Turnover ceilings are an integral part of healthcare purchasing. Turnover ceilings or healthcare caps are regularly a point of contention in the healthcare contracting process. Although they are meant as a means of curbing rising healthcare costs, the use of inadequate turnover ceilings often negatively impacts healthcare providers and their clients. On paper, these problems should not (readily) occur, since healthcare insurers and care administration offices have a statutory duty of care. The duty of care of healthcare insurers set out in Article 11 of the Zorgverzekeringswet (Healthcare Insurance Act) means that healthcare insurers must ensure that all insured persons receive the care they need as part of the basic package and within a reasonable time and distance. The existence of a duty of care does not mean that it is always enforced in a timely manner by the NZa (Dutch Healthcare Authority) (see here and here). Regardless of the absence of effective enforcement of the duty of care by the NZa, healthcare insurers and care administration offices continue to impose turnover ceilings in healthcare purchasing. The use of turnover ceilings therefore frequently gives rise to conflicts between healthcare insurers and healthcare providers.
NZa healthcare procurement regulation gains importance: at the NZa as well as in civil courts
Practice has shown that if a ceiling is found to be too low, entering into timely and adequate additional contracts often proves to be a difficult process. The NZa has previously called on healthcare insurers to draw up specific additional contracting policies in advance. Two civil courts recently ruled in favour of healthcare providers on inadequate healthcare ceilings. The NZa’s Regeling transparantie zorginkoopproces Zvw (Regulation on Transparency in the Healthcare Procurement Process under the Healthcare Insurance Act (the “Healthcare Procurement Regulation”) played a key role in these judgments. And not for the first time: the Healthcare Procurement Regulation had been cited by the Court of Appeal of Den Bosch in 2020 already in determining how healthcare insurers should act during the contracting process. It was also already known that the NZa, which enforces the Healthcare Procurement Regulation, no longer merely issues formal warnings when a healthcare insurer violates these mandatory rules. In June 2021, healthcare insurer VGZ unsuccessfully objected to an NZa fine of €150,000: the fine was upheld. VGZ had been fined by NZa in 2020, after receiving two formal NZa warnings for previous violations (see here and here). The fact that the Healthcare Procurement Regulation now also plays a prominent role in the outcome of civil proceedings is highly relevant to healthcare providers. The details of the judgments are addressed in this blog. We furthermore explain what they mean for healthcare providers during the healthcare procurement process.
Procurement of district nursing care
Dichtbij is a cooperative of healthcare organisations which offer district nursing. In 2019, VGZ applied a €500,000 turnover ceiling, based on 25 clients receiving 30 hours of care per month. In late 2019, Dichtbij requested VGZ to increase the ceiling, because it was providing hours of care in excess of the agreed 30 hours. VGZ offered an increase to €700,000, but made that offer subject to the requirement that Dichtbij aim for a maximum of 21 hours of care per client per month in 2020, with a care ceiling of €594,627. The care ceiling was again exceeded in 2020, despite a reduction in Dichtbij’s care hours. In the course of 2020, Dichtbij submitted a tender to VGZ for 2021. VGZ rejected Dichtbij’s tender on the grounds that it did not meet the efficiency requirement. Dichtbij filed an objection, arguing that the care hours had been reduced by no less than 14% in 2020 compared to 2019, but VGZ did not concede. Dichtbij then demanded in court that VGZ offer Dichtbij a contract after all and provide insight into the way in which VGZ scored tenderers during the procurement process.
The court first of all found that the procurement law principles of equality and transparency applied to the procurement procedure. Dichtbij could reasonably expect VGZ to conduct its procurement policy in an objective, transparent and non-discriminatory manner. In ruling that these principles apply, the court took into account that the Healthcare Procurement Regulation aims to increase the transparency of the contracting process between insurers and healthcare providers. The NZa’s aim in drawing up the Healthcare Procurement Regulation was to ensure that healthcare providers can try to enter into a contract with a healthcare insurer by taking part in a tendering procedure in which the assessment criteria are clear in advance.
In the court’s opinion, VGZ did not comply with its own VGZ procurement policy. VGZ based its decision not to offer Dichtbij a contract on the argument that it had not met an efficiency requirement in the past. That requirement did not form part of VGZ’s procurement policy. VGZ furthermore based its decision on 2020 figures, whereas it had promised providers that it would look only at 2019 figures, because of the corona crisis. The 2020 agreement provided that Dichtbij had to notify VGZ if it expected to exceed the turnover ceiling. VGZ and Dichtbij then had to discuss what measures were required to limit the excess. Dichtbij gave timely notice in both 2019 and 2020 that it expected to exceed the turnover ceiling. VGZ itself then decided to increase the turnover ceiling without first assessing whether the care was effective. The court therefore found that VGZ could not now accuse Dichtbij of providing ineffective care because it had previously exceeded turnover ceilings. The court ruled in favour of Dichtbij and VGZ had to offer Dichtbij a contract after all.
Mental healthcare procurement – CZ
Metabletica is a provider of basic mental healthcare and specialist mental healthcare, and wished to enter into a contract with CZ for 2020. After written consultation with CZ, in which CZ reported that Metabletica met the qualitative requirements of the procurement framework, Metabletica presented a tender format to CZ. Metabletica based it on a turnover ceiling of €2,500,000 and 598 clients. CZ rejected the tender on the grounds that that turnover ceiling was allegedly five times higher than Metabletica’s 2017 turnover. The reasons given by Metabletica for the higher turnover ceiling were the fact that it was growing, that it would be opening a new location and that the demand for mental healthcare was increasing. Metabletica’s turnover in 2019 was therefore already significantly higher than in 2017. During the healthcare procurement process, Metabletica lowered the turnover ceiling several times to accommodate CZ. CZ stated that it would not accept any growth in 2020 compared to previous years and subsequently refused to enter into a contract with Metabletica.
