The healthcare system in Germany is based on four principles.2
a Statutory insurance: All citizens and permanent residents of Germany must generally have statutory health insurance, provided that their gross earnings are below a certain threshold. Anyone who earns more than such threshold can voluntarily choose a private insurance instead of the statutory health insurance.
b Parity financing: Healthcare is financed for the most part by insurance premiums that are based on a percentage of income, shared between the employee and employer. However, these premiums are only based on a percentage scale up to a certain income level. Anyone earning more than this amount pays the same maximum premium.
c Solidarity: In the German healthcare system, statutory health insurance members mutually carry the individual risks of loss of earnings and the costs of medical care in the event of illness. Everyone covered by statutory insurance has an equal right to have access to care – regardless of their income and premium level.
d Self-governance: While the state sets the conditions for medical care, the further specific setup, organisation and financing of individual medical services is the responsibility of the legally designated self-governing bodies within the healthcare system. They are made up of members representing doctors and dentists, psychotherapists, hospitals, insurers and the insured people. The Federal Joint Committee is the highest entity of self-governance within the statutory health insurance system.
II THE HEALTHCARE ECONOMY
Germans are offered three mandatory health benefits, which are co-financed by the employer and employee:
a health insurance;
b accident insurance; and
c long-term care insurance.
There are two different types of health insurance: public health insurance and private insurance.
Both systems of health insurance struggle with the increasing cost of medical treatment and the changing demography. About 89.4 per cent of the persons with health insurance are members of the public system, while 10.6 per cent are covered by private insurance (as of 2016).3
Accident insurance for working accidents is paid for by the employer and basically covers all risks for commuting to work and at the workplace.
Long-term care is paid by the employer and the employee fifty-fifty, and covers cases in which a person is not able to manage his or her daily routine (provision of food, cleaning of housing, personal hygiene, etc.). The insurance premium is about 2.55 per cent of the yearly salaried income or pension of the insured, with employers and employees each paying half of the total premium.4
ii The role of health insurance
All citizens and permanent residents of Germany are required by law to have health insurance. Everyone who has statutory health insurance in Germany is entitled to the same healthcare – regardless of how much they pay for their insurance. The premium is determined solely by income level. Statutory health insurance is based on the principle of solidarity, so people who earn more money pay more than those who earn less, and healthy and ill people pay the same amount. In this way, if people get ill, the costs of their medical care and loss of earnings are shared by everyone with that insurance.
The statutory health insurance is a mandatory insurance scheme. Enrolled in this scheme are employees and their dependants. It is financed by members' contributions, which are paid as payroll taxes by the employer and the employee. For unemployed individuals, the contributions are paid by the employment agency. An exception is the self-employed, who are not covered by the statutory health insurance, but can buy private insurance. People eligible for statutory health insurance with a high income (over €59,400 in 2018) have an opt-out option if they choose private insurance instead.5
The statutory health insurance operates under the principle of benefits in kind. This means that the insured receives healthcare services without being issued a bill for the services.
iii Funding and payment for specific services
All employees pay a health insurance contribution based on their salary if they are enrolled in the public health insurance. The actual contribution rate is calculated by a panel of experts at the Federal Ministry of Finance (BMF) and is the same across all statutory insurers. From 2015, the premium is 14.6 per cent of the gross income, but only up to a certain income level. The employer and insured employee share the costs equally, paying 7.3 per cent each. Insurers may charge extra fees if their insurance premiums and other funding sources are not sufficient to cover their costs.
Most of the statutory health insurance benefits are standard services and compulsory for all of the insurance providers. The services covered include practice-based treatment by family doctors, specialists and psychotherapists, hospital-based treatment and – under certain circumstances – treatment in rehabilitation facilities. These services also include screening tests, necessary vaccinations (not travel vaccinations) and medical care related to pregnancy and birth.
Prescription drugs are nearly always covered. Treatments like physiotherapy or speech therapy and medical aids like prosthetic devices or hearing aids are also covered by statutory health insurance, as long as they are medically necessary and have been prescribed by a doctor. People have to pay a certain amount out of their own pocket for these services, though. This amount is fixed by law. The out-of-pocket costs for prescribed drugs range between €5 and €10, depending on their price. Children and teenagers under 18 do not have to pay these additional costs.
