Municipalities are responsible for the procurement of care covered by the Social Support Act (Wet maatschappelijke ondersteuning – Wmo) and the Youth Act (jointly referred to as the social domain). All municipalities are required by law to ensure that their residents receive the healthcare to which they are entitled (the duty of care). In practice, municipalities meet this responsibility by purchasing this healthcare from specialised Wmo or youth healthcare providers.
Realistic rates in the social domain
Healthcare providers in the social domain that are engaged by municipalities are entitled to a realistic rate (Article 2.6.6 of the Wmo and Article 2.11 of the Youth Act). This means that there must be a sound ratio between the price and the quality of the youth healthcare to be provided, whereby the price may not be detrimental to the quality.
The Wmo Realistic Rates Decree has applied to Wmo care since as far back as 2017. The cost elements that municipalities must factor into the realistic price for Wmo care are set out in that Decree. It is apparent from the evaluation of these rules that they have contributed to transparency about the price structure and to knowledge about cost prices. The rules have furthermore increased both the awareness of and the importance of realistic prices.
No similar regulation so far applies to youth care. But Article 2.11 (previously Article 2.12) of the Youth Act nevertheless requires that municipalities set realistic rates. The term ‘realistic rate’ is not defined in law, but has been addressed in case law. The District Court of The Hague ruled in 2019 that municipalities must be able to properly substantiate why the rates they set are realistic and cost-covering. The Court of Appeal of The Hague and the Court of Appeal of 's-Hertogenbosch have also confirmed that municipalities must set realistic rates with due care. With reference to the aforementioned case law, the District Court of Midden-Nederland also recently found that municipalities must set realistic rates with due care. The reason for this, briefly stated, was that the municipality in question had insufficiently investigated and clarified that the rates were realistic. It was therefore not an established fact that the rates offered did justice to the facts and regional circumstances in practice.
This and earlier case law, and the discussions about realistic prices, gave rise to a call for clarification. The Socially Responsible Procurement Act under the Youth Act and Wmo 2015 (the Socially Responsible Procurement Act) entered into force in the summer of 2022. It entails that Article 2.11 of the Youth Act provides that further rules could be introduced on the duty to set realistic prices. The Youth Act Realistic Prices Decree is therefore now being drafted. That decree is to enter into force 1 January 2024. It is similar to the Wmo Realistic Prices Decree and identifies the same minimum cost price elements in setting realistic prices for youth healthcare. In practice, the cost price elements are also already being incorporated into municipal regulations, such as those of Leiden, Amsterdam and Almere. This is in anticipation of the future Decree. The municipalities concerned must already adhere to these municipal regulations when procuring youth care.
The Handreiking inzicht in tarieven (Guide to Understanding Rates) now also provides guidance on setting realistic rates in youth healthcare. This guide identifies the cost price elements, cost price calculations and substantive points of attention in respect of rates. The (draft) explanatory notes to the Youth Care Realistic Prices Decree frequently refer to the Guide to Understanding Rates.
A realistic rate must therefore in any event be based on the following cost price elements:
- the costs of healthcare-providing staff (such as salary, allowances, taxes and labour market allowances);
- client-related costs other than those of professional staff (costs of indirect client-related staff, materials and resources);
- overhead costs (staff, ICT, accommodation, and general costs and business expenses, such as bank/financing costs and travel expenses); and
- indexation costs.
According to the District Court of Midden-Nederland, municipalities must in any event take the following cumulative aspects into account when setting realistic prices:
- the expertise of the professionals and their employment conditions;
- everyday practice;
- the cost price of a reasonably efficient youth care provider;
- specific regional circumstances; and
- certain organisation-specific aspects (such as the specific care, its complexity, real estate costs, availability of sufficiently qualified staff, crisis response times and specialisations).
Youth healthcare reform
Youth healthcare is currently being reformed in this respect. Nationally, efforts are being made to improve youth healthcare, for instance by phasing out residential healthcare and focusing on small-scale residential facilities. The Youth Reform Agenda has been drawn up to this end.
This Youth Reform Agenda is important not only in terms of care. An important theme within this Youth Reform Agenda is simplified procurement of youth care with price differentiation. This means that healthcare providers will be paid according to the intensity of the care provided. The Lower House adopted eleven motions submitted during the parliamentary debate on the Youth Reform Agenda. The Lower House wants the regulations for realistic rates with rate differentiation to be in force by early 2024. The Youth Act Realistic Prices Decree should promote such rate differentiation as from 1 January 2024.
Municipalities’ duty to investigate and duty to inform
The government also wants municipalities to make prices more transparent. This task will be assigned to the municipalities that procure youth healthcare. Municipalities therefore have a duty to inform and a duty to investigate with regard to rates in procurement procedures. The Youth Act Realistic Prices Decree is not expected to set specific rules on how municipalities should structure that investigation. Case law again provides guidance, however.
Last October, the District Court of Midden-Nederland confirmed that municipalities must carry out or commission a meticulous and sound cost price survey into realistic rates. The rates must be established in a transparent process in relation to youth healthcare providers. The openness of healthcare providers about their rates and rate structures also plays a role here. The rates must furthermore be traceable and recognisable for youth care providers. In light of the Youth Reform Agenda, municipalities must also take into account the distinction between complex and non-complex youth care in setting and substantiating rates.
In light of the principle of due healthcare, municipalities must make it clear of their own accord – after carrying out or commissioning the cost price survey – how they arrived at the rates set: the municipalities’ duty to inform. The Court of Midden-Nederland ruled that this information must be provided during the procurement procedure already (and before the tender date). Only then can interested care providers check whether the rates set are realistic, before having to decide whether they want to submit a tender. This is an independent obligation of the municipalities. They may therefore not wait for healthcare providers to ask questions about the setting of the rates.
These duties to investigate and to inform are precisely what municipalities failed to comply with in the October 2023 ruling, according to the court.
Disproportionate conditions
Care providers must bear in mind that municipalities may not impose disproportionate conditions in tender procedures, because the principle of proportionality applies. This principle means that conditions and criteria imposed on tenderers and tenders must be in reasonable proportion to the contract. This principle of proportionality is elaborated in the Proportionality Guide. Regulation 3.9A provides that risks must be borne by the party that can best control or influence the risk. For instance, requiring a maximum treatment period of a young person without including a ‘safety valve’ for extending that treatment period unfairly places the risk entirely on a healthcare provider. That is a disproportionate requirement.
Conclusion
Practice shows that inadequate investigation or weak substantiation by municipalities in the case of realistic rates is punished by the courts.
Please do not hesitate to contact us if you are unsure as to whether a municipality applies realistic rates or has complied with the duty to investigate and the duty to inform, and if it applies disproportionate conditions in a tender.
Read our five practical tips for healthcare providers operating in the social domain here. More information on the rights of healthcare providers in healthcare sales can be found at www.zorgcontractering.com
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