Joint Circular No. 151/1998/TTLT-BTC-BYT guiding the financial management regime of the health insurance fund

JOINT CIRCULAR

JOINT CIRCULAR NO. 151/1998/TTLT-BTC-BYT OF November 20, 1998 ISSUED BY THE MINISTRY OF FINANCE AND THE MINISTRY OF HEALTH GUIDING THE FINANCIAL MANAGEMENT REGIME OF THE HEALTH INSURANCE FUND

WHEREAS, Decree No. 58/1998/NĐ-CP dated August 13, 1998 of the Government promulgates the Health Insurance Regulations, the Ministry of Finance and the Ministry of Health guide the financial management regime of the health insurance fund as follows:

I. GENERAL PROVISIONS

1. The financial management regime of the health insurance fund prescribed in this Circular applies to the Vietnamese Health Insurance System, including:

- Vietnamese Health Insurance.

- Provincial and municipal health insurances (provincial health insurance), sectoral health insurances under the Vietnamese Health Insurance.

- Health insurance branch offices at districts, counties, cities, and towns within provinces and centrally governed municipalities (hereinafter referred to collectively as county-level health insurance branch offices).

2. The health insurance fund is formed from the following sources: health insurance contributions, a portion of profits from fund preservation and growth activities, and other revenues. The health insurance fund is managed centrally and uniformly throughout the Vietnamese Health Insurance System, independently accounted for from the State Budget, and protected by the State.

3. The health insurance fund is used to pay for medical examination and treatment costs for individuals with health insurance cards, and to cover administrative expenses of the Vietnamese Health Insurance System.

4. In the initial phase, the Vietnamese Health Insurance System receives state budget funding to build physical infrastructure according to the annual state budget plan approved.

5. The Vietnamese Health Insurance System opens deposit accounts for the health insurance fund at state-owned commercial banks. Any surplus funds in these deposit accounts held by the health insurance system at state-owned commercial banks earn interest at the prescribed deposit rate.

6. Temporary idle funds (if any) of the health insurance fund may be invested in treasury bills and bonds issued by the State Treasury and state-owned commercial banks, and other measures may be taken to preserve and grow the health insurance fund while ensuring sufficient resources for payment when needed.

II. COMPULSORY HEALTH INSURANCE MANAGEMENT

A. SOURCES OF FUNDS

The compulsory health insurance fund is formed from the following sources:

- Health insurance contributions of the mandatory subjects as stipulated in Article 2 of the Health Insurance Regulations promulgated together with Decree No. 58/1998/NĐ-CP dated August 13, 1998 of the Government.

- A portion of profits from fund preservation and growth activities (including bank deposit interest).

- Revenues from sponsorships and aid from organizations and individuals both domestically and internationally.

- Interest on overdue health insurance contributions.

- Other income (if any).

B. HEALTH INSURANCE COLLECTION

1. Compulsory health insurance collection is carried out pursuant to Articles 12 and 13 of the Health Insurance Regulations promulgated together with Decree No. 58/1998/NĐ-CP dated August 13, 1998 of the Government.

2. Agencies, units, employers, and agencies managing the budgets of health insurance participants are responsible for deducting health insurance contributions from their budgets and collecting health insurance contributions from employees to timely and fully remit them into the health insurance fund at least once every three months. The health insurance agency may enter into collection agreements with the finance agency, tax agency, and related agencies. The Vietnamese Health Insurance can allocate up to 0.1% to 0.5% of total collected health insurance contributions as collection fees, which are recorded as administrative expenses of the health insurance system. The General Director of the Vietnamese Health Insurance decides the specific collection fee rates for each subject and region. The health insurance agency and agencies, units, and employers may enter into long-term agreements regarding contribution payments and issuance of health insurance cards but must ensure that revenue is not lost.

3. Health insurances at all levels are responsible for guiding and organizing the collection of health insurance contributions from all participating subjects in accordance with the prescribed periods and quantities.

4. In cases where agencies, units managing budgets, or employers delay in paying health insurance contributions, they must pay:

- The unpaid health insurance contributions by the agencies, units managing budgets, employers, and employees. These arrears are transferred into the health insurance fund. During the period of delay, the head of the unit must use the unit's own funds to cover the medical examination and treatment costs for patients under their management according to hospital charges.

