Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 4973 l-DO
PROJECT APPRAISAL DOCUMENT
ON A Public Disclosure Authorized PROPOSED LOAN
IN THE AMOUNT OF US$30.5 MILLION
TO THE
DOMINICAN REPUBLIC
FOR A
HEALTH SECTOR REFORM APL 2 (PARSS2) PROJECT Public Disclosure Authorized
August 20,2009
This document has a restricted distribution and may be used by recipients only in the
Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
(Exchange Rate Effective: 06/17/2009 -Appraisal stage)
Currency Unit = Dominican Pesos RD$35.85 = US$1 US$O.O28 = RD$1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
AAA Analytic and Advisory Activities ADOPEM Dominican Association for Women Development (Asociacidn Dominicana para el Desarrollo de la Mujer) AIDS Acquired Immune Deficiency Syndrome APL Adaptable Program Loan ARCS Audit Report Compliance System BCG Bacillus Calmette-GuCrin (or Bacille Calmette-GuCrin, BCG) Tuberculosis Vaccine BCRD Central Bank of the Dominican Republic BHD Banco Hipotecario Dominicano BMT Monthly Based Transfer CCT Conditional Cash Transfer CERSS Executive Commission for Health Sector Reform (Comisidn Ejecutivapara la Reforma del Sector Salud) CESDEM Center for Social and Demographic Studies (Centro de Estudios Sociales y Demogrdficos) CMU Country Management Unit COPRESIDA Presidential Commission for Fight Against HIV/AIDS (Consejo Presidencial del SIDA) CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy CR Contributory Regime cv Curriculum Vitae DA Disbursement Arrangements DDEI Directorate of Institutional Strategic Development (Direccidn de Desarrollo Estratbgico Institucional -DDEI) at SESPAS DGA General Directorate of Customs (Direccidn General de Aduanas) DGII General Directorate of Internal Taxes (Direccidn General de Impuestos Internos) DHS Demographic Health Survey DIGECITSS General Directorate for the Control of Sexually Transmitted Infections and AIDS (Direccidn General de Control de Infecciones de Transmisidn Sexual) DPL ' Development Programmatic Loan DPT Diphtheria, pertussis, tetanus ENDESA National Demographic and Health Survey (Encuesta Nacional de Demografia y Salud) FHF Family Health File (Ficha Familiar de Salud) FHI Family Health Insurance (Seguro Familiar de Salud - SFS) FM Financial Management FMA Financial Management Assessment FY Fiscal Year GAIN Global Alliance for Improved Nutrition FOR OFFICIAL USE ONLY
GDP Gross Domestic Product GEF Global Environment Facility GODR Government of Dominican Republic HIV/AIDS Human Immunodeficiency VirudAcquired Immunodeficiency Syndrome HMMIS Health Management Monitoring and Information System HRS Human Resources Strategy IADB Inter-American Development Bank IBRD International Bank for Reconstructionand Development (World Bank) ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation IFMIS Country Integrated Financial Management System IFRs Interim Unaudited Financial Reports IMF International Monetary Fund IP ImplementationProgress IRR Internal Rate ofReturn IS Information System ISAs International Standards on Auditing ISDS Integrated Safeguards Datasheet ISR Implementation Status and Results IT Information technology IUFR Interim Unaudited Financial Reports JICA Japanese International Cooperation Agency LCSFM Financial Management, Latin American and Caribbean Region LCSHE Unit of Education, Latin American and the Caribbean Division LCSHH Unit of Health, Nutrition and Population of the Latin American and the Caribbean Region LCSHS Unit of Social Protection of the Latin America and the Caribbean Region LCSPT Procurement Unit ofthe Latin America and the Caribbean Region LEGLA Legal Department for the Latin American and the Caribbean Division M&E Monitoring and Evaluation M&I Monitoring and Information MD Medical doctor MFT Monthly Fixed Tranche MFTm Fixed based transfer for the “m” month MOEPD Ministry ofEconomy, Planning and Development (Secretaria de Estado de Economia, P1anifkacid.n y Desarrollo - SEEPyD) MOF Ministry of Finance MOH Ministry of Health (Secretaria de Estado de Salud Pziblica y Asistencia Socia-SESPAS) MS Moderately Satisfactory Mu Moderately Unsatisfactory NCB National Competitive Bidding NCI Number of Complied Indicators NGOs Non-Governmental Organization NHI National Health Insurance (Seguro Nacional de Salud - SENASA) NHIA National Health Insurance Agency NPV Net present value NSSC National Social Security Council OM Operational Manual OP Operational Policies OPBP Operational PoliciesBank Procedures PAD Project Appraisal Document PAHO Pan American Health Organization PARSS Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud - PARSS PARSS 1 Phase 1 -Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud)
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PARSS2 Phase 2 - Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud) PASS First Performance and Accountability of Social Sectors DPL PCN Project Concept Note PCU Project Coordination Unit PD Provincial Health Directorates PDO Project Development Objective PEFA Project Expenditures and Financial Accountability PFM Public Financial Management PIC Project Implementation Committee PID Project Information Document PIU Project Implementation Unit PMTISS Multi-phase program ofinstitutional transformation in the health sector (Programa Multifase de Transformacidn Institucional del Sector Salud) (IDB Project) POA Annual Operational Plan (Plan Operativo Anual) P-Q Prequalification PREM Poverty Reduction and Economic Management PRIMA Portfolio and Risk Management PROMESE Program for the Supply ofEssential Medications (Programa de Medicamentos Esenciales) PROMESEKAL Program for the Supply ofEssential Medications and Office for Logistical Support (Programa de Medicamentos Esenciales y Central de Abastecimiento y Logistica) PSR Partially Subsidized Regime QCBS Quality- and Cost-Based Selection RACM Results-adjusted Capitation Module RBFC Results Based Financing Committee (Comite' de Financiamiento por Resultados) RHS Regional Health Services. The public sector networks ofhealth care providers that currently belong to the MOHbut are in the process ofdecentralization. RMI Results Monitoring Indicator SESPAS Ministry of Health (Secretaria de Estado de SaIud Pliblica y Asistencia Social) SHLR Superintendence for Health and Labor Risks (SISALRIL) SIFMUN Municipal Financial-Administrative Integrated System (Sistema Integrado de Finanzas Municipales) SIGEF Integrated Financial Management System (Sistema Integrado de Gestidn Financiera) SIL Specific Investment Loan SIUBEN Information System and Beneficiaries Registry ofthe Cabinet of Socio-Policy Coordination (Sistema de Informacidn y Registro Unico de Benejkiarios) SOE Statements ofExpenditure SR Subsidized Regime SST Social Security Treasury TA Technical Assistance UEPEX External Project Execution Units (Unidades Ejecutoras de Pre'stamos Externos) UNIPAGO Firm processing the Database ofthe Dominican Social Security System WB World Bank or IBRD - International Bank for Reconstruction and Development
Vice President: Pamela Cox Country Director: Yvonne Tsikata Country Manager Roberto Senderowitsch Sector Manager: Keith Hansen Task Team Leader: Fernando Montenegro Torres DOMINICAN REPUBLIC
Health Sector Reform APL 2 (PARSS2)
CONTENTS
Page
I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues ...... 1 B. Rationale for Bank involvement ...... 2 C . Higher level objectives to which the project contributes ...... 4 I1. PROJECT DESCRIPTION...... 4 A . Lending instrument ...... 4 B. Program objective and Phases ...... 5 C . Project development objective and key indicator ...... -5 D. Project components ...... -6 E. Lessons learned and reflected in the project design ...... 12 F. Alternatives considered and reasons for rejection ...... 13
I11. IMPLEMENTATION...... ;...... 13 A . Institutional endorsement for introducing results-based financing mechanisms ...... 13 B. Institutional and implementation arrangements ...... 13 C . Monitoring and evaluation of outcomeshesults ...... 16 D. Sustainability ...... 16 E. Critical risks and possible controversial aspects ...... 17 F. Loadcredit conditions and covenants ...... 18 Iv. APPRAISAL SUMMARY ...... 19 A . Economic and financial analysis ...... 19 B. Technical ...... 19 C . Fiduciary...... 20 D. Social ...... -21 E. Environmental ...... -22 F . Safeguard policies ...... 23 G . Policy Exceptions and Readiness ...... 23 Annexes
Annex 1: Country and Sector or Program Background...... 24 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 38 Annex 3: Results Framework and Monitoring...... 39 Annex 4: Detailed Project Description...... 44 Annex 5: Project Costs ...... 53 Annex 6: Implementation Arrangements ...... 55 Annex 7: Financial Management and Disbursement Arrangements ...... 60 Annex 8: Procurement Arrangements ...... 71 Annex 9: Economic and Financial Analysis ...... 76 Annex 10: Safeguard Policy Issues ...... 82 Annex 11: Project Preparation and Supervision ...... 87 Annex 12: Documents in the Project File...... 89 Annex 13: Statement of Loans and Credits ...... 90 Annex 14: Country at a Glance ...... 91 Annex 15: Map IBRD 33398R ...... 93 DOMINICAN REPUBLIC
HEALTH SECTOR REFORM APL 2 (PARSS2)
PROJECT APPRAISAL DOCUMENT
LATIN AMERICA AND CARIBBEAN
LCSHH
Date: August 20,2009 Team Leader: Fernando Montenegro Torres Country Director: Yvonne M. Tsikata Sectors: Health (1 00%) Sector Manager/Director: Keith E. Hansen Themes: Health system performance (P) Project ID: P106619 Environmental screening category: Partial Assessment Lending Instrument: Adaptable Program Loan
[XI Loan [ 3 Credit [ ]Grant [ 3 Guarantee [ ]Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 30.5 Proposed terms: Fixed-Spread Loan (FSL) USD denominated IBRD Flexible Loan with a fixed spread, with a repayment schedule linked to commitments and with all the conversion options
Development Total: 44.24 0.00 44.24
Borrower: Dominican Republic
Responsible Agency: Comisibn Ejecutiva para la Reforma del Sector Salud (CERSS) Calle Gustavo Mejia Ricart No. 14 1 Edificio F.J. Montalvo, Ensanche Julieta Santo Domingo Dominican Republic Tel: 1 (809) 547 2509 Fax: 1 (809) 565 2768 [email protected] Estimated disbursements (Bank FY/US$m) 7Y FYOll FY012 FY013 FY014 FY015 4nnual 5.42 5.80 4.28 6.06 8.94 hmulative 5.42 11.22 15.5 21.56 30.5
Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantialyyor “high”? [XIYes [ ]No Re$ PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Ref: PAD IK G. Project development objective Re$ PAD ILC., Annex 3 The Project’s Development Objectives are to: (i)Improve the capacity of Regional Health Services (RHS) to deliver, in a timely fashion, quality services known to improve the health of mothers, children and people with chronic conditions by public providers at the first level of care; (ii)improve health system responsiveness, defined here as the institutional capacity of public sector health organizations to conduct strategic purchasing of he~althcare services and goods, and to respond to public health emergencies.
Project description Re$ PAD II.D. Component 1: Introducing results-based financing mechanism for the first level of care in Regional Health Services (US$21.49 million - Bank financing US$14.52 million). Using results- adjusted capitations this component would contribute to finance the delivery of ambulatory primary health care services to an estimated 550,000 poor individuals in selected Regional Health Services.
Component 2: Strengthening the capacity of the MOH (Ministry of Health) to improve and monitor health system responsiveness while fostering transparency and accountability (US$lO.OO million - Bank financing US$7.00 million). This component would finance goods, technical assistance, non-consulting services, training and operational costs to strengthen MOH capacity to deliver public health goods and services while fostering transparency and accountability, and to strengthen existing information systems for the adequate functioning of results-adjusted capitations.
Component 3: Improving the quality of public spending on health care goods and services (US$12.57 million - Bank financing US$8.80 million). This component would finance goods, technical assistance, non-consulting services, training and operational costs to strengthen coordination and institutional capacity of public sector organizations for more sustainable financing, planning and purchasing of health goods and services with an emphasis on primary health care. Component 4: Support for Response to Public Health Emergencies (US$O.lO million - Bank Financing US$O. 10 million). This component would finance consulting and non-consulting services, technical assistance and goods including medicines, laboratory and protective equipment, laboratory reagents and other medical supplies, development and dissemination of materials for information campaigns, training for emergency preparedness to support the response to public health emergencies oflocal or international nature.
Which safeguard policies are triggered, if any? Ref: PAD IKF., Annex 10 The Environmental Assessment (OP/BP 4.0 1) policy is triggered under the proposed project.
Significant, non-standard conditions, if any, for: Ref: PAD III.F. Board presentation: None
Loankredit effectiveness: The Borrower will retain a procurement specialist at the Direccibn de Desarrollo Estratbgico Institucional (DDEI) with qualifications and terms ofreference satisfactory to the Bank.
Covenants applicable to project implementation:
The Borrower shall ensure that the different departments and agencies involved in Project implementation operate during the implementation of the Project in accordance with the Inter- Institutional Agreement dated July 30, 2009, with a view to ensuring the accelerated implementation ofHealth Sector Reform Laws and the introduction ofmechanisms for improved results-based financing and accountability.
Establishment of a Project Oversight Committee (Comite' Directivo de Proyecto) and a Results- based Financing Committee (Comite' de Financiamiento por Resultados), comprising representatives ofMOH, MEPD, NHI and the PCU.
Disbursement Condition for Component 4: No withdrawal shall be made for Component 4, unless a Public Health Emergency as defined in the Operational Manual occurs, and the Bank has provided its no objection to the activities of the action plan to be financed with loan proceeds.
Possible reallocation of funds: In the case that by no later than 2.5 years after the Project effectiveness a "Health Emergency" has not occurred and/or the Bank has not provided its written no objection for the disbursement of the loan proceeds allocated to Component 4, those resources may be used at the request ofthe Borrower to finance activities under Component 1, 2, or 3 of the Project. Not later than two months from that date, the Borrower shall submit to the Bank for its approval, a proposal ofhow the resources under Component 4 ofthe Project will be allocated.
I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. The Dominican Republic is a middle income country which has achieved greatly increased access to health services and positive results in key health outcomes over the past few decades. With a population of 9.6 million inhabitants and life expectancies at birth of 66 for men and 74 for women, the Dominican Republic has longer life expectancies and lower child mortality than twenty years ago'. Comparable data from Demographic and Health Surveys (DHS) surveys collected from 1986 to 2007 shows a reduction in under-five mortality from 88 to 36 per thousand live births. Infant mortality dropped from 67 to 32, and neonatal mortality from 40 to 23 per thousand live births. Chronic malnutrition in children under-five years old has shown a clear downward trend overall in the population2 over the last ten years (currently an estimated 9.7 percent of children under five show signs of chronic malnutrition).
2. Nevertheless compared to countries in Latin America with similar or lower levels of economic development, the Dominican health system achieves lower mother and child health outcomes, while chronic diseases are emerging as a new challenge. Countries such as El Salvador, Peru and Paraguay have achieved significantly lower levels of infant and child mortality. For example, in 2007, El Salvador achieved an infant mortality rate of 21 and Peru of 17 per 1,000 live births. El Salvador has a mortality rate for children under five of 24, Peru of 20 and Paraguay of 24 per 1,000 live births. In 2007 the prevalence of tuberculosis was 69, considerably higher than the average of 50 per 100,000 people for Latin America and the Caribbean. Diabetes and hypertension along with other preventable chronic conditions typical of a country in epidemiologic and demographic transition have emerged as new public health care challenges.
3. There are no major access barriers to public sector health services, yet quality of care is an important challenge overall for the health system. The last DHS, conducted in 2007, shows that when individuals reported a disease or condition deemed to require medical care, the majority had used public sector facilities. Roughly 70 percent of the two poorest quintiles of the population and 57 percent of the overall population reported receiving care at the facilities of the Ministry of Health (MOH) when they needed and sought health services3. An additional 6 percent of all individuals received health services from other public providers, including the social security institute and the military and police health units. Private medical providers were used by 29 percent of the population. Nevertheless, data suggest that quality seems to remain a serious issue to be solved. The MOH has identified problems in the quality of prenatal controls as one of the factors that contribute to maternal mortality. Although more than 97 percent of births are attended by a physician, maternal mortality rates remain stubbornly high, with an estimated rate of almost 150 per 100,000 deliveries.
I World Health Organization. Basic Country Health Data, 2009. ' World Food Program. Nutrition in the Dominican Republic, 2007 - Analysis based on several DHS surveys conducted in the Dominican Republic also known by its acronym in Spanish as ENDESA. ENDESA, 2007.
1 4. Almost a decade ago, the Government of Dominican Republic (GODR) embarked on an ambitious health sector reform program aimed at improving health system responsiveness. An important milestone at the beginning of this process was the passage in 2001 oftwo key laws: The General Health Law (42-01) and the Law Establishing the Dominican Social Security System (87-01). The reform envisioned financial as well as organizational arrangement changes to increase the responsiveness of the health system while enhancing financial protection for the poor. Key provisions of these laws included the establishment of a universal health insurance system and the restructuring of public provision of health services, including the progressive decentralization of regional health care networks. The 200 1 Laws also established a mandatory package of health services known as the Family Health Insurance - FHI (Seguro Familiar de Salud).
