Indonesia

The main strategic purchasing units are as follows:

The National Social Security Agency for Health (BPJS Kesehatan or BPJSK). BPJSK is an independent agency (operating under the President) that implements strategic purchasing for healthcare services under the National Health Insurance. BPJSK purchases services from hospitals through established contracting and payment mechanisms and incentive-setting. A utilisation review team identifies service gaps from the clinical and cost perspective.

The Ministry of Health (MOH) is the main purchaser for priority public health programmes and individual health services. The MOH gathers relevant funds from multiple sources to plan for public health programmes such as vaccinations. The Secretary General (SecGen) of the MOH manages strategic purchasing as it regulates the management of health affairs. The two main sub-units under SecGen that deal with financing are the Bureau of Health Planning and Budgeting (overseeing the public budget allocation for transfer funds); and the Center for Health Financing and Policy (overseeing mechanisms for strategic purchasing for individual efforts by the Ministry of Health, and allocating the public budget for JKN premium subsidies for the poor).

Other agencies are involved in some functions of strategic purchasing:
• Assessing national health priorities is a shared task between the MOH and the Ministry of Development Planning (BAPPENAS).
• Assessing population health needs is a shared task between the MOH and the Coordinating Ministry of Human Development.
• The Indonesian Health Technology Assessment Committee (InaHTAC) under the MOH reviews the list of essential medicines.

Medicines and vaccines (national level)
Ministry of Health
National Procurement Agency (LKPP)
Ministry of Finance

Medicines and vaccines (subnational level)
District health office (for public providers)
Private providers

Medical equipment and consumables (national level)
Ministry of Health
National Procurement Agency (LKPP)
Ministry of Finance

Medical equipment and consumables (subnational level)
District health office (for public providers)
Private providers

Healthcare services (national level)
BPJSK/Social Security Agency for Health
Private insurance providers

Healthcare support services (national level)
Ministry of Health
Ministry of Finance

Healthcare support services (subnational level)
District health office
Private hospital
Emergency support services (9-1-1 services)

The public purchaser of healthcare services is the national health insurance body, the BPJSK. The BPJSK pools multiple sources of funds into a single National Health Insurance (NHI) pool called Dana Jaminan Sosial (DJS). The DJS is kept sustainable through a balancing of revenue and payment. BPJSK uses the NHI fund to pay for services delivered by both primary and referral care services. This scheme accounts for 23% of all health spending.

Private purchasers include private insurers, corporate schemes and household out-of-pocket (OOP) payments. The private sector still makes up the majority of healthcare sources. OOP payments account for a total of 32% of all care spending, while corporate schemes account for 11%, and private insurance for 3.5%.

For public healthcare services, purchasing is conducted centrally following the National Health Insurance (NHI) scheme. The private sector follows a similar pattern, whereby private payers purchase services on top of the mandatory public service. Both co-exist, and therefore a coordination of benefit (COB) scheme between public and private insurance exists in Indonesia.

There is a coordination of benefit (COB) scheme that allows private insurance users to top-up for services on top of the benefit allowable through the public scheme (National Health Insurance, NHI). There are currently 2 mechanisms for purchasing services through COB:

• Private service on top of mandated in JKN: the service allows users of both insurance schemes to use JKN for mandatory services and upgrade benefits through their own private scheme;

•Private service first-use: the private insurance user can use services through their private scheme. The private payor can then request reimbursement for a certain percentage if the basic NHI package occurs within utilisation.

• Badan Penyelenggara Jaminan Sosial Kesehatan (BPJS-K) — Jaminan Kesehatan Nasional (JKN)
• Private insurance

When deciding on a purchase, purchasers typically decide based on cost-quality assessments. Several criteria are considered.

1) Benefits: In the JKN system, the benefit package is universal as all diseases are covered. However, treatment follows the cost-effectiveness rule, meaning that only cost-effective interventions are covered under the national benefits package list. (i.e., drugs have to be listed in the National Formularium, FORNAS).

2) Cost: In an ideal scenario, purchasers would buy services with the lowest cost. However, quality of service is also considered as a trade-off.

3) Volume: From the purchaser’s point of view, coverage of services with high utilisation rates (or volume) provides the most benefit to users. In Indonesia, purchasers use existing lists on “most catastrophic diseases” and “most prevalent diseases” to decide on the volume of services purchased.

For the Social Health Insurance (SHI) fund, the Law on Health Insurance specifies management principles, stating “the health insurance fund shall be managed in a centralized, uniform, public and transparent manner with management decentralization within the system of health insurance institutions” (Article 34). The following principles therefore govern the SHI’s use of funds (in no order of importance):
1. Centralised and uniform;
2. Public and transparent;
3. Management decentralisation within the SHI institutions.

