Healthcare providers that provide care under the Wet langdurige zorg (Long-Term Care Act) are greatly dependent on contracts with one or more care administration offices. Care administration offices are bound by various rules in dealing with healthcare providers. Those rules arise from the law, case law and the Gedragscode Goed Zorgverzekeraarschap (Healthcare Insurance Code of Conduct). Healthcare providers can use those rules to safeguard their rights during the long-term care procurement process and to ensure that they can continue to provide long-term care at at least cost-effective rates. This blog addresses the rules that care administration offices must observe and the manner in which healthcare providers can exercise their rights.
Significant market power
In principle, contracting between care administration offices and healthcare providers is governed by the principle of freedom of contract. But that freedom is not unlimited when it comes to the procurement of long-term care. Only one care administration office operates in each care office region and that office always has a purchase monopoly (monopsony). Each individual care administration office therefore has Significant Market Power (“SMP”) within the meaning of Article 47 of the Wet marktordening gezondheidszorg (Healthcare Market Regulation Act). The Explanatory Memorandum to that Act provides that a care administration office has SMP when it has a market share of 55% or more, save for evidence to the contrary. The fact that care administration offices have SMP was established in case law in 2020, partly after the care administration offices themselves so acknowledged. That was confirmed on appeal in 2021.
The fact that care administration offices have SMP should of course come as no surprise; each care office region has only one care administration office, which has a 100% market share, and there is no competition whatsoever between them. But there are often several healthcare providers per care office region with which a care administration office may enter into a contract in order to meet its duty of care. Even when the number of healthcare providers in a care office region is limited, it could be argued (certainly in light of the position taken by the Dutch Healthcare Authority (“NZa”) in the SMP decision regarding Emergis) that the care administration office has SMP, since there is always a healthcare procurement monopoly in each care office region, and no long-term care may be provided (except for personal care budgets) if no long-term care contract is in place. Healthcare providers are therefore always dependent on the care administration offices, of which those offices are well aware.
If a care administration office has SMP, the NZa may impose measures (such as a contracting obligation or a transparency obligation) for a maximum period of three years, either ex officio or in response to signals or complaints. It is not a requirement that a care administration office has actually abused its SMP position. The NZa may decide to impose one or more SMP measures in the event of imminent abuse by a care administration office of its SMP position. The same applies to abuse, or imminent abuse, of its duty of care. The NZa may then intervene by imposing an SMP contracting obligation. The NZa has imposed that measure on healthcare providers in the past (for instance on the Breskens Pharmacy), but it may also be imposed on a care administration office. In 2020, the NZa imposed a contracting obligation on mental healthcare institution Emergis in the province of Zeeland. The NZa did so of its own accord, although it did report in its decision that it had received signals from healthcare insurers regarding the position allegedly taken by Emergis in the sale of care under the Zorgverzekeringswet (Healthcare Insurance Act). See our earlier blog on this subject. It is remarkable that the NZa also received various signals about healthcare insurers and care administration offices, but has so far not imposed any SMP measures on them. This does not mean that the NZa does not acknowledge that care administration offices have SMP, nor can it be said that the NZa is unaware that there are bottlenecks in the purchase of long-term care or that it is questionable whether all the care administration offices are actually complying with their duty of care. It is sooner a matter of prioritisation on the part of the NZa; see also here, here and here.
Also if the NZa does not take action (ex officio) on the basis of its SMP powers in respect of long-term care procurement, it is apparent from case law, as stated above, that care administration offices have SMP. This fact, which follows from the permanent purchasing power of care administration offices, means that care administration offices always have a special responsibility when purchasing care. In the purchasing process, care administration offices must, for instance, take into account the implementation reality in the sector and the cost price of a “reasonably efficient” provider. But that is not all: there are also other matters that the care administration office must take into account and for which it can be called to account by the healthcare provider.
Procurement principles
Care administration offices are required (usually also by their own admission) to comply with the procurement-law principles of transparency, equality and proportionality. Care administration offices must therefore operate in a transparent, non-discriminatory and proportional manner during the procurement process. The transparency principle means that care administration offices must state why they believe that the rates that they apply in the purchase of long-term care are realistic. In doing so, care administration offices must take into account organisation-specific aspects of healthcare providers, as well as legitimate regional or other (substantiated) cost differences. The reasons given by the care administration office must also be verifiable by healthcare providers. This gives long-term care providers the opportunity to argue that a care administration office should make higher payments for the long-term care to be provided.
Healthcare Insurance Code of Conduct
Care administration offices must furthermore comply with the Healthcare Insurance Code of Conduct. That code was drawn up by Zorgverzekeraars Nederland (the “ZN Code of Conduct”). The ZN Code of Conduct applies in all cases and to all parties, including care administration offices. The basic values on which the ZN Code of Conduct is based are certainty, commitment and solidarity. A number of provisions are particularly relevant in long-term care sales. Article 2.0.2, for instance, provides that a care administration office must act with integrity and as a reliable partner, live up its promises and act in an honest and fair manner. It must furthermore exercise the required diligence (Article 2.3.1). A care administration office may also not abuse its position of power (Article 2.3.1). The latter is particularly relevant because, as explained above, every individual care administration office has SMP.
Rules of pre-contractual reasonableness and fairness
Moreover, the rules of pre-contractual reasonableness and fairness require that care administration offices and healthcare providers take each other's legitimate interests into account. This principle is contingent on the dependent position in which the parties find themselves. Healthcare providers are permanently and entirely dependent on the care administration office for obtaining a long-term care contract. Without such a contract, a healthcare provider is unable to provide long-term care (except for personal care budgets), which immediately places the continuity of the care at risk. The combination of the ZN Code of Conduct and the rules of pre‑contractual reasonableness and fairness implies, among other things, that care administration offices must ascertain when purchasing care whether assumptions in the field of cost control (such as increasing efficiency) are feasible in practice for healthcare providers.