5, The Health Reform contemplated universal health insurance coverage through three regimes. These regimes are: Contributory Regime (CR) for the formal sector, financed by employers and employees; the Subsidized Regime (SR) for the poor, fully financed with fiscal resources; and the Partially Subsidized Regime (PSR) financed with voluntary contributions and partial fiscal subsidies. Each source offunding is channeled through the Social Security Treasury which creates three separate financial pools for each of the health insurance regimes. The first health insurance regime to operate was the SR, which began in 2003 and which by the end of 2008 had enrolled 1.2 million. The CR started in 2007 and has 1.7 million enrollees as of March 200g4. The PSR is not yet operating.
6. The National Health Insurance (NHI) was established as the health care purchasing agent for SR enrollees. Funds for the SR are transferred from the Social Security Treasury to the NHI on a per capita basis. The MOHestablishments were designated as the mandatory health care providers for the SR enrollees. The Health Sector Reform Laws, as part of the process of decentralization, established the Regional Health Services (RHSs). The RHSs were legally enabled to sign contracts with the NHI. The NHI currently uses prospective payments on a per capita basis (capitation) to ensure that RHSs will provide health services at the first level of care to SR enrollees. Inpatient and specialized services for SR enrollees are paid by the NHI on a fee- for-service basis. In the past two years the NHI and the MOH have explored how to better coordinate financing to the RHSs to better align incentives to improve delivery of care for the poor.
B. Rationale for Bank involvement
7. The proposed project is the second investment loan of a three-phase APL and has been designed within the framework of the overarching objectives of the APL approved by the Board in 2003: (i)improved mother and child health, and reduction of poverty; (ii) implementation ofnew health sector reform laws (42-0 1 and 87-02), including, strengthening the stewardship role of the MOH; consolidating universal health insurance as the public stewardship organization for the health sector; development of regional health care networks; and health insurance mechanisms.
The CR was able to expand rapidly because many an important share ofemployees in the formal sector were already enrolled in a private health insurance scheme.
2 8. The trigger indicators for APL2 were included in the Project Appraisal Document (PAD) of PARSS1. These indicators were in turn modified during a major project restructuring that was carried out and negotiated in 2006. A series of follow-up studies are now being conducted to measure project development objectives indicators; however, available data suggest that some of the APL trigger indicators may not be achieved by the end of the project. Nevertheless, PARSS 1 achieved very important progress toward the overarching APL objectives.
9. The rationale for proceeding with APL2 with Board approval is based on contributions of PARSSl to key aspects of the health sector reform agenda and important changes in some public policy for the health sector. Given the economic crisis and its negative impact on fiscal resources the GODR seeks to prioritize interventions in the quality of public spending. The new health sector priorities for the government emphasizes: i) results-based financing; ii)enhanced accountability and transparency; and ii)accelerating the development of autonomous regional health services as networks ofpublic providers.
10. PARSSl and the Bank’s technical assistance have contributed to critical policy changes and interventions in health sector reform enabling the GODR to introduce new policies for results-based financing mechanisms including the signing of performance agreements with Regional Health Services’ (RHSs); agreements between the NHI; and the agreement between MOH and NHI to harmonize the use of results monitoring indicators for the contracts of NHI with the RHSs and newly established performance agreements between MOH and RHSs; building consensus on an agreement for the national procurement agency to procure and distribute essential medicines for primary health care. A more detailed discussion on PARSSl results and the current available data on the status of the project indicators is included in Annex 3.
11. The GODR has requested the Bank to focus the new phases of the APL on support for improved quality of public spending and accountability in the delivery of health care. Therefore, the proposed project would support the GODR in introducing results-based financing mechanisms. The project would pave the way for improved quality of spending, in particular the use of public resources for the poorest groups of the population, a key element in the anti- poverty focus of the Bank’s work in the Dominican Republic. The project would also be consistent with the Bank’s efforts to support financial sustainability and sound fiscal policy by introducing results-based financing mechanisms to improve the quality ofthe delivery of priority health services known to improve health outcomes for poor. To expand the impact of the project, this phase of the APL would support the introduction of a single results-based capitation payment mechanism for allocations from the Ministry of Health and the NHI (via SR) to RHSs.
12. The proposed project would exploit synergies with other governmental initiatives, including some financed by the Bank, to respond to the challenges the GODR faces due to the current global economic crisis. This project would complement other Bank operations’ support for strengthening safety nets for the poor, and would improve quality ofpublic spending for subsidized health insurance. The Social Protection Loan will refine the proxy means test
On July 1, 2009 the MOH signed the frst two performance agreements with two RHSs (Regions VI and VIII), which constitutes a major step towards decentralization.
3 currently used by the NHI to determine eligibility of the SR’s target population. The project would also complement and expand results of policy changes addressed through a new Human Development DPL (PASS) that would focus on multisectoral coordination, performance and accountability of social sectors that focuses on strengthening the supply of care for new health care conditionalities to be introduced in the CCT Program (Solidaridad). Finally, this project would complement the main agenda developed by key health sector stakeholders in close collaboration with the Ministry of Economy and Planning during the recent national meetings on responses to the global economic crisis.
C. Higher level objectives to which the project contributes
13. The project would be consistent with the strategic objectives of the new Country Partnership Strategy (CPS). The proposed project would contribute to two ofthe four pillars of the new CPS, “Reducing vulnerability while producing results for all.” These two pillars are social cohesion; and services and quality for public expenditures and institutional development. The project would contribute to the first objective by improving access to quality primary health care services, especially those targeted to the poor. The project would also contribute to the second objective by providing concrete mechanisms for generating production of health care services, procurement and distribution of pharmaceuticals and results for increased transparency and accountability ofpublic expenditures.
14. The project would contribute to the GODR development plan objective of improving quality of public expenditures. The Ministry of Economy, Planning and Development (MOEPD) developed a plan to gradually introduce performance-informed budgeting techniques. The plan includes the development of results agreements with different sectors and public institutions. To develop these result-agreements sectoral plans would use measurable targets to ensure progress towards sectoral objectives. The project can contribute to the introduction of results-based financing for health care. This project would specifically focus on the first level of care that constitutes the first point of contact of the population according to the new public sector health care networks model.
15. The project is also consistent with the new agreements for the health sector in the recent national summit on actions and public sector policies. The meetings of this summit were oriented to develop national consensus on short term actions to weather the new economic crisis and on development policy priorities for the next four years ofthe new administration. The project would contribute to strengthening social protection in health through the SR managed by the NHI by enhancing coordination and unification of mechanisms for more efficient and effective delivery of health care services and key inputs, including pharmaceuticals for primary health care from the national essential medicines program.
11. PROJECT DESCFUPTION
A. Lending instrument
16. The proposed project is the second phase of an Adaptable Programmatic Loan (APL) to support the implementation of the Health Sector Reform in the Dominican Republic. It is consistent with the objectives and agreements of the APL, which called for three consecutive
4 loans. The first phase-following a restructuring-focused on strengthening health care infrastructure, reorganization of regional health systems, strengthening multiannual financial planning, and supporting expansion of enrollment of the poor in the SR.
17. The current global financial crisis and its impact on the fiscal resources available for human capital investments pose new challenges to multiannual financial plans and implementation of the universal health insurance system enacted by law in 2001. Therefore this second phase would focus on improving financing and accountability mechanisms for the delivery of health care services and goods most needed by the poorest groups of the population
B. Program objective and Phases
18. The proposed second phase of this APL is designed within the framework of the overarching objectives of the APL approved by the Board in 2003,
19. The trigger indicators for APL2 were modified during project restructuring in 2006. Although the selection of indicators and new targets after amendment were extremely ambitious, preliminary data on intermediary outcomes and results of PARSS1 suggest that project achieved important progress in the overarching objectives of the APL approved by the Board in 2003.
20. Key aspects of the rationale of proceeding with APL2 with Board Approval are related to how PARSSl outputs and results have contributed to advance important key aspects of the Health Sector Reform Agenda that enable the GODR to focus on new approaches to improve the quality of the delivery of primary health care and on the quality of spending. The latter is even more urgent within the negative fiscal impact of the global economic crisis. These changes include the signing of performance agreements with Regional Health Services6 (RHSs); development of coordinating instruments and agreements between the NHI and the MOH to use same instruments in the contracts that NHI signs with the RHSs, the implementation of new regulatory instruments for delivery of care based on a new model centered on primary health care, the accelerated implementation of the new model of public sector regional networks which includes decentralized management of human resources. A more detailed discussion on progress of the indicators and results of APLl is included in Annex3,
2 1. The trigger indicators for APL3 agreed during the preparation of this APL2 are consistent with a project design that emphasizes results-based financing, which the government has set as a key objective for the health sector. The trigger indicators for APL3 are also included in Annex 3.
C. Project development objective and key indicator
22. The Project's Development Objectives are to: (i)improve the capacity of RHSs to deliver, in a timely fashion, quality services known to improve the health of mothers, children and people with chronic conditions by public providers at the first level of care; (ii)improve health system responsiveness, defined here as the institutional capacity of public sector health
On July 1'' 2009 the MOH signed the first two performance agreements with two RHSs (Regions VI and VIII) which constitutes a major step towards decentralization.
5 organizations to conduct strategic purchasing of health care services and goods, and to respond to public health emergencies.
23. The proposed indicators for measuring progress toward the project’s objectives include:
(a) Indicators for component 1’:
(i) Percentage of pregnant women from target population with risk evaluation completed before the 15th week ofpregnancy.
(ii) Percentage of children from target population under 15 months with vaccination scheme completed according to national protocol.
(iii) Percentage of individuals from target population diagnosed with hypertension under treatment according to national protocol.
(b) Indicators for components 2 and 3:
(i) A Baseline on risk factors and burden of disease has been conducted, disseminated and used by corresponding MOH units to develop annual operational plans for strengthening public health interventions with an emphasis on health promotion and prevention.
(ii) At least one region is producing monthly reports on the number of poor individuals who were prescribed a medicine at the first level of care according to national protocols and who actually received medication within 48 hours at the point of consultation service or in a facility ofthe Program of Sup ly of Essential Medications and Office for Logistical Support (PROMESE/CAL). P
D. Project components
24. The project consists offour components:
Component 1: Introducing results-based financing mechanism for the first level of care in Regional Health Services (US21.49 million - Bank financing US$14.52 million)
25. The component would introduce results-adjusted capitation mechanisms to better align incentives to improve delivery of health services at the first level of care. To expand impact, the results-adjusted capitation mechanism would be used both to transfer resources from the MOHto the RHSs and to transfer part of the funds ofthe SR - specifically, capitated payments to RHSs
’These indicators have been selected fiom the menu ofthe FHI basic package of health services to improve those key health outcomes for the poor that are ofgreatest concern to Government. 8 This indicator captures the outcomes ofvarious interventions aimed at enhancing strategic purchasing: implementation of results-adjusted capitations, improved monitoring and enforcement of new protocols for the delivery of services at the first level of care, strengthening the procurement and supply chain ofpharmaceuticals, and inter-institutional coordination.
6 for the first level ofcare. This component would contribute to finance the delivery ofambulatory primary health care services to an estimated 550,000 poor individuals in selected RHSs’.
26. The disbursement mechanism used for this component would be capitations (see Box 1). This component would finance capitation transfers on a declining basis to the RHSs. The average per capita cost of providing basic FHI primary health care benefits to those enrolled in the SR would be used to calculate the periodic disbursements to be made for component 1; therefore the per capita amount would be the same as the per capita used for the SR expressed in dollars.
Box No. 1: Capitations and results-based financing in health sector operations Capitations constitute a special payment mechanism that Bank financed projects are currently using in the design of various health sector operations in the region. Resources are allocated for the delivery of care to a target population on a per capita basis adjusted by the achievement oftargets ofpriority services. Regional level providers receive capitation payments in two installments to provide incentives for providers to enroll beneficiaries and to deliver services and meet agreed targets. The first installment (between 50 to 80 percent in different projects) is calculated using the total certified list of beneficiaries and the average unit cost. The second installment (between 20 to 50 percent) is calculated with data of each health providers’ achievement of results (targets for heath outputs / intermediary outcomes). Not every regional level provider would necessarily receive 100 percent of the second installment; some may receive a smaller percentage if not all the targets are met. Targets and rules for transfers to the regional health providers are part of performance agreements established between the national and sub-national levels. Performance agreements are negotiated annually and include specific targets for health outputdintermediary outcomes directly linked to delivery of the health services package.
In recent years, capitations have been introduced as a specific payment mechanism in the design ofhealth sector operations in Latin America in several operations financed with IBRD and IDA loans in countries such as Argentina, Brazil, Nicaragua, and Panama (Honduras is soon to be presented to the Board). Capitation, used along with rigorous monitoring, and technical (medical) and financial auditing have contributed to improved expenditure efficiency in the public health sector. Capitation mechanisms have been used as a strategic purchasing tool within the ftamework ofpolicy reforms aimed at separating health system functions (financing, risk pooling, and delivery of services). Capitations can contribute to align providers’ incentives for improving coverage and quality ofprimary health care services.
Central to the Bank’s use of capitation in health sector operations is the concept of prospective allocation of resources to ensure delivery of services when needed. This is equivalent to a health insurance premium in the sense that the payment is made ex-ante as opposed to fee-for-service mechanisms in which payments are made after services are rendered. The financial risk is transferred from the purchaser to the provider, who guarantees an adequate supply of a defined package of services with an agreed set of quality standards to the individuals covered. The capitation payment is made so that when the medical need arises (either preventive or curative) the provider will deliver the service according to a set ofagreed standards.
27. Capitation payments would be made on the basis of (i)a roster of eligible individuals; and (ii)the achievement by the RHSs of targets of a set of ten indicators (both verified by a external concurrent audits). The list of ten.indicators selected and detailed description of each one is included in Annex 6.
These RHSs were selected using several criteria that included, progress toward signing performance agreements with the MOH and decentralization process, institutional capacity in managerial and technical aspects ofdelivering health care, size ofthe population categorized as poor by SIUBEN, and size ofthe population covered by the SR. If there are project implementation savings the expansion to a third RHS could be explored after the mid-term review.
7 28. To foster ownership and sustainability ofthe new results-adjusted capitated system, data collection and flow of information would be based on existing institutions, organizational arrangements and procedures. Specifically the arrangements are those already established by NHI and the MOH for monitoring implementation of performance agreements and contracts already signed with RHSs. Prioritized health services to be financed through capitations would be those the NHI already has selected from the FHI package for contracts with the RHSs for the first level ofcare (see table 1).
Table 1: Basic Ambulatory Primary Health Care Services
Pre and post-natal control Growth monitoring ofchildren < 5 years old Full vaccination scheme for children < 10 years old according to national guidelines Treatment ofchildren with Acute Infectious Diarrhea Treatment ofchildren Acute ResDiratorv Infection Tuberculosis treatment Malaria'treatment Prevention and control of cervical cancer (for all women in fertile age) Family Planning Prevention. control and treatment ofsexuallv transmitted diseases Prevention, control and treatment of hypertension Prevention, control and treatment Diabetes Types Iand I1 Ambulatory treatment ofnon emergency of conditions treatable by primary health care
Roles of the NHI, the MOH and the PCUfor implementation of component 1
29. Based on the indicators developed for the new performance agreements signed with Regions VI and VIII, the MOH has selected a set of ten indicators for component 1. These indicators and corresponding annual targets would be included in annual agreements and contracts to be signed by the MOH and NHI with participating RHSs. The NHI would coordinate the required flow of information for transfers of resources to participating RHSs using results- adjusted capitations. The NHI would verify completeness and accuracy (through external concurrent audits) of the data sent by RHSs and would determine the actual amounts to be transferred to each of the participating RHSs. Also, the NHI would send an invoice to the PCU with the amounts to be transferred to the RHSs which in turn would be the basis for the PCU to determine the amounts for disbursements requests to the Bank for component 1.
Flow of funds for component I:Responsibilities, information and verijkation processes
30. RHSs would be in charge of developing the roster of eligible beneficiaries for disbursements of Component 1. NHI would be in charge of coordinating the verification process for the roster of eligible individuals and the achievement oftargets.
8 31. For developing the roster of eligible beneficiaries, the RHSs would document the collection of individual data of eligible persons in the Family Health File - FHF. The FHF is an instrument developed by the MOH for collecting health and socio-demographic data from families assigned to their corresponding health center based on the geographical location of the place of residence and the catchment areas assigned to each health center. After the individual collection data is entered in the FHF, the RHSs would be in charge of certifying the poverty status ofthe potential beneficiary.
32. In order to ensure consistency with the targeting mechanisms for other social programs, the RHSs would certify the poverty status of the formally assigned individuals using the same approach that the SR and the CCT program use. To identify eligible poor individuals for the SR the NHI employs a beneficiary identification system based on the proxy means test (known by its acronym in Spanish - SIUBEN) developed for the conditional cash transfer program Solidaridad. With the Bank’s financial and technical assistance the GODR plans to improve SIUBEN and to better integrate various safety net programs using a multi-sector coordination approach.
33. In this project, the registration of individual data in the FHF along with the certification of poverty status is called “formal assignment’y1o. The RHS would send the roster of formally assigned individuals to the NHI for verification ofindividual data.
