics, hospitals and dialysis. To further rationalise the reimbursement of health services, a resource-based relative value scale and a Taiwanese version of diagnosis-related groups (DRGs) were initiated in 2004 and 2010 respectively. The payment system of the NHI is discussed in more detail in Chap. 3.

### *The Healthcare Quality of the National Health Insurance*

To enhance the quality of health care, various projects addressing different needs have been implemented to offer adequate health care. For example, the Integrated Delivery System Plan, which was initiated in 1999, has improved health care in mountainous areas and on offshore islands by encouraging hospitals to dispatch doctors to these areas. This Integrated Delivery System Plan provides health care to 50 remote areas and serves about 480,000 people each year. In addition, different pay-for-performance projects have been implemented for certain diseases since 2001. Furthermore, patient-centred projects are effective to make patients easily access the health care they need.

For those who are less fortunate, the government provides several types of assistance, such as premium subsidies, fnancial assistance for the poor and medical assistance for the disadvantaged, to make sure that they have access to medical services. In addition, the policy of unlocking NHI cards removes the fetters imposed on fnancially disadvantaged people who fear seeking medical care because of overdue premium payments. One of the core values of Taiwan's NHI programme is to remove fnancial barriers in health care for people through the NHI fund. This explains why the NHI can cover catastrophic diseases, such as haemophilia, which makes a patient cost 97 times as much as the average patient. The strategies for pursuing health equity through the NHI will be introduced in Chap. 5.

### *The Information System of the National Health Insurance*

The NHI MediCloud system provides medical professionals with patients' medical data to ensure drug safety and enhance healthcare quality. Medical professionals use the system online to view patients' previous important data and images when patients visit them or are hospitalised. Medical professionals can read patients' records of medications, surgeries, tests and exams, medical images, history of drug allergies, etc., through a secure virtual private network.

Figure 1.7 depicts the reduction rates of overlapping medication with the use of the NHI MediCloud system. In terms of overlapping days, the prescriptions of six selected drugs for chronic diseases with the same pharmacological action have signifcantly decreased by over half from 2014 to 2020, resulting in not only a savings of more than US\$ 10 million but also making patients safer.

Furthermore, the NHI MediCloud system can improve the utilisation effciency of medical resources. Physicians can view patients' medical images, such as computed tomography (CT) scans, magnetic resonance imaging (MRI), X-rays, ultrasound images and endoscopic images, uploaded by other healthcare providers.

Smart card technology has been adopted since 1 January 2004. The NHI card contains records of a patient's last six visits, drug prescriptions, drug allergies, catastrophic diseases, consent for organ donation, consent to palliative care and consent

**Fig. 1.7** The overlapping rates of medication with the use of the National Health Insurance MediCloud system

to a 'Do not resuscitate' (DNR) order (Fig. 1.8). The NHI card can also be used to monitor high-utilisation patients and detect fraud by analysing data that are uploaded daily. It can also help to identify potential carriers of communicable diseases in major epidemic outbreaks. Over the years, cloud computing technology has also been applied to give the card additional and more powerful functions, and the Virtual NHI Card Pilot Plan is also underway (Fig. 1.9).

To heighten awareness of self-care and preventive health care, 'My Health Bank' was established. People can initiate their 'My Health Bank' account by authenticating themselves on a mobile phone or computer to access their health data anytime anywhere. 'My Health Bank' provides people with 3 years of medical data, medication records, test and exam results, vaccination records, as well as other useful services, including online named-based medical mask purchases (Fig. 1.10).

**Fig. 1.8** The records on the National Health Insurance card

**Fig. 1.9** The Virtual National Health Insurance Card Pilot Plan

**Fig. 1.10** My Health Bank

**Table 1.2** Digital technologies in response to COVID-19

To prevent COVID-19 from spreading to communities during its early phase, since January 2020, the NHI MediCloud system has served as a real-time alert for healthcare providers. For any person with defned conditions, including foreign travel history, designated occupation, contact with a COVID-19 patient and a specifc clustering situation, the NHI MediCloud system allows healthcare providers to obtain these data in real time and pay the costs for health care, enabling effcient triage as well as rapid and accurate diagnoses.

Moreover, the NHI card is used for name-based medical mask purchase. People can go to pharmacies to buy government-supplied medical masks with their NHI cards. This system helped people to have access to medical masks at the beginning of the pandemic when there was a shortage of medical masks. The NHIA also releases data on mask sales timely to cooperate with non-proft groups to update their 'mask purchase map' apps. The NHIA also analyses and provides medical data to Taiwan's Centers for Disease Control, MOHW for pandemic surveillance (Table 1.2).

The NHIA has a huge health database with a grand collection of medical images and data. To facilitate the development of artifcial intelligence (AI) models for health care, researchers can apply to use these de-identifed CT and MRI images to develop AI for precision medicine applications to enhance the quality of health care. Several successful applications have been developed, including MedChex, a detection platform for COVID-19 with an accuracy rate of 92%; DeepMets+, a diagnostic model with an accuracy rate of 97% in detecting brain tumours and metastatic lesions; PANCREASaver, which automatically identifes pancreatic cancer with an accuracy rate of up to 91.1%. Moreover, the NHIA uses a cloud-computing platform for data cleaning, image labelling and data training to build a basis of valueadded NHI big data and facilitate analysis and research.

### **Achievement of the National Health Insurance**

The NHI has earned a good reputation among citizens of Taiwan and is considered to be one of Taiwan's most popular public programmes. The public satisfaction rate has improved from 39% in 1995, the NHI programme's frst year, to 61% in its second year and to more than 80% recently. According to a poll in 2020, public satisfaction with the NHI programme is 90.2% (Fig. 1.11).

**Fig. 1.11** The high public satisfaction with the National Health Insurance programme

The NHI has safeguarded the health of all nationals and residents since its inception. People are insured to have easy access to healthcare providers regardless of their ability to pay. The NHI has not only established a secure healthcare network for all residents in Taiwan but is also well-known internationally for achieving universal health coverage and providing comprehensive health care at an affordable cost. Public satisfaction is also high, and medical quality is assured.

The NHI plays a crucial role in improving people's health in Taiwan and has been sharing its successful experience with the rest of the world. However, the challenges it faces include rising life expectancies, increased prevalence of chronic diseases, technological advancement, as well as new drugs, which stimulate more innovative solutions. Therefore, 'My Health Bank' and the NHI MediCloud system were established to ensure the quality of health care and strengthen people's health. Furthermore, virtual NHI card and AI technology are currently applied to some pilot projects to achieve high-performing, effcient and secure operations.

### **The Critical Blueprints of Taiwan's National Health Insurance**

The outbreak of coronavirus disease has created a global health crisis that has had a deep impact on the way we perceive our world and everyday lives. Some countries were caught off guard by the sudden epidemic and struggled with disaster reduction. Taiwan employed the "National Health Insurance MediCloud System (NHI MediCloud System)" immediately as a platform to instantly update patient travel histories. This initial prevention measure received a positive response from the medical feld. *BMJ Opinion*, the top international academic journal, published an article on 21 July 2020, titled "What we can learn from Taiwan's response to the COVID-19 epidemic?". It explained Taiwan's use of medical information technology and

**Fig. 1.12** Applying artifcial intelligence to National Health Insurance big data

**Fig. 1.13** Main ideas of National Health Insurance

comprehensive medical information to facilitate a farsighted project to face the contagious disease.

With the breakthroughs and continuous development of science and technology each year, an artifcial intelligence (AI) wave has been sweeping the globe. Taiwan's National Health Insurance (NHI) system has accumulated a medical claims database for 27 years, which is the best foundation for developing AI applications and big data analyses for health care (Figs. 1.12 and 1.13) to gradually develop new medical economic models.

Taiwan has a strong and solid information technology background that can create a smart telemedicine model through information and communication network technology so that medical care is no longer limited by distance. In addition, "homebased medical care" is a new trend. Taiwan's National Health Insurance Administration (NHIA) encourages medical personnel to join the medical team. It is believed that more new medical technologies will be applied to home-based medical care in the future. Meanwhile, the NHIA has been establishing a new management system step by step.

