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Mixed feelings for mixed billing – the case in Japan.

17 August 2015 Cecilia Chui

Japan has one of the most sophisticated and generous healthcare systems in the world. The country has enjoyed universal health coverage for more than 50 years, and the system enables every citizen to access medical care at their choice of institution under a uniform fee schedule. For insured medical services, patients are charged 30% of the treatment costs, while for uninsured medical services, patients have to pay 100% out of pocket at the market price set by the medical institutions.

In the scenario where the patient receives both insured and uninsured treatment performed in the same series of medical treatments, which is known as a mixed medical care series (kongo shinryo; MMS), NHI is to refuse reimbursing not only the uninsured treatment but also the insured treatment, and patients will pay 100% of both under Japanese regulations. The prohibition of billing for MMS means that providers are obligated to separate medical services covered by NHI and those not covered, and patient can get treated for MMS only if they pay out-of-pocket.

The ban on simultaneously charging inside and outside the public insurance is aimed at equality in health care. It clearly does promote equality between those who can afford to pay the non-covered services and those who cannot. However, it also means that once a doctor uses an unapproved drug, such as an anti-cancer drug that is not listed in the NHI fee schedule, the combined use of that drug and insured treatment services cannot be covered under NHI.

While the ban on MMS confines all medical services provided within Japan to insured treatment, one can also argue that the regulation limits patient access to innovative medications. In our recent research into our next multi-client study, Pathways to Precision Medicine: Navigating Payer Needs and Healthcare Systems through Molecular Diagnostics, one stakeholder named the ban on mixed billing to be one of the key access barriers for personalised medicines. In fact, Japan has long struggled from "drug lag" - a lag in drug approval times as compared with those in the US and the EU - primarily caused by the lengthy review and evaluation process by the Japanese drug regulatory agency, the PMDA. Patients remain frustrated by the delay in time required for oncology drug marketing approval and in access to such drugs in Japan.

This is about to change in the near future. Taking into consideration Japan's increasing fiscal burden, the prime minister's office proposed reforms to expand coverage of MMS as parts of its economic growth strategy last year. The government hopes that by expanding the scope of MMS, innovation in the medical industry will be encouraged. The partial exemption of the ban of MMS, which will be introduced in 2016, will allow the use of drugs that have been approved elsewhere in the world, but not yet in Japan, in selected hospitals at the request of patients. A patient will have to pay the costs of the drugs themselves but routine clinical care will be covered under NHI. The new system will enable Japanese patients to access novel care with lower costs than medical treatments for which patients bear full expenses of treatment, including the costs of unapproved drugs.

At the same time, reform of Japan's mixed treatment policies should improve market access for multinational companies, who will be able to provide their products to Japanese patients without product approval in more situations than they currently can. Also, since some of the treatment will now be covered by insurance, mixed treatments will be affordable for a much larger number of patients as well.

While it remains to be seen how well the new system will play out, concerns have also been raised that the expansion of mixed treatments could also result in certain insured treatments being delisted or therapies patients require becoming unavailable under public health insurance.

As Japan continues to tackle the dilemma of sustaining a generous healthcare system while trying to cope with a rapidly aging population, the government will need to pay attention to the burden on taxpayers as well as improving patients' access. This, eventually, will go back to the question of balancing equality and efficiency.

Our study will be available for purchase in October. If you would like to participate in our data survey, or discuss the research in-depth, please contact us through the comments section.

Cecilia Chui is a life sciences senior analyst for IHS
Posted on 17 August 2015

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