34. The process of verification to be conducted under the coordination ofthe NHI would use the same process that NHI uses for the SR including the external audit system carried out by an independent firm (known by its acronym in Spanish as UNIPAGO). The objective of the NHI verification is mainly to ensure that there is no duplication in the financing for the health care of the same individual.
35. Loan proceeds to be transferred from the PCU to the RHSs on a capitated basis would be composed of two parts. The first part represents a fixed amount (the fixed part of capitation) representing 50 percent of the total capitation based on the roster of eligible individuals. This would be transferred monthly. The second part represents a variable amount (the variable part of capitation) calculated on the basis of how many of the ten MRIs targets were achieved by the RHSs. Each indicator achieved would be worth five percent of the overall capitation. This part would be transferred every four months.
36. Concurrent technical and financial audits conducted by independent firms would verify the eligibility of beneficiaries, achievement of targets and actual delivery of services. A concurrent audit would review individual files and conduct spot checks to verify that services were in fact provided to eligible individuals, that these services were delivered following the agreed quality standards and that the reported achievements oftargets were accurate. loThe term “formal assignment” is used because within the framework of the new model of delivery of services developed by the MOH, the population living in the corresponding catchment area of each health center is assigned to a health center based on population estimates derived from the Census. The units at the first level of care become the formal point of entry and the main interface with the health system. Health centers are in charge of identifying and periodically collect individual and other socio-demographic data of the households in their catchment areas. Once they collect the data of the individuals in the FHF, individuals are considered to be formally assigned to the health center for monitoring and information purposes at the MOH’s regional and central levels.
9 37. The concurrent financial audit would be a separate audit from the audit of overall the project and would verify that funds were disbursed in a timely fashion and used for the purposes and according to the stipulations of the Operational Manual. A more detailed explanation of implementation arrangements and flow of funds can be found in Annexes 4,6 and 7.
Component 2: Strengthening the capacity of the MOH to improve and monitor health system responsiveness while fostering transparency and accountability (US$lO.OO million - Bank financing US$7.00 million)
38. This component’s objectives are to strengthen MOH capacity to deliver public health goods and services while fostering transparency and accountability, and to strengthen existing information systems for the adequate functioning ofresults-adjusted capitations
Subcomponent 2.1. Strengthening the strategic planning and evaluation capacity of the MOH to improve transparency and accountability with an emphasis on improving health system responsiveness
39. This subcomponent’s main objective is strengthening the MOH’ s institutional capacity to conduct strategic analysis and planning, and improve delivery of health care services and public health interventions. This subcomponent would finance goods, technical assistance, non- consulting services, training and operational costs.
40. This subcomponent would finance data collection and analysis for policy development to enhance results and accountability; and implementation of new biomedical waste management regulations and monitoring. Other activities to be financed would be oriented to improving epidemiologic surveillance, enforcement of public health regulations, and long-term sectoral institutional capacity to respond to public health emergencies. This subcomponent would also seek to strengthen the MOH unit in charge of institutional strategic development (Direccidn de Desarrollo Estratkgico Institucional - DDEI) and would finance incremental operational costs for the PIU at the MOH.
Subcomponent 2.2. Strengthening monitoring, information and evaluation systems for results- based finan cing
4 1. This subcomponent would finance goods, technical assistance, services, training and operational costs. It would support the newly created office of national Monitoring and Evaluation (M&E) systems (as a unit within the DDEI at MOH) to improve existing instruments to introduce results-based financing.
42. It would specifically finance activities for development of information system modules needed for the implementation of results-based capitation mechanisms, and development of social audits. It would also support more broadly the strengthening of decentralized RHSs health information systems for improved monitoring of primary health care results and finance activities and studies to establish baselines for this project.
10 Component 3: Improving the quality of public spending on health care goods and services (US$12.57 million - Bank financing US$8.80 million)
43. The objective of this component would be to strengthen coordination and institutional capacity of public sector organizations for more sustainable financing, planning and purchasing of health services and other key inputs needed to improve the quality of health services with an emphasis on primary health care. This component would include three subcomponents.
Subcomponent 3.1. Strengthening public sector planning, procurement and distribution of medicines and medical inputs.
44. The first subcomponent would finance goods (software, hardware and other equipment), technical assistance, non-consulting services and training to improve procurement and distribution of essential medicines and other inputs acquired by the Program of Supply of Essential Medications and Office for Logistical Support (PROMESE/CAL). Activities focus on international biddings and expansion and modernization of the supply chain of pharmaceuticals with an emphasis on ensuring access by the poor to quality medicines for primary health care.
Subcomponent 3.2. Strengthening institutional capacity to expand and enhance social protection in health for the poor
45. This subcomponent would finance technical assistance, non-consulting services, investments, and training costs to strengthen institutional capacity of NHI and other key SR stakeholders (including the Ministry ofEconomy, Planning and Development - MOEPD and the Ministry of Finances - MOF) to consolidate and expand the SR. This component would finance activities needed to improve provider payments systems for the Family Health Insurance (FHI), institutionalize results-based financing mechanisms, and improve accountability and transparency in health financing. This component would also support activities to expand the SR.
Subcomponent 3.3. Overall project coordination and operational costs for implementation of components 1 and 3
46. This subcomponent would finance operational costs for the PCU at CERSS for the overall coordination of the project and implementation of components 1 and 3, including the concurrent external audits. This component would also finance incremental operational costs that NHI may incur for implementation ofthis project.
Component 4: Support for Response to Public Health Emergencies (US$O.lO million - Bank Financing US$O.lO million)
47. The objective of this component is to support the MOH in coordinating and implementing activities for a swifter and better response to public health emergencies. This component would finance consulting and non-consulting services, technical assistance and goods including medicines, laboratory and protective equipment, laboratory reagents and other medical supplies, development and dissemination of materials for information campaigns, training for
11 emergency preparedness and incremental operational costs related to the health sector response to public health emergencies of local or international nature.
48. This component would finance activities to ensure a swift and efficient response by the health system to major public health emergencies. This subcomponent would finance activities to support the national response to different types of threats to public health, including the current pandemic of the influenza virus AHlN1. In case of a public health emergency funds may be reallocated to this category. In order to trigger the use of funds the MOH has developed a specific mechanism based on the International Health Regulation and the National Risk Management Law (147-02) to determine whether a public health emergency exists, the details of which are included in the Operational Manual.
E. Lessons learned and reflected in the project design
49. Prioritize the use of existing institutions and organizational arrangements to avoid delays in the implementation and ensure sustainability of project. To avoid time consuming development of new institutional agreements and to jump start key activities, it is important that the project design maximize the use of existing organizational arrangements. This project is designed in close coordination with the MOH and the NHI to ensure that objectives can be achieved within the framework of existing units and structures. Also the project takes advantage of the maturing of coordination ofprocesses between the MOH, the NHI and the regional health care networks. This project actually uses several mechanisms for resource allocation already in place for the SR and introduces some important refinements to improve providers’ incentives to deliver better quality ofcare.
50. Coordinate with other projects and development partners to ensure exploiting synergies with multisectoral interventions that focus on human development to multiply results. In the past health sector interventions involved engagement with stakeholders in the Ministry of Economy, Planning and Development (MOEPD), but there was no emphasis on working with other social sector programs. This project is designed in close coordination with other human development projects such as the social protection (CCT - Programa Solidaridad), and education projects. The project design also takes into consideration participation of other development partners such as the IADB to ensure complementarities with their new interventions in human development.
51. In order to provide swifter access to resources to support the Government’s response to emergency situations resulting from epidemics, natural disasters or other events that pose a threat to the public health, a specific component with resources that can be rapidly disbursed is a very effective tool. In the past, health projects (Le. the HIV/AIDS prevention and control project and PARSSl) had to mobilize additional resources to support public health interventions to respond to epidemics (Le. dengue, avian flu) or to natural disasters with negative effects for the public health. In other countries, the Bank has recently introduced in its health operations a component or subcomponent to enable faster reallocation of resources or additional financing in case resources are needed during periods of national or global public health crisis.
12 F. Alternatives considered and reasons for rejection
52. The possibility ofa DPL was considered, but rejected for the following principal reasons:
(a) The Bank has a commitment with the GODR for a three-phase APL, and the government has confirmed its keen interest in the second phase of this programmatic lending to provide technical assistance and financial resources needed to introduce results-based financing.
(b) Support for introducing this type of results-based capitation mechanism requires intensified hands on supervision and immediate availability of resources. Ensuring adequate coordination between the MOH and the NHI necessitates technical support from highly qualified experts, training and some investments to improve strategic purchasing for better use of targeted subsidies for the poor and to strengthen the monitoring and information systems.
(c) In the pipeline, there are two DPLs with important components of support for the health sector including expansion of the SR. Both DPLs consider support for policy changes to support health sector reform and this investment lending would provide an important complement to the objectives of the other DPLs providing additional channels and expand to engage in policy dialogue with key health sector stakeholders.
111. IMPLEMENTATION
A. Institutional endorsement for introducing results-based financing mechanisms
53. In order to avoid parallel arrangements outside the existing institutions already established by the Health Sector Reform Laws, the overall implementation ofthe project would be carried out in close coordination with the key stakeholders: the MOH, the MOEPD, CERSS, the NHI and PROMESEKAL. These institutions would update an inter-institutional agreement endorsing the introduction of results-based financing mechanisms and commit to support increased accountability in the delivery ofhealth care.
B. Institutional and implementation arrangements
For overall project implementation
54. A Project Oversight Committee (Comite' Directivo de Proyecto) would be established with the participation of the Ministers of Health and Economy, Planning and Development, and the Directors of the National Health Insurance, PROMESEKAL and CERSS to oversee overall project implementation providing stewardship on the implementation ofthe project.
13 55. A Results-based Financing Committee - RBFC (Comite' de Financiamiento por Resultados) would be established with appointed officers from the MOH, MOEPD, the NHI and the PCU. This committee would oversee the day-to-day operations of results-based financing in the selected regions, as well as provide technical advice and inter-institutional operational coordination needed for the appropriate implementation of component 1 and related activities of components 2 and 3.
PCU and PIU
56. Government has a medium-term goal of phasing out PCUs that lie outside the public organizations that have been ordained by law to carry out the reforms. To this end, PARSSl created a PIU within the DDEI (Direccibn de Desarrollo Estratkgico Institucional).
57. As part of the transition toward a single, ministry-based executing unit, DDEI will assume the responsibility for executing component 2 and 4 in this phase. While the DDEI acquires experience and fiduciary capacity, CERSS will remain as the project coordinating unit and will execute components 1 and 3. It is envisioned that by the end of this phase the DDEI will be prepared to assume full responsibility for execution of future projects.
58. As in the ongoing project, the PCU would provide the overall coordination for project implementation, and would be responsible for adequate coordination, timely execution and adherence to Bank's guidelines. The PCU would collect and consolidate all the information on the project execution to be sent to the Bank according to the Operational Manual. The MOH would be in charge of execution of component 2 through the DDEI.
59. The PCU would ensure the adequate flow of funds (capitations) of the disbursements made from the Bank to the designated account for Component 1, and from this designated account to Capitation Transfer Fund Account and on to the individual accounts in the participating RHSs. The PCU in coordination with NHI and MOH would also ensure timely execution of activities and flow of information including the data on the results monitoring indicators and financial external audits for Component 1. The PCU, the MOH, the MOEPD and NHI would collaborate proactively to ensure an adequate and transparent flow of information of two-tranche capitated transfers to the regions based on the enrolled population and achievement of agreed goals.
Arrangements for Capitated Disbursements in Component 1
60. In order to ensure sustainability of financing mechanisms introduced by this project, this component would be based on existing organizational arrangements and institutions for the financing of the delivery of health care to the poorest groups of the population. Therefore, the prioritized services would be based on those included in the FHI. The NHI has already selected a package of ambulatory services used as the basis for prospectively allocating resources on a capitated basis to the MOH's regional health care providers. Furthermore, the NHI is harmonizing its contracts with the RHSs, along with the new performance-based agreements developed by the MOHwith its network of providers at the regional level.
14 Flow of funds
61. Loan resources for Component 1 would be disbursed periodically to a designated account from which the PCU would transfer funds to an operational account (Capitation Transfer Fund Account) to be used exclusively for this component. The capitations, in turn, would be transferred from this operational account for Component 1 to the RHSs in two tranches. To expand the impact of Component 1, this two-tranche mechanism would also be used to transfer capitated funds for the delivery of services at the first level ofcare for the SR. The MOHand the NHI have agreed on a set of indicators to track achievement of targets by each RHS (Results Monitoring Indicators - RMIs). The PCU would have the responsibility of overseeing the timely flow of funds to the regions. The PCU would ensure that the implementation of Component 1 and of the overall project is conducted according to the Loan Agreement, Bank fiduciary guidelines and the Operational Manual.
62. The PCU would coordinate with MOH and NHI to ensure synchronized transfers to the RHSs for both the SR and Component 1. Upon reception of an invoice produced by the NHI, the PCU would transfer the first tranche of the prorated per capita for the corresponding month for each ofthe participating regions. The second tranche ofthe per capita would be transferred to the participating RHSs every four months upon reception by the PCU of an invoice produced by the NHI based on the verification of achievement of RMI targets. The specific rules for calculating the second tranche would be based on achievement oftargets and reported RMIs and spelled out in detail in the Operational Manual (more detailed information on this process is included in Annexes 4,6 and 7).
63. The Bank and the GODR would agree on a grace period to last no longer than eight months after the first request for disbursements for Component 1, in order to allow for adjustment of existing data collection and flow of information mechanisms and to conclude the process ofcontracting firms for external concurrent technical and financial audits for Component 1. During this grace period, the Bank would advance 100 percent of the total amount of the estimated capitation payment for the population enrolled in this primary health care benefits expansion program. The total amount to be disbursed would be calculated based on enrollment estimates developed by NHI, MOH and the Ministry of Economy and Planning.
64. External firms would be contracted to conduct concurrent technical and financial audits specifically for Component 1 (in addition to the normal financial audits of the whole project). The technical medical audit would certify the accuracy of the list of enrolled individuals. The audit would also ensure that reported results are verifiable and accurate and that services were in fact rendered to eligible individuals, following agreed quality standards. The financial audit will confirm that resources were indeed used to ensure access to the basic package of services, following the Bank's guidelines and the stipulations of the Loan Agreement, Project Appraisal Document, and the 'Operational Manual.
15 C. Monitoring and evaluation of outcomeshesults
65. The recently created National Office of M&E at the Directorate of Institutional Strategic Development (Direccidn de Desarrollo Estratkgico Institucional -DDEl) would coordinate and oversee the strengthening of the monitoring and evaluation systems for the delivery ofcare in the newly decentralized RHSs. The DDEI would also oversee in close coordination with the NHI the development of appropriate information systems with individualized data for an adequate functioning ofresults-based financing.
66. Component 2 would provide funds for conducting a baseline for the PDOs during the first year ofproject implementation. DDEI would be in charge of conducting this baseline and would be designed to test a special module to collect information on results-adjusted financing to be included in the next DHS to be conducted in the Dominican Republic. These surveys would also test the use of existing poverty definitions that allow for analytical work more relevant to the analysis ofresults and outcomes ofkey safety net interventions including the SR and the CCT.
D. Sustainability
67. The GODR is committed to implement the health sector reform as envisioned in the Laws passed in 2001 (General Health and Establishment of the Dominican Social Security System Laws). The government is in the process of developing new multi-annual budgets with various sectors. One of the first sectors where multi-annual budget for social services delivery with results-based financing mechanisms is the health sector.
68. The risk of long term sustainability of the project is mitigated by the sectoral development plans that include the expansion of results-based financing with an emphasis on the poor. The preparation of this project was carried out in close coordination with the MOEPD and the MOF within the framework of the new agreements of MOEPD with various sectors for results-based development plans and multiannual budgets. The MOEPD will coordinate the establishment of development priorities in the health sector including the financing of activities needed for the expansion of results-adjusted capitations. The financing ofthe MOHto the RHSs would decrease when the amount ofenrollees in the SR increases.
69. Policy dialogue with the MOEPD and MOH and key health sector authorities is ongoing and the project includes activities for enhancing the planning and better response of the government to protect the poor’s safety nets in the health sector. Additionally, the Bank is intensifying the support to the country for policy development to protect and improve outcomes that result from the delivery of basic social services. The Bank’s support is composed of various instruments including a series of DPLs that include among its conditionalities protecting the budget for the delivery of health care services and goods for the poorest and most vulnerable groups ofthe population.
16 E. Critical risks and possible controversial aspects
Risk factors Description of Risk Risk Mitigation Measures Residual Rating Risk
I.Country Risk Macroeconomic Double-digit GDP growth in 2005 M A series of laws to strengthen the M framework and 2006 and a return to sound budget process has been recently macro balances reflect a strong passed to improve fiscal recovery from the bank failure- performance and accountability. induced macro crisis of 2003 and 2004.