Metabletica requested the court to order CZ to offer it a contract for 2020 after all. Alternatively, Metabletica requested that CZ be ordered to enter into negotiations again in order to enter into a contract. Metabletica stated that it was dependent on CZ for 50% of its income. CZ’s refusal to enter into a contract might lead to bankruptcy. CZ relied on its freedom of contract and stated that it was not obligated to enter into a contract with Metabletica. The court found that, in principle, healthcare insurers are free to decide with which care providers they wish to enter into a contract and on what conditions. However, the Healthcare Procurement Regulation provides that CZ is obligated to pursue an objective, transparent and non-discriminatory procurement policy. In the court’s opinion, it is not clearly apparent from the published CZ procurement policy that the 2017 turnover would be used as the basis for determining the turnover ceiling. CZ’s actions were therefore insufficiently transparent. Moreover, Metabletica had made various proposals, all of which CZ rejected without making a specific counterproposal. Although CZ stated that the procurement policy offered “room” regarding the turnover ceiling, it is unclear how CZ dealt with that room during the negotiations. CZ had therefore acted wrongfully towards Metabletica. The court ruled that CZ was not obligated to offer Metabletica a contract for 2020, but that it did have to resume negotiations with Metabletica.
Mental healthcare procurement – Zilveren Kruis
Psychologen Kollektief Groningen (PKG) is a provider of basic mental healthcare and specialist mental healthcare in the north of the Netherlands. PKG entered into contracts with Zilveren Kruis (“ZK”). Part of the conflict between PKG and ZK dates back to 2012. The first question was whether ZK and PKG had agreed on a turnover ceiling in 2012. In ZK’s opinion, a turnover ceiling of €300,000 had indeed been agreed on. Because PKG claimed more than €300,000 in 2012 and also in subsequent years, ZK reclaimed substantial amounts from PKG. PKG argued that no turnover ceiling had ever been agreed on. PKG assumed that the €300,000 “ceiling” was a guideline or target amount. PKG considered it impossible that ZK would actually charge PKG for exceeding the ceiling and that consultation on an alternative solution would not be possible.
Unlike the court, the Court of Appeal agreed with PKG and found that no turnover ceiling had been agreed on in 2012. The Court of Appeal took into account that ZK paid out care claimed before 2012 without applying a turnover ceiling. ZK should have explicitly and clearly explained that the amount of €300,000 was a strict financial limit. ZK had failed to do so. ZK had not used the word “turnover ceiling” anywhere in its procurement documentation. ZK did state in its procurement documentation that it regarded the maximum amount as a “spearhead”, but in the Court of Appeal’s opinion that did not make it clear what consequences ZK would draw if the amount was exceeded. The use of turnover ceilings was not yet standard practice among healthcare insurers in 2012. PKG was therefore not required to pay the amounts reclaimed by ZK for 2012 and 2013.
The second question was whether ZK was entitled to unilaterally lower the agreed turnover ceiling in 2016. ZK believed it was entitled to do so because it had fewer insured persons in 2015-2016 compared to previous years. PKG believed that ZK could adjust the turnover ceiling only if ZK was able to demonstrate that there were fewer Zilveren Kruis policyholders in the northern region where PKG operates. The Court of Appeal again ruled in PKG’s favour. ZK had insufficiently substantiated why a decrease in the total number of policyholders also affects PKG: the number of Zilveren Kruis insured persons may well have remained stable in the north of the country but decreased elsewhere. ZK acknowledged at the hearing that the turnover ceiling must be based on the number of insured persons in a specific region. The Court of Appeal ruled that ZK should therefore not have unilaterally lowered the 2016 turnover ceiling.
Conclusion
Although the courts are ruling that, in principle, healthcare insurers are free to decide with what parties they enter into contracts, that freedom is limited, since it also follows from the rulings that courts (rightly) set store by the fact that healthcare providers must be able to rely on healthcare insurers complying with their own procurement policies and the Healthcare Procurement Regulation. The Healthcare Procurement Regulation is clear: healthcare insurers must make it clear in their procurement policies, by 1 April of any year at the latest, what criteria they use when offering or rejecting contracts. The same applies to the setting or adjustment of turnover ceilings. If healthcare insurers fail to do so, or change their procurement policies after 1 April without complying with Article 7 of the Healthcare Procurement Regulation, there will be consequences. For aggrieved healthcare providers, taking legal action in the civil courts may be worthwhile. But the stable door can also be closed before the hose has bolted and instituting preliminary relief proceedings against the healthcare insurer are required. The NZa is in charge of enforcing the Healthcare Procurement Regulation. If a formal enforcement request is submitted, the NZa is obligated to take a formal decision. The NZa has previously announced that it will take stricter action against healthcare insurers that violate the Healthcare Procurement Regulation. NZa has already warned DSW, ZZ and VGZ (several times), and fined ZK and VGZ, for violating the Healthcare Procurement Regulation. For quite some time already, these healthcare insurers therefore cannot claim ignorance of the mandatory rules of the Healthcare Procurement Regulation. Also if insufficient care has been procured, it is of course possible to draw attention to the need for the healthcare insurer in question to comply with the duty of care.
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