The services covered also include dental check-ups, dental treatment, gum treatment and orthodontic treatment. When it comes to dental prosthetics, statutory health insurers pay a fixed amount. Before any dental work involving prosthetics is started, the dentist makes a treatment and cost plan that must be submitted to the insurer. The insurer then decides what costs will be covered, giving a better idea of how much the patient will need to pay him or herself.
If a patient has special requests – such as a private room in hospital, treatment by a senior consultant or certain dental treatments – the patient has to pay for those costs by him or herself. Private health insurance companies offer separate policies for some such special requests.
With the exception of out-of-pocket costs, all costs for services that are covered are paid by the insurer directly to the care provider. This means that the patient is not involved in the transaction.
Private insurers charge risk-related contributions. The premium in the private system is based on an individual agreement between the insurance company and the insured person defining the set of covered services. The amount of the premium depends on the level of services chosen and the person's risk and age of entry into the private system. For privately insured patients there is a refund of costs, meaning they have to pay the amount for healthcare at the time of being sick, and the insurance reimburses them with the costs later.
III PRIMARY / FAMILY MEDICINE, HOSPITALS AND SOCIAL CARE
The difference between outpatient and inpatient care needs to be distinguished. Whereas outpatient care does not require a prolonged stay of the patient at a facility, inpatient care generally refers to medical services that require admission into a hospital. Outpatient care also includes care received in a hospital or at a psychiatric institution that does not involve an overnight stay.
In Germany, outpatient care is mainly provided by the individual practices of self-employed doctors, dentists, psychotherapists or other healthcare professionals. The first point of contact is usually the family doctor (i.e., a general practitioner, internist or paediatrician). Where necessary, the family doctor may refer the patient to suitable specialists for specific medical problems. The patient may also go straight to a specialist without any referral of the family doctor.
Besides individual practices, a number of joint practices and medical care centres exist, where two or more doctors or other healthcare professionals provide healthcare services. The advantage of such joint practices is that they may offer services that might otherwise only be available in hospitals. This particularly applies to special examinations or day surgery.
In the case of inpatient treatment, patients are charged with additional fees for accommodation and meals that are not covered by the statutory health insurance. These fees are agreed upon between the patient and the hospital in a separate contract before the treatment starts.
Inpatient medical care also includes rehabilitation. Rehabilitation facilities provide treatments that help people to regain independence and improve their performance after getting over serious illness or recovering from intensive therapy. These treatments include physiotherapy, psychological care and help learning how to use medical aids and appliances. This is often done immediately after a hospital stay (for instance, following surgery). There are also rehabilitation facilities for people with mental illnesses and addictions.
As of 2015, electronic medical chip cards are used nationwide by all patients who are insured with a statutory health insurance. The electronic medical chip card encodes information on the patient's name, address and date of birth, along with details of insurance coverage and the patient's status regarding supplementary charges.
IV THE LICENSING OF HEALTHCARE PROVIDERS AND PROFESSIONALS
To a large degree, regulation is delegated to self-governing associations within sickness funds and provider associations, which are together represented by the most important body, the Federal Joint Committee. This committee is the highest decision-making body within the self-governing healthcare system. It includes members representing doctors, dentists, psychotherapists, statutory insurers, hospitals and patients. As the central entity of federal-level self-governance, the Federal Joint Committee makes decisions concerning which medical services will be covered by the statutory insurers and what form that coverage will take.