The Law on State Budget (Article 8) also specifies eleven management principles, of which the following are relevant to purchasing (in no order of importance):
1. Uniform and democratic;
2. Public, transparent and ensuring equity;
3. Management decentralisation to provincial People’s Councils;
4. Efficient and prudent (economical);
5. Based on the approved budget plan and public cost norms imposed by authorities.

The main stakeholders are are the Ministry of Finance (MOF), Parliament and the Ministry of Health (MOH). The MOF allocates budgets for health spending annually, particularly for public health services and subsidised individual services (e.g., the JKN scheme). The MOH implements this budget by regulating service provision and purchasing activities.

The Ministry of Home Affairs (MOHA) oversees the transfer of health funds, particularly because health programme delivery units are decentralised at the subnational level.

The Ministry of Development Planning (BAPPENAS) creates a medium-term framework for strategic planning, which outlines health program priorities and/or new initiatives. BAPPENAS, alongside MOH closely follows global indicators to make sure the country is meeting global targets for health priorities (e.g., Sustainable Development Goals, Universal Health Coverage).

Professional associations (e.g. Indonesian Medical Council, Indonesian Medical Specialist Association, the Clinical Specialist and the Healthcare Provider Association) can sometimes impact health system financing and priority-setting set by the government.

Private insurers also influence the health systems; although utilisation rates are still low (~5% of the population), private payers have leverage in guaranteeing access to innovative medicines, among other top-up benefits offered to their users.

Decisions on strategic purchasing for health are made using similar patterns to the budget cycle. The Ministry of Finance (MOF) is responsible for allocating budgets, including the health budget; the Ministry of Health (MOH) is responsible for implementing this budget. Within the MOH, various agencies are involved in strategic purchasing decisions. The MOH’s Center for Health Financing and Policy oversees strategic purchasing for MOH-led activities and for Jaminan Kesehatan Nasional (JKN) health insurance subsidies for the poor. The Indonesia Health Technology Assessment Committee (InaHTAc) and professional bodies advise on what to include in the essential medicines list and on cost-effective interventions. The Quality Improvement team reviews clinical guidelines and decides on preferred treatment choices.

The MOH collaborates with the Dewan Jaminan Sosial Nasional (DJSN), Indonesia’s national social security council, to make decisions on service models and cost-sharing mechanisms for health as well as on provider payment methods.

Strategic purchasing decisions for the National Health Insurance (NHI) are largely made by BPJS-K as the relevant implementer. BPJS-K conducts contracting with providers and implements provider payment methods as dictated by MOH and DJSN. On some occasions, BPJS-K may adjust provider payment methods to implement performance-based incentives (pay-for-performance).

The Presidential Decree of 82/2018 on the National Health Insurance highlights the majority of strategic purchasing responsibilities — particularly the role of stakeholders in deciding the benefit package, tariffing of healthcare services and purchasing power. The regulation was revised into Presidential Decree 64/2020 which mentioned a change on JKN premium amounts based on class membership.

The Presidential Decree 32/2014 delineates the utilisation of capitation funds, the payment scheme for contracted primary care providers.

The Ministry of Health Decree 52/2016 on the Standard Tariff of Healthcare within the National Health Insurance Scheme. This decree manages the standard tariff for both primary and secondary healthcare and defines how providers are paid.

The Ministry of Finance Decree 7/2020, which delineates the use of shared funds to finance JKN, particularly through excise tax for goods that have morbid consequences on health (tobacco). The purchasing scheme of population health programs follows a different financing structure.

Bylaw of 25/2009 on public service delivery dictates procurement processes and the channeling of public goods financed from the public budget, including (but not limited to) public services, public infrastructure development, as well as goods or services not financed by public budget (e.g., Corporate Social Responsibility projects and Public-Private Partnerships)

Bylaw 17/2003 on National Finance dictates that national finances should be managed adhering to the bylaw as efficient, effective, transparent and responsible, with emphasis on adequacy and justice.

Bylaw 25/2004 on the National Development Planning System bylaw dictates the medium, long, and short-term development planning accrued with the budget cycle. The regulation also enforces consistency across the planning, budgeting, executing and monitoring of budgets (referring to the Public Financial Management/PFM cycle). The same bylaw also describes the role of subdistrict governments in executing budget transfers (e.g., the subnational revenue fund, the village fund).

