Friday, June 18th, 2010

CANADA 05-31-2010 / Changes to Ontario drug plan changes postponed until end of June

The Ontario government has postponed its plans to lower generic drug prices, eliminate professional allowances, increase dispense fees, and set a limit for markup. The changes were initially intended to take effect in mid-May, but the government is still deliberating on the actual policies that will be put in place. Changes are not expected to be effective until the end of June.

Of the proposed changes, the one that is most certain to take effect is the elimination of professional allowances, the payments that drug companies provide to pharmacies to stock their products. The elimination of professional allowances was included in Bill 16, which the legislature passed on May 18th, 2010.

The following are the proposed changes to drug plans, both the public plan (Ontario Drug Benefit or ODB) and private plans.

Generic drug prices
The government has emphasized that limiting generic drug prices is one of the most important components of the proposed drug plan changes. The government’s proposal calls for a limit on generic drug prices of 25% of the retail/brand-name versions. This limit would take effect immediately for the public plan, which has a current limit of 50%, and be phased in for private plans, which currently are not subject to any limits. For private plans, the limit would be 50% in 2010, 35% in 2011, and 25% in 2012.

Mercer estimates that while generic drug prices are 30% to 80% of brand name versions, this average is skewed by the higher cost of drugs released since 2006, so the weighted average is about 55% to 65%. This would mean that significant decreases in generic drugs would not occur until 2011.

Professional allowances
The elimination of professional allowances would take effect immediately for the public plan (currently a 20% limit), and be phased in for private plans, which are not subject to regulations on these allowances. For private plans, professional allowances would be limited to 50% in 2010, 35% in 2011, 25% in 2012, and eliminated completely in 2013.

Dispense fees and markups
The government’s proposal only calls for changes in the public plan regarding the dispense fees and markups (for ingredient costs) that pharmacies may apply. For the dispense fees, the proposal calls for an increase from CAD 7 to CAD 8, plus a 2.5% annual increase as from April 1st 2011 for the next five years. The increase would be different (CAD 1 to CAD 4) in rural areas.

The proposal calls for the markup cap to remain 8% (same rate as before) but to be subject to a new cap of CAD 125 applicable for prescriptions in excess of CAD 1,500.

Observers expect for dispense fees and markups to increase for those on private plans as pharmacies attempt to generate revenue to replace losses caused by the drug price limits.

SPAIN 05-28-2010 / European Court of Justice to decide if Spain violates EU law by not paying for medical expenses incurred abroad

The European Commission contends that EU law is breached by Spanish legislation that allows reimbursement of hospital or non-hospital care received by a Spanish resident in other EU countries only in cases of “vital emergency.” The Commission points out that the EU regulation on the coordination of social security systems requires an EU country to grant authorization for treatment abroad when the conditions in the regulation are satisfied. Authorization only can be refused if the same or equally effective treatment can be obtained without undue delay in the patient’s own member state. The Commission says that Spain is acting unreasonably by systematically refusing to reimburse hospital costs when a request for reimbursement is submitted late; i.e., at the time of treatment or after the treatment. Thus, the Commission has asked the European Court of Justice to decide whether Spain will have to change its legislation on this matter.

ISRAEL 05-28-2010 / Court overturns inclusion of children’s comprehensive dental care in basic health benefits package

On May 20th  2010, the High Court overturned the government’s decision to include comprehensive dental care for children in the basic health benefits package (also referred to as a “health basket”). All Israel residents are compulsorily covered by a health insurance fund (Clalit, Maccabi, Meuhedet, or Leumit), and all funds are legally required to cover the services in the basic health benefits package.

This court decision overturns the Cabinet’s approval on May 2nd, 2010 of the Health Ministry’s plan to add dental care for children up to age 8 in the basic benefits package. This dental care was to include two check-ups and x-rays per year and a cleaning for free, and filings, extractions, and other services at a subsidized cost of ILS 20 each up to a cap of ILS 40 per visit.