Over the past two decades, although medical technology and equipment have progressed signifcantly, patients' clinical conditions have become increasingly complex. This has led to relative increases in labour resource requirements in practising treatments. As a frst step, the NHIA will review system fairness and payment standards.

Medical AI, precision medicine, new drugs, new medical devices and new medical technologies will provide medical care with a new economic model. These medical developments will affect medical management and new business strategies. "There is no chance to change without starting". Our original goal at the outset, to provide the best medical care for 23 million people and create a happy working environment for the medical profession, will never change. We also hope that all medical partners can offer more health education to the public with their professional knowledge so that together, we can conserve the precious resources of the NHI system.

There is still much room for improvement in our system, but it cannot be rushed. After all, there are certain procedures for implementing new policies. With the following, I would like to provide, as a reference for all sectors, a list of unreasonable phenomena that must be dealt with in the future. In the meantime, I will contemplate how they can be improved and the suggestions I would make.

### **Western medicine clinics**

### **Hospital**

### **Institutional elements**

	- (a) Under the same global budget category, relative value units (RVUs) are different under the jurisdiction of each regional division of the NHIA.
	- (b) Institutions in "regions in remote areas with insuffcient medical resources" should be recognised based on facts.
	- (c) The newly obtained "nursing fee", "transplant coordinator fee" and others were not actually paid to the service providers.
	- (d) Does the calculation formula for the annual growth of the global budget of NHI meet the actual conditions?
	- (e) The requirements for NHI-contracted medical institutions are loose. The excessive supply of hospitals and clinics indirectly induces medical demand.
	- (f) Has the "overseas medical reimbursement system" become a loophole?
	- (a) How to stop investigating cases that have already occurred and avoid recurrences?
	- (b) Is the intricate relationship between hospitals and "long-term care facilities" a major loophole?
	- (a) Have the drugs for rare diseases been controlled by specifc hospitals and doctors?
	- (b) There are too many drug items in the NHI system, and an exit mechanism or a competition mechanism should be established.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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# **Chapter 2 Income Strategy**

### **Po-Chang Lee, Mei-Hsin Chen, Shu-Ching Chiang, and Yu-Pin Chang**

### **Introduction**

National Health Insurance (NHI) is compulsory social insurance that adopts an independent fnancial system. The government bears the statutory obligation for the premiums but is not responsible for flling the income gap. Therefore, a stable and suffcient source of insurance income is the cornerstone of the sustainable operation of NHI.

### **Sources of National Health Insurance Income**

During the early stage of the NHI, premiums were calculated and collected based on regular salary income. As salaries have grown at a slower rate than medical expenditures, the fnancial gap of NHI has gradually expanded. To improve the fnancial condition and increase the fairness of premium contributions, besides actively seeking supplementary fnancial resources, the National Health Insurance Administration (NHIA) implemented the second generation of NHI in 2013. It began collecting "supplementary premiums" for non-recurring salary income and increased the government's overall contribution rate. Therefore, NHI income currently comes from premiums as well as other insurance income.

P.-C. Lee (\*) · M.-H. Chen · S.-C. Chiang · Y.-P. Chang

National Health Insurance Administration, Ministry of Health and Welfare, Taiwan, Taipei, Taiwan

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### *Premium Income*

National Health Insurance premium income includes regular premiums, supplementary premiums, and a 36% difference contributed by the government. Regular premiums are billed according to the occupation and salary of the insured. For instance, the insured classifed within categories 1, 2 and 3 are employees, and their premiums are calculated based on their monthly salaries. The insured classifed within categories 4, 5 and 6 pay premiums calculated based on the average premiums of the insured in categories 1–3, and a fxed insurance premium is charged. The calculation of supplementary premiums includes large bonuses, part-time wages, professional service income, dividend income, interest income, rental income and the difference between the total monthly salaries paid by employers (the insured units) and the total payroll basis of the employees. In addition, the current premiums are paid by the insured, the insured units, and the government at the statutory rate, and the NHI Act specifes that the government's contribution to annual premiums must be at least 36% of the total. Therefore, when the government's contribution is less than 36%, other budgets must be allocated to make up for it. Other insurance income includes tobacco health and welfare surcharges, public welfare lottery earnings that are distributed to reserve funds by law, overdue charges for late payments of premiums and net investment income.

### *Proportions of Various Sources of Income*

The analysis is based on the NHI system's income sources in 2020 (Fig. 2.1). Total insurance income is New Taiwan dollars (NTD) 627.8 billion. The premium income (comprising regular premiums, supplementary premiums and the 36% difference contributed by the government) is NTD 614.3 billion, accounting for 98% of total revenue, and it is the main source of income. Other income is NTD 13.5 billion,

**Fig. 2.1** The amounts and proportions of various sources of insurance income in 2020

**Fig. 2.2** The amount and proportion of the tripartite burden of premium income in 2020

accounting for only 2% of total revenue. The tripartite premium burdens of the insured, employer-owned private enterprises and the government (Fig. 2.2) accounted for NTD 207.2 billion (34%), NTD 185.9 billion (30%) and NTD 221.1 billion (36%).

### **Enrolment Eligibility and Premium Calculations**

The NHI provides universal coverage to all citizens of Taiwan who have previously participated in the NHI within the last 2 years and have a registered domicile in the Taiwan area. Those who have had a registered domicile in the Taiwan area for 6 months, and any person with an alien resident certifcate for the Taiwan area who has resided in Taiwan for at least 6 months must participate in the NHI and pay premiums, whether staying in Taiwan or abroad. The right of the insured to access medical care is protected, whether they suffer from illness or injury or require reproductive care. Since the implementation of Taiwan's NHI, it has undergone several revisions to gradually expand its coverage to nationals with a registered domicile, new immigrants, foreigners stationed long term in Taiwan, overseas Chinese and foreign students, military personnel, and inmates at correctional facilities.

### *Classifcation of the Insured*

The NHI classifes insureds into six categories based on occupation, status and some specifc groups to which they may belong. Categories 1–4 classify those insured by their occupational groups; category 5 consists of members of low-income households; and category 6 consists of veterans or dependents of deceased veterans and heads of households or household representatives other than the abovementioned insured and their dependents. The insured should participate in the NHI system in order of eligibility from category 1 to category 6 (Table 2.1).

**Table 2.1** Classifcation of those insured and their insured units

### *Calculation of Premiums*

The NHI premiums adopt the principle of ability to pay, and the computation varies according to the category of those insured. The premium paid by the insured (the public), the insured units (employers), and the government is divided into regular premiums and supplementary premiums (Table 2.2).

	- (a) Regular premium. The regular premium is calculated based on income from labour services such as regular wages; the dependents' premiums are paid by those insured, and the maximum number of dependents is three, even if the actual number is higher.
	- (b) Supplementary premium. The second generation of NHI was implemented on 1 January 2013. Items such as large bonuses, part-time wages, professional service income, dividend income, interest income and rental income not included in calculating the regular premium are included in the billing

**Table 2.2** Calculation of National Health Insurance premiums

Notes:

1. Effective January 2021, the regular premium rate is 5.17%, and the supplementary premium rate is 2.11%.

2. Part-time wages—wage income not paid by the insurance registration organisation of those insured.

basis for supplementary premium. Expanding the premium base can ensure that persons with equivalent incomes pay similar premiums, thus improving the fairness of the burden.

	- (a) Regular premium. The regular premium is calculated based on labour income such as regular employee wages.
	- (b) Supplementary premium. The supplementary premium is collected on the difference between the total monthly salaries that employers actually pay their employees each month and the total payroll basis for those employees.

### **Calculation of the Premium Rate**

To maintain the fnancial independence and liability system of the NHI, the National Health Insurance Act stipulates that the annual premium rate should be reviewed each year. In principle, the total amount of the NHI reserve fund must be at least 1–3 months of insurance payments. Hence, the actuarial calculation plays a crucial role in reviewing the annual premium rate.