Besides the Federal Joint Committee, the key regulators in Germany are as follows:
a The Federal Ministry of Health (BMG): The BMG has a supervisory role for the governmental institutions, statutory health insurance, social insurance, prevention and the effectiveness of the healthcare system. It is responsible for policymaking at the federal level. Furthermore, the task of the BMG is to draft administrative guidelines that establish the framework of the self-governing activities within the healthcare system.
b State Ministries of Health: The Ministries of Health in the 16 federal states of Germany are primarily responsible for the provision of healthcare, in particular, hospital planning. The Ministries of Health manage disease registers and management of infection outbreaks.
ii Institutional healthcare providers
Quality of care is addressed through a range of measures broadly defined by law, and in more detail by the Federal Joint Committee. As of 2016, the Institute for Quality and Transparency (IQTiG) is responsible for developing instruments for interfaculty and intersectional quality assurance on behalf of the Federal Joint Committee. In addition, the institute develops criteria for evaluating certificates and quality targets and ensures that the published results are comprehensible to the public.
All hospitals are required to publish findings on selected indicators, as defined by the IQTiG, to enable hospital comparisons. Volume thresholds have been introduced for a number of complex procedures (e.g., transplants), requiring that hospitals perform a minimum number of such procedures to be reimbursed for those procedures. Process and, in part, outcome quality is addressed through the mandatory quality reporting system for the roughly 2,000 acute-care hospitals. The Hospital Care Structure Reform Act, which came into effect on 1 January 2016, introduced a focus on quality-related hospital accreditation and payment.
Structural quality is further assured by the requirement that providers have a quality management system, by the stipulation that all physicians continue their medical education, and by health technology assessments for drugs and procedures. For instance, all new diagnostic and therapeutic procedures applied in ambulatory care must receive a positive evaluation for benefit and efficiency before they can be reimbursed by sickness funds.
Although there is no revalidation requirement for physicians, many institutions and health service providers include complaint management systems as part of their quality management programmes. In 2013, such systems were made obligatory for hospitals.6
iii Healthcare professionals
German medical students have to pass primarily scientific basic study before they are admitted to the clinical part of their university courses. After the medical approbation examination (usually after five years), a phase of five to seven years as assistant or resident physician follows before the physician can pass the specialisation examination for one of the clinical fields. During this time of specialisation, a clearly defined catalogue of diagnostic or operative procedures must be fulfilled (such as a certain number of the most important operations in the field where the physician is specialising). After passing this additional examination, the specialised physician can either pursue his or her profession in a hospital or as a self-employed physician in private practice.
Training for the nursing profession is fixed at three years. It has to follow a government-prescribed curriculum, be offered by schools that stand under state supervision and provide theoretical education as well as on-the-job training. The examination is also state-controlled. After a number of years in the job, nurses can acquire additional special certificates, for example, as an operation nurse or anaesthetics nurse. These additional training courses usually take another two years of on-the-job training.
To practise medicine or carry out specialty training in Germany, all physicians must be in possession of a valid full or temporary licence to practise. The full licence to practise is valid across the country for an unlimited period of time. The temporary licence to practise is limited to a certain time period and is valid only within the federal state in which it was issued.
In this context, the federal government's Recognition Act came into effect on 1 April 2012. It has improved the procedure for assessing and recognising professional and vocational qualifications obtained outside Germany. It allows individuals to have the equivalence of their professional qualifications assessed in Germany, regardless of nationality.
The state health authorities of the respective federal state are responsible for issuing full and temporary licences to practise. Physicians wishing to practise in Germany must also become a member of one of the 17 State Chambers of Physicians. Each of the 16 federal states of Germany (and two in North Rhine-Westphalia) has a State Chamber of Physicians. As corporations under public law, these bodies are responsible for the administration of all matters related to specialty training in Germany. The state laws governing the healthcare profession and the activities of the Chambers set out the responsibilities of the State Chambers of Physicians with respect to physicians professionally active, or residing, within their area of jurisdiction.7
V NEGLIGENCE LIABILITY
German medical liability law is based on the German Civil Code and its provisions on liability arising from contracts and torts. These principles have been substantiated by German case law. The individual who treats a patient is liable for an error in treatment if the treatment causes injury to life, the body or the patient's health. Independently of error in treatment, the individual providing medical care is liable for mistakes made in the context of obtaining informed consent. The prerequisite is that the doctor makes a mistake when obtaining informed consent, e.g., that the doctor does not fully inform the patient of all possible risks. Such mistake needs to be causal for the patient's consent for the treatment. In the absence of effective consent, the treatment is considered illegal, irrespective of the fact of whether it was free of treatment error or not. The most common causes of liability are treatment errors, wrong diagnosis, wrong medication, lack of information and lack of documentation.