Currently, the basic health benefits package only covers preventive dental care for children up to age 5. The health funds offer coverage beyond this minimum in supplemental policies. In its decision, the court stated that the approval of the Knesset (the legislative body) was necessary in order to add this new category of comprehensive dental care for children up to age 8 to the basic benefits package

Now that this comprehensive dental care coverage for children has been struck down, there is a push to return the ILS 65 million that was diverted for this coverage from the ILS 415 million in overall funding for the basic health benefits package. The government approved this allocation back in December 2009.

RUSSIAN FEDERATION 05-24-2010 / New law waives foreign worker quotas for “high skilled specialists”; social contributions payable for these employees

On May 20th 2010, the president signed into law a comprehensive package of revisions to the Federal Law No. 115-FZ (“On the legal status of foreign citizens in the Russian Federation”). These changes aim to create a more favorable legal framework for foreigners working in Russia. New provisions will come into effect on January 1st, 2011.

Previously, the amendments were approved by the lower house, the State Duma, on May 12th and approved by the upper house, the Federation Council, on May 13th.

High skilled specialists
The main novelty of the revised law is introduction of “high skilled specialists” as a new category of migrant workers. In essence, to be considered a high skilled specialist, an individual must be paid not less than RUB 2,000,000 annually. The Russian government reserves a right to lower this ceiling if necessary for the country’s economic futherment.

Employers are no longer limited by quotas on foreign workers when it comes to high skilled specialists. This is particularly important given the continuing trend of cutting foreign labor in Russia — in January 2010 the quota was reduced from 2,000,000 to 1,300,000.

While by definition foreign high skilled specialists must have experience, skills, or achievements in a certain area, employers are now entitled to establish the competency of such individuals on their own. They also do not have to obtain an authorization to employ a foreign expert (this particular provision becomes effective on July 1st, 2010).

Income tax for foreign high skilled specialists is set at 13%, the rate currently applicable to Russian citizens. For comparison: all other types of migrant workers are subject to 30% income tax.

High skilled specialists are not subject to the requirement to live in Russia for at least a year to become eligible for residency. Residency can be granted to high skilled specialists and their family members for a term of more than five years (based on the employment contract). High skilled specialists will be able to receive a legal resident status at the same time as the work permit.

Unskilled migrant workers
Unskilled migrant workers from the countries having no visa requirement with Russia will now have to provide their biometric information (photographs and fingerprints) to the country’s immigration authorities as of January 1st 2013. These workers must also obtain a “patent” (work license) in order to work in the country. The patent will cost a laborer RUB 1,000 per month. It will be issued for a term of 1 to 3 months and can be renewed for up to one year. According to the revised law, the patent or a rejection notification must be issued not later than 10 days after the application.

Work permits
Work permits to high skilled specialists will be issued for the length of their work agreements not to exceed 3 years. This permit can be renewed multiple times but no longer than for a 3-year period each time.. Additionally, the amended law established a new timeframe of 14 days for processing work permit applications. It currently takes from 12 to 23 months to process such paperwork. The purpose of the described amendments is to simplify the procedure of bringing foreign work migrants into the country.

In Russia, government regulation No. 681 from November 15th 2006 (“On the procedure for issue of permitting documentation to foreign citizens for performing temporary labor activities in the Russian Federation”) sets the rules for work permit procedures. Importantly, in 2009 Russian immigration authorities began to strictly enforce one of the regulation provisions that requires apostilles or consular legalized copies of foreign educational qualifications (diplomas, certificates of degrees etc.). Previously, notarized diplomas accompanied by translation would be accepted in most cases. Now a legalized copy of educational qualifications must be submitted with every work permit.

As an exception, notarized documents will still be accepted for 31 countries having mutual recognition of official documents with Russia. The newly enforceable rule equally applies to foreign workers submitting work permit applications for the first time and to those already working in Russia.