- Interest on the delayed contributions calculated at the overdue loan interest rate specified by state-owned commercial banks at the time of collection. This interest is transferred into the medical examination and treatment reserve fund.

5. The Vietnamese Health Insurance uniformly manages health insurance collections across the entire industry. The General Director of the Vietnamese Health Insurance is responsible for specifying the detailed management of health insurance collections across the entire industry.

C. DISTRIBUTION AND USE OF COMPULSORY HEALTH INSURANCE REVENUES:

The revenues from compulsory health insurance contributions are distributed and used as follows:

1. Medical examination and treatment expenses amount to 91.5% of the annual collected health insurance revenues, including:

- The medical examination and treatment fund to pay for medical examination and treatment costs for individuals with health insurance cards amounts to 86.5%.

- The medical examination and treatment reserve fund at the Vietnamese Health Insurance amounts to 5%.

2. Administrative expenses for the operation of the Vietnamese Health Insurance System amount to 8.5% of the annual collected health insurance revenues.

D. CONTENTS OF COMPULSORY HEALTH INSURANCE FUND EXPENDITURES INCLUDE:

1. Medical examination and treatment fund expenditures.

a) Provincial and sectoral health insurances may use 86.5% of the annual collected health insurance revenues to pay for medical examination and treatment costs for individuals with health insurance cards managed by them and are responsible for managing and using the medical examination and treatment fund for its intended purpose, in accordance with regulations, and ensuring balance between income and expenditure of the medical examination and treatment health insurance fund.

At the end of the year, if there is a surplus in the medical examination and treatment fund, it will be transferred into the medical examination and treatment reserve fund of the provincial and sectoral health insurances. If the medical examination and treatment costs in the year exceed the payment capacity of the medical examination and treatment fund at the provincial and sectoral health insurances, it will be supplemented from the medical examination and treatment reserve fund.

b) Medical examination and treatment costs for individuals with health insurance cards are paid as follows:

- The health insurance agency shall pay 100% of the examination and treatment costs based on hospital fees for social beneficiaries as prescribed in the Ordinance on Preferential Treatment for Persons Engaged in Revolutionary Activities, Martyrs and Their Families, War Invalids, Veterans, and Those Who Have Contributed to the Revolution.

- The health insurance agency shall pay 80% of the examination and treatment costs based on hospital fees, while the remaining 20% of the examination and treatment costs based on hospital fees shall be paid by the patient to the healthcare facility for those who do not fall under the scope of social preferential treatment as specified above. The amount of 20% of the examination and treatment costs based on hospital fees that the patient must pay to the healthcare facility in a year shall not exceed six months' minimum wage. If it exceeds six months' minimum wage, subsequent examination and treatment costs in the year will be fully covered by the health insurance agency.

Example: Mr. Nguyen Van A has a health insurance card and went for examination and treatment three times in a year according to the health insurance regulations; the current minimum wage is 144,000 VND/month. The maximum amount of 20% of the examination and treatment costs based on hospital fees that Mr. A must pay in a year is:

144,000 VND/month x 6 months = 864,000 VND.

First examination and treatment:

The examination and treatment cost of Mr. A based on hospital fees is: 2,500,000 VND

+ Mr. A must pay to the healthcare facility:

20% x 2,500,000 VND = 500,000 VND

+ The health insurance agency pays to the healthcare facility:

80% x 2,500,000 VND = 2,000,000 VND

Second examination and treatment:

The examination and treatment cost of Mr. A based on hospital fees is: 3,000,000 VND

+ 20% of the examination and treatment costs based on hospital fees is:

20% x 3,000,000 VND = 600,000 VND

However, at the first examination and treatment, Mr. A had to pay 500,000 VND himself, so for the second examination and treatment, Mr. A only needs to pay a maximum of:

864,000 VND - 500,000 VND = 364,000 VND

+ The health insurance agency pays to the healthcare facility 80% of the examination and treatment costs:

80% x 3,000,000 VND = 2,400,000 VND

At the same time, the health insurance agency must pay to the healthcare facility the remaining portion of the 20% of the examination and treatment costs based on hospital fees for the second visit that Mr. A does not have to pay:

600,000 VND - 364,000 VND = 236,000 VND

Therefore, the total amount that the health insurance agency must pay to the healthcare facility for the second visit is:

2,400,000 VND + 236,000 VND = 2,636,000 VND

Third examination and treatment:

The examination and treatment cost of Mr. A based on hospital fees is: 5,000,000 VND

+ Mr. A does not need to pay to the healthcare facility

+ The health insurance agency pays to the healthcare facility: 5,000,000 VND

- Health insurance card holders can only enjoy health insurance benefits as stipulated above when:

+ Receiving examination and treatment at healthcare facilities registered on their health insurance cards for management and health care.

