Healthcare across EU borders: a safe framework - European Union Committee Contents

CHAPTER 4: Prior authorisation and payment

The issue

66.  In this chapter we consider the central practical features of the system: prior authorisation by the home State, and payment. Issues include the merits of prior authorisation, the suitability of the definitions of hospital and non-hospital care and the need for a distinction between the two for prior authorisation. We also explore the potential created by the Directive for UK patients to "top-up" their medical care. This could occur in two ways: by patients paying the difference where care abroad is more expensive than in the home Member State or by paying for the prescription of an authorised drug that is not publicly funded in the home State.

Contents of the proposal

67.  In the light of ECJ case law, the Directive provides that reimbursement for non-hospital care shall not be subject to prior authorisation, provided that if this care were carried out in the home Member State, it would have been paid for by its social security system.[24]

68.  However, the Directive permits Member States to implement a system of prior authorisation for reimbursement of the cost of hospital care provided in another Member State.[25] The Commission considers that the ECJ has recognised that the possible risk of seriously undermining a social security system's financial balance or the objective of maintaining a balanced medical and hospital service open to all may constitute overriding reasons in the general interest capable of justifying a barrier to the principle of freedom to provide services.[26] The proposal introduces a minimum Community definition of hospital care (see Box 4), as no consistent definition of hospital care currently exists across the EU, and stipulates that prior authorisation must be non-discriminatory and proportionate.[27]


Definitions of hospital and non-hospital care

Hospital care is defined in the proposed Directive as healthcare which requires overnight accommodation of the patient for at least one night or healthcare that does not require overnight accommodation but is included in a specific list (to be set up and regularly updated by the Commission). The Commission states that this list shall be limited to healthcare that requires use of highly specialised or cost-intensive medical infrastructure or medical equipment; or healthcare involving treatments presenting a particular risk for the patient or the population.

Non-hospital care is therefore all healthcare not requiring an overnight stay and not included on this list.

69.  The Directive states that "Member States shall specify in advance and in a transparent way the criteria for refusal of the prior authorisation".[28] It also stipulates that any administrative decisions regarding the use of healthcare in another Member State must be subject to administrative review and capable of being challenged in judicial proceedings.[29]

70.  On funding of treatment, the Directive provides that "The costs of healthcare provided in another Member State shall be reimbursed by the Member State of affiliation … up to the level of costs that would have been assumed had the same or similar healthcare been provided in the Member State of affiliation, without exceeding the actual costs of healthcare received."[30]

Merits of prior authorisation

71.  The vast majority of the submissions we received supported prior authorisation. (QQ 2, 265, pp 62, 115, 157, 158) The Association of British Insurers stressed the importance of Member States' ability to use prior authorisation to control costs and protect the financial resources of their health systems. (p 159) The Patient Liaison Group of the Royal College of Surgeons (PLG) stated that "If prior authorisation safeguards the stability of the healthcare delivery and the service in the home state, I think that is important and valid." (Q 157)

72.  The NHS Confederation, the PLG and the Royal College of Nursing (RCN) highlighted another benefit of prior authorisation, suggesting that it could help patients to make an informed decision as to whether to seek cross-border treatment. In particular, the RCN considered that it would give a patient the opportunity to explore some of the quality and safety issues involved with cross-border healthcare and to develop realistic expectations about what would be included in their treatment and what the long-term implications of this might be. (QQ 156, 265, 271, p 89)

73.  Some witnesses identified the potential for such a system to be over-bureaucratic and consequently to delay the process for a patient seeking cross-border treatment. (Q 18) The PLG was concerned that prior authorisation could act as a barrier to an individual's freedom to seek cross-border treatment; the Law Society suggested that the opportunities for Member States to erect administrative hurdles for the patient to overcome should be minimised. (Q 156, p 167)

"Hospital care" and "non-hospital care"

74.  Several groups drew our attention to the potential for confusion over the term "hospital care". (QQ 165,175, pp 133, 159, 167) The Royal Pharmaceutical Society considered that the definition as treatment requiring an overnight stay did not reflect the increasing volume of treatments being carried out as day cases or within primary care. (Q 175) The Commissioner stressed that the Commission "have maintained the possibility to expand the concept of hospital care to cases of healthcare which do not necessarily require an overnight stay, but which are, by nature, costly or need a heavy infrastructure to be properly delivered". (Q 378) This was criticised by UNISON as "meaning yet more significant powers for the Commission."[31] (pp 133, 134)