Under the ongoing IMF SBA, The IMF SBA remains in place inflation fell to 6 percent, reserves through January 2008. The Central are up and the exchange rate is Bank continues its policy of steady. Domestic debt jumped targeting low inflation. Substantial sharply during the crisis, but total progress in banking supervision and debt ratios remain moderate and bringing prudential regulations to are projected to decline. Fiscal international standards reduces the pressure remains, stemming partly probability of large bank crises in from continued subsidy of the the future. electricity sector, as well as inadequate planning and spending controls. 11. Sector Govei ance Policies and Institutions Sector Policies Personnel changes at key public H Signing Memorandum of S and institutions organizations and management Understanding between all key positions slow down institutions involved to ensure implementation. political support at the highest level.
Project includes design that maximizes use of existing institutions and management structures and minimizes parallel project structures. 111. Operation S xific Risks Sustainability and External shocks or changes in Use other instruments such as M Implementation budget policies decrease DPLs to protect budget for SR. availability of resources for Development of policy dialogue in individuals already enrolled in the close coordination with other SR constraining the potential development partners to protect positive impact of introducing budget for SR for key health care results-based capitations in inputs (including medicines). coordination with the NHI.
Financial Two-installment capitation Project will focus on the regions M Management payments for the package of with substantial experience-on services are a new mechanism for health care projects and I regional networks ofproviders. management ofresources providing better results from NHI and will Project with significant FM strengthen administrative and challenges: several implementing financial management systems. entities with different levels of 1
17 Risk factors Description of Risk Risk Mitigation- Measures I Residual Rating Risk Rating capacity, a flow of funds that Following best practices for includes regional health projects using two-installment authorities, a Ministry that needs capitation payments for health care, strengthening, and highly concurrent external audits centralized operations in public specifically for Component 1 would entities. be carried out to ensure flow and use of funds according to Implementation ofPFM reforms regulations laid out in the is still a pending task at various Operational Manual. ministries, departments and agencies. Project would foster the implementation of SIGEF in participating RHSs regions and UEPEX in PIUs. IV. Overall Ris,- (including reputational Risk) : S Risk Rating on a four - point scale: High (H), Substantial (S), Moderate (M), and Low (L) - according to likelihood of occurrence and magnitude ofpotential adverse impact
F. Loadcredit conditions and covenants
70. Conditions of Effectiveness: That the Borrower has retained a procurement specialist at DDEI with qualifications and terms ofreference satisfactory to the Bank.
7 1. Inter-Institutional Agreement. The Borrower shall ensure that the different departments and agencies involved in Project implementation operate during the implementation of the Project in accordance with the Inter-Institutional Agreement dated July 30, 2009, with a view to ensuring the accelerated implementation of Health Sector Reform Laws and the introduction of mechanisms for improved results-based financing and accountability.
72. In addition, as a Loan Convenant, a Project Oversight Committee (ComitC Directivo de Proyecto) and a Results-based Financing Committee (ComitC de Financiamiento por Resultados) need to be established not later than 30 days after Effectiveness.
73. Disbursement Condition for Component 4: No withdrawal shall be made for Component 4 (Support for Response to Public Health Emergencies), unless a "Health Emergency" (defined as a serious and unforeseen public health emergency ofnational or international concern that has been: (i)determined as such in accordance with the Operational Manual; and (ii)formally declared by the Borrower's Minister of Health through a Ministerial Resolution) has taken place, and the Bank has provided its prior written no objection to the activities of the action plan to be financed with loan proceeds.
74. Possible reallocation of funds: In the case that by no later than two years and six months after the Project effectiveness a "Health Emergency" has not occurred and/or the Bank has not provided its written no objection for the disbursement of the proceeds of the Loan allocated to Component 4, those resources may be used at the request ofthe Borrower to finance activities under Component 1, 2, or 3 of the Project. Not later than two months from that date,
18 the Borrower shall submit to the Bank for its approval, a proposal of how the resources under Component 4 ofthe Project will be allocated.
IV. APPRAISAL SUMMARY
A. Economic and financial analysis
75. The results of this cost-benefit analysis indicate that, under reasonable parameters and expectations, the net present value project would be positive. The benefits derived from the project are quantified from the reduction of deaths of pregnant women, puerperal mothers and infants; and the decrease in mortality and disabilities from hypertension and diabetes. The computation is based on the joint distribution of age and income from labor for the segment of the population targeted by the project. The discount rate used is 8 percent and represents the social investment opportunity cost of the Dominican Republic. Nonetheless, a range of discount rates is used, and their corresponding results are presented in a sensitivity analysis of the net present value ofthe project, using variations ofthe discount rate and the success ofthe project in reducing deaths and disabilities. At a discount rate of 8 percent, the net present value of the project is estimated at US$ 936,759, and the corresponding internal rate ofreturn is 8.35 percent, when the rates of reduction of infant mortality, maternal mortality, and disabilities from chronic diseases are at the middle oftheir respective expected ranges.
B. Technical
76. The project would introduce a results-based mechanism for financing the first level of care in public sector regional health services networks (RHSs). Use of adjusted capitations for health centers would take place within the framework of decentralization of regional health care networks. Separation of functions and decentralization is at the core of the health sector reform laws and regulations. The Bank’s support for health sector reform support in the previous phase of the APL focused on laying out the groundwork for the implementation of a new approach to improve health system responsiveness centered on primary health care services. APL1 focused on developing a series of regulatory instruments, improving the design of the delivery of basic mother and child health services, supporting the strengthening of the infrastructure and equipment and management of key inputs (human resources and pharmaceuticals) for the first level ofcare in prioritized RHSs.
77. This new phase would strengthen financing mechanisms for basic health services to align incentives, building upon the experience of the capitation system used by the National Health Insurance for the SR. APL2, also known by its acronym in Spanish as PARSS2 would strengthen the technical and fiscal sustainability ofpolicies to increase access to preventive and ambulatory primary health care services for poor. The project would finance technical assistance and activities to strengthen institutional capacity of key organizations of the public sector, including the MOH, the NHI, and PROMESEKAL to better respond to the roles assigned by the separation offunctions envisioned in the health sector reform laws and regulations.
19 78. The proposed project would foster better results in other social sector interventions supported by the Bank through investment and policy lending operations. PARSS2 would refine the model of financing for the first level of care in order to respond to an increased demand for quality services that would result the introduction ofnew health conditionalities for beneficiaries ofthe CCT Program and a new social sector DPL.
C. Fiduciary
79. This new phase of the APL project would be conducted by two implementing units, one of which would be the project coordination unit (PCU). The PCU at CERSS that is in charge of implementing PARSS 1 has prior experience with managing the fiduciary responsibilities including the administrative and financial management aspects of Bank- and IADB-financed projects. As part of the agreement with the MOH, during the implementation of PARSS1 the Bank financed a team at DDEI that was trained to assume the fiduciary responsibility of implementing a small grant (GAIN Project). DDEI took over the fiduciary responsibilities of the GAIN Project that closes on June 30,2009.
80. The PCU in charge of implementation of PARSS1 would assume the fiduciary responsibilities of implementation of components 1 and 3 and would be the APL2 PCU. At the MOH, the DDEI (Direccibn de Desarrollo Estratkgico Institucional) would assume fiduciary responsibility for implementation ofComponent 2.
Financial Management
81. LCSFM completed a financial management assessment (FMA) with results included in Annex 7. The FMA concluded that both units at CERSS and DDEI, currently implementing Bank Projects, meet minimum Bank requirements for financial management (FM) arrangements to implement the loan. The overall control FM risks for the operation are substantial and would be rated moderate when the entity, with Bank support, implements a time-bound action addressing identified measures to mitigate risks.
82. Both units would prepare interim unaudited financial reports every four months for the proposed project following the World Bank’s 2002 “Guidelines for Borrowers: Financial Monitoring Reports for World Bank-Financed Projects”. The ‘annual external audits and the periodic concurrent audits would be performed according to the 2003 “Guidelines: Annual Financial Reporting and Auditing for World Bank-Financed Activities”, and terms of reference approved by the Bank. Both units will process reimbursements, advances, and direct payments as methods for disbursements. Disbursement procedures would be handled according to the 2006 “Disbursement Handbook for World Bank Clients”; the Disbursement Letter attached to the Loan Agreement, and customized SOEs. The Borrower would follow the 2006 “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”.
83. The FM Supervision Plan defined the scope as a comprehensive supervision, including full on-site supervision covering all areas specified in the FM supervision checklist, review of the annual financial audit reports, recurrent audit reports and IFRs every 4 months, plus periodic
20 spot checks ofspecific areas ofconcerns. The frequency ofFM supervision would be semiannual the first year. The intervals and scope would be revised with the supervision results as indicated in the FM ISR rating.
Procurement
84. Since the project would use capitated payments (a specific disbursement category to be included in the Loan Agreement for which there are no Bank-specific procurement guidelines), Component 1 would not be subject to Bank procurement rules and would follow strictly the financial management arrangements indicated above and detailed in the Operational Manual.
85. The PCU at CERSS would be responsible for procurement of components 1 and 3, with the PIU at DDEI responsible for procurement of components 2 and 4. Procurement activities will be carried out by the procurement teams of the PCU and PIU respectively. The Bank assessed the capacity of the PCU at CERSS and the PIU at DDEI to implement procurement actions in May 2009. The assessment reviewed the organizational structure for implementing the project and the overall procurement capacity of the implementing agencies. (More details are provided in Annex 8.)
86. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits,” dated May 2004 and revised October 2006; “Guidelines: Selection and Employment of Consultants by World Bank Borrowers,” dated May 2004 and revised October 2006; and the provisions stipulated in the Legal Agreement. For each contract to be financed by the Loan, the Borrower and the Bank have agreed on a procurement plan that states procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and the period.
D. Social
87. The proposed project is specifically intended to have a positive social impact in increasing access to health care and improving mechanisms to target and deliver health care. No social safeguard policies are triggered by the project activities. The main social development issues related to the proposed project refer to the inequality in access to health services, inequality of health status among different population groups and between urban and rural regions, high child and maternal mortality rates for the country as a whole, and the impoverishment impact of ill health and disability among the poor uninsured population. Of particular relevance is the issue ofundocumented Dominicans and access to health services.
88. In the Dominican Republic lack of individual documentation is a problem that disproportionately affects the poor. In 2006 the GODR, through a proxy means test conducted in the areas with the largest concentrations of poor people, identified that roughly 24 percent of individuals 16 years and older did not have legal documentation. Documentation is a major barrier to health insurance for approximately 700,000 Dominicans, often the poorest, as legal identity documentation is required for enrollment in social protection systems such as the national health insurance program. Although health insurance cannot be provided to undocumented individuals, the facilities of the Ministry of Health are obliged to provide
21 emergency services to all individuals regardless of their documentation status. However, costs are often much higher (especially for pharmaceuticals) if not enrolled in the health insurance system.
89. The planned reforms in the PARSS2 project are particularly relevant for vulnerable groups as access to health services would not be dependent on health insurance, and improved quality ofcare would also benefit all Dominicans. A proposed Development Policy Loan would also provide further support for the implementation of the Social Protection Investment project and PARSS2, specifically technical assistance for improving documentation of the Dominican poor.
E. Environmental
90. Over the long term, it is possible that greater access to health services could lead to an increase in biomedical waste which, if managed improperly, could raise health risks for the public and personnel as well as environmental contamination. Though these types of risks are indirectly related to the actual project activities and are a persistent issue in the Dominican Republic, the project can add value by supporting better waste management practices framed as not only an environmental issue but as one facet ofimproving the quality ofhealth care.
91. The project was originally classified as a Category B at the PCN stage, however as project preparation progressed the team found that a Category C would be more appropriate, given that the project activities would cause no adverse environmental impacts and no civil works would be financed. Nevertheless, OP 4.01 is triggered on account ofthe Bank’s proposed work with the client to develop a strategic approach to address biomedical waste management in the health sector, as a measure of quality enhancement. This will capitalize on past analytical work from APLl and other projects, as well as new legislation specific to biomedical waste management. This aims to have a positive impact on public health, worker safety, and link the notion ofimproved environmental management to quality health service delivery.
92. A regulation adopted in February 2009 under the General Health Law establishes clear procedures and an institutional framework specifically for biomedical waste management. Given the foundation of past analytical work (supported by the Bank and other donors) on practices for biomedical waste management in the Dominican Republic combined with the momentum ofnew legislation, PARSS I1 is well-positioned to build capacity within the MOH to implement these procedures. Under APL2 the client would build on previous work to apply lessons learned from past experiences and develop a strategy to implement measures from the new regulation.
93. The implementing agency currently has low capacity to implement biomedical waste management procedures, lacking staff, capability to monitor health facilities’ waste management practices and the ability to enforce standards and coordinate with other Government actors (e.g. environmental, solid waste, and regional health authorities). Authorities are supportive of building capacity and have in the past undertaken a limited initiative on training health care professionals on the proper care of biomedical waste management under the auspices of the Japanese aid agency JICA. The Government has expressed interest in pursuing a more strategic approach to adopting safeguard measures in its health sector and has asked the Bank to provide
22 technical assistance. The Bank is in discussion with the Government on considering alternative options.
F. Safeguard policies
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.0 1) [ XI [I Natural Habitats (OP/BP 4.04) [I [ XI Pest Management (OP 4.09) [I [ XI Physical Cultural Resources (OP/BP 4.1 1) [I [ XI Involuntary Resettlement (OP/BP 4.12) [I XI Indigenous Peoples (OP/BP 4.10) [I [ XI Forests (OP/BP 4.36) [I [ XI Safety of Dams (OPBP 4.37) [I [ XI Projects in Disputed Areas (OP/BP 7.60). [I [ XI Projects on International Waterways (33OP/BP 7.50) [I XI
G. Policy Exceptions and Readiness
94. There are no foreseen policy exceptions.
95. The GODR has introduced the counterpart funding in the draft budget of 2010 that will be presented to Congress later this year. The Inter-institutional agreement between the Ministries of Health, Economy and Planning, the National Health Insurance, CERSS and PROMESEKAL has already been signed. The Results Monitoring Indicators were agreed between the MOH and RHSs VI and VI11 have started to plan the activities needed for the construction of baselines. Performance agreements between the MOH and RHSs VI and VI11 have also been signed. The latter provides the overall framework for results-based financing mechanisms to be introduced by this project. Additionally DDEI has already started the process of selection and contracting of a procurement specialist with experience in Bank’s operations and the terms of reference for the external concurrent audit have already been developed.
* By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination ojthe parties’ claims on the disputed areas
23 Annex 1: Country and Sector or Program Background DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
1. This section has two parts. The first part presents tabulations of some data from the most recent round ofthe Demographic and Health Survey (DHS) for selected health sector issues that provide an important background to the project. The second part presents a summary of the results ofPARSS 1.
Part I: Summary of key health sector information
The Dominican Republic and Health Sector Reform
2. Over the past six years, the GODR has initiated two major reforms that promise to improve the performance of the health system as a whole, and, specifically, the performance of the national health system. In 2001, the Government enacted the General Health Law and the Social Security Law, and, in 2006, the Budget Law. Both reform initiatives introduce fundamental changes to the way the national health system is financed. Though different in their approaches, both initiatives aim to replace historical budgets with output and results based finance mechanisms.
3. The General Health and Social Security Laws mandate organizational changes prior to a fundamental reform of the financing of the national health system. The General Health Law decentralization of the provision of health services by the Regional Health Service networks (RHSs) from the Ministry of Health. Regional health services, which are to be transformed over time into autonomous health service networks. The Social Security Law delegates the responsibility for the financing of personal health services from the MOH to an autonomous National Health Insurance Agency. Furthermore, it delegates the financial oversight function to the Superintendence for Health and Labor Risks. Once these changes are in effect, the role ofthe Ministry ofHealth will focus on the stewardship of the health system and the provision ofpublic health services' '. In addition, the financing function will be organizationally separated from the service provision function for personal health services, thus paving the way for results-based or competitive financing arrangements.
4. The Social Security Law stipulates the shift from a National Health Service approach to an insurance-based, demand-driven health system. Breaking with the past of financing health services under a historical budgeting scheme, the Social Security Law makes health insurance mandatory for all Dominicans and creates the Family Health Insurance system with two financing schemes to be administered by the National Health Insurance - NHI (Seguro Nacional de Salud SENASA): First, a fully-subsidized scheme for the poor and, second, a partially- subsidized scheme for the unemployed and informally employed. Under both schemes, the National Health Insurance is expected to. purchase a package of health services from the RHSs. The changes to the financing mechanisms mandated by the law were designed to reduce
'' In the health arena, stewardship is defmed as providing vision and direction for the health system, collecting and using intelligence, and exerting influence -through regulation and other means (WHO 2000).
24 inequalities in health financing, in particular, to reduce out-of-pocket expenditures by the poor as well as to boost the efficiency of the system by paying providers based on service delivery outputs *
5. The implementation of the General Health Law and the Social Security Law experienced substantial delays in the first six years. The General Health Law and the Social Security Law foresee a phased implementation over a period of ten years that was supposed to conclude by 201 1. Overall, implementation has been sluggish, although important milestones have been reached. In 200 1, the responsibility for the delivery of personal health services was decentralized and the regional health services (RHSs) were created with their own legal provisions and capacity to establish contracts with the NHI. The General Health Law stipulates the decentralization of all management functions to the regional health services, including the recruitment of staff and the Budget Law mandates a programmatic budgeting approach. Progress has been made in the decentralization of key inputs still to be transferred fiom the Ministry of Health, especially in human resources.