+ Receiving examination and treatment at other healthcare facilities referred according to regulations on medical specialty levels issued by the Ministry of Health.

+ Receiving emergency examination and treatment at any state-owned healthcare facility.

c) In cases where patients request examinations and treatments on their own terms: choosing their own doctors, choosing their own wards, choosing their own healthcare facilities, choosing various medical services; receiving examinations and treatments beyond the medical specialty level without referral letters as prescribed by the Ministry of Health; receiving examinations and treatments at healthcare facilities without contracts with the health insurance agency (except in emergencies), the health insurance agency shall only cover the examination and treatment costs based on hospital fees at the appropriate medical specialty level as prescribed by the Ministry of Health and as stipulated in point b, Clause 1, Part D hereof. Any additional difference (if any) shall be borne by the health insurance card holder to the healthcare facility.

2. Management and utilization of the examination and treatment contingency fund.

Vietnam Health Insurance shall uniformly manage the examination and treatment contingency fund (hereinafter referred to as the contingency fund), including the contingency fund at provincial and sectoral health insurances and the contingency fund at Vietnam Health Insurance.

a) Sources forming the contingency fund.

- The contingency fund at provincial and sectoral health insurances is formed from the following sources:

+ The surplus of the examination and treatment fund each year.

+ A portion of the interest from bank deposits and income from activities to preserve and increase the health insurance fund.

+ Interest from late payments when collecting health insurance.

- The contingency fund at Vietnam Health Insurance is formed from the following sources:

+ 5% of the total health insurance revenue of the entire health insurance system.

+ A portion of the interest from bank deposits and income from activities to preserve and increase the health insurance fund.

+ Funds transferred from the contingency fund at provincial and sectoral health insurances when necessary.

+ A portion of the surplus (if any) of the administrative expenses of the health insurance system.

b) Management and utilization of the contingency fund.

In case the examination and treatment costs in a year at provincial and sectoral health insurances exceed the examination and treatment fund (86.5%) due to objective reasons, provincial and sectoral health insurances may use the contingency fund at provincial and sectoral health insurances to make up for the shortfall after obtaining written approval from Vietnam Health Insurance. If the contingency fund at provincial and sectoral health insurances has been exhausted but still cannot cover the shortfall, it may be considered for supplementary funding from the contingency fund at Vietnam Health Insurance, but the maximum amount shall not exceed 5% of the total health insurance revenue of the province or sector that has been submitted to the contingency fund of Vietnam Health Insurance. In special cases, if the contingency fund at Vietnam Health Insurance has been exhausted and the examination and treatment costs still exceed the payment capacity, Vietnam Health Insurance shall prepare a report and submit it to the Ministry of Health and the Ministry of Finance for resolution.

c) The General Director of Vietnam Health Insurance shall stipulate the principles, procedures, and decide on the use of the contingency fund. In cases where it is necessary to adjust the contingency fund between provincial and sectoral health insurances and transfer the contingency fund from provincial and sectoral health insurances to Vietnam Health Insurance, such actions must be approved by the Management Council of Vietnam Health Insurance.

3. Administrative expenses of the Vietnam Health Insurance system.

a) The Vietnamese Health Insurance System allocates 8.5% of the annual revenue from health insurance premiums for the operation of the management machinery of the entire health insurance system, which is centrally managed, balanced, and regulated by the Vietnamese Health Insurance. At the end of the year, if there is a surplus in the management fund, it will be distributed as follows:

- A portion will be transferred to the award and welfare fund to ensure that the award and welfare fund equals three months' worth of actual salary funds of the entire health insurance system (in cases where the award and welfare fund is insufficient).