Damages in medical malpractice cases are awarded on the basis of the Civil Code provision on indemnity for losses suffered. Damages are entirely compensatory. Punitive damages are not awarded in Germany. The cost of treatment, rehabilitation, mitigation of the consequences of permanent damage and long-term care can be generally awarded in medical malpractice cases and in personal injury cases. In addition, earnings losses are compensated and damages for pain and suffering are awarded. However, the amounts of such compensation claims are much lower than in US cases, for example.
Doctors who are in private practice in Germany must have occupational liability insurance in place that meets the costs arising from medical malpractice cases. The doctors and dentists who are employed in a hospital can, as a rule, join the hospital's institutional occupational liability insurance. The occupational liability insurance covers personal injury, and material and property damage, as well as lawyers' fees and procedural costs.
ii Notable cases
One of the most recent decisions of the German Federal Court of Justice was handed down on 14 March 2017. The German Federal Court of Justice decided in this case that a doctor might also be held liable for medical malpractice if he or she has not pointed out the necessity and urgency of further medical inventions with regard to the patient. This decision underlines that medical malpractice has a large scope and does not only apply in cases of error in treatment.
Case law in previous years often referred to the question on the burden of proof. Under German Civil Law, it is generally the claimant who has the burden of proof. In medical malpractice cases, this is often difficult as the patient does not have insight into the medical work of the doctor. Therefore, many decisions of the German courts have looked at the questions in which cases it is justified to reverse the burden of proof by various presumptions. For example, a treatment error was held to be presumed when an injury occurs that corresponds to a known risk inherent in the treatment that the physician should have been able to control. Also, a physician was held to be presumed to be at fault for an error if he or she has not recorded the course of the treatment or not kept records. Causation was held to be presumed if the physician carried out a procedure for which he or she had not been certified and also if the physician committed a serious treatment error that is capable of causing the injury at issue. These cases are now implemented directly into the German Civil Code (Paragraph 630h).
VI OWNERSHIP OF HEALTHCARE BUSINESSES
Ownership of a hospital can be with:
a the government, on the local level (i.e., towns and counties) or on the state level, where the federal states are responsible for university hospitals as part of their responsibility for education;
b free non-profit institutions, such as the big churches with their federations, the Red Cross with its nurse societies and other non-profit organisations; or
c private for-profit companies and hospital chains.
Most hospitals in Germany treat all patients, regardless of whether they have statutory or private health insurance. Large hospitals usually have public backing; in other words, they are financed by the state or municipality. Charity-run or church-run hospitals are operated by organisations such as the Red Cross. There are also many privately run hospitals, some of which will only see patients who are privately insured. These hospitals are typically smaller and more likely to be specialised.
Physicians either work in their individual, solely owned practice or in partnership with other doctors. In addition, a new legal form, the Medizinisches Versorgungszentrum (MVZ), was introduced in Germany in 2004. MVZs are licensed medical service providers that may be owned by any person or entity entitled to render any services or sell products within the statutory health insurance. This means that medical appliance shops or physiotherapist service providers can be owners of an MVZ.
VII COMMISSIONING AND PROCUREMENT
Most healthcare services of hospitals are provided by employees of the hospitals. Besides this, some services, such as laboratory services, are purchased by the hospitals from third parties. The commissioning of such services for government-sponsored hospitals has to be made by public tenders. Those tenders are national tenders if the value of the services procured does not exceed €209,000 net. If this threshold is exceeded, the tender has to be made Europe-wide. Outside of government-sponsored hospitals, commissioning of private healthcare services must take place in accordance with general German and EU procurement laws, which are outside the scope of this chapter.
VIII MARKETING AND PROMOTION OF SERVICES
Advertising for the services of doctors is limited in Germany by the German Act on Healthcare Advertising, the Act against Unfair Competition and the German professional codes of doctors and dentists.