### *The Annual Premium Rate Review Process*

Following the second generation of NHI implementation, the annual premium rate review process has gradually applied an income/expenditure linkage mechanism. The National Health Insurance Committee (NHIC), comprising the insured, employers, insurance medical service providers, experts, reputable public fgures, and representatives from relevant agencies, negotiates the total amount of the next year's global budget each September. After accounting for the estimated insurance income, the committee decides the annual premium rate. Because the annual premium rate has to be announced within certain time frame, the National Health Insurance Act stipulates that the NHIC must complete the rate review process 1 month before the start of the next year and submit it to the Ministry of Health and Welfare (MOHW) to obtain the Executive Yuan's approval. If the annual premium rate review process cannot be completed within the specifed time, the MOHW will submit the suggested rate for the Executive Yuan's approval (Fig. 2.3):

### *The Financial Structure of National Health Insurance*

The fnancial structure of NHI is mainly composed of three parts, including the insurance income, the insurance costs and the reserve fund.

Insurance income includes the premium income and other insurance income, which is mainly used to cover the insurance costs such as medical expenses for the insured. Among them, the premiums account for about 98% of the insurance income, which is the most important source for the income of NHI. The premiums include the regular premiums, the supplementary premiums and the 36% difference contributed by the government. Other insurance income includes tobacco health and welfare surcharges, public welfare lottery earnings distributions, overdue charges for the premiums and net investment income.

**Fig. 2.3** National Health Insurance annual premium rate review procedures

#### 2 Income Strategy

As for the insurance costs, it includes the insurance payment and other insurance costs. Among them, insurance payment accounted for about 99.95% of the insurance costs. It is the total amount of medical beneft payments determined in the agreement, after deducting the expenses borne by the insured, the amount of subrogation compensation and tobacco health and welfare surcharge subsidies for raredisease medications (Fig. 2.4). Other insurance costs include expenditures for improving the effectiveness of insurance services, small shortfall payment of the premiums and reissuance checks that have not been cashed for more than 2 years.

The function of the reserve fund is to adjust the income and costs of NHI. If there is a balance between the income and costs of the insurance in the current year, the balance shall be deposited into the reserve fund. On the contrary, the reserve fund will be used to fll shortfalls between income and costs (Fig. 2.5).

**Fig. 2.4** Insurance cost architecture

**Fig. 2.5** Correlation of the reserve fund, insurance income and insurance costs

### *Establishment of an Actuarial Model to Calculate the Premium Rate*

The NHIA uses three major components of fnancing NHI to establish the current actuarial model for the premium rate. In accordance with the regulations of the NHI Act, the actuarial calculation of the premium rate adopts the method of "adjust income to expense", and the premium rate is calculated based on the principle of covering insurance costs and maintaining the total reserve fund for 1–3 months of the insurance payment. The description of the model is as follows:

> Pt *r S* Bt *t* St *St* St 1 1 1/ / 2 3 Bt St 12 Bt

*r* is the balance of the premium rate for year *t*. *Pt* is the insurance income of year *t*, including the premium income and other insurance income. *Bt* is the insurance costs for year *t*, including insurance payment and other insurance costs. *ΔSt* is the amount of the reserve fund for year *t*. *St* is the balance of the reserve fund at the end of year *t*.

The premium actuarial model of NHI refers to the population projection data from the National Development Council, various historical changes and trends, the major policies that may have a great impact in the future, medical service costs (e.g. new drugs and treatment items), goals of medical policy, reasonable growth of medical expenses, the introduction of new medical technology and other factors to estimate insurance income and insurance costs. Then, according to the pre-set rate, the premium income and other insurance income under this rate is calculated to determine whether the total income this year is enough to cover the annual estimated insurance costs and meet the required amount of the reserve fund. By adjusting the rate value repeatedly in this way to derive the minimum rate value that equates both sides, the balance rate that meets the legal standard for that year is fnalised.

According to the trial calculation results of the premium rate actuarial model, the NHIA submits a premium rate proposal to the NHIC (a task force under the MOHW) for discussion. The actual premium rate determined by the MOHW must be sent to the Executive Yuan for fnal approval.

### **Co-payments Under the National Health Insurance Act and How They Are Charged**

To make the proper use of the medical resources of the NHI, the NHI Act clearly stipulates the co-payments of the outpatient and the inpatient. In addition to the premiums, those insured also need to pay a part of the medical expenses when seeking medical care. This increases the cost awareness of the insured and prevents the insured from using medical resources at will because of paying the premiums. It further reduces unnecessary medical care and enhances the effciency of the payments.

According to the NHI Act, the outpatient co-payment can be calculated and divided into two systems called the "fxed-rate system" and the "fxed-quota system", and each system has its own advantages and disadvantages. The current outpatient co-payment employs the "fxed-quota system". When NHI was launched 27 years ago, a "fxed-rate system" was considered to pose too-large an economic burden, which would create an economic barrier for economically disadvantaged people seeking medical care. Therefore, in accordance with Article 43, Item 3 of the NHI Act and Article 61 of the Enforcement Rules of the NHI Act, a fxed-quota system was adopted and promulgated to charge a certain amount for the basic outpatient and emergency care co-payments, outpatient medicine co-payments and co-payments for outpatient rehabilitation (including Chinese medicine traumatology) for patients receiving follow-up treatment (apart from the moderate to complex and complex items of the rehabilitation physical therapy), and they have been used until now.

According to the NHI Act, the inpatient co-payment adopts a "fxed-rate system" and charges 5–30% of the inpatient medical expenses depending on the acute and chronic wards and the length of hospitalisation.

### *Co-payments for Outpatient Visits*

At the initial establishment of the NHI, the public did not understand the level of medical institutions and the related operations with or without a referral. Therefore, there was a period when the Western medicine outpatient co-payment could not be determined with or without a referral. On 15 July 2005, the Western medicine outpatient co-payment was set. It is charged according to the level of the medical institution, and there are distinctions between visits with and without referrals.

To promote a tiered medical care system and increase primary medical service capacity, diversions and referrals of patients are based on professional medical opinions to ensure that medical institutions at all levels can perform their duties through the division of work and cooperation in care. The co-payment adjustment plan for the National Health Insurance's outpatient and emergency care was implemented on 15 April 2017. The outpatient co-payment for patients referred to medical centres and regional hospitals has been reduced. However, the outpatient co-payment increases if one goes to a medical centre or regional hospital without a referral. Thus, the current outpatient co-payment structure of the NHI is as follows:

1. Basic co-payment for outpatient visits (Table 2.3): Western medicine outpatients at all levels with and without referral, NTD 170 and NTD 420 for medical centres, NTD 100 and NTD 240 for regional hospitals, NTD 50 and NTD 80 for district hospitals, and NTD 50 for clinics, dental medicine care and Chinese medicine.

**Table 2.3** National Health Insurance co-payments for outpatient visits

### *Co-payments for Emergency Care*

In the initial stage of establishing the NHI, the basic co-payment quota for emergency care is set according to the types of medical institutions. The purpose is to make effective use of emergency medical resources in hospitals. In order to return the medical centre to the role of emergency intensive care, the co-payment of emergency care was adjusted on 15 April 2017. To the medical centre's emergency

**Table 2.5** Co-payments for emergency care

**Table 2.6** Co-payment rates for inpatient care

**Table 2.7** Co-payment ceiling per hospitalisation and for the entire year

department, the co-payment of Grades 3, 4 and 5 of the triage grades are NTD 550, and Grades 1 and 2 are NTD 450 respectively. The co-payment of the regional and district hospitals' emergency care remains at NTD 300 and NTD 150 respectively (Table 2.5), guiding people to change their medical habits and to cherish emergency medical resources.

### *Co-payment Rates for Inpatient Care*

In accordance with Article 47 of the NHI Act, the inpatient co-payment will charge 5–30% of hospitalisation medical expenses according to the acute and chronic wards and the length of hospitalisation (Table 2.6).