6. Also in 2001, the National Health Insurance Agency and the Superintendence for Health and Labor Risks were created, and in the following year the subsidized regime of the Family Health Insurance was launched. However, while budget allocations to the Ministry of Health kept growing, it was only in the last two years that the National Health Insurance Agency received budgets sufficient to enroll the poor according to the schedule defined in the laws. As a result, by the end of 2008, approximately 1.2 million individuals from the target population were enrolled. The partially subsidized regime of the Family Health Insurance has yet to be launched. There has been no progress in introducing results-based financing mechanisms through the resources allocated to the MOH or through those allocated to the NHI for the SR.
7. The Budget Law passed in 2006 aims to increase the efficiency of public services by mandating a mid-term, programmatic budgeting approach. The budget law clarifies the roles and responsibilities ofthe newly created Ministry ofFinance and Ministry ofEconomy, Planning and Development in the budgeting process and introduces a programmatic, mid-term approach. In the absence of a national development plan, the law mandates the elaboration of a four-year budget to be approved by the national development council. The four-year budget will guide the preparation of annual budgets. Both four-year budgets and annual budgets will adopt a program- instead of an organization-centered structure, that is, expenditures will be classified in terms of governmental objectives and not according to organizational structures. Furthermore, the law provides the opportunity for the Ministry of Finance to enter into performance contracts that, subject to the achievement of agreed results, provides Ministries with an increased level of flexibility in administrative procedures, in particular, in setting the wage scale.
8. While the original schedule of full implementation of the Budget Law planned for fiscal year 2009 may be delayed, some important steps are already being taken. Most importantly, the 2008 budget adopted a programmatic structure, that is, the budget was presented according to objectives with corresponding monitoring indicators and targets. However, spending decisions have continued to be based on historical spending levels oforganizations.
25 The Financing and Accountability Arrangements of Regional Health Services
9. Committed to simultaneously implement the General Health Law, Social Security Law and Budget Law, the GODR faces significant coordination challenges with possible adverse effects on the performance ofregional health services. The majority ofpublic resources allocated to the health sector for delivery of health care services are done through the MOH via historical budgets and through the NHI via SR. The resources from these two main channels flow to the RHSs to finance the provision health services for the non-formally employed to a basic package ofhealth services (Figure 1j. 10. The Social Security Law mandates that the National Health Insurance Agency purchases services from regional health services. The NHI finances services for the first level of care with prospective payments (on a capitated basisj but pays on a fee-for-service basis for specialized ambulatory, inpatient and diagnostic services for the secondary and tertiary level earmarking for certain types of expenditures. The NHI and the MOH monitor the use of these funds by expenditure categories but do not hold regional health services accountable for the quantity or quality of services provided.
Figure Al.l. Schematic visual representation of the organizational arrangements for the SR
-i_President's ORce
Provider Units I
Abbreviations: MOF (Ministry of Finance); PD (Provincial Health Directorates); RHS (Regional Health Services); NSSC (National Social Security Councilj; SHLR (Superintendence for Health and Labor Risks); NHIA (National Health Insurance Agencyl; SST (Social Security Treasury);
11. With the GODR committed to simultaneous implementation of the General Health Law, the Social Security Law and the Budget Law, it faces two main challenges: First, it has to ensure that the incentives created by the distinct financing and accountability rules are compatible. Second, it has to ensure that the regional health services have the capacity to provide timely information about their performance and to respond to the incentives they face.
26 12. Aware of the coordination challenges inherent to the simultaneous implementation of the General Health Law, Social Security Law and Budget Law in the health sector as well as capacity limitations, the GODR requested the World Bank to develop a proposal for a streamlined financing and accountability mechanisms for the regional health services. The World Bank is the most important development partner providing technical and financial assistance in the health sector for the health sector reform. Under its first health sector reform project, the World Bank supported the development and implementation of a mid-term reform program launched in May 2006 to accelerate the implementation of the General Health Law and the Social Security Law.
13. Discussions with sector stakeholders during the project’s mid-term review of the first phase of the APL for the Health Sector Reform (PARSS1) demonstrated the need to better coordinate the implementation of the General Health Law and Social Security Law with the implementation of the Budget Law, in particular, to harmonize financing and accountability mechanisms for the capacity constrained regional health services. The GODR therefore requested the World Bank’s support in the development of a streamlined financing and accountability framework for the regional health services. It was agreed that during discussions for preparation of APL2, the Bank and key health sector stakeholders would explore how to improve service productivity and quality and specifically consider (i)upstream financing and accountability rules facing the financing agencies, for example, the obligations of the National Health Insurance Agency vis-a-vis the Superintendence for Health and Labor Risks, (ii)the capacity of regional health services, and (iii)the GODR’s reform plans for the financing and accountability rules internal to the regional health services, for example, the financing mechanisms for provider units.
Information’ on delivery of health care services and intermediate outcome indicators12
Prenatal Care
14. According to the Dominican Republic’s 2007 DHS (ENDESA 2007), the majority of pregnant women received some form of prenatal care and in almost 99 percent of time by a medical doctor or a gynecologist. For poorer quintiles, the proportion of women receiving care from a general doctor rather than a gynecologist was higher than in the rest of the quintiles, were gynecological checkups predominated. The poorest coverage overall was observed in Elias Pina, Pedernales, and San Juan provinces, and in the poorest and less educated populations of pregnant women.
l2This section presents a summary of the wealth of data that the DHS conducted by CESDEM and Macro- International with funding from USAID and the World Bank in 2007.
27 Table Al.1. Prenatal care completed by qualified personnel
13 I 27.1% I 71.4% I 1.5% I 4 22.0% 77.3% 0.7% 5 (Richest) 11.7% 87.4% 0.9% Total (all auintiles) 31.5% 67.3% 1.2%
15. According to ENDESA, over 95 percent of women received at least 4 or more prenatal checks, without significant variations between urban and rural areas. The large majority (82 percent) also completed the checks in the first 4 month of pregnancy and some additional 13 percent in the 4th or 5'h months.
Table A.1.2. Number of Prenatal Controls
Table A.1.3. Quarter at which first prenatal control took place
16. It is important for pregnant women to understand early signs of complications that may arise during their pregnancy, and an explanation by a doctor is highly important in managing such possible conditions. Self-report data shows important variations among pregnant women from different quintiles. A significantly lower percentage of women from the poorest quintile report receiving medical explanations almost 30 percent less of the time than their rich counterparts.
28 Table A.1.4. Percentage of pregnant women receiving explanation of their complications
4 75.7% 5 (Richest) 82.5% Total (2002) 6 1.3% Total (2007) 69.1%
17. Over 98 percent of births took place in institutional health settings: 77 percent of these were carried out in the public health establishments and 20 percent in private clinics and hospitals. Despite a high coverage of institutional births, there are still some provinces unable to provide access to qualified care. For example, in the Elias Pifia and Pedernales province, 14 and 11 percent of births respectively occurred in the women’s home without the assistance of qualified personnel.
Table A.1.5. Place of delivery by type of establishment (public or private sector)
Public Health Private Health House Other No Births in Total Establishment Establishment info Health Number of Facilities Births By Residence Urban I 74.8% I 23.3% I 0.6% I 0.5% I 0.8% I 98.1% I 7,114 Areas Rural I 82.2% I 14.0% 12.4% I 0.6% I 0.8% I 96.2% I 3,429
Total 77.2% 20.3% 1.2% 0.5% 0.8% 97.5% 10,543 (2002) Total 76.4% 21.5% 1.5% 0.2% 0.4% 97.9% 10,850
18. Over 98 percent of births were attended by qualified personnel, such as a gynecologist or a general doctor, with the latter predominating in coverage of births over 65 percent of the time.
29 Table A.1.6. Births attended by qualified personnel (in the past 5 years prior to the DHS)
13 I 64.1% I 33.9% I 0.5% I 14 I 68.2% I 30.7% I 0.2% 1 5 (Richest) 65.0% 34.1% 0.0% Total 65.1% 32.0% 0.7%
Child Health Care
19. According to ENDESA-2007, only 39 percent of children between 18-59 months old had received a compete scheme of vaccination in their first 18 months of life and five percent did not receive any vaccination coverage. The most widely administered vaccine was the BCG, with 93 percent of children receiving the shot. The ones that were least complete in their coverage were the third dozes of the polio and DPT vaccines.
Table A.1.7. Vaccination Coverage in Children (18 to 23 and 48 to 59 months old)
Vaccine Type Coverage in Children Coverage in Children 18-23 M.O. ( percent) 48-59 M.O. ( percent) BCG 95 91 DPT 1 92 89 DPT 2 84 81 DPT 3 75 70 Polio 1 91 88 Polio 2 78 74 Polio 3 65 49 Measles 74 64 Total 50 31 1
20. According to the ENDESA close to 10 percent of children under 5 suffer from chronic . malnutrition, measured as height to weight ratio. While figures for malnutrition will have declined by 2 percentage points from when it was last measured in 2002 given older WHO standards for the condition, the new more stringent standards actually increased the proportion of malnourished children in DR.
21. The age group that is most affected by the condition is that of children between 12-23 months old, 12 percent of whom are considered malnourished and third with severe malnutrition. Over 13 percent of children residing in the rural areas suffered from malnutrition as opposed to 8 percent in the urban areas. Socioeconomic level and levels of education of the mother was another important factor in determining child’s malnutrition, with only 5 percent of children malnourished in the mother with superior education as opposed to 15 percent in the lowest education group.
30 Table A.1.8. Chronic Malnutrition in Children Under 5
Chronic Malnutrition percent Under -3SD percent Under -2SD (Height/Age) by age
Less than 6 1.8% 8.6% 6-8 1.1% 6.2% 9-1 1 2.2% 9.7% 12-17 3.3% 12.1% 18-23 4.0% 12.4% 24-3 5 2.3% 10.7% 36-47 1.8% 9.9% 48-59 1.8% 8.0% By Gender Male 2.6% 10.7% Female 2.0% 8.8% By Area of Residence Urban 2.1% 8.4% Rural 2.5% 12.5% I By Quintile 1 (Poorest) 4.2% 15.58% 2 2.4% 10.8% 3 1.8% 7.3%
5 (Richest) 0.6% 4.7%
Total 2.03% 9.8%
Coverage of Health Care Services
22. According to the ENDESA survey data on the population at large, public health care providers were used most of the time, with 57 percent of people with health problems seeking consultation in ministerial hospitals and clinics. Social security clinics and military facilities were used by 6 percent of the population. With the expansion of private insurance demand for the private sector increased in the past years with 30 percent ofthe population of the DR seeking healthcare in facilities ofprivate for and non for profit institutions.
31 Figure A.1.2. Provider of services during the last time individual reported a need for health care by category of provider for individuals living both in urban and rural areas
23. Rural populations were more likely to use public health care clinics than their urban counterparts, with 67 percent of rural residents (vs. 52 percent of urban residents) using ministerial healthcare facilities when sick. The poorest quintiles of the population (1 and 2) used MOH’s health establishments more often (70 percent of the time) than individuals from the richest quintiles, who used it only 25 percent of the time. Conversely, private sector providers were used substantially only by 15 percent of the population of quintiles 1 and 2 seeking services at public clinics.
Figure A.1.3. Provider of services during the last time individual reported a need for health care by category of provider for individuals living in rural areas
32 Part 11: Background information on implementation of APLl and tripgers for APL2
24. The Board approved a $30.0 million loan for the Health Sector Reform Support Project on June 26, 2003. The loan constitutes the first of the three phases of a $90 million APL to be implemented between 2003 and 2015. The general objectives of the APL approved by the Board in 2003 for the programmatic lending were:
(i)improved mother and child health and reduction ofpoverty;
(ii)implementation of new health sector reform laws (42-01 and 87-02), including strengthening the stewardship role of the MOH; consolidating universal health insurance as the public stewardship organization for the health sector; development of regional health care networks; and health insurance mechanisms.
25. The original Project Development Objectives of the first phase of the APL were to (a) reduce child mortality, improve maternal health, and contribute to the eradication of extreme poverty by protecting the poorest from financial loss due to ill health and disability; and (b) support the implementation ofthe Borrower’s health sector reform legislation. Brief review of PARSSl implementation and results
26. Project preparation for PARSSl started in 2002. While the Bank’s board approved the project in 2003, the loan did not become effective until January 6, 2005, , due to delays in its ratification by Congress. The time lag between the loan’s approval by the Board and its effectiveness spanned an administration change in the Dominican Republic that took place in August 2004 after the presidential elections. In consequence the first phase of the APL suffered substantial implementation delays from the start of the project. In early 2005, the Government of the Dominican Republic (GODR) and the Bank anticipated implementation delays due to discrepancies between the GODR’s approach to reform, emerging priorities and project design. For example, only two out of nine regions established regional management systems for their decentralized service delivery systems and the approach in each region was different.
27. In May 2005 the PCU with the support ofthe Bank’s supervision team conducted a series of analyses, workshops and consultations. As a result stakeholders agreed on a three-year action plan. The ratification of the program in May 2006 formalized a shift in the GODR’s short and mid-term reform priorities. The program aims to accelerate the enrollment of the poor into the SR in prioritized regions and provinces, foster their demand and ensure their access to quality health services and strengthen public sector organizations to comply with their roles and functions as established in the General Health and Social Security Laws.
28. Discussions to restructure the project commenced in March 2005 when GODR and Bank discussed an early draft of the mid-term reform program. Recognizing the importance of accelerating the reform and the project’s role in this process, GODR and Bank agreed on a two- step approach to align the APL with GODR’s strategy to implement the General Health and Social Security Law. In a first step, the first phase ofthe APL would be immediately restructured
33 to align the project’s phase-two Development Objectives, components and activities, and triggers with the GODR’s mid-term reform program and objectives. The themes and indicators for phase two and three then would be revisited, and if necessary changed in parallel to the implementation of phase one. Activities of a Non Lending Technical Assistance and policy notes were used to conduct the second step.
29. After the restructuring, the project focused on: i)strengthening capacity of health sector organizations to provide care within the framework of separation of functions (revenue collection, pooling and purchasing of health services, and delivery of care), and ii) preparing regional health care networks for a progressive process of decentralization. Implementation of PARSS 1 yielded results in overall development of regulations, procedures for regional health networks, and planning and investing in key inputs. These inputs included infrastructure and pharmaceuticals to better respond to the primary health care needs of the poor (enrolled and not enrolled in the SR) in selected regions. Changes in human resource management and policies presented important obstacles due to multiple factors , including complex bureaucratic and centralized decision making; human resource policies outside the control of the health sector; and lack ofalignment of financial incentives to promote behavior changes.
30. The PARSS1 project was redesigned around four components designed to advance key objectives ofthe health sector reform.
31. The first component was aimed at supporting improvement of infrastructure and other inputs for primary health care in selected RHSs. Some of the results of this component include: New regulations for prescription and delivery of medicines; development and dissemination of and training for new pharmaceutical protocol guidelines for primary health care; training of more than 20,000 MOH staff at the regional level on the use of a new single prescription form to standardize prescription of primary health care medicines; and improved accountability and enforcement of new regulations. Investments in infrastructure included 2 1 refurbished primary health care centers with all necessary equipment; several rehabilitated hospitals and other primary health care facilities; and support for new quality standards for diagnostic and laboratory procedures.
32. The second component focused on assisting the GODR to accelerate the decentralization of health services to regional networks. This component supported the MOH in building consensus and developing the new model of decentralized provision of health services based on regional health network; developing corresponding regulatory framework for guidelines; disseminating the new regulations and guidelines; and training personnel in specific areas for decentralization of services. This component produced several outputs that have allowed the MOH to proceed with the decentralization of health care services and the establishment of performance agreements that took place in the first semester of 2009. The regulations developed include management and monitoring functions and responsibilities for staff ofregional networks; a strategic plan for decentralization of RHSs; regulations for the decree for the decentralization of individual health services; drafting performance agreements between MOH and decentralized regional health networks; and guidelines and norms for management of pharmaceuticals at the primary health care level.
34 33. The third component focused on support for accelerating and expanding enrollment to the SR and providing information to insurance beneficiaries on their rights. The results of this component include investments in infrastructure and development of an operational manual; new electronic systems and other logistical support for accelerated documentation of newborn children in hospitals that represent a large share ofdeliveries nationwide; support for a fast track for eligible individuals to obtain legal documents for enrollment in the SR; and education and social communication campaigns for SR beneficiaries to enhance understanding among the poor on accessing regional health networks and obtaining needed health services.
34. The fourth component focused on supporting investments, training, technical assistance and operational costs aimed at increasing the capacity of the MOH and other stakeholders to carry out its legally required role in the health sector reform process. Important results of this .component include the development of a system and standards for accreditation of primary health care units and the corresponding regulations; development of new procedures; operational manuals; procurement guidelines; and public access to information systems to improve transparency and accountability in the management and procurement of goods and contracts conducted by the MOH.
