Regulations in private compulsory care insurance

Known in German as the ‘Gesundheitsversorgungsweiterentwicklungsgesetz’, the Health Care Development Act (GVWG) would earn a lot of points in Scrabble, yet this complex word is indeed symbolic of a highly complex subject area. In practice, the GVWG, which was passed in July 2021, is one of many regulatory frameworks that apply to private compulsory health insurance. Besides acts such as the GVWG, there are two other important types of regulatory framework: regulations that come straight from the federal ministries – such as the Social Security Computation Size Regulation, which affects the pension contributions of caregivers (SoSiP) – as well as directives and interpretation and application guidance for acts and regulations. Ultimately, these regulatory frameworks largely affect the conditions of private compulsory care insurance, which are regularly revised by the Association of German Private Healthcare Insurers (PKV) and made available to the member insurance companies.

 

The Association of German Private Healthcare Insurers plays an important role in the operational structure of private compulsory care insurance. As all private comprehensive health insurers in the association must provide this insurance, yet each insurer’s customer structure might be completely different – from just a few policyholders in need of care to lots of cases – the association organises the necessary balance of risk between the member companies and lays down a standardised framework for benefits to be paid.

 

Almost every regulatory change influences the software solutions used by the insurance companies which provide products relating to long-term care insurance. However, software providers like msg nexinsure ag and msg life are not directly involved in the development of the benefit guidelines. This makes communication between software providers and insurers even more important, so that no time is wasted in starting to find a solution that has to be implemented in the standard software as well as, potentially, in customer-specific configurations.

 

The SARS-COV-2-pandemic turned the world of private compulsory care insurance upside down: In 2021, no fewer than 30 changes had to be implemented in that period, in what can almost be referred to as a ‘minor care reform’. In an average year, msg nexinsure ag has to deal with around one third of these regulatory requirements. For instance, ‘the supplementary benefit to cover care expenses in full-stationary care (Section 43c of Book XI of the German Social Code (SGB)) as of 1 January 2022’ and ‘the raising of maximum limits on benefits in kind (outpatient care; Section 36 (3) SGB XI) as of 1 January 2022’ from the GVWG had to be implemented, as did the second ordinance to extend measures to maintain care during the pandemic caused by the SARS-COV-2 coronavirus.

The supplementary benefit to cover care expenses in full-stationary care (Section 43c SGB XI) is but the tip of the iceberg. Motivated by the ambition to provide quality inpatient and outpatient care whilst also seeking to reverse the lack of specialists, the German government decided to introduce mandatory collective bargaining agreements for carers in September 2022. In parallel, with regard to outpatient care, the maximum limits on benefits in kind and short-term care were raised from January 2022.

 

In full-stationary care, on the other hand, the maximum limits on flat-rate allowances have not been raised. Instead, the government agreed to limit the co-payment for care-related expenses, such as mobilising or washing patients or helping them eat, based on the duration of full-stationary care from 1 January 2022. The supplementary benefit starts at 5% of the care-related co-payment for recent admissions and rises to 70% after three years. This new dynamic had to be tracked in the insurers’ software solutions, i.e., the duration of full-stationary care had to be determined reliably and the supplementary benefit had to be calculated correctly and processed statistically. Particularities such as a change of care home, the eligibility of the new supplementary benefit to be subsidised and retroactive corrections when periods of full-stationary care are subsequently discovered had to be discussed and converted into software solutions.

In practice, at the height of the Covid-19 pandemic in particular, regulatory matters had to be implemented at extremely short notice, some of which had a retroactive effect. In this situation, regulatory changes might affect settled transactions, which then have to be corrected.

 

Additionally, not all regulatory matters are governed quite as clearly as the aforementioned supplementary benefit for full-stationary care. Individual topics that still lack a clear underlying interpretation can be handled differently from case to case, which poses additional challenges for software providers.

 

In software development, a well-organised dialogue with client businesses is therefore important so as to be able to respond with excellent solutions at short notice.

Our business consultants analyse upcoming and emerging regulatory changes continuously, prepare proposals for implementation, share them with the insurance companies on the client side and coordinate the technical requirements relating to implementation in the software.

 

We organise user conferences and forums and present our solutions in order to ensure that the regulatory requirements are implemented lawfully yet also practically and economically. In the discussion surrounding possible solution scenarios, open questions can be factored back into the work of the association. Moreover, the dialogue in these idea-sharing formats is a tremendously important way to create practical solutions. Although software solutions would comply with legal requirements without this close coordination, they might be developed without any practical input. As such, users from the side of the client businesses who are regularly affected are involved.

 

Working in dialogue with experts from specialist departments at the client businesses, for example, we were able to clear up technicalities and limit variety of options, and in doing so make sure that regulatory function blocks are efficient in terms of organisational processes and case handling work.

Requirements management is followed by implementation in the standard software. The workload can range from a few person days for changes throughout the year to thousands of person days when extensive care reforms are announced. Alongside the standard product, we then have customer-specific configurations.

 

Quickly implementing all regulatory requirements to stay compliant is a major task for insurers that requires them to invest large amounts of money and time. Standard software minimises these expenses, as professional software providers implement changes as quickly as possible and in collaboration with those companies that will later use them. The solutions they create are therefore highly practical as well as custom-fit and their costs are predictable.