The maximum amount of the co-payments to be borne by the insured per hospitalisation in an acute care ward for not more than 30 days or in a chronic ward for not more than 180 days for the same illness and the maximum amount for the accumulated co-payments for the whole year shall be determined by the competent authority (Table 2.7).

The co-payment mechanism in the NHI Act refects the spirit of social insurance. In every country that implements social insurance, a co-payment system will be formulated to remind everyone that medical resources are precious. Because the medical resource should be used to help people who are sick, it should be spent where it is most needed, and it must be used appropriately.

There are many opinions from all stakeholders regarding the adoption of a "fxed-rate system" or a "fxed-quota system" for co-payment. There is no perfect policy. We can only seek a balance between the tendencies of the policy goals to achieve sub-optimal effects. It is also hoped that the public will realise that "the National Health Insurance is the property of the whole people" and cherish the resources of the NHI.

### **Fair Burden─Change Unnecessary Health Care [1]**

To maintain fnancial balance and protect disadvantaged groups, the Minister of Health and Welfare, Shih-Chung Chen, increased the premium rate of the NHI from 4.69% to 5.17% in 2021. Then, the annual premium contributed by 890,000 business owners increased by NTD 19.3 billion, and the government's annual expenditure has increased by NTD 23 billion. For about 1.26 million people who originally received full government subsidies, their premiums are still borne by the government. However, such a premium income is still not enough to balance the continuously growing medical expenses. There must be fnancial management supporting measures to make good use of the resources of the NHI to which everyone contributed.

### *The Value of National Health Insurance Manifests When Major Illnesses Occur*

The fnancial mechanism of the NHI is that an annual medical global budget is set frst, and medical services are paid in relative value units (RVUs). If medical institutions only focus on increasing the number of medical services delivered or drugs prescribed, then the more RVUs exceed the global budget, and the lower the value of the RVUs will be. Moreover, the same medical behaviour will result in a reduced monetary return. Medical ethics is the cornerstone of medical behaviour. We hope to communicate and work with the medical profession and the public, to confront human nature practically, and that the medical profession may contribute highquality medical services with pleasure.

Academia and medical profession have different opinions on whether Taiwan's NHI is social welfare or social insurance. Some people think that the monthly premiums or supplementary premiums are expensive when they are not in need of medical treatment. However, they realise the core value of the NHI when they or their loved ones have major illnesses.

### *Provide the Best Drugs for Patients in Need*

From 2018 to 2020, the NHIA included 55 new antineoplastic drugs covering 16 types of cancers with the assistance of medical experts. This annual drug expenditure amounts to NTD 12.8 billion. The coverage expansion is estimated to beneft more than 8000 patients each year. At the same time, 20 drugs for rare diseases were also included, with an annual drug expenditure of NTD 1.6 billion, to beneft more than 1000 patients. There is an annual drug expenditure of NTD 3.5 billion for hepatitis B, benefting about 90,000 patients each year. The accumulated expenditure on new oral drugs for hepatitis C is about NTD 20.2 billion. More than 110,000 patients benefted from the policy.

Only patients will not forget about the physical and mental suffering caused by diseases and the fnancial pressure caused by striving to obtain the best medical treatment that they and their families can bear. Providing patients who are really in need with the best medication is the priority and goal of the NHIA.

### *Avoid the Vicious Circle*

By analysing outpatient medical expenses, we found that medical personnel's labour income "Diagnostic Fee" only accounts for 17.7%, and the proportion is declining year by year. The "Medication Fee" accounts for 27.2% and the "Examination and Test" accounts for 12.5%, and both proportions are increasing every year. Obviously, many resources are shared by machines and medicines rather than labour and expertise. This ecology is a vicious circle that the NHIA and the medical profession must face seriously.

Therefore, Minister Shih-Chung Chen proposed three major reform directions:

The essence of the "User Charge" is the "Fair Burden", which is more in line with the concept of health insurance for the young generation who truly bears the fnancing of the NHI. Only by controlling quantity with price can we raise people's cost awareness of health care. We must tackle the overuse of health care together through communication with the medical profession and patients.

### *Drug Co-payments May Increase Slightly*

The ceiling of the co-payment for drugs, which is currently NTD 200 may be raised slightly. The co-payment for examinations and tests, which were not collected before, may also be charged according to the level of medical institutions that perform the examinations and tests. The NHIA is also discussing restoring the copayment for refllable drug prescriptions for chronic illnesses, and co-payment for those who have major illnesses.

The purpose of "increasing co-payment" is not to increase the fnancial income of the NHI but to reduce unnecessary medical behaviours of the people and doctors. When clinicians have more time to take care of patients, the quality of care will naturally improve. It also helps clinicians to earn reasonable rewards and prevents medical staff burnout.

### **Conclusion**

A stable and suffcient source of insurance income is the cornerstone of the sustainable operation of the NHI. The actuarial calculations of the premium rate and fnancial estimation help to understand the future fnancial situation of the NHI and respond early.

The co-payment not only raises cost awareness of the insured when using the resources of the NHI but also realises the spirit of user charge. It can motivate people to seek proper care in a tiered healthcare system and achieve the goal of effective medical resource utilisation and sound fnancial security of the NHI.

The NHIA is committed to protecting the rights and interests of disadvantaged groups with proactive actions. We also look forward to seeking consensus through social dialogues and identify more disadvantaged groups in need of help. As everyone may get sick, it is the responsibility of the government to protect people's health effectively. By doing so, we can guarantee the appropriate distribution of medical resources and the sustainable development of the NHI. Let us work together for the sustainability of the NHI.

### **Reference**

1. 20210111 健康名人堂, United Daily News.

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### **Chapter 3 Payment Structure**

**Yu-Pin Chang, Yu-Chuan Liu, Wen-Wen Chang, Chun-Fu Lee, Chun-Mei Lin, Shu-Hwa Lin, and Min-Yu Lee**

### **Introduction**

After medical institutions provide medical services to patients, the insurer—the National Health Insurance Administration (NHIA)—pays them through various measures constituting a "payment system." The various payment methods include fee-for-service, case payment, per diem payment, pay-for-performance, Taiwan diagnosis-related groups (Tw-DRGs), capitation payment (in the pilot program), and global budget payment (Fig. 3.1). Different payment systems infuence how medical providers deliver medical services, which subsequently affects patient treatment and care. At the same time, they have a tremendous impact on the overall growth in medical expenses, the allocation of medical resources, and medical effciency and quality. Therefore, how to choose a more appropriate payment system requires further discussion.

The payment system of health insurance in most countries is "fee-for-service," that is, the more you do to patients, the more money you make. The advantage is that the doctors can decide the treatment according to the disease severity, patient's need, and the volume of medical services provided is related to remuneration. The disadvantage is that the insurer pays strictly for the medical services the doctor provides with no consideration of treatment quality or effcacy, thus creating no incentives for medical providers to reduce the number of unnecessary medical services they provide.

Although the diversifed payment methods have been implemented successfully, the "fee-for-service" is still the main payment method, which results in fast-growing medical expenses. In addition, the medical resources are limited, so the global

Y.-P. Chang (\*) · Y.-C. Liu · W.-W. Chang · C.-F. Lee · C.-M. Lin · S.-H. Lin · M.-Y. Lee National Health Insurance Administration, Ministry of Health and Welfare, Taipei, Taiwan e-mail<EMAIL_ADDRESS><EMAIL_ADDRESS><EMAIL_ADDRESS><EMAIL_ADDRESS>tw<EMAIL_ADDRESS><EMAIL_ADDRESS><EMAIL_ADDRESS>
**Fig. 3.1** Evolution of the National Health Insurance payment system

budget payment system was implemented in 2002 to promote reasonable use of medical resources and strike a balance of conficting interests between payers and medical service providers under the negotiation mechanisms.

The National Health Insurance (NHI) Fee Schedule is adjusted from the macro and objective perspective to promote appropriate and high-quality medical behaviors. The NHIA constantly revises the fee schedule to encourage medical providers with reasonable medical payments and improve the current medical environment.