- The remainder will be transferred to the medical examination and treatment reserve fund at the Vietnamese Health Insurance.

b) Based on the health insurance revenue plan approved by the Management Council of the Vietnamese Health Insurance and the actual implementation situation, quarterly, the Vietnamese Health Insurance may temporarily allocate the management fund to distribute and provide budgetary funds to units operating according to the approved budget estimates. The allocation of funds to units depends on the nature of their tasks, the scale of organizational machinery already approved, ensuring that the total management fund allocated does not exceed the total management fund of the Vietnamese Health Insurance System, and encouraging the improvement of operational efficiency of each subordinate unit. At the end of the year, based on the final settlement figures of health insurance revenue, the officially allocated management fund amount will be determined; if the amount allocated exceeds the allowable amount, it must be deducted from the next year's plan; if the amount allocated is less than the allowable amount, additional allocations will be made. The additional allocations will be used for:

- Transferring a portion to the award and welfare fund to ensure that the award and welfare fund equals three months' worth of actual salary funds of the entire health insurance system (in cases where the award and welfare fund is insufficient).

- Transferring a portion to the management fund of the following year corresponding to the management tasks of the previous year that need to be carried out in the following year.

- The remainder will be transferred to the medical examination and treatment reserve fund at the Vietnamese Health Insurance.

c) Based on the management machinery expenditure plan of the Vietnamese Health Insurance System, the Vietnamese Health Insurance reviews and approves the management machinery expenditure budget of provincial and sectoral health insurances, notifies them, and directly provides the management machinery budget to provincial and sectoral health insurances.

d) The expenditure on management machinery of the Vietnamese Health Insurance System is carried out according to current state-set standards and norms. Special expenditures of the health insurance system will be reported by the Vietnamese Health Insurance to the Ministry of Health and relevant authorities for resolution.

e) The General Director of the Vietnamese Health Insurance specifies the detailed procedures for preparing, reviewing, approving, distributing, and settling the management machinery budget for subordinate units within the Vietnamese Health Insurance System.

4. Investment in infrastructure.

a) The budget for investment in infrastructure for the Vietnamese Health Insurance System is funded by the State budget according to the annual budget estimate. Additionally, in the initial years, 50% of the interest from bank deposits and 50% of the profits generated from the preservation and growth of the health insurance fund will be allocated to supplement the capital for building infrastructure across the industry.

b) When implementing construction investments using State budget funds and interest/profits from deposits, the Vietnamese Health Insurance must comply with current State regulations on investment and construction management.

E. ACTIVITIES FOR THE PRESERVATION AND GROWTH OF THE HEALTH INSURANCE FUND:

1. The Vietnamese Health Insurance System uses temporarily idle funds to implement measures for the preservation and growth of the health insurance fund according to the principle of:

- Ensuring funds for medical examination and treatment for those holding health insurance cards.

- Ensuring safety and minimizing risks to the lowest possible level.

- Ensuring economic and social efficiency.

2. Forms of preservation and growth of the fund include:

- Purchasing Treasury bills, bonds, and promissory notes issued by the State Treasury and state-owned commercial banks.

- Lending to commercial banks.

- Investing in recovery projects for medical examination and treatment facilities, pharmaceutical production and trading enterprises, and medical equipment owned by the State. Such investments must be project-based and approved by competent authorities.

3. The Management Council of the Vietnamese Health Insurance decides on measures for the preservation and growth of the health insurance fund.

4. Interest from bank deposits and profits earned from the preservation and growth of the health insurance fund are distributed among the following funds:

- In the initial years, 50% is allocated for the technical infrastructure investment of the entire health insurance system.

- Establishing an award and welfare fund; the total annual allocation for both funds shall not exceed three months' worth of actual salary funds of the entire Vietnamese Health Insurance System.

- The remainder is added to the medical examination and treatment reserve fund.

F. MANAGEMENT AND USE OF THE AWARD FUND AND WELFARE FUND:

1. The welfare fund is used for:

- Strengthening material resources and repairing welfare facilities of the health insurance system.

- Funding public welfare activities for all staff members throughout the system, including social welfare.

- Additionally, a portion can be used to support the living conditions of health insurance system staff, including retirees, those who have lost their ability to work, or those engaged in charitable work.

The use of the welfare fund at provincial and sectoral health insurances is decided by the Provincial or Sectoral Health Insurance Director after consulting with the Trade Union of the Provincial or Sectoral Health Insurance. The use of the welfare fund at the Vietnamese Health Insurance is decided by the General Director of the Vietnamese Health Insurance after consulting with the Trade Union of the Vietnamese Health Insurance.

2. The award fund is used for:

- Regular and year-end bonuses for all staff members in the system.