Bylaw 2/2020 on Financial System Stability State Policy to Mitigate COVID-19 Pandemic, which sets forthan ad0hoc financial policy established as part of the COVID-19 mitigation and recovery plan.

Government tendering processes follow set procurement standards. The most recent regulation regulating public procurement is the Presidential Decree 12/2021. According to this Decree, the procuring executive agency or ministry will design a procurement plan and create a committee for procurement. The methods are divided into bidding, direct appointment and direct purchase. 

Healthcare sector tendering follows a similar process to general public procurement, as outlined in the Presidential Decree 12/2021. The stakeholders involved, however, are specific to healthcare.

An example is the drug procurement process. The Ministry of Health (MOH)’s role is to establish the national formulary of medicines (FORNAS) in Indonesia, particularly including drugs with many years of cost-effectiveness reviews. The FORNAS is sent to the National Procurement Agency (LKPP). LKPP will then carry out the role of preparing an e-catalogue for providers (both primary and secondary level) to enable them to directly purchase included products.

Contract enforcement with service providers is the responsibility of the purchaser. For the JKN national health insurance scheme, this falls on BPJS-K. Providers need to first undergo credentialing (an input-based quality assurance test) to become contracted within the JKN scheme. If this is passed, BPJS-K will outline a service contract with providers. Providers are expected to provide for services under designated guidelines, including the benefit package and based on nationally-agreed healthcare service fees.

Currently, output-based incentives are done at the primary care level. The incentives follow a pay-for-performance design which allows capitation funds to be geared with reward and punishment systems.

BPJS-K implements three levels of outputs as incentives in primary care (written into BPJS Decree 7/2019):
1) Contact rate,
2) Ratio of controlled chronic diseases,
3) Ratio of non-specialist referral.

There are currently no output-based incentives at the referral care level. The current payment system , Diagnostic Related Group (DRG), already sets a form of incentives in the form of bundled payments.

Performance assessments are done jointly by the BPJS-K as purchaser, the Ministry of Health (MOH) as the care quality regulator and the National Social Security Council (DJSN) as primary regulator.

The current monitoring evaluation system for JKN, known as SISMONEV JKN, is primarily managed by the DJSN and derives information from direct reports from BPJS-K.

National care quality standards are regulated by the MOH which releases indicators and minimum service standards for healthcare facilities to comply with (co-developed with BPJS-K).

Service utilisation reviews are conducted by TKMKB, a body administered through BPJS-K and split up per region. The regional TKMKB conducts monthly utilisation reviews to look for patterns and check for waste within the current purchasing system.

BPJS-K’s mechanism to provide feedback is currently ad hoc and not institutionalised. Provider/supplier feedback is based on closed-door meetings with the BPJS-K’s utilisation review team, TKMKB, whose data is not publicly available. There is, however, a whistleblower application which was designed by BPJS-K into a mobile application called Mobile JKN.

System-level analysis does not go through an institutionalised process yet. The Utilisation review body of BPJS-K, TKMKB, does not have a structured process for analysing system-level efficiency. TKMKB only shares descriptive analyses from the regional level to the central level, for the sole use of reporting.

Nonetheless, numerous think tanks produce reports on service utilisation, quality and financial protection to inform policy recommendations.

Several data and information management systems are used.

• Claims are submitted through the e-claim system, a database for claims reimbursement that follows hospital Diagnostic-Relaetd Groups (DRG) payment systems. This system contains information related to services such as utilisation rates of certain procedures, length of stay (LOS) and payment related data (e.g., charges).

• The P-Care system is a database utilised by BPJS-K for maintaining records on primary care and referral systems.

•  National hospital quality data reporting is used, but this is not publicly available.

• PeduliLindungi,  an application established by the Ministry of Health (MOH) during the COVID-19 pandemic but aimed to be expanded to cover Indonesia’s health services data.

•  Other vertical reporting systems for diseases, such as the Tuberculosis Information System.

Findings on health system performance are currently used to inform purchasing decisions at a national and subnational level. However, this process has not been institutionalised yet and is largely done behind closed-door stakeholder meetings.

A recent example is the payment system for COVID-19 treatment which was rapidly established as fee-for-service, but as payment data was gathered, the Ministry of Health (MOH) successfully revamped it to be closer to Diagnostic Related Groups (DRG). It should be noted that similar processes are rarer at the subnational level due to the lacking capacity of regional agencies/stakeholders.

The following indicators are used to both select and evaluate purchasing decisions:

1) Cost
2) Utilisation/volume
3) Supply side availability
4) Quality of care
5) Equity