### **Different Payment Methods in the National Health Insurance System**

### *A Simple Explanation of the Global Budget Payment System*

In the global budget payment system, the payers and the medical service providers negotiate the total medical expenditure (global budget) in advance for certain medical services, including dental outpatient, Chinese medicine outpatient, Western medicine outpatient, and inpatient services for the future period (usually 1 year ahead) and reimburse the medical services provided by each medical department during the period. A payment system such as this is aimed at ensuring the fnancial balance of health insurance.

#### 3 Payment Structure

Taiwan's NHI global budget has "upper limit expenditure." The annual global budget for health insurance expenditures is allocated in advance based on the growth of the cost and the volume of medical services. The relative value units (RVUs) of medical services refect the costs of those services, and the amount paid per RVU is retrospectively priced by dividing the actual total medical service volume (RVUs) into the global budget cap. When the actual total medical service volume is greater than the originally agreed-upon total medical service volume, the payment amount per RVU decreases, and conversely, if the total volume is less than the originally agreed-upon total, the payment amount per RVU increases. Because this payment system has a fxed annual global budget, the medical expenditures can be controlled precisely. Medical providers will be aware of the annual global budget in advance, so incentives to obtain excessive remuneration by providing excessive medical services can be reduced through peer constraints. Therefore, overall medical behaviors should be inclined toward a reasonable direction.

### *Introduction to Each Payment Method*

based on the length of stay at the hospital and the per diem payment, for example, chronic psychiatric inpatient, inpatient hospice.

6. Capitation payment: capitation is a prospective payment method that providers are paid in a fxed amount per patient, and the medical expenses are prearranged between the insurer and the medical providers based on the different health types of patients, for example, age, gender, medical cost. By building an integrated medical care system and emphasizing the concept of patient-centered care, preventive health care, acute and chronic disease care, and other health care are provided by specifc medical providers for the comprehensive care.

The advantages and disadvantages of each payment system are described in Table 3.1.

### *Implementation of Pay-for-Performance and Bundled Payment in Recent Years*

The promotion for the pay-for-performance payment method is carried out by several projects. The process indicators and the performance indicators are set in each project, and medical institutions receive additional rewards according to their implementation conditions. In 2019, the total RVUs of the implementation of payfor-performance projects were 1.42 billion, and the implementation status is shown in Table 3.2.

In 2019, the number of case payment cases totaled 406,000, medical expenses totaled 9.84 billion RVUs, and the number of medical visits amounted to approximately 315,000, all showing an increasing trend year by year. In addition, the Tw-DRGs have been implemented under the NHI since 2010. A total of 401 DRGs were implemented in the frst and second phases in January 2010 and July 2014 respectively. After the DRG reclassifcation in 2020, a total of 407 DRGs have been implemented. In 2019, the medical expenses of DRGs accounted for 18% of the overall inpatient medical expenses.

### **Global Budget Payment System**

Because the global budget is negotiated by payers and medical providers through the platform of the National Health Insurance Committee (NHIC), in theory, various cost factors have been fully considered. As a consensus on the budget has been reached (or directly approved by the health authority without a consensus), providers have to reach professional consensus among their peers by exercising strategies such as fle or data analysis, resource sharing to reduce medical service volume and increase the RVU value and eventually avoid falling into a vicious circle of doing more and receiving less.

**Table 3.1** Comparison of the advantages and disadvantages of various payment methods

**Table 3.2** The implementation of various pay-for-performance projects in 2019

Note:

1. Cases: the cases were actually claimed under the project among all inpatient and outpatient claims in 2019

2. Care rate: the numerator is the number of the cases actually claimed under the project among all inpatient and outpatient claims in 2019; the denominator is the number of cases claimed under the project with a specifed diagnosis code

### *Planning the Annual Global Budget*

As the global budget is determined in advance, the negotiating procedure for the annual global budget occurs before the beginning of the year. The health authority—the Ministry of Health and Welfare (MOHW), taking into account the country's overall economic development and the medical needs of the people, drafts the global budget range for the next year. After consulting the NHIC, the drafted global budget will be submitted to the Executive Yuan for approval 6 months before the start of the year. Then the NHIC, which is composed of representatives of the insured, employers, medical institutions, experts, and scholars, is responsible for the negotiation (Fig. 3.2).

Taking the global budget in 2021, for instance, the MOHW suggested that the range of global budget growth rate in 2021 should be 2.907–5.0% after comprehensively considering factors such as overall population growth, aging, medical service costs, new drugs, and special medical devices, allocation of medical resources, and healthcare quality. After being submitted to the Executive Yuan for reconsideration,

**Fig. 3.2** Procedure for negotiating the annual global budget

**Note: According to Article 60 of the National Health Insurance Act, the annual global budget of medical expenses shall be drafted by the health authority and submitted to the Executive Yuan for approval after consulting the NHIC**

the range was approved to be 2.907–4.5% and transferred to the NHIC for negotiation. Eventually, the global budget growth rate for 2021 announced was 4.107%, and the global budget was New Taiwan dollars (NTD) 783.6 billion.

The global budget is allocated quarterly, which means the payment amount per RVU is retrospectively settled after the end of the quarter, so the situation that the budget is used up before the end of the year will not happen.

### *Global Budget Distribution and Management*

Taiwan's National Health Insurance Act (hereinafter referred to as the NHI Act), which stipulates the implementation of the global budget payment system, the global budget of dental outpatients, Chinese medicine outpatients, Western primarylevel clinics, hospitals, and other budgets (not covered by the global budget of the four departments mentioned above and the cross-departmental budget), was implemented since July 1998, July 2000, July 2001, and July 2002 respectively. Therefore, it can be said that Taiwan has fully implemented the global budget payment system since July 2002.

Moreover, to promote the balanced medical resource allocations, the principle of "the budget follows the people" is used when distributing the budget to the six districts to strengthen the fnancial and healthcare responsibilities of each district. For example, in the frst year when the global budget of dental outpatients was implemented, 10% of the global budget was distributed according to the adjusted "population risk" of each district and 90% was distributed according to the actual proportion of medical expenses for benefciaries in each district in the year before the global budget of dental outpatients was implemented. In 2007, the budget distribution was 100% based on the number of those insured and adjusted according to the "population risk" of each district.

The distribution of the global budget of each department and the regional budgets are macrolevel strategies, and microlevel supporting measures are still necessary to improve the effciency of medical services and reduce medical waste, for example, active investigation and punishment with violations, payment system reforms, fee schedule adjustment, motivation for effective medical services, review system improvement, information system upgrade, enhanced peer management among the medical profession, promotion of My Health Bank system.

The annual global budget is the result of the negotiation and mutual understanding between the payers and the medical providers. Every dollar of the global budget also comes from the premiums paid by those insured, so it must be spent in a worthy way to buy necessary medical care. Medical waste is the last thing we want to see. Therefore, purchasing medical care of higher effciency and better quality through the improvement of the payment system is the overall goal of the insurer.

### *Reducing the Provision of Unnecessary and Excessive Medical Services to Increase the Value of the Relative Value Unit*

The COVID-19 pandemic has caused a signifcant decrease in the number of medical visits in 2020. The number of outpatient visits was 360 million in 2018 and increased to 368 million in 2019. Instead of increasing continuously, the number of outpatient visits decreased to 340 million in 2020, which was 28 million less than the number in 2019 and 20 million less than the number in 2018 (Fig. 3.3). During this period, there were no major changes in people's health.

**Fig. 3.3** Weekly moving average of outpatient visits (full calendar year 2018 vs. 2019 vs. 2020)

#### 3 Payment Structure

Because the global budget has been fxed, the reduction in the number of medical visits does not reduce the income of the medical institutions from the NHI global budget. On the contrary, owing to the increase in the RVU value, doctors can get the same amount of income as before, without seeing as many patients and this is the path that we have been following. Doctors can concentrate on treating patients properly instead of making reparative appointments and providing more and more medical services to create potential RVUs. This concept was verifed during the pandemic. According to the preliminary settlement results of the global budget, the RVU value of the primary-level Western clinics in 2020 is expected to reach more than NTD 1 per RVU.