Duty of care or care procurement duty of care administration offices
Care administration offices also have a duty of care within the meaning of Articles 4.2.1 and 4.2.2 of the Long-Term Care Act. This duty of care means that care administration offices are exclusively responsible for ensuring that people with access to long-term care are provided in a timely manner with the care they need. This duty of care (or rather this care procurement duty) rests exclusively on care administration offices and, contrary to what the term “duty of care” suggests, not on healthcare providers. The duty of care applies in all cases, regardless of how the purchasing process is organised. The duty of care means that care administration offices must not only ensure that they purchase the right care and sufficient care, but also that the care meets the applicable requirements of quality, timeliness and accessibility. We previously addressed this duty of care and the NZa's role in enforcing it in this blog and this blog.
NZa’s role in enforcing the care administration offices’ duty of care
The NZa supervises compliance with this duty of care. The NZa has previously reported an increase in the waiting lists for nursing home care and care for the disabled. The NZa has called on care administration offices to make every effort to guarantee the accessibility of care when waiting times increase. In the NZa’s opinion, care administration offices must furthermore aim more actively for quality improvement. The NZa has also previously reported that efficiency initiatives taken by care administration offices are primarily aimed at lowering prices, while according to the NZa the effects of such initiatives on the quality of care are insufficiently clear. It is of course a good sign that the NZa has drawn attention to this. But it does not suffice to draw attention to this in the case of a care administration office with a pure purchasing monopoly. Even after two formal NZa warnings, healthcare insurer VGZ proved unwilling to comply with the most basic NZa rules that apply to healthcare procurement under the Healthcare Insurance Act. In addition to the NZa fine subsequently imposed on VGZ, the NZa also previously fined De Friesland/ZK and issued warnings to CZ, DSW and ZZ for violating the mandatory Healthcare Procurement Transparency Regulations. In sum, the NZa is aware that abuse of purchasing power by healthcare insurers is a recurring problem in healthcare procurement. Care administration offices, as the NZa is also aware, have a much more dominant position in relation to healthcare providers than healthcare insurers, given their 100% purchasing market share. In light of the above, the NZa’s request to care administration offices to pay more attention to the quality of care when purchasing healthcare is foreseeably inadequate. A better and more effective approach would be to proactively address bottlenecks in the purchase of long-term care. This is not yet being done. The NZa applies various regulations to the purchase of long-term care (the Regeling transparantie contracteerproces Wlz (Regulations on Transparency in the Long-Term Care Contracting Process) and the Beleidsregel normenkader Wlz-uitvoerder (Long-Term Care Provider System of Standards Policy Regulations), but no specific implementation has so far been given to them in respect of the duty of care. The NZa announced, for instance, that it would be publishing guidelines for care administration offices in the first quarter of 2021 regarding the implementation of their duty of care. They have still not been published. The guidelines that the NZa has published for healthcare insurers can be found here. This obviously calls for immediate action on the part of the NZa. At the same time (since prevention is better than cure), the NZa could inquire at the care administration offices and healthcare providers about the current situation regarding compliance with the duty of care in the purchase of long-term care, and take action where necessary.
Exercise your rights in good time
Regardless of the lack of adequate proactive supervision of care administration offices by the NZa, healthcare providers themselves can also protect their interests and those of their clients. Healthcare providers that want at least cost-covering long-term care rates should enter into timely discussions with the care administration office in order to exercise their rights. These healthcare sale tips equally apply to healthcare contracting by care administration offices. The premise is that care administration offices are responsible for ensuring that everyone who is entitled to long-term care actually receives that care in a timely manner. Healthcare providers on the other hand must of course receive a realistic and cost-covering rate, otherwise they will be unable to offer sustainable, timely and high-quality care. If a situation arises in which long-term care must be provided at rates that do not cover the costs, it may be worthwhile taking the matter to the civil courts. But that is not an option in many cases, because care administration offices apply short response deadlines and forfeiture of rights provisions in their purchasing procedures.
Engagement of the NZa
In the event of breach, or imminent breach, of the duty of care by a care administration office, a report or formal enforcement request may of course be made to the NZa. Such a request may be made by one or more healthcare providers (possibly supported by a trade association), on behalf of one or more long-term care clients. If a formal request for enforcement is submitted, rather than a report, the NZa is required to take a formal decision (which is subject to objection and appeal). The NZa must take this decision with due care. The NZa may then impose a measure (an order subject to a penalty or an instruction) on the care administration office. The NZa has already demonstrated that it can impose instructions on care administration offices: see here. The NZa could also opt to impose one or more obligations on a care administration office ex officio, on the basis of its SMP instruments. The NZa’s investigation of Emergis has shown that it is prepared to impose a drastic measure (including a contracting obligation) on a healthcare provider without there being any acute problem. If the quality of long-term care is under pressure due to inadequate funding by the care administration office, the NZa therefore has no excuse for failing to address that problem (ex officio): the NZa has both the right and the means to do so.
Be that as it may, since the NZa claims to set store by efficient healthcare purchasing and compliance with the duty of care, the NZa has its work cut out for it in the healthcare procurement. Healthcare providers and client councils or patients’ representatives could of course draw the NZa’s attention to specific or imminent emergency situations. If the NZa receives concrete signals or enforcement requests, there can be no justification (particularly since the NZa’s action in the Emergis SMP case) for failing to use the SMP instrument to address that signal or the complaint regarding breach of the duty of care by a care administration office.
If you are faced with inadequate turnover ceilings in long-term care sales, please consult this blog for practical tips. More information can be found at www.zorgcontractering.com.