35. Implementation ofPARSSl had two extensions of the closing date and is now scheduled to close by December 30, 2009. PARSSl yielded outputs that laid the groundwork for the decentralization process and introducing performance-based agreements between the central level ofthe MOH and RHSs. Some ofthe key outputs and intermediary results include:
Development of new organizational arrangements and regulations for decentralization ofregional networks and corresponding interventions including a strategic plan for decentralization ofRHSs.
Establishment of new management and monitoring functions and staff responsibilities.
Development of the infrastructure and equipment master plan for primary health care networks to comply with new accreditation standards development.
Consensus building and agreements among key stakeholders on performance agreements between MOHand the RHSs harmonized with NHI contracts for the SR.
Investments in infrastructure, including refurbished primary health care centers and complementary infrastructure and equipment; rehabilitation of secondary level hospitals and other primary health care facilities; development of new quality standards for diagnostic and laboratory procedures.
New mechanisms for standardization of protocols and prescription of medicines.
35 0 New mechanisms for standardization of protocols and prescription of medicines; development and dissemination of and training for new pharmaceutical protocol guidelines for primary health care; training of more than 20,000 MOH staff at the regional level on the use of a new single prescription form to standardize prescription of primary health care medicines; and guidelines and norms for management of pharmaceuticals at the primary health care level.
0 Development of a new electronic system and other logistical support for accelerated documentation of newborn children in hospitals that represent a large share ofdeliveries nationwide.
Support for a fast track for eligible individuals to obtain legal documents for enrollment in the SR.
0 Education and social communication campaigns for SR beneficiaries to enhance understanding among the poor on accessing regional health networks and obtaining needed health services.
36. Original triggers for the second phase ofthe APL did not correspond with GODR’s short and mid-term reform objectives. Amendment for APLl introduced a new set of PDO and APL trigger indicators and very ambitious outcome targets.
Table A1.9. Trigger indicators for PDO
PDO Indicator Baseline Target Status as of 12f30f08 Improve access of the Percent of public 0 percent 50 percent 27 percent poor in prioritized primary health care regions and provinces facilities in PRP (PRP) to high quality that are accredited health seivices included with MOH in the benefits package of the FHI Percent pregnant 8 percent >50 percent A new study similar to the women who one that established the receive antenatal baseline is in the process care services in of being conducted to PRP’s according to measure achievement of national guidelines target Reorganize and RHSs operate an Not designed June 2007: MOH authorities have not strengthen health systems integrated financial System designed. decided on the proposals in prioritized regions to management December 2007: for model a system comply with the roles system that permits System piloted in designed specifically for and functions as entering into one RHS the RHSs was presented established in the service contracts June 2008: to MOH authorities. General Health Law and System Country is prioritizing the Social Security Law implemented in now the introduction of four regions the national system SIGEF
36 PDO Indicator Baseline Target Status as of 12/30/08 Strengthen the financial Percent of the poor 45 percent >70 percent A new survey similar to planning ofthe SR, enrolled in the SR the one that established ensure the effective who know the FHI the baseline is in the enrollment of the poor benefits process of being and improve their conducted to measure knowledge of their rights achievement of target about FHI Strengthen the capacity M&E System May 2007 System M&E System designed. of national health sector of Health designed Implementation of system organizations to comply Sector Reform October 2007 and automatization would with their roles and designed, System populated be carried out by the functions as established implemented January 2008 1St newly established national in the General Health and results performance office of M&E. Law and the Social disseminated report Security Law disseminated
37 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
1. In the area of combating the HIV/AIDS the Bank completed a project to support the prevention and control of the epidemic on July 31" 2008. The ICR of this project has been completed and no IEG rating is currently available yet. The Global Fund has an active grant for HIVIAIDS and Tuberculosis of about US$90 million to be disbursed over the next five years.
Table A2.1: Related Projects supported by the World Bank:
Latest Supervision Sector Issue Project (ISR Rating) (Bank-financed Projects only)
Implementation Development Bank-financed Progress (IP) Objectives (DO)
CCT program to improve Social Sectors Mu S coverage, targeting and Investment Program effectiveness of the DR's social Loan 748 1-DO protection programs, through the Approval Date: provision of legal identity 8/2/2007 documents to the pow, by Closing Date: institutional strengthening of 6l30120012 targeting mechanisms, and increased monitoring and evaluation of social programs.
Early Childhood Development Early Childhood MS S and Education project to increase Education Project availability ofhigh quality Loan 7 144-DO education services for young Approval Date: children ages 0 to 5 by targeted 9/5/2002 early childhood interventions with Closing Date: focusing on the poor. 1213 112009
2. The Bank manages, on behalf of the Global Alliance for Improved Nutrition (GAIN), a food fortification project originally prepared by a public-private partnership coordinated by the MOH with the support of the Pan American Health Organization (PAHO) and approved by GAIN in 2005. The US$l.8 million grant is one of the projects managed by the Bank around the world. as part of a special arrangement with the Gates Foundation and USAID and was not presented for Board approval. Therefore this project does not have ISR ratings. The GAIN Project is executed by the DDEI of the MOH and the project closed on June 30,2009.
38 Annex 3: Results Framework and Monitoring DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
Table A.3.1.Results Framework
PDO Project Outcome Indicators Use of Project Outcome Information
(i)Improve the capacity of 1. Percentage of pregnant women Monitor progress towards RHSs to timely deliver priority from target population with risk achievement of PDOs quality services known to evaluation completed before the improve the health of mothers, 15th week of pregnancy. children and people with chronic conditions by public providers at 2. Percentage of children from the first level of care; target population under 15 months with vaccination scheme completed according to national protocol
3. Percentage of individuals from target population diagnosed with hypertension under treatment according to national protocol.
(ii)Improve health system 4. A Baseline on risk factors and Monitor progress towards responsiveness, defined here as burden of disease has been achievement of PDOs focusing the institutional capacity of conducted, disseminated and on health system responsiveness public sector health organizations used by corresponding MOH and public health interventions to conduct strategic purchasing units to develop annual including strengthening of of health care services and goods, operational plans for response to public health and to respond to public health strengthening public health emergencies. emergencies. interventions with an emphasis on health promotion and prevention.
5. At least one region is Monitoring progress towards producing reports every fourth enhanced strategic purchasing of months on the number of poor health care services (including individuals who were prescribed services for those covered by the a medicine (from the essential health insurance for the poor - medicines list) at the first level of Subsidized regime) and goods care and actually received (medicines and medical inputs medication within 48 hours at the procured and distributed by the point of consultation service or in national agency. a facility of PROMESE/CAL,.
39 Intermediate Outcomes Intermediate Outcome Use of Intermediate Indicators Outcome Monitoring Component 1 *Percentage of clinical files that Monitoring appropriate use of have all the information complete new clinical file instruments for the audit to verify results introduced along with new reported by participating RHS13 protocols for the first level of care Component 2 * The Health Management Monitor progress in enforcement Information System of the MOH of new planning and M&I includes a module for collecting instruments including protocols and managing information and clinical files instruments needed for monitoring results at the first level of care with data available for RHSs, MOHcentral level, and the NHI.
* Risk factors and burden of disease surveys designed, implemented and results disseminated. Component 3 * Percentage of health centers Monitor progress and from participating RHSs that lack enforcement of new agreement a PROMESEKAL pharmacy that between the MOH, NHI and receive on a regular basis PROMESEKAL to provide medicines procured and essential medicines to the first distributed by PROMESEKAL level ofcare.
Arrangements for results monitoring
1. A new unit in charge of national coordination of monitoring, information and evaluation systems which is part of DDEI at the MOH would be in charge of setting up the information system required for results adjusted capitations. Authorities and officers at the central level ofthe MOH would work in close coordination with NHI and CERSS to ensure that data collection for baselines and reports is conducted in a timely manner. The national M&E office would upgrade the national health management information system with needed interfaces and automatization to monitor progress toward achievement of performance agreements, both the overall agreement signed by the MOHand the specific agreement for implementation of Component 1.
2. Quantitative data would be collected by first level of care units under the leadership of the RHSs management teams (Direcciones Regionales de Salud) and with technical assistance of the MOHat the central level. The collection ofdata would not be carried out by a parallel system but will use existing systems. Types of data collection would include clinical management, delivery of care quality indicators, and eventually patient satisfaction and social audits (which component 2 will help finance).
13 Complete also means that the information is readable.
40 3. In the past year the MOH and the NHI have established coordination mechanisms to harmonize various instruments including the new performance agreements that the MOH signed with RHS VI and VIII. The objective is to exploit synergies and ensure that both the MOHperformance agreements and the contract of NHI with the RHSs have similar information requirements. The data collection mechanisms were developed with the objective of meeting shared information needs for the MOH in the management ofthe decentralization process and of NHI for SR regime management.
4. Data for results monitoring would be completed with information from the SR through the participation ofthe NHI. The NHI would collect the information for the population to receive health services at the first level of care with financing both from the project and from the SR. The PCU at CERSS would provide coordination and consolidate information to ensure that all the PDO and intermediate outcome indicators and other related information is submitted to the Bank in a timely fashion.
5. In the case of the indicators for which the baseline would be completed in year 1 of the project, once the baseline is obtained the targets would be reviewed to ensure that their achievement contributes to the project objectives, but also that they are realistic.
Trigger Indicators
6. Triggers for the third phase of the APL are discussed in this section. As per discussions with the government during project preparation. The next phase would also focus on results- based financing.
Table A.3.2. Triggers for phase 3 of DO APL Health Sector Reform
Trigger Indicator Evidence of results-adjusted capitations 1, Two participating RHSs have achieved targets mechanisms in full implementation in at least 70 percent of the MRIs
Evidence of financial management enhanced 2. Two participating RHSs use SIGEF (new accountability on results-based financing country financial management system) for financial management of capitation funds financed by the project 3. Annual summaries of SIGEF and of MRIs by health areas and HRS are published by the new Office of Public Access to Information of the MOH
7. The new health policy notes prepared this year conclude that one of the priorities of the health sector is to improve quality of spending and expand social protection in health. Both objectives can be advanced by expanding the use ofresults-based financing through expansion of the SR and through the financing of the MOH (switching from historical budgets to results- adjusted capitated transfers). The readiness to appraise the next phase would be closely linked to the successful introduction ofthe new capitation system in regions VI and VIII.
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I Annex 4: Detailed Project Description DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
Component 1: Introducing results-based financing mechanism for the first level of care in Regional Health Services (US$21.49 million - Bank financing UW14.52 million)
1. The objective of this component is to introduce improved finance mechanisms in the two main sources of public funding for the first level of care: the budget of the MOH for the RHSs and the funds from the SR transferred by the NHI to the RHSs as part of a formal contract. Results-based mechanisms would foster accountability and seek to align incentives between these two sources offunding for health care providers to improve quality ofhealth care.
2. This component would use results-adjusted capitations for allocation of resources to the first level of care for the majority of poor individuals in two Regional Health Services - RHSs (regions VI and VIII)I4. The project would expand its impact on the poor in the participating regions by an agreement with the NHI to introduce same capitation mechanism for those individuals enrolled in SR. This way the incentives that the public sector regional providers receive from the MOHand the NHI would be aligned to improve better quality in the delivery of health care services to all poor individuals (those enrolled in the SR and those who have are not Yet).
3. Currently RHSs receive already capitations for delivery of services at the first level of care. Full amount of capitations are transferred monthly from NHI to the RHSs for the total number of individuals enrolled in the SR that reside in the corresponding health region. As part of the project the NHI in coordination with the MOH and the PCU at CERSS would introduce transfers in two tranches of results-adjusted capitations. The rules for receiving transfers from NHI for the first level of care services for the SR enrollees would be the same as those described here for receiving funds from the project (component 1) except the formal assignment (described below) since individuals would already be formally covered and enrolled in the SR.
4. Therefore, the target population of Component 1 would be composed by all individuals from households categorized as poor by the proxy means test (known by its acronym in Spanish as SIUBEN) living in the participating regions. Services rendered by the RHS to those individuals enrolled in the SR would be financed by the capitations transferred by the NHI and for those not enrolled in the SR would be financed by project resources. The total amount ofthe
14 These regions were selected using several criteria that included, progress in the preparation for signing performance agreements with the MOH and decentralization process, institutional capacity in managerial and technical aspects of delivering health care, size of the population categorized as poor by SIUBEN, size of the population covered by the SR. If there are savings during project implementation expansion of project to the population of a third region could be explored after the mid-term review.
44 target p~pulation'~is about 825,000 individuals of which about 271,000 are enrolled in the SR and 554,000 are not (see Table 1).
Table A.4.1. Individuals to benefit from introducing results-adjusted capitations for the first level of care
No. of individuals Region Region from poor Total VI VI11 households
Total No. of Poor 459,295 365,669 824,964 Enrolled in SR 148,525 122,525 27 1,050 Not enrolled 3 10,770 243,144 553,914
5. To request capitation transfers from project funds, RHSs would have to identify and formally assign eligible individuals to the corresponding first level of care unit. Formal assignment would start with RHSs collecting data of eligible individuals in personal interviews and filling out the person's information in the Family Health File - FHF (Ficha Familiar de Salud), which is the instrument selected by the MOH for collecting key data on individuals health status and other conditions that affect health outcomes. The FHF would be updated at least twice a year.
6. To exploit synergies with arrangements and tools used for other targeted safety net interventions for the poor, the process of identification of the eligible population (individuals from households categorized as poor) would be the same as that used by the NHI for verification of eligibility ofthe SR. The instrument to be used for identifying individuals that belong to poor households not enrolled in the SR would the proxy means test (known by its acronym in Spanish as SIUBEN) also used for the existing Conditional Cash Transfer program.
7. In order to ensure sustainability ofresults-based financing mechanisms introduced by this project, the arrangements and services prioritized would be based on those already existing for the financing and delivery of health care to the poorest groups of the population through the Subsidized Regime (SR). Therefore, the prioritized services to monitor results would be based on those selected by NHI for the SR for the first level ofcare (see table 1 in main text ofthis Project Appraisal Document - PAD). The NHI already has selected package of ambulatory services used as the basis for prospectively allocating resources on a capitated basis to the MOH's regional health care providers. Furthermore, the NHI is harmonizing its contracts with RHSs to exploit synergies with the new performance-based agreements developed by the MOHto be used in the process of decentralization ofthe RHSs.
*'The precise number of individuals whose services would be financed with results-adjusted capitations may vary along the implementation ofthe project due to speed on the capacity of RHSs to identify eligible individuals with proper documentation and others that may be already covered by the contributory regime. Nevertheless there are positive externalities that may results from improved quality of care in the units at the first level of care that benefit all the population in the health centers catchment area such as improved organization of the services, better access to key inputs, etc.
45 8. The capitation payment would represent the average unit cost of ensuring timely access to quality basic primary health care services by the population. This component would use the NHI estimate of the average per capita cost of providing basic FHI primary health care benefits to those enrolled in the SR in order to calculate the periodic disbursements to be made for Component 1. This component would finance capitated allocations of funds to RHSs on a declining basis. The established amount by the NHI expressed in dollars is about US$27 dollars (at an exchange rate ofRD$36).
9. The disbursement procedures of the Bank to the PCU for Component 1 are described in detailed in Annexes 6 and 7. Here we described how the results-adjusted capitations would be paid from the PCU to the RHSs.
10. The results-adjusted capitations are transferred to the RHSs in two parts. One part is a fixed amount and represents 50 percent of the capita and the other is a variable amount based on results achieved and can be a maximum of 50 percent of the capita. The fixed part of the capita would be transferred to the RHSs on a monthly basis. The variable part of the capita would be transferred to the RHSs every four months and the final amount would be the result of prorating the remaining fifty percent for the requested period (four months) according to the information on the achievement of targets of a set of indicators.
11. The fixed part is paid against the roster of individuals formally assigned. Formal assignment in this project means:
The RHSs have identified a potential eligible individual (by poverty status of household later to be confirmed by a proxy means test). Individual was interviewed and personal data was filled out in the respective Family Health File (FHF) The RHSs sends information and obtains confirmation of poverty status of the individual by the proxy means test (SIUBEN) Information on the individual was sent to NHI for verification by the same external audit process that individuals of SR go through (UNIPAGO) With the results of verification by UNIPAGO, the NHI proceeds to include the individual in the roster of formally assigned individuals in the corresponding region for the monthly invoice sent to the PCU
12. Every month the regions would send the information on formally assigned population; the NHI would verify completeness of information, check data for errors and duplications and calculate the amounts to be transferred to the RHS. The NHI would then produce an invoice that would be sent to the PCU. Upon receipt of the invoice of the NHI the PCU would proceed to transfer the capitation.
13. The second part represents a variable amount that is calculated based on the achievement of annual targets set by the MOH for ten indicators for monitoring results of the prioritized interventions. The list of ten Results Monitoring Indicators - MRIs are included in Table A6.1 in Annex 6.
46 14. The MOH would set annual targets for each of the ten MRIs. However to ensure a progressive achievement oftargets, MOHwill also set targets to be met by the RHS's every four months. Transfers of the variable part would be made against achievement ofthe targets for each ofthe four-month periods The RHSs can receive a maximum of 50 percent corresponding to the maximum ofthe variable amount of the capita. If a RHS achieves all the targets set by the MOH for the four month period then receives 50 percent (the maximum ofthe variable part) multiplied by the total number of capitations corresponding to the formally assigned individuals.