### *Relative Value Units and Relative Value Unit Values are the Overall Causes and Outcomes of Each Other*

Generally speaking, there is a 7–9% gap between the claimed RVUs and the global budget (Fig. 3.4). Even when only taking the approved RVUs into consideration, there is still a gap of 2–4% from the global budget. According to the RVU growth trend of outpatients and inpatients (Fig. 3.5), the growth rate of outpatient RVUs is higher than that of inpatients, and the percentage of outpatient RVUs reached almost 70% in 2019. With further analysis of outpatient RVUs, the growth rate of medication costs and diagnostic and treatment costs (including examination and test costs) is higher.

Some doctors complain that the RVUs for certain items are too low, but the RVU values often drop after the RVUs increase. Some doctors are not satisfed with the low RVU value, hoping to fx the RVU value of certain medical specialties, diseases, or treatments within a certain range. However, with a limited global budget, when the RVU values of these items are guaranteed, the RVU values of other items inevitably drop. The dilemma of whether to raise the payment of certain items or to guarantee their RVU value and fairly satisfy providers' requests is indeed a diffcult problem to address.

To promote the tiered medical care and encourage large hospitals to transfer stable chronic outpatients to primary medical institutions, it is necessary to relatively increase the payment of emergency and critical care to large hospitals. After patients are transferred to the primary medical institutions, it is also crucial to enhance the capability of primary care providers with appropriate payment to maintain the patient's confdence in seeking medical care from them continuously. Both of these goals could be effectively attained by increasing the RVU and guaranteeing the RVU value.

**Fig. 3.4** The difference between the global budget and the claimed and approved relevant value units (RVUs) from 2009 to 2019

**Note:**

**1. Global budget (blue), approved RVUs (green), and claimed RVUs (red), excluding other departments**

**2. Approved RVU value: global budget/approved RVUs (green)**

**3. Claimed RVU value: global budget/claimed RVUs (red)**

### *Adjusting Relative Value Units to Promote Balanced Development of Medical Specialties*

After the implementation of a global budget payment system, each medical treatment was related to a corresponding payment of RVUs. However, the medical environment has changed since the NHI system was launched 27 years ago. The cost of treatments related to emergency and critical care has risen rapidly, so the relevant payment also needs to be modifed accordingly. To avoid uneven development among the medical specialties, the NHIA has actively striven for budgets to universally increase the payment for main departments such as internal medicine, surgery, obstetrics and gynecology, and pediatrics in recent years.

Over the past 3 years, a budget of NTD 19.5 billion was allocated to adjust the payment for Western medicine, including:

1. In 2017, NTD 11 billion was invested to increase the RVUs of emergency and critical care, including the markup rate of ward fees of district hospitals, inpatient nursing fees, and outpatient diagnostic fees; the frst-stage outpatient diagnostic fees in primary medical institutions were increased by 20 RVUs.

**Fig. 3.5** Trends in the number of outpatient and inpatient claimed relevant value units (excluding other departments) and the number of the patient population from 2009 to 2019

### *Guaranteeing the Relative Value Unit Value to Encourage Investment in the Healthcare Workforce*

Human resources is the most valuable asset of healthcare facilities. However, medical professionals often complain that they have worked hard without getting the "affrmation" they deserve. Because the RVU value for medical professionals' labor or machine output fuctuates in the same way under the NHI global budget payment system, it is no wonder that medical professionals are frustrated by how labor was undervalued. According to big data analysis, the examination-related proportion of costs has shown an increasing trend, whereas the cost of diagnosis carried out by medical professionals has gradually decreased.

As it is diffcult to cultivate medical professionals, their efforts should not be overlooked by fuctuating RVU values in the global budget. Therefore, in addition to securing the RVU value for items such as operations and anesthesia, which are carried out mostly by medical professionals, the NHIA also guaranteed the RVU value for emergency and critical care in big hospitals and for the medical services provided at night and on holidays by small hospitals to realize the spirit of tiered medical care. The NHIA has secured NTD 1 billion and NTD 500 million for these two items respectively in 2021. Depending on the outcome of budget negotiation, in the future, the NHIA will endeavor to improve the overall medical environment step by step.

### **Establishment and Revision of Fee Schedule**

After clinical medical professionals provide patients with medical services such as diagnoses, examinations and tests, treatment, surgery, and anesthesia, they are paid according to the "NHI Fee Schedule and Reference List for Medical Services" (hereinafter referred to as the Fee Schedule) by submitting a claim for medical costs to the NHIA under the categories of Western medicine, dental services, Chinese medicine, home care, psychiatric community rehabilitation, case payment, etc. The NHIA has continued to allocate budget for expansion and revision of treatment items to further refect technological progress, clinical needs, and reasonable rewards for health professionals. At present, nearly 4,600 medical service items are included.

### *Fee Schedule Revision Procedure*

Because the revision of the fee schedule involves the cost of medical institutions and the clinical practice considerations such as the effcacy, safety, and technical profciency of each diagnosis or treatment, most revision proposals were submitted to the NHIA by medical institutions or related medical specialist associations. The application form includes Chinese and English names of new items, main clinical function and objectives, comparison with traditional diagnosis or treatment, estimated performing volume and NHI fnancial impact assessment; report with evidencebased data, cost analysis tables, operating procedures (including the number of hours invested by various medical professionals in each process) and supporting documents should also be submitted. After collecting relevant information and opinions from clinical professionals, and conducting comprehensive assessment,

**Fig. 3.6** Fee schedule revision procedure

**Table 3.3** Fee schedule revision process

the NHIA submits proposals to the "Expert Consultation Meeting on NHI Fee Schedule and Reference List for Medical Services" for approval, and then to the "NHI Fee Schedule and Reference List for Medical Services Joint Committee" for discussion. After the members of the committee agree on whether to include an individual item in the benefts of the NHI, the NHIA submits the agreed items to the MOHW, which announces the effectiveness of the inclusions. The complete procedure and process are shown in Fig. 3.6 and Table 3.3.

### *Health Technology Assessment*

After the implementation of the second-generation NHI in 2013, Article 42 of the National Health Insurance Act stipulates that the insurer shall adapt the health technology assessment (HTA), and shall consider human health, medical ethics, costeffectiveness of the treatment, and the fnancing of the National Health Insurance, to support the decision-making of the NHIA. Since 2013, the NHIA has started to carry out HTAs for costly medical technologies, medical treatments, and diagnosis items that have a large impact on NHI fnance, require literature confrmation on its effcacy or in-depth domestic cost-effective analysis.

Over the years, the HTAs of nearly 40 medical services has been completed, and new medical technologies that brought better medical outcomes and were proven to be safer and more cost-effective than traditional treatments according to relevant evidence were included in the NHI benefts through the discussion of the "Expert Consultation Meeting on NHI Fee Schedule and Reference List for Medical Services" and the "NHI Fee Schedule and Reference List for Medical Services Joint Committee." In total, fve items are covered by the NHI currently, including "transcatheter insertion or replacement of permanent leadless pacemaker," "molecular adsorbent recirculating system," "vagus nerve stimulation," "transcatheter aortic valve implantation," and "bipolar transurethral resection/plasma vaporization of the prostate." In addition, the surgical fees for "Da Vinci radical prostatectomy" and "Da Vinci robotic partial nephrectomy" are covered by the NHI as existing items (such as laparoscopy), whereas the medical devices remain out-of-pocket items.

The HTAs will continue to be conducted to support the decision-making on NHI payments. Furthermore, the NHIA will introduce "Health Technology Reassessment" for follow-up surveillance of the performance of diagnosis and treatment covered to ensure the quality of medical care and NHI fnancial stability.

