Maria Silvia LA Marques
Pinheiro Neto Advogados, São Paulo
msmarques@pn.com.br

Luciana Mayumi Sakamoto
Pinheiro Neto Advogados, São Paulo
lsakamoto@pn.com.br

Camilla Fernandes Cardoso Marcellino
Pinheiro Neto Advogados, São Paulo
​​​​​​​cmarcellino@pn.com.br

In an age of constant technological advances, there is a natural difficulty for regulators to keep up with changes. This situation is no different in the healthcare industry.

While new ideas and innovations emerge, legislation can often create a barrier or at least hinder the practical implementation of new products. Although this is a common issue around the world, this article will focus on the legal discussion of this topic in Brazil.

Legal framework

There are three main types of healthcare plans in Brazil: individual private healthcare plans, employer-based private healthcare plans and private healthcare plans by association.

In general lines, individual private plans are offered for free adhesion by individuals, with or without their family group. Employer-based private plans and private healthcare plans by association are group types of contracts offering healthcare coverage, respectively, for beneficiaries limited and linked to a legal entity by employment relationship, and for beneficiaries linked to legal entities of professional councils and associations.

Individual healthcare plans are far more regulated than group healthcare plans. As an example, the National Regulatory Agency for Private Health Insurance and Plans (ANS) sets a maximum percentage for price adjustment of individual private health insurance contracts, and healthcare plan operators must request authorisation to apply any such adjustment to beneficiaries. For their part, price adjustments to group health insurance contracts can be freely negotiated between the healthcare plan operator and the contracting party on an annual basis. Additionally, unlike group plans, individual plans cannot be unilaterally terminated by the operator (except in specific situations defined by the law, such as fraud or default in payment of monthly premiums for more than 60 days, subject to previous notification of the beneficiary).

Such is the influence of regulation in the private plan sector that, in 2021, the ANS set the adjustment index applying to individual plans at around minus-eight per cent caused especially by the reduction of elective procedures due to Covid-19. Naturally, this decision has a huge impact on the pricing and economic viability of these plans.

Due to the highly regulated price adjustment mechanism applied to individual healthcare plans that must observe the maximum percentage established by ANS, the operators usually deal with financial imbalance, especially when the loss ratio of those plans are significantly higher than the payment made by beneficiaries. Hence, healthcare operators must always analyse creative solutions to reduce costs and the loss ratio of those plans to keep their sustainability.

As a result of such overregulation, Brazilian plan operators have steadily pushed individual healthcare plans into near oblivion in the past few years.

Nevertheless, the crisis caused by the pandemic has led to a surge in the country’s unemployment rates and, by extension, to a decrease in beneficiaries of group healthcare plans. At the same time, the pandemic has also shed light on the importance of healthcare and, once again, several operators saw a niche with great growth potential in individual healthcare plans.

Although the marketing of individual healthcare plans seems an excellent opportunity in the healthcare industry, operators are now faced with the challenge of modernising their individual products to avoid the well-known problems caused by overregulation in the sector.

Within this context, several startups and health techs have emerged with innovative ideas to improve and revolutionise the individual healthcare plan industry and even to offer more affordable products to those without access to the private health system. These ideas essentially rely on the use of new technologies, promotion of healthy habits and on primary care practices.

New health product solutions

Healthcare operators have taken a disruptive path by launching products that changed the old system currently in place, adopting in practice the primary health care model.

Primary care advocates continuous care with a focus on prevention and maintenance of health, which goes well beyond the mere diagnosis and treatment of chronic or specific problems. Thus, it encompasses diet, lifestyle, body care, mental health, control of exams, check-ups, vaccines, and other preventive procedures. Based on this model, new healthcare operators embraced the idea of ‘health management’. Instead of seeking medical care (mainly in the emergency room or directly from a specialist or clinic) only when some symptoms appear, the beneficiary is accompanied by a general practitioner who works on prevention, diagnoses a problem early on (based on the reported symptoms), treats diseases and, if necessary, refers the beneficiary to a specialist or hospital.

This ends up optimising the system’s resources by avoiding unnecessary or repetitive procedures, with greater savings and quality of services. 

Another important tool for individual products is the implementation of new technologies in healthcare. One of the greatest innovations that has gained strength in the last year was the increased use of telemedicine to make medical appointments, diagnosis and drug prescription possible remotely, using only an internet-connected platform.

Additionally, big data and analytics tools helped analyse the massive volume of data coming from healthcare applications and improve the beneficiaries’ experience, also reducing costs. In this scenario, some health techs created apps that help in the coordination of care by recording each person’s health history, including appointments and exams, visits to the emergency room, chief complaints and health conditions, restrictions on medications and even each person’s short- and long-term health goals. Moreover, other applications, in turn, encourage individuals to improve their lifestyle and to adopt better and healthy habits.

Finally, the new individual plans are also pioneers in the adoption of value-based healthcare in Brazil. The value-based healthcare represents a huge transformation in the country’s healthcare scenario, as the remuneration of doctors and hospitals is traditionally based on quantity (‘fee for service’), not on the quality of services. In value-based healthcare, the remuneration is variable, being proportional to the quality of care/procedure delivered to patients.

The measurement of service quality is made easier precisely by the adoption of new technologies, as well as by the integration of health data. This model is advantageous for service providers and clients alike, in that it leads to a reduction in costs, more efficiency in processes, faster results and more robust data analysis.

Conclusion

The success of innovations being implemented especially for individual healthcare plans can only be gauged over time. If all breakthroughs help overcome regulatory barriers and, consequently, maintain the viability of individual plans in the long term, this will certainly contribute to a more democratic and efficient market for the benefit of all society. Further, this modernisation, if successful, may extend to group plans as well, revolutionising the entire health sector in Brazil.