75.  Several submissions questioned the need for a distinction between hospital and non-hospital care for prior authorisation. The NHS Confederation viewed the distinction as a false one and considered that prior authorisation should be required regardless of where care was delivered. However, they suggested that it should be for Member States individually to decide the circumstances under which prior authorisation would operate. (QQ 267, 270) The Association of British Insurers agreed that prior authorisation should be introduced according to the treatment required rather than the facility in which the care was to be provided. (p 159) The Law Society suggested that the draft Directive could usefully clarify whether "accommodation" meant within a hospital or, more broadly, within healthcare facilities. (p 167)

76.  The Government disagreed with the Commission's interpretation of the ECJ case law, insofar as the Commission have judged that non-hospital care is excluded from prior authorisation. (Q 55) The Royal College of Nursing presented a similar view "The Commission has made an assumption that those Court of Justice rulings are saying that you are not required to have prior authorisation for non-hospital care". (Q 271)

Payment upfront

77.  Another issue highlighted by witnesses was the proposed system of patients paying for their cross-border treatment upfront and receiving reimbursement at a later date. The RCN believed this would affect the equity of the Directive as it would exclude from cross-border healthcare those without the financial resources to pay in advance. (pp 92, 117)

78.  The Association of British Insurers suggested that prior authorisation should be the rule, not the exception, in order to avoid a situation where patients who had used cross-border healthcare and paid for this upfront, without first seeking prior authorisation, might be ineligible for reimbursement if their home Member State considered that payment for that particular treatment was not its responsibility. (p 159)

79.  The NHS Confederation indicated that one of the benefits of prior authorisation could be to enable the patient, the local health authority and the clinician to discuss the costs involved, outlining what would need to be borne upfront and, within this, what the patient would be entitled to reimbursement for. (Q 245)

80.  The RCN considered that where patients had sought prior authorisation, there ought to be the option of direct payment between Member States, and that this should be made explicit in the proposal. (Q 248, p 92) PA Consulting proposed a similar change to the Directive, or the implementation guidance, in order to clarify whether the payment system would involve a patient paying upfront and receiving reimbursement at a later date or the home Member State paying the host Member State directly. (Q 3)

81.  The Minister expressed concern that if the Government were to issue money to individuals prior to treatment it would take them into some difficult areas with the potential for fraud. (Q 61) Commissioner Vassiliou stated that the Commission would want to see reimbursement for cross-border healthcare occurring only after the patient had been treated. However, she was clear that the Commission was not ruling out the option for home Member States to transfer payment directly to the host Member State, but that this payment should follow treatment. (Q 386)


82.  Limiting reimbursement of costs to what would have been borne had treatment been delivered in the home Member State was widely supported by our witnesses. (pp 17, 54, 88-89, 115, 117, 159) However, the fact that this would leave patients to bear any additional costs that might arise from their cross-border treatment, and effectively "top-up" their care, was the subject of greater challenge. In particular, the Patient Liaison Group of the Royal College of Surgeons was concerned that meeting these costs would deter patients from seeking cross-border healthcare, a point echoed by the British Medical Association which suggested that this would damage equality of access. (Q 151, p 117) UNISON was more explicit in its criticism of the need for patients to meet any extra costs and suggested that this would create a two-tier system, impacting directly on the founding principles of the NHS and potentially resulting in legal challenges within the UK. (Q 334)

83.  The Royal College of Nursing was concerned about the principle of top-ups and the inequalities they can create. In responding to Professor Richards' review,[32] they had "felt that top-up payments should be allowed but only for a limited period, to allow a full risk assessment of the impact of allowing a broader system of top-up payments because we do not think that enough is understood about the implications of that." In the cross-border context, they stressed that top-ups should not be allowed to spread across Member States without some form of public debate. (Q 250) Nevertheless, PA Consulting considered that "a degree of top-up probably is unavoidable" while the Royal Pharmaceutical Society (RPS) thought that the need should be minimised. (QQ 13, 179)

84.  From the perspective of the potential for top-up with the EU-wide recognition of prescriptions, the Minister referred to Professor Richards' report[33] which suggested that patients should not lose their entitlement to NHS care if they chose to buy additional care privately, as long as the private element of care would be delivered separately from NHS care. The Minister also informed us that the Government had published draft guidance making this principle clear for the NHS for consultation. (p 31)