### *Items Not Been Covered by the NHI*

According to the fee schedule, when the NHI-contracted medical institutions provide medical services not listed in the fee schedule, they should submit the claim based on the RVUs of the most similar items in the relevant category. Therefore, when a medical institution carries out a treatment or diagnosis not covered by the NHI, it should claim the reimbursement following the corresponding table listed in the "Claiming Standards of Items Not Listed in the Fee Schedule for the Contracted Medical Institutions" published on the NHIA's offcial website. For example, "left atrial appendage occlusion" should be claimed according to the current code 68005B "Cardiorrhaphy for heart wound or injury." As for other items that are not listed in the corresponding table, they should be claimed by the medical institutions as the most similar items in the relevant category of the fee schedule.

In addition, when people seek medical care and receive medical treatment not covered by the NHI, except for the out-of-pocket items, the rest of the items that are already covered are still paid by the NHIA. For example, when people seek medical care owing to illness and agree to receive the out-of-pocket "high-intensity focused ultrasound" operation, except for the out-of-pocket costs of the operation and related medical consumables, other inpatient costs during this hospital stay (including consultation fees, ward fees, examination fees, medicine fees, anesthesia fees, etc.) can be claimed via the NHIA. As for the necessity or appropriateness of the surgical treatment, it should be determined by their professional judgment and will be reviewed by medical experts of the NHIA.

### **Self-Management Plan Under the Global Budget Payment System and Corresponding Measures of Insuffcient Budgeting**

Since its inception in 1995, the NHI inherited the payment system of the Government Employees' Health Insurance and Labor Insurance, which reimburse medical expenses mainly in the "fee-for-service" system and supplemented by "case payment." On the basis of fee-for-service, the overall medical expenditure has increased signifcantly from NTD 143.3 billion in the frst year of the NHI to NTD 268.7 billion in 1998, which is almost doubled in just 4 years. Therefore, the NHIA has learned from developed countries such as Canada, Germany, and Australia, and implemented the global budget payment system in the dentist department in 1998. The global budget payment system was applied to the traditional Chinese medicine department and Western medicine clinics subsequently, as well as the hospital department in July 2002. The annual NHI medical expenses are negotiated and determined by the government, payers, experts, scholars, and medical service providers. The overall medical expenditure in 2020 has reached NTD 752.6 billion, a growth of 5.25 times in 25 years. After the implementation of the global budget payment system, when the growth of the global budget is less than that of the medical service volume, the value of each RVU is less than NTD 1, which means that the payment is the discounted. The medical professionals have often discussed this situation.

### *Self-Management Plan*

In order to allocate the limited global budget appropriately, the NHIA optimizes the returned deducted medical reimbursement from abnormal cases for hospitals to reuse. Each division of the NHIA also establishes a co-management mechanism with hospital representatives within its jurisdiction to negotiate and formulate a "self-management plan," which encompasses various cost control and quality assurance measures.

### *Subtracting Relative Value Units Directly*

The NHIA divisions set the "target value of the RVU" through the abovementioned co-management mechanism and allocate the "hospital-specifc global budget" to each hospital in advance. The NHIA divisions provide review exemption as an incentive for those hospitals that do not exceed the allocated quota to encourage self-management, hoping to avoid the devaluation of RVUs attributed to the signifcant growth in medical services. If the RVUs of medical services exceed the allocated quota, the excess will be subtracted directly or via a sampling rate in proportion with excess RVUs.

### *Sharing the Relative Value Unit Gap*

Some divisions of the NHIA estimate the value of the RVU at the end of the quarter. If the estimated value of the RVU cannot reach the preset "target RVU value," the differences between them will be shared by all hospitals. After negotiating special items (such as rare diseases, hemophilia, or anti-rejection medication after organ transplantation) and items that require guaranteed values, the hospitals share the gap of RVUs according to the "percentage of contribution to RVU growth" and "proportion of expenses," so that the value of the RVU can reach the target. In this way, each hospital claims with the better priced RVUs to acquire reallocated medical expenses.

### *Analysis and Refections*

It has been more than 27 years since the implementation of the NHI. People in Taiwan have a high level of freedom in seeking medical care, and the expectation of receiving high-quality service with low payment is so deeply rooted that controlling the volume of medical services is quite diffcult. In the past 20 years, the average RVU value in the hospital department has always been less than NTD 1 (Fig. 3.7).

The operation methods of each NHIA division are introduced as follows:

1. NHIA: Taipei Division

Taking the NHIA-Taipei Division (the largest division, which includes Taipei, New Taipei, Keelung, Yilan, Kinmen, and Lianjiang's six counties and cities) as an example, the annual difference between budget and claimed RVUs is as high as NTD 19.2 billion if the value of one RVU equates to NTD 1 in the past 5 years (Fig. 3.8). Using the aforementioned measures such as self-management, RVU subtraction, and RVU gap sharing, the Taipei Division barely maintains the value of one RVU to be higher than NTD 0.9. However, it is diffcult to remunerate hospitals properly for the medical services they provide. This so-called "sweat hospital" phenomenon indicates the room for improvement in management measures.

**Fig. 3.7** The relative value unit value of global budget for hospitals from 2006 to 2019

**Fig. 3.8** The relative value units claimed, budget, and difference in the NHIA Taipei Division (medical treatment business group)

### 2. NHIA: Northern Division

The approval process of RVU value and the quality improvement program for the global budget of the Northern District hospitals is described in Table 3.4.

### 3. NHIA: Central Division

**Table 3.4** Approval process of relative value unit (RVU) value and the quality improvement program for the hospital global budget of the Northern District hospitals

To safeguard the medical rights of the inhabitants of the area and protect the development of hospitals, the NHIA Central Division ensures reimbursement of fve specifc items by setting target RVUs for individual hospitals or overall quotas in the management program. The abovementioned items include long-term respirator usage management program, hospitals with quarterly claims under 36 million RVUs, RVUs for emergency triage classifcation level 1 or 2 and hospital stay for major trauma or cancer surgery, drug fee for outpatient and inpatient cancer chemotherapy, and single outpatient prescription for catastrophic illness with drug fee greater than 6000 RVUs. The Central Division refers to the original claim value of hospitals and peer claim value when formulating relevant management and control programs.

To prevent waste of medical resources while attaining service quality and rationality, the Central Division uses the unit price for outpatient and inpatient drug fees and nondrug fees as monitoring indicators. In addition, the quality indicators are integrated into the reward mechanism to improve the care quality of hospitals.

**Fig. 3.9** Risk control and quality improvement program implementation framework of the hospital global budget relative value unit value in the NHIA Southern Division

### 4. NHIA: Southern Division

The management methods of the NHIA Southern Division include "allocation in advance," which means one's voluntary compliance with the rules and "supervision afterward," which means one's compliance with the rules under others' supervision. The "Risk Control and Quality Improvement Plan of the Hospital Global Budget RVU Value of the NHIA Southern Division" is a kind of allocation in advance, which encourages self-management of hospitals by setting a "hospital-specifc global budget." The overall execution structure is shown in Fig. 3.9 and described as follows:

	- A. According to the available budget and the target value of the RVU negotiated by the medical professionals, the Southern Division acquired the total number of RVUs to allocate. Then the "hospital-specifc global budget" is formulated based on the proportion of each hospital's base period and the composition of providers (the number of medical personnel). This is a kind of quantity management. As the medical expenses consist of price and quantity, the Southern Division must also control the unit price as well as the total

amount. Therefore, the average drug fee and nondrug fee per person of the outpatient and inpatient clinics are managed based on their own comparison.