15. Every four months, the RHSs would send information on the achievement of targets of the MRIs to the NHI. The NHI would verify completeness of information, calculate the amounts to be transfehed and produce an invoice that would be sent to the PCU. The PCU would then transfer the variable part ofthe capitations.
Special Provisions for a period of grace without second tranche adjustments
16. The Bank and the GODR would agree on a grace period to last no longer than 8 months after the first request for disbursements for component 1, in order to allow for adjustment of existing data collection systems and flow of information mechanisms and to conclude the process ofcontracting firms for external concurrent technical and financial audits for Component 1.
17. During this grace period, the Bank would advance 100 percent ofthe total amount of the estimated capitation payment for the population to be formally assigned during this period. The total amount to be disbursed would be calculated based on formal assignment process estimates that would be produced by the MOH, NHI and PCU.
18. Although during the period of grace there would be no adjustments to the capitated amounts to be transferred to the regions, each region would nevertheless start to collect information on results and send reports to the NHI.
External audits including Social Audit
19. External firms would be contracted to conduct concurrent technical and financial audits specifically for Component 1 (besides the normal financial audits of the whole project). The technical medical audit would certify the accuracy of the list of identified eligible individuals through the FHF; verify that services were indeed rendered to the eligible individuals according to the agreed quality standards, and that reported results are verifiable and accurate. The financial audit will confirm that resources were indeed used to ensure access to the prioritized services, and that this was done following the Bank's guidelines and the stipulations of the Operational Manual.
20. A social audit would be developed, tested and implemented by the MOH in the participating RHSs and would be incorporated as another accountability tool during project implementation.
47 Component 2: Strengthening the capacity of the MOH to improve and monitor health system responsiveness while fostering transparency and accountability (US%lO.OO million - Bank financing US$7.00 million)
21. The objectives of this component are to: (i)strengthen MOH’s stewardship capacity to improve transparency and accountability in the delivery ofpublic health services and goods with an emphasis on primary health care services; conduct strategic planning; (ii)support MOH efforts to strengthen existing information systems and develop new M&I instruments needed for the adequate functioning of results-adjusted capitations that can provide timely information on quality of delivery of health care services; (iii)contribute to finance MOH interventions and the coordination of activities for the health system to provide a swifter and better response to public health emergencies.
Subcomponent 2.1. Strengthening the strategic planning and evaluation capacity of the MOH to improve its stewardship to foster transparency and accountability with an emphasis on improving health system responsiveness (US$7.85 million - Bank financing US$5.49 million)
22. This subcomponent’s main objective is strengthening the MOH’s institutional capacity to conduct strategic analysis, planning and implementation of sectoral interventions in order to exercise its stewardship over the delivery of health care services and public health interventions at the national and regional level. This subcomponent would finance goods, technical assistance, training, non consulting services and operational costs.
23. It would finance activities for refining policies and information collection mechanisms to enhance results and accountability at the primary health care level (including inpatient care). Other complementary activities include strengthening intervention and dissemination efforts of the Office of Access to Public Information at the MOH, and preparing the second ten-year health sector plan.
24. Other activities supported by this subcomponent include monitoring progress and contributing to the implementation and monitoring of new biomedical waste management regulations, conducting key studies and household surveys that would provide information to refine new modules for the next Demographic and Health Survey, including risk factors, micronutrient analysis, out-of-pocket expenditures with detailed information on expenditures for specific medicines, etc.
25. The MOH has requested support to ensure that key public health functions in the Dominican Republic are not weakened during the process of separation of functions and decentralization. MOH organizational changes to be supported by this project would ensure continuity and improve controls of public health interventions during the process of decentralization. These changes are related to the MOH enforcement role on regulations and public health intervention current units (salud colectiva). Activities would seek to ensure continuity and strengthen health promotion and prevention interventions, public health emergency preparedness, and strengthen the epidemiologic surveillance system.
48 26. This subcomponent would seek to strengthen the unit in charge of institutional strategic development at the MOH(Direccidn de Desarrollo Estratkgico Institucional- DDEI) and would finance incremental operational costs for the PIU at the MOH.
Subcomponent 2.2. Strengthening monitoring, information and evaluation systems for results- basedfinancing (US$2.15 million - Bank financing US$1.51 million)
27. This subcomponent would focus on supporting the newly created office ofnational M&E systems (as a unit within the DDEI) to improve existing instruments of the Health Management Monitoring and Information System of the MOH. In order to strengthen the MOH’s capacity to manage multiple and sometimes incompatible modules ofthe national health information system, a National Office for M&E was established as a key unit within the Directorate of Strategic Institutional Strengthening. This office would provide leadership and technical assistance for consolidating multiple efforts that are currently dispersed across the MOH.
28. This subcomponent would contribute to financing the M&I system that would provide data for the adequate functioning of results-adjusted capitations. To provide timely and sufficient data for the flow of funds of component 1 this subcomponent would develop a specific module for all key stakeholders to have real-time access to information on formal assignments and delivery of care by the first level of care in the RHSs (Results-Adjusted Capitations Module - RACM). Activities financed for this objective would be coordinated closely with the NHI and the PCU.
29. This subcomponent would also finance activities oriented to incorporate into the results- adjusted capitations indicators related to patient satisfaction and social audits. Although at the launch of component 1 the MRIs and external audits do not include patient satisfaction and social audits, the MOH is planning to develop new interventions to incorporate key inputs of patiefits and their families and community leaders as part of the results considered for transferring capitations.
30. Activities to be financed include the development ofa module on information for results- adjusted capitations and some key analytical work activities to monitor implementation progress ofproject-supported interventions to ensure better access to quality medicines at the first level of care.
Component 3: Improving the quality of public spending on health care goods and services (US$12.57 million - Bank financing US$8.80 million)
31. The objective of this component would be to strengthen coordination and institutional capacity of public sector organizations for more sustainable financing, planning and purchasing health services and other key inputs needed to improve the quality of health care with an emphasis on primary health care. This component would contribute to improve the institutional capacity to consolidate the provisions for social protection in health stemming from the Health Sector Reform Laws with an emphasis on results-based financing and allocation of resources for strategic purchasing via prospective payments for primary health care services.
49 32. This component would include three subcomponents.
Subcomponent 3.1. Strengthening public sector planning, procurement and distribution of medicines and medical inputs (US$4.70 million - Bank financing US$3.29 million)
33, The first subcomponent would finance investments in software, equipment, technical assistance, non-consulting services and training to improve planning for more efficient acquisition and distribution of essential medicines and other inputs acquired by PROMESEKAL.
34. Currently the distribution network of PROMESEKAL does not reach all the units of the first level of care. This subcomponent would finance activities to accelerate the strengthening of the supply chain through distribution by PROMESEKAL to these health centers.
35. PROMESEKAL is improving the M&I systems for stock control. This subcomponent would contribute to develop new instruments to link information on stock control with distribution to patients ofthe first level of care of the RHSs with an emphasis on the poor (both enrolled and not enrolled in the SR).
36. Other lending instruments being prepared have initiated a dialogue with multiple actors from the health sector, the MOEPD and MOH for the development ofa medium-term action plan to accelerate access by the poor to quality medicines procured and distributed by PROMESE/CAL. As a result a new inter-institutional agreement between MODPD, MOF, MOH, NHI and PROMESEKAL is being prepared. This subcomponent would provide the resources needed to implement such a mid-term action plan including support for international bids and automatization of M&I systems to provide information on actual access by the poor to medicines from the essential medicines program.
Subcomponent 3.2. Strengthening institutional capacity to expand and enhance social protection in health for the poor (US$3.76 million - Bank financing US$2.63 million)
37. This subcomponent would finance technical assistance, non-consulting services, investments, non-consulting services, and training costs to strengthen institutional capacity of NHI and other key SR stakeholders (including the Ministry of Economy, Planning and Development - MOEPD and the Ministry ofFinances - MOF) to consolidate and expand the SR.
38. This component would finance activities needed to improve provider payments systems for the Family Health Insurance (FHI), institutionalize results-based financing mechanisms, improve accountability and transparency in health financing, and overall. This component would also support activities to expand the SR.
50 Subcomponent 3.3. Overall project coordination and operational costs for implementation of components 1 and 3 (US$4.11 million - Bank financing US$2.87 million)
39. Finally the third subcomponent would finance operational costs for the PCU for the overall coordination of the project and implementation of components 1 and 3 including the concurrent external audits. This component would also finance incremental operational costs that NHI may incur for implementation of this project in particular for the adequate functioning of results-adjusted capitations including the verification costs by UNIPAGO.
40. Component 4: Support for response to public health emergencies (US%O.lO million - Bank financing US $0.10 million)
41. This component would be implemented by the PIU at DDEI (MOH). The objective of this component is to contribute to finance MOH interventions and the coordination of activities for the health system to provide a swifter and better response to public health emergencies. The fourth component was included as part of the lessons learned and within the framework of the global economic crisis, its negative effects on fiscal resources, and the new threat to the public health in the Dominican Republic posed by the influenza virus AHlNl ,
42. Components of this type have been introduced in other health projects recently prepared by the Bank and have shown positive results in terms of more rapid access to funds to permit more effective national coordination of the response to the influenza virus. Furthermore this component was developed after taking stock of past emergencies where Bank-financed health projects lacked such specific provisions. In those emergencies, the need for amendments and reallocation of funds during the peak of the crisis sometimes delayed access to funds, which at times were not available until the state ofemergency had diminished.
43. This component would finance activities to ensure a swift and efficient response by the health system to major public health emergencies. This component would finance coordination of the response of the health sector to different types of threats to public health, including the current pandemic ofthe influenza virus AHlNl . If a public health emergency occurs funds from this component could be used or funds reallocated to this component for a swift access to needed resources.
44. Funds from this component can be disbursed when a public health emergency has been declared by the Minister of Health consistent with the operational definition as described in the Operational Manual. The public health emergency could be local, provincial, regional or national, with its scope defined by the Minister of Health. The operational definition of public health emergency would be described in the Operational Manual consistent with the Dominican Republic’s Risk Management Law (1 47-02) and the International Health Regulation, along with the procedures to request a disbursement offunds from component 2.3.
45. To initiate the disbursement for this component a formal request from the Minister of Health would be sent to the Bank summarizing the nature of the public health emergency along with a no objection request and procurement plan for activities to be carried out. Activities would be implemented by the PIU at the MOH.
51 46. This component would finance consulting and non-consulting services, technical assistance and goods to support the health sector capacity to respond rapidly to public health emergencies. The investments and activities to be financed include medicines, vaccines, laboratory equipment and reagents, transportation equipment for biological samples and individuals, protective equipment for health care personnel and other medical supplies. Other important activities that this component might finance include the development and dissemination of materials for information and educational campaigns; training for emergency preparedness; and incremental operational costs related to local or international public health emergencies.
52 cm m sc V a, m *') v, 21 a In.. !i! 4 Table A5.2. Allocation of Loan Proceeds (US$ Million)
Suggested Allocation of Loan Proceeds YOof Total Project Component Loan Amount cost Component 1: Introducing results-based mechanism for the first level of care in public sector regional health care networks 14.52 47.62% Component 2: Strengthening the capacity of the MOH to improve and monitor health svstem resDonsiveness 7.00 22.95% Component 3 : Improving the quality of public spending on health care goods and services 8.80 28.85% Component 4: Support for response to public health emergencies. 0.10 0.33% Front- end Fee I 0.08 I 0.00%
Total 30.50 100.00%
54 Annex 6: Implementation Arrangements DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
A. Partnership Arrangements
1. The proposed project would be implemented in close coordination with the Government, IADB, and World Bank's teams responsible for the social protection projects, to promote greater synchronization ofactions. The UGAF would be the coordinating entity among the three groups. Furthermore, the Bank would coordinate closely with the IADB to ensure a smooth transition in the delivery of services provided under the IADB-financed health project PMTISS.
B. Institutional and Implementation Arrangements
2. Consistent with actions and agreements reached with the Minister of Health during the amendment of PARSS1, the implementation arrangements of this new phase of the APL would designate DDEI as an implementation unit directly responsible for execution of activities related to the MOH.
3. Therefore, there would be two implementation units, one of which will be the PCU. Component 2 would be executed by DDEI and components 1 and 3 by the PCU at CERSS.
4. An Operational Manual was reviewed and approved by the Bank. The Manual covers in sufficient detail the institutional and implementation arrangements for the overall implementation of the project, including disbursement mechanisms, flow of funds, information systems, and performance agreements and results indicators for component 1.
Oversight of overall project implementation and of day-to-day results-basedJinance activities
5. A Project Oversight Committee (Comite' Directivo de Proyecto) would be established with the participation of the Ministers of Health and Economy, Planning and Development, and the Directors of the National Health Insurance, PROMESEICAL and CERSS. The committee would oversee overall project implementation and provide stewardship on the implementation of the project, ratify project priorities and decisions, and endorse annual MRI targets.
6. A Results Based Financing Committee - RBFC (Comite' de Financiamiento por Resultados) would be established and would consist ofone representative appointed by each one the following institutions: Ministries of Health and Economy, Planning and Development; the Directors ofthe NHI and ofCERSS. This committee would oversee the day-to-day operations of results based financing in the selected regions as well as provide technical advice and inter- institutional operational coordination needed for the appropriate implementation of component 1 and related activities ofcomponents 2 and 3,
55
7. The PCU would provide all the operational support needed by the RBFC to ensure adequate functioning. The PCU would also coordinate project implementation and administrative activities, such as contracting consultants and works, carrying out procurement processes, and overseeing audits.
Arrangements and flow of funds for component the use of results adjusted capitations as a disbursement mechanism
8. The arrangements for the flow of funds for component 1 are based upon the roles and functions defined by the health sector reform and other laws and regulations and governmental initiatives for introducing results-based mechanisms in public budgets. Here are some of the key roles and functions relevant to the implementation ofthis project for the three main public sector institutions regarding delivery ofcare for the poor:
The Ministry of Health would provide stewardship over the health sector and seek improvement in health system responsiveness to improve health outcomes (for all groups ofthe population including the poor).
The NHI would manage risk pools and collect and process information for strategic purchasing of health services for the poor and to ensure compliance ofproviders on agreed standards for the delivery ofcare.
The Ministry of Economy, Planning and Development would coordinate the process of results based budgeting and overall improvements of accountability and transparency of public funds for the delivery of public services including health.
9. The MOH would be in charge of the establishment of formal annual performance agreements with each of participating RHSs, in coordination with the NHI. The Ministry of Health would, in coordination with the NHI, establish annual and monthly targets for adscription16 and Results Monitoring Indicators (RMIs) to be achieved by each of the participating RHS.
10. The MOH would be responsible for refining and developing interventions and activities for an information system that can provide data for the adequate flow of funds of component 1. Data for the information system would be collected at the regional level; however the information system should permit the consolidated information to be accessible simultaneously by the NHI, the MOHand the PCU at CERSS.
16 Formal assignment refers to an individual with complete information in the family health file.
57 11. The following table contains the agreed results monitoring indicators to be used.
Table A6.1: Results Monitoring Indicators (RMIs)
12. The NHI would receive and process all the infomation on individuals assigned and achievement of the MRIs and of calculating the amounts to be transferred to each of the health regions. The calculation of capitated transfers would be made by the NHI both for the capitations financed by the project and for the capitations financed by the NHI for the SR.
13. The NHI would then submit the order to the PCU at CERSS which with this transfer order would proceed to transfer the indicated amounts to each the participating RHSs for the capitations financed by the loan.
14. The NHI would also pay the SRHs for individuals covered by the SR in the participating regions using the same results adjustment capitation mechanisms. The RBFC would ensure that transfer made by the PCU at CERSS and by the NHI to the regions is made in a coordinated and timely fashion to better align incentives to the RHSs.
15. The NHI would also be in charge of coordinating the use and dissemination of the technical results of external audits among the members of the RI3FC. The NHI would also be in charge of calculating the amounts that need to be transferred to each ofthe health regions.
16. The PCU at CERSS would transfer the funds according to the transfer order received from the NHI. The PCU would also ensure the timely and adequate flow of information from and to the Bank.
58 17. The Regional Management Units (Direcciones Regionales de Salud) would be responsible for ensuring the quality and timeliness of access to the health services at the first level of care services in their jurisdictions as agreed upon in the annual performance agreements. At the regional level, the RHSs would be accountable for the implementation, monitoring and management of information and the timely provision of technical, administrative, and financial information to NHI and to the PCU at CERSS.
18. The RHSs would also be responsible for: (i)regularly updating the database of assigned population at the regional level; (ii)ensuring an effective organization ofthe health care network and adequate and timely supply of inputs to achieve targets; (iii)the administrative and financial management of project’s transferred funds to ensure an improved delivery of services at the first level of care; and (iv) ensuring timeliness and quality ofthe flow of information from and to the MOH, the NHI, and the PCU at CERSS.
Flow of funds
19. Component 1 would use capitations as a payment mechanism. Disbursements from the Bank to the designated account of the PCU would be made on the basis of capitations for the total number of individuals formally assigned and targets achieved by each of the participating RHSs.