The rules for advertising the services of doctors have changed considerably in recent years. Up until a few years ago, doctors were banned from almost any advertising. In the course of the liberalising of the jurisdiction of the German Federal Constitutional Court on the professional rights of freelancers (including doctors), the provisions have become less restrictive. Since 2002, factual job-related advertising is permitted. Only 'unlawful' advertising that improperly affects the patient, and thus could lead to a medical health hazard, is forbidden. This includes, in particular, misleading and comparative advertising.
IX FUTURE OUTLOOK AND NEW OPPORTUNITIES
Since 2012, the German healthcare system has been undergoing a period of active reform in several areas. The year 2018 will also bring changes in the healthcare system. These generally include more health benefits, relief for supplementary payments (e.g., for medication or hearing aids), the right to the opinion of a second doctor and additional preventive check-ups for better dental health. Infants, people in need of care and people with disabilities will benefit from the new range of services offered by the statutory health insurance funds.8
Other than that, Germany passed a bill for secure digital communication and healthcare applications (the E-Health Act) in December 2015, which provides for concrete deadlines for implementing infrastructure and electronic applications and introduces incentives and sanctions if schedules are not adhered to. From 1 January 2017, statutory health insurance physicians receive additional fees for transmitting electronic medical reports, and receive additional fees for collecting and documenting emergency records (since 2018) and managing and reviewing basic insurance claims data online. As of July 2018, statutory health insurance physicians who do not participate in online review of the basic insurance claims data receive reduced remuneration.9
Furthermore, despite the legal mandate to have health insurance, it has been estimated that about 0.1 per cent of the population did not have insurance in 2015. A population group with a higher risk of being uninsured are low-income self-employed individuals, as it can be difficult for them to afford statutory health insurance (SHI) contributions or private health insurance (PHI) premiums. Indeed, independent of their actual income, the self-employed pay a contribution based an expected minimum income of €2,284 per month, which is unmanageable for a large proportion of small business owners. The bill to reduce the mandatory contributions that insured individual must pay into the SHI system (SHI-Contribution Relief Law; bill of the German Federal Ministry of Health of 19 April 2018) plans to halve the reference amount used to calculate the minimum contribution. This measure will lead to an estimated loss in revenue for the SHI of €800 million, which will be compensated for by the current financial reserves.10
On 25 June 2018, the German Federal Ministry of Health submitted a draft bill to strengthen the nursing staff (Nursing Staff Strengthening Act). This act is intended to enter into force on 1 January 2019, and aims to achieve tangible improvements in the daily lives of nursing staff through better staffing and working conditions in nursing and care for the elderly. In order to improve staffing facilities in hospital care, in future every additional nursing position will be completely refinanced by the payers.11
Germany's healthcare system is largely characterised by the public health insurances that provide access to care for nearly everyone. However, the German healthcare market, which is one of Germany's largest-growing markets, is expected to be subject to profound changes over the course of the next years. As digital healthcare becomes more and more important in ensuring a sufficient healthcare supply to patients, there will be a particular focus in this area. In this context, regulators and the legislator still have a long way to go to pave the way to a digitally driven healthcare system. This is all the more important in light of the demographic change in Germany, with its drastic increase of elderly people.
1 Stefanie Greifeneder is a partner in the Munich office of Fieldfisher LLP.
4 Data published by vdek under www.vdek.com/vertragspartner/arbeitgeber/beitragssaetze.html.
5 Reference is made to www.pkv.de/themen/krankenversicherung/so-funktioniert-die-pkv/wer-kann-sich-privat-versichern/.
6 Reference is made to http://international.commonwealthfund.org/countries/germany/.
8 Reference is made to https://www.vdek.com/politik/was-aendert-sich/gesundheitswesen-2018.html.
9 Reference is made to http://international.commonwealthfund.org/countries/germany/.
10 Reference is made to http://www.hspm.org/countries/germany28082014/countrypage.aspx; and https://www.bundesgesundheitsministerium.de/fileadmin/Dateien/3_Downloads/Gesetze_und_Verordnungen/GuV/G/GKV-VEG_RefE_Versichertenentlastungsgesetz_190418.pdf.