	- A. Group A self-manages within the budget and when the RVU claims exceed the upper limit of the target, the excess RVUs are subtracted directly. If the estimated RVU value is higher than the target value before settlement, the RVUs will be allocated back to group A for it is a contribution made by group A.
	- B. A developing hospital in group B is likely to fle more claims than the target RVUs. If the estimated RVU value is lower than the target value at the time of settlement, all hospitals in group B will share the total number of RVU differences, as group A has already taken the responsibility of subtracting the excessive RVUs. The growth in the number of patients cared for and the scope of claims is considered in the calculation and is excluded from the RVU deduction of group B.
	- C. Both group A and group B need to execute unit price management reduction. In quarterly settlements, group A reduces RVUs down to the upper limit target as it already has a direct subtraction mechanism, and the insuffcient part will be directly deducted from the target RVUs for the next year. As for group B, RVUs are reduced in the current quarter.
	- A. To balance the responsibility of caring for the patients in these two groups, the Southern Division weighted the difference between the growth rate of the service volume and the supply volume of the two groups before settlement. When one group has much more growth rate than the other one, the budget would be redistributed to the other group to limit the difference of growth rate within 3%. The purpose is to prevent group A from reducing the provision of medical care owing to the fnancial risk, to ensure the well-being of patients, curb the buck passing, and prevent drastic differences in the net growth rate between the two groups.

Although the Global Budget Payment System of the NHI can control the growth of national medical expenses, competition can easily occur among medical institutions, as the payment is based on the fee-for-service model. To prevent the interference of uncertain or low RVU values with hospital operations, all NHIA divisions adjust expenses according to their income and execute programs to stabilize the RVU values of the hospital global budget. The related implementation strategy is commonly known as the "hospital self-management plan."

### 5. NHIA: Kaoping Division

The NHIA Kaoping Division provides information feedback to contracted institutions, intending to strengthen the management of institutions and reduce the medical waste. The NHIA understands that the medical RVUs would lead to medical waste and thus, it is necessary to continuously develop various global budget management strategies. The NHIA provides information from the National Health Insurance MediCloud System for medical institutions to inquire about patients' medical treatment records across different hospitals and clinics. In addition, it can assist physicians in obtaining a thorough understanding of past test/examination results and the drug use status of patients. This system benefts physicians in making relatively more precise diagnoses and prescriptions while reducing the waste of medical resources due to repetitive prescriptions or repetitive examinations/tests. The NHIA also provides personal health information through My Health Bank system so that the public can strengthen self-health management, identify illegal behaviors of institutions and physicians via big data analysis, and promote selfimprovement through information disclosure and feedback, which facilitates professional communication among peers while conducting precise reviews.

### 6. NHIA: Eastern Division

The structure of the "Professional Review for Hospital Global Budget in the Eastern Division" is based on the number of hospital management targets, the number of claims, and hospital income in the same period last year. The NHIA Eastern Division also calculates the number of quarterly management targets in each hospital with multiple adjustment factors such as adjustment of the RVU growth rate of medical expenses for outpatient, inpatient, emergency and critical care, and the number of patients. If the hospital controls the RVUs within the target, or agrees with subtracting the excessive part directly, then it is regarded as a self-management (A-level) hospital, which is exempt from random sampling reviews. A hospital that chooses to be a nonself-management (non-A-level) hospital will have to share the RVU gap when the estimated RVU value in the jurisdiction is lower than 92% of the target value. The Eastern Division has included the mechanism of the RVU gap sharing in the program since 2008 and executed it until now (the gap-sharing mechanism is activated if the estimated value is higher than 0.92 before settlement). Owing to the impact of the epidemic in 2020, the target RVU value in the Eastern Division is estimated with a foating formula, and the upper and lower limits are set at 0.92–0.96, whereas the range of 2021 is 0.92–0.94.

As the population risk factor and the referral percentage were used to adjust the allocation of the hospital global budget in 2017, the annual budget of the Eastern Division was reduced. Through unremitting efforts, the Eastern Division has been awarded the risk transfer fund since 2019 and set the principles for the use of the risk transfer fund with the hospitals in the jurisdiction jointly. To look after the disadvantaged and support remote areas, the NHIA East Division used more than 70% of the risk transfer fund for various projects, such as the diabetes care plan, hepatitis C, cancer, emergency medicine, remote wound care, and others; the rest of the budget was included in the target management allocation to compensate for the increased medical expenses of each program.

The complaints about self-management of the hospital global budget from the medical community are inevitable, and this is a plight that both the medical community and the NHIA are facing. The insuffcient budget will certainly not only affect the medical service for patients, but will even affect the overall development of the country's medical and related industries. For example, how will the value of the RVU respond to emergencies such as natural disasters, major accidents, or emerging infectious diseases? Besides supervising and balancing, payer representatives should face the concept of user fees squarely. Adjusting co-payment for the general public while protecting the economically disadvantaged may be a reform direction for the NHI.

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### **Chapter 4 Comprehensive Policies**

**Po-Chang Lee, Yu-Pin Chang, and Yu-Yun Tung**

### **Introduction**

The National Health Insurance (NHI) is the most important cornerstone of social security, and the National Health Insurance Administration (NHIA) is always committed to providing comprehensive and continuous services for the insured. With the sharply escalating medical expenses, expenditure reduction and high-value health care is the only answer to protecting patients' medical rights with the limited resources that we have in hand. The NHIA has also implemented a number of programs for the medical needs of the super-aged society that Taiwan will face in the future.

Taiwan followed the steps of many advanced countries in separating medicine and pharmacy to realize pharmacists' role of integrating and reviewing prescriptions issued by physicians. The NHIA has endeavored to promote two-way referrals in the tiered medical care structure since 2017. We hope to improve the effciency of the overall healthcare system by the redistribution of the workload and cooperation between hospitals at different levels. Therefore, in addition to a reimbursement increase for hospitalization and emergency treatment, differences in co-payment for referral visit from a different level of hospital was applied to encourage better healthcare-seeking behavior. Recently, co-payment adjustment was proposed to raise the public's cost awareness and address overuse.

P.-C. Lee (\*) · Y.-P. Chang · Y.-Y. Tung

National Health Insurance Administration, Ministry of Health and Welfare, Taipei, Taiwan e-mail<EMAIL_ADDRESS><EMAIL_ADDRESS><EMAIL_ADDRESS>
P.-C. Lee et al. (eds.), *Digital Health Care in Taiwan*, https://doi.org/10.1007/978-3-031-05160-9\_4

### **Implementation of the Separation of Medicine and Pharmacy from a National Health Insurance Perspective1**

Since the inception of the NHI in March 1995, improved access to the contracted medical institutions facilitated a great opportunity to implement an independent pharmaceutical service through the NHI system. Therefore, the pharmacist association advocated for the enactment of Article 102, Item 2 of the Pharmaceutical Affairs Act, to separate drug prescribing and dispensing. The clause mandated that after 2 years of implementation of the NHI, physicians can dispense drugs by themselves based on their own prescriptions only in the remote areas where practicing pharmaceutical personnel are not available or in the case of urgent need for medical treatment services. It became the legal basis for the independent pharmaceutical service.

The medical profession is quite dissatisfed with the amendment, feeling deprived of their right to dispense, so physicians and pharmacists hit the street separately to protest against the new policy. The separation of prescribing and dispensing not only eliminates the medical institutions' benefts derived from drug price differences but also causes hidden worries such as license leasing, fewer medicines than the hospitals, dispensing alternative drugs, and modifying prescriptions.

Because of the stalemate between medical and pharmaceutical professionals over the issue of separating medicine and pharmacy, the former Department of Health, Executive Yuan, adjusted the original single-track system2 to a dual-track system. In this way, the physicians in the medical institutions can release prescriptions, or hire pharmacists to dispense the prescription in-house. In this controversial adjustment, clinical pharmacists become employees hired by physicians to dispense drugs. As there is an employment relationship, the intention of holding pharmacists accountable for the supervision and professional review of the prescription by separating medicine and pharmacy is easily weakened or even disappears. Owing to the implementation of the dual-track system, instead of practicing completely separately, most of the time medical and pharmaceutical professionals only cooperate to share the workload.

The NHIA was tasked to establish a system that incentivizes physicians to release prescriptions. Therefore, the NHIA paid an additional 25 relative value units (RVUs) for the prescription released by clinics and provided pharmacies with higher dispensing and drug fees, so that the pharmacy could earn an extra 51 RVUs3 on each

<sup>1</sup>Taiwan Bar Journal.