Health insurance and benefits for foreign workers
Employers must provide high skilled specialists health insurance, social security coverage, and accommodations. All the benefits must become effective on the first day of work of such individuals. Notably, high skilled specialists’ income is subject to social taxation as long as they have a legal resident status. Therefore, such individuals are entitled to medical insurance coverage and other social security benefits (temporary disability, maternal benefits) to the extent Russian citizens are.

Foreign workers temporarily residing in Russia (not having a legal resident status) are not entitled to medical insurance or any social security coverage.

BACKGROUND
During work permit application process notarized diplomas will be accepted from the following countries, no apostille required: Albania, Algeria, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cuba, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Kazakhstan, Macedonia, Moldova, Panama, Poland, Romania, Serbia, Montenegro, Slovak Republic, Slovenia, South Korea, Spain (applies to documents issued by the Spanish Registry Office only), Tajikistan, Turkmenistan, Ukraine, Uzbekistan and Vietnam.

TAIWAN 05-31-2010 / Legislative committee completes first reading of draft bill amending the National Health Insurance Act

On May 20th 2010, the Health & Environment Committee of the Legislative Yuan completed its first reading of the draft bill to amend the National Health Insurance Act. This bill is primarily focused on the adjustments of premiums. It is not expected for this bill to be signed into law any earlier than 2011.

After this first review, the bill sets a new standard premium rate of 2.67%. This is lower than the previous proposed rate range (3-4%) because of the consideration of single insurers. The current total premium rate is 5.17% (split amongst employer, employee, and the government), which was raised from 4.55% in April. The same rate applies to individuals/ non-employees.

The draft bill proposes setting highest and lowest income limit to differentiate the premium for individuals with different levels of income. Those whose income exceed the highest earning ceiling of TWD 7.5 million per household will pay a monthly fixed amount of TWD 16,688 per person and those whose income fall below the lowest earning line of TWD 150,000 per household will pay a monthly fixed amount of TWD 334 per household. For those whose household income range falls between TWD 150,000 and 7.5 million, their premium will be calculated at the rate of 2.67%.

The basis of the premium calculation will be the total household income. In the first reading, the Health & Environment Committee of the Legislative Yuan was unable to reach a conclusion about whether the calculation of total family income should consider non-salary elements including dividends, rental income, pension income and donation. This particular provision will be sent to the Legislative Yuan for further debate.

The draft bill also states that expatriates who leave Taiwan for four years will only be able to resume participation in the national health insurance program after a six month waiting period.

So far, there has been no evidence that this legislation will affect the scope of covered medical treatments.

As the government and the opposition party have not agreed on several provisions of the legislation, the debate has continued on the unsettled issues. As the Legislative Yuan will adjourn after June 8th 2010, the third reading of the draft bill will likely to continue in the second half of 2010. The government expects the bill to be completely passed in 2011 and become effective by 2012.

The Executive Yuan (cabinet) initially submitted this draft bill to the Legislative Yuan on April 9th 2010.

SOUTH AFRICA 05-18-2010 / Task force appointed to develop guidelines for compliance with Medical Schemes Act

The Council for Medical Schemes (CMS), the statutory body that has responsibility for regulating approved medical schemes in South Africa, has appointed a 16-member task force to monitor compliance with the Medical Schemes Act and to develop a code of conduct for the industry. Particular attention is to be devoted to the obligations of the medical schemes to provide the legally-required prescribed medical benefits. The law requires approved plans to provide coverage for diagnosis, treatment and care of 270 listed diseases, 25 chronic conditions, and all emergency medical conditions.

The chairman of the CMS said that more than 4,500 complaints were received last year about unpaid accounts, benefit limitations, and denial of authorization to receive benefits; however, it has been estimated that about 90% of all complaints are settled or abandoned before they reach the CMS. Currently, there are more than 8 million members of approved medical schemes.

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