- Awards for individuals and groups within the health insurance system who have innovative improvements.

The use of the award fund at provincial and sectoral health insurances is decided by the Provincial or Sectoral Health Insurance Director after consulting with the Trade Union of the Provincial or Sectoral Health Insurance. The use of the award fund at the Vietnamese Health Insurance for bonuses for staff members of the Vietnamese Health Insurance Office is decided by the General Director of the Vietnamese Health Insurance after consulting with the Trade Union of the Vietnamese Health Insurance.

3. The General Director of Vietnam Health Insurance shall submit to the Management Council of Vietnam Health Insurance for decision on the allocation and regulation of the fund for rewards and welfare benefits for health insurance in provinces, sectors, and other cases.

G. WORK ON ESTABLISHING BUDGET PLANS, FINAL ACCOUNT REPORTS, REVIEW AND AUDIT OF FINAL ACCOUNTS FOR HEALTH INSURANCE FUNDS:

1. Establish budget plans for health insurance funds.

Annually, based on guiding documents for establishing socio-economic development plans and sectoral development plans, the Vietnam Health Insurance system will establish annual budget plans for health insurance (with quarterly expenditures) following the procedures below:

- The health insurance branch at the district level shall base on the guidance of Vietnam Health Insurance and provincial/sectoral health insurance to establish budget plans for health insurance and send them to provincial/sectoral health insurance.

- Provincial/sectoral health insurance shall consolidate the budget plans for health insurance from the district-level health insurance branches and send their own management budget plans to Vietnam Health Insurance.

- Vietnam Health Insurance shall review and approve the budget plans for health insurance sent by provincial/sectoral health insurance; establish the overall budget plan for health insurance to be submitted to the Management Council of Vietnam Health Insurance for approval, and report to the Ministry of Health for consolidation and reporting to the Ministry of Finance. The Ministry of Health assigns the budget plan to Vietnam Health Insurance and sends it to the Ministry of Finance.

After being approved and assigned the budget plan by the Ministry of Health, Vietnam Health Insurance assigns the budget plan to provincial/sectoral health insurance. Provincial/sectoral health insurance bases on the indicators assigned by Vietnam Health Insurance to inform the district-level health insurance branches of the budget plan.

The budget plans established by the district-level health insurance branches, provincial/sectoral health insurance, and Vietnam Health Insurance must fully reflect activities such as: revenue collection plans, issuance of health insurance cards; expenditure plans for medical examination and treatment funds; management expenditure plans; plans for the preservation and growth of health insurance funds. The General Director of Vietnam Health Insurance shall provide detailed guidance on the procedures and contents of annual and quarterly plans for uniform application throughout the sector.

2. Regarding accounting and financial reporting.

- Vietnam Health Insurance and provincial/sectoral health insurance shall carry out accounting and financial reporting according to Decision No. 999/QD-CĐKT dated November 2, 1996 of the Ministry of Finance, Decision No. 144/BYT-QĐ dated January 31, 1997 of the Ministry of Health, and current regulations.

- Provincial/sectoral health insurance shall organize accounting work, prepare and report quarterly and annual final accounts according to prescribed regulations to Vietnam Health Insurance. Vietnam Health Insurance is responsible for reviewing the final accounts of provincial/sectoral health insurance, consolidating the final accounts of the entire system, submitting them to the Management Council for approval, and reporting to the Ministry of Health for approval and announcing the final accounts to Vietnam Health Insurance. After the final accounts of the Vietnam Health Insurance system are approved, Vietnam Health Insurance is responsible for announcing the approval of the final accounts to provincial/sectoral health insurance and guiding provincial/sectoral health insurance to adjust necessary points (if any) according to the approved final accounts.

III. MANAGEMENT OF VOLUNTARY HEALTH INSURANCE FUNDS

Revenue from voluntary health insurance is accounted for separately and managed uniformly. The Ministry of Health and the Ministry of Finance shall stipulate in detail and guide the use of health insurance funds for each type of voluntary health insurance.

IV. IMPLEMENTATION

1. This Circular takes effect from January 1, 1999, all previous provisions contrary to this Circular are abolished.

2. Vietnam Health Insurance is responsible for guiding subordinate health insurance agencies to implement the provisions of this Circular correctly. Any difficulties encountered during implementation should be reported to the Ministries for consideration and resolution.