85.  The RPS highlighted another potential problem in topping-up, whereby "If a prescriber were aware that the patient was not going to be reimbursed for their treatment back home, they would be under pressure, be it moral or financial, to prescribe something that the patient could be reimbursed for. That potentially skews treatment away from the standard treatment in this country." (Q 188)

Private Medical Insurance

86.  Article 2 states that the Directive "shall apply to provision of healthcare regardless of how it is organised, delivered and financed or whether it is public or private."[34] Commissioner Vassiliou confirmed that it would be for the patient to decide whether to access cross-border treatment through public or private healthcare and that the Directive would apply to private insurance providers. This principle follows, she explained, from an ECJ judgment in 2007[35] in which the Court ruled that the Greek authorities should reimburse a Greek resident for the costs incurred when he was admitted to a private hospital in the UK. (QQ 386-388)

87.  The Association of British Insurers (ABI) considered that the primary purpose of the Directive relates to State-provided healthcare. They had particular concerns about the possible increase in insurance costs that could be passed onto consumers through increased premiums. However, the ABI recognised that this point was UK-specific as in many other EU Member States consumers buy private medical insurance to complement or supplement their national health system cover. (pp 157, 158) The Minister stated that the Government were still consulting on the application of the Directive to private insurance and that they were having discussions on this point with the private insurance industry. (Q 49)

Conclusions and recommendations

88.  We think that a system of prior authorisation is necessary. This will protect the financial resources of Member States' healthcare systems. It will also allow clinicians to explain clearly to patients the treatment options available to them, including their respective advantages and disadvantages. This is particularly important to enable patients to make an informed decision and consider properly all of their treatment options and the corresponding practical arrangements, such as translation services (see Chapter 5).

89.  A system of prior authorisation under which a patient is reimbursed after having made a payment in the host Member State raises issues of equity as it will exclude those without the necessary financial resources from using cross-border treatment. However, we recognise that issuing funds to the patient in advance of treatment could increase the risk of fraud, a risk that must be assessed by the Commission when reviewing the application of the Directive.

90.  These issues could be tackled by providing that once prior authorisation has been granted, it should be possible to transfer funds from the provider in the home Member State directly to the provider in the host Member State. However, in line with the principle of subsidiarity and given the different systems in use across Member States for payment, it is important that Member States maintain flexibility to decide whether to transfer funds directly.

91.  We are concerned that the definition of hospital care does not adequately reflect clinical reality across the EU and we query the need to distinguish between hospital and non-hospital care for prior authorisation in the manner proposed by the Commission. Instead, we suggest that the guidance of the European Court of Justice should be used, whereby prior authorisation can only be justified by overriding reasons of general interest. In recognition of the different health systems and methods of financing across the EU and in line with the principle of subsidiarity, we recommend that it should be for each Member State to decide when prior authorisation is required, subject to the principles laid down in the ECJ's case law.

92.  We agree that, where a prior authorisation system operates, patients must have a right of appeal in case prior authorisation is refused. This right will be distinct to each Member State and it should be clearly communicated to the patient, along with the procedure for exercising this right. Failure to do so could constitute an unnecessary barrier to patients' rights to seek cross-border healthcare.

93.  We recognise the potential for Article 6 of this Directive to impact upon the equity of cross-border healthcare and note that the prospect of additional costs may deter some people from seeking cross-border healthcare. We consider that it is for Member States to determine the rules for "top-up" payments, both for medical care and for prescribed medicines.

24   (COM (2008) 414) Article 7 Back

25   (COM (2008) 414) Article 8 Back

26   ibid. Back

27   (COM(2008) 414) Article 8 (4) Back

28   (COM (2008) 414) Article 9(3) Back

29   (COM (2008) 414) Article 9(5) Back

30   (COM (2008) 414 Article 6(2) Back

31   This comment refers to the comitology process, as outlined in paragraphs 50-51. Back

32   Letter from Professor Mike Richards: A review of the consequences of additional private drugs for NHS care Back

33   Improving access to medicines for NHS patients: a report for the Secretary of State for Health by Professor Mike Richards  Back

34   (COM(2008) 414) Article 2 Back

35   Case C-444/05 Stamatelaki vs O.A.E.E [2007] ECR I-3185 Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2009