20. Loan proceeds would be transferred from the Capitation Transfer Fund Account every four months against the certified and validated list of the total enrolled individuals formally assigned in first level ofcare units ofeach of the participating RHSs. Certification and validation of the list of beneficiaries would be provided by the same mechanisms used for SR individuals which includes the SIUBEN and the external audit firm (UNIPAGO) used for the certification of all the beneficiaries ofthe SR.
2 1. During an initial grace period of eight months (starting at the date of the first request of disbursement for Component l),disbursements from the Bank to the MOH would be made using the total target population to be assigned during the first year. After the initial grace period, disbursement amounts would be reconciled against a certified list of beneficiaries provided by the MOHbefore a third disbursement for this component takes place.
22. Transfers of capitations from the PCU to each ofthe participating RHSs would be made in two tranches each tranche would represent 50 percent ofthe total capitation. The first tranche would be made on a monthly basis. This tranche is made on the basis of the verification by NHI of the submission of the list of formally assigned individuals from the RHSs to the NHI and certified by the external audit firm (UNIPAGO).
23. The details of transfer mechanisms from the central level of MOH to the RHSs, and mechanisms to select and modify the list of indicators are spelled out in detail in the Operational Manual.
59 Annex 7: Financial Management and Disbursement Arrangements DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
1. This section summarizes the results of the financial management (FM) capacity assessment of the ability of the existing PCU at the Executive Commission for Health Sector Reform (Comisidn Ejecutiva para la Reforma del Sector Salud -CERSS) and the Directorate for Strategic and Institutional Development (DDEI) at the MOH to act as implementing and fiduciary entities of a US$30.5 million loan. Both entities are currently implementing Bank projects. The PCU at CERSS is implementing a US$30.0 million loan to be completed on Dec. 31, 2009 (Id. P076802, Loan No. IBRD 71850), and DDEI is implementing a US$1.8 million TF grant completed on June 30, 2009 (Id. P090061, Loan TF 54021), still in its disbursement grace period.
2. The objective of this assessment is to determine whether PCU and DDEI have acceptable FM arrangements including the accounting, and reporting systems, auditing, and internal controls for Bank FM purposes. The specific activities and circumstances of the project were also factored in to ensure that these entities’ FM systems are also commensurate with the needs and the unique nature ofthe project.
3. The assessment conclusion is that both entities have acceptable FM arrangements place for APL-I and TF, and meet the minimum FM requirements for this project. The control framework is adequate at CERSS and needs to be strengthened at DDEI. Health regions VI and VI11 need to strengthen their FM capacity, which currently is highly centralized. Controls in place for existing Bank projects would be combined with the concurrent audits to oversee capitation payments and use of loan proceeds at the provider level, including enrollment and enrollment reporting practices. The specific features required for this Project, especially activities under component I,responsible for transferring capitation payments, and its concurrent audits would be detailed in the OM.
Background
4. Project description is included in Annex 4. The project, which has capitation as one ofits main features, would be implemented in 2 health regions, VI (which includes the provinces of Azua, San Juan, and Elias Piiia), and VI11 (which includes the provinces of Sanchez Ramirez, Bonao, and La Vega). Capitation scheme is not new to the country, which is gradually expanding. To ensure the Project will be implemented smoothly, an inter-institutional agreement will be signed by all participating entities. Although Dominican Republic scored low on financial management outputs in fiscal discipline, transparency and supporting efficiency in operations, in 2005, in 2006-2007 a new legal framework was defined and is being implemented. Among other objectives, the new legal framework aimed at improving financial management performance, including budget and procurement, and strengthening institutional capacity at the national and sub-national levels. There are numerous obstacles to implementing the many new laws, although there are visible improvements. Inherent Risk at the Country Level below provides more background information.
60 Strengths
5. Both units at CERSS and DDEI are currently implementing Bank Projects; their FMunits are staffed with qualified and experienced professionals, already familiar with Bank’s guidelines. The audit reports for FY08 issued unqualified (clean) opinions on: financial statements; internal control structures; and the Designated Accounts. Although the DDEI was implementing the TF at an extremely low pace, and the opinion on the sources and uses of funds was qualified with exception, during the past six months it has shown notable improvements, not only in its disbursement rate, but in its administrative procedures, internal controls, and FM reporting capabilities. Health regions VI and VI11 have engaged civil society organizations, leaders of entities at their regions (academia, church and citizens) and they participate as members of the Regional Health Committees. Participants actively oversee the quality and efficiency of the provision of health services in their regions. There is already a unified database in place, Sistema Unico de BeneJciarios (SIUBEN), and an independent entity, National Health Insurance - NHI (Seguro Nacional de Salud - SENASA) would verify and certify the eligibility of individuals to be recognized for capitation, prior to disbursements.
Risk Assessment and Mitigation
6. Overall FM risk at entry is Substantial, downgraded to Moderate once risk mitigating measures take place. The following matrix summarizes the FM risk assessment:
Table A.7.1 Financial Management Risk Assessment
I Risk After Mitigation Risk Mitigation Measures Condition of Risk Risk Rating Incorporated into Project Negotiation, Design Board or Effectiveness Inherent Risk Country level: Substantial Comments below this matrix. Moderate Entity level: Project units have previous Substantial Capacity building and technical Moderate experience implementing WB-funded assistance to increase Effectiveness & projects, however, they have no effectiveness at the fiduciary and Implementation experience with capitation schemes, nor executing units are incorporated projects at the regional level. Weak FM into project design. The OM at regional level. would cover the unique features of this project.
Project level: The Project needs inter- High Coordination will be defined in Substantial institutional coordination (MOH, inter-institutional agreement. Effectivsness & CERSS, NHI, and SIUBEN) and Capitation payments would be Implementation decentralized operations in a centralized verified by NHI for eligibility and sector. by concurrent audits.
Overall Inherent Risk Substantial Moderate
61 I Risk After Mitigation Risk Mitigation Measures Condition of Risk Risk Rating Incorporated into Project Negotiation, Design Board or Effectiveness Control Risk 1. Budgeting: Budgets are currently substantial The automated system UEPEX Moderate prepared, although both entities need to has a budgeting module. It would Effectiveness & implement SIGEF/UEPEX. Regional be implemented at both units and Implementation units use reports in Excel. their FM staff would be trained. The regional health centers would implement SIGEF. 2. Funds Flow: The government has substantial FM would continue to monitor Moderate substantially improved the flow of funds GODR performance on flow of Negotiation cycle from the designated accounts to the funds. The SOE format for Effectiveness & projects’ operating accounts (from 45 capitation payments would be Implementation down to 7 days). Need for a customized developed. Payments would be SOE format. processed on a verified list of eligible individuals. 3. Staffing: Although staff at PCU and substantial FM staff at the PCU would be Moderate DDEI are qualified and have experience trained on UEPEX, the new Effectiveness & implementing WB-financed projects, automated FM system. Training Implementation they do not possess experience would also be provided on Bank’s commensurate with the scope ofthis procedures for FM and project, neither in capitation schemes, nor Disbursement arrangements. regional FM responsibilities. 4. Accounting Policy & Procedures: substantial The Operational Manual defines a Moderate PCU and DDEI have manuals specifying consistent set of accounting Effectiveness accounting policies and procedures. The policies and procedures. It would OM for this Project is a strategic element be complemented by the manual currently being defined. defined for UEPEX. 5. Internal Audit: The Comptroller substantial The Operational Manual includes Moderate General has appointed internal auditors at a section on internal audit Effectiveness & the PCU, still performing ex-ante &controls to foster adequate Implementation reviews. internal control environment. 6. External Audit: Both entities are Moderate TORSwould be included in the Low annually audited by private audit firms. OM and the audit fm would be Effectiveness & The project would require having contracted as soon as possible Implementation periodic concurrent audits, besides the within the first three months, annual audits. once the project is declared effective. 7. Reporting & Monitoring: The current substantial FM staff would be trained on Moderate automated system allows having timely SIGEF/UEPEX. This system has Effectiveness periodic reports, although not linked to timely and accurate reporting line item; it does link to project physical capabilities, linked not only to progress, category, nor component. line item, but to project physical progress, category and component. 8. Information Systems: Both entities substantial See comments in 7 above. Moderate have an IS in place, the FM staff is Effectiveness trained. Shortcomings in 7. Overall Control Risk Substantial Moderate
62 7. Country Level. The Country inherent risk was defined as high in the 2005 Country Fiduciary Assessment Report. The report concluded that the Government should be commended for the successful design of a Country Integrated Financial Management System (IFMIS), called SIGEF (Sistema Integrado de Gestidn Financiera -SIGEF) as part of a broader country strategy. The automation and modernization efforts have been steadily continued, and the system has been implemented in 100+ ministries, departments and agencies of the central government. Its equivalent at the sub-national level (SIFMUN) has been implemented in nearly half the municipalities. On another front, the Bank has joined forces with IADB to finance with donor credit funds the design of sub-system for implementing entities called "Unidades Ejecutoras de Pre'stamos Externos (UEPEX). This sub-system has a SIGEF interface; it is already in its final design stage fine-tuning formats and reports. In 2009 the Ministry ofHacienda deployed UEPEX and it has been adopted in 7 PIUs implementing IADB projects, and in most PIUs implementing Bank projects, except for those near to be completed.
8. Although financial reporting has seen some marked improvement and public entities are providing more useful information, the government recognizes that the need to enhance PFM and is determined to adapt public finances to international standards. A series of laws aiming to strengthen the budget process' 7, improve fiscal performance'*, promote transparency and increase public acc~untability'~was passed in late 2006 and early 2007. These laws are notable steps forward; their expeditious implementation is critical for achieving intended results. The government's efforts to implement actions according to the FM legal framework were highlighted in the Project Expenditures and Financial Accountability (PEFA) exercise, jointly performed in 2007 by the European Commission and the Bank2'. Regardless of improvements, the PFM is still affected by significant weaknesses; challenges remain to successfully comply with the many laws, enforce them and apply sanctions for deviations. The Bank and other development partners are discussing possible joint analysis to document progress in the reforms, identify quick wins and establish a baseline to assist the government to implement them.
9. Project Level. Notwithstanding financial weaknesses at the country level, their impact on the project risks are likely to be limited given the defined implementation arrangements. The OM would define specific FM procedures developed solely for the project. Adequate level of controls would be followed by both entities. 10. The project presents a substantial risk, due to the capitation scheme, the need for inter- institutional coordination (MOH, CERSS , NHI, SIUBEN) and weak regional health centers
The laws promulgated in November and December 2006 that affect the budgeting process are the Law 498-06 on Public Planning and Investment, the Law 496-06 creating the State Secretariat of Economy, Planning and Development, and the Law 423-06 on Organic Budget for the Public Sector, which promoted a drastic reduction of discretionary spending. '' The following laws aim to have more fiscal discipline: Law on the National Treasury (567-05), Law on Public Credit (6-06), Law on the granting of autonomy of the General Directorate of Customs -DGA (226-06) and the General Directorate of Internal Taxes -DGII (227-07). To strengthen transparency & accountability, the Laws on Government Procurement and Contracting (449-06), on Financial Management System of the State (5-07), and the establishment of the Internal Control System (10-07). The latter defined the roll of the General Comptroller's Office as the internal auditor, and the Chamber of Accounts, remained as the external auditor. 2o Complete report can be accessed in the following link: httu://ec.europa.eu/europeaid/what/economic- sumort/public-finance/documents/dom reuublic uefa en.rIdf
63 (Regions VI and VIII). A centralized culture persists and inter-institutional coordination needs to improve. Capacity building and technical assistance are incorporated into project design. MOH, NHI and CERSS would sign inter-institutional agreements by negotiations. Risk at the Project level is rated high and significant after mitigating measures.
Implementation Arrangements
1 1. Implementation arrangements are described in detail in Annex 6, and the fiduciary agents are CERSS for Components 1 and 3 and DDEI for Component 2.
Organizational Arrangements and Staffing
12. The PCU at CERSS would have fiduciary responsibility for Components 1 and 3. In that capacity it would be responsible for overseeing the timely flow of funds to the regions and would coordinate implementing activities with the MOH, NHI, MOEPD, and Essential Medicines Procurement Agency and Central of Logistical Support (Programa de Medicamentos Esenciales y Central de Abastecimiento y Logistica - PROMESEKAL). The PIU at DDEI would be in charge ofthe FM aspects for Components 2 and 4.
13. MOH, MOEPD, CERSS, NHI and PROMESEKAL will sign an inter-institutional agreement covering main technical aspects including FM. The Operational Manual includes: (i) budget formulation and monitoring; (ii)cash flow management; (iii)maintenance of accounting records; (iv) preparation of in-year and year-end financial reports; (v) administration of underlying information systems; and (vi) arranging for execution of external and concurrent audits. Also, for Component I, the Results-Based System, coordinated by a Project Oversight Committee composed by the heads of the MOH, MOEPD, NHI and CERSS, and a Results- Based Financing Operating Committee, integrated by representatives of the MOH, MOEPD, NHI and the PCU. The roles of the committees would be defined in detail in the OM. The PCU at CERSS and DDEI currently have adequate staffing arrangements in place and no additional FM staff is expected to be needed.
Planning, Budgeting, Accounting, and Financial Reporting
14. Expenditures need to be consistent with the budget amount allocated by the Ministry of Hacienda, which would coordinate with the entities for consistency with the consolidated POA and procurement plan, reviewed by the Bank. The sub-system UEPEX has a module for tracking budget resources execution and fund accounting. Internal control would rely on the controls embedded in the system. Automated data would be extracted from the system for preparation of project financial reports and Statements of Expenditure (SOEs). Those reports would reflect project categories, components and sources of funding. To account for the use of loan proceeds, the regional health centers would implement SIGEF.
15. The PCU and the PIU would prepare project financial reports consisting of annual financial statements and Interim Unaudited Financial Reports (IUFRs) every 4 months as ,part of project progress reports. Annual financial statements would be prepared on a combined cash and accrual basis; they are to be compliant with International Accounting Standards; and subject to annual financial audits. The CERSS would contract for the audit for the project as a whole.
64 16. Project-specific FM arrangements are documented in the OM, among others, the format ofFinancial Statements and IUFRs, and the customized SOE format to be formally defined.
Flows of Funds and Disbursement Arrangements
17. Disbursement Methods that may be used under the loan are: (i)reimbursement; (ii) advance; and (iii)direct payment, The minimum value for applications for direct payments and reimbursements would be US$200,000 for CERSS and US$150,000 for DDEI.
18. Loan proceeds to be withdrawn using the advance method would use 2 Segregated Designated Accounts (DAs) in USD, one for CERSS, to implement Components 1 and 3, and other for DDEI to implement component 11. The Designated Accounts would be held at the Central Bank of the Dominican Republic (BCRD) - standard procedure in Dominican Republic. The ceiling for advances to be made into the DA would be US$1,700,000.00 for CERSS and US$1,300,000.00 for DDEI, estimated sufficient for peak disbursement periods of project execution.
19. Supporting documentation should be provided with each withdrawal application as follows: all records and receipts for Goods contracts valued at US$250,000 or more; payments for consultant services contracted with firms and valued at US$lOO,OOO or more; and payments for individual consultants, non-consultant services, training and operating costs valued at US$50,000 or more. For contracts and payments below the above established thresholds, the project will only need to present Statement of Expenditures (SOEs), or in the case of Capitation Payments, customized SOEs in the format attached to the Disbursement Letter. The General Conditions require the borrower to retain all records (contracts, orders, invoices, bills, receipts, and other documents) evidencing eligible expenditures and to enable the Bank’s representative to examine such records. They also require the records to be retained for at least one year following receipt by the Bank ofthe final audited financial statement required in accordance with the legal agreement or two years after the closing date, whichever is later. Borrowers are responsible for ensuring that document retention beyond the period required by the legal agreement complies with their government’s regulations.
20. Under Component I, loans proceeds would be disbursed to the DA every four months against a certified roster of formally assigned individuals in participating RHSs adjusted by achievement of results of the ten MRIs, submitted to the Bank using customized SOEs. The PCU would in turn transfer loan proceeds to the participant RHSs. The PCU would create a restricted fund for the transfers to the health regions.
2 1. A grace period of no longer than 8 months would be agreed upon to allow development and implementation of the new IFMIS and contract for the external financial and concurrent audits. During this grace period the monthly fixed tranche (MFT) would be calculated at 100 percent of the per capita value based on a projection of eligible individuals. In the ninth month the NHI would reconcile projections against the certified enrollment of eligible individuals, and, in the event of significant differences, funds would be deducted from the subsequent payment. In addition, recurrent audits would review the eligibility of beneficiaries and confirm that services were in fact rendered and the financial audit would confirm payments were made
65 according to the per capita value established by NHI. Adjustments to the value will need Bank approval.
22. Results-adjusted capitations would be delivered in two tranches and verified in the concurrent audits. The indicators, 10 in total, will have an intrinsic value of 5% each: In the case ofthe indicators not met, the YOeligible for financing will be reduced by the number of indicators not met. The first tranche would be a fixed amount to be monthly calculated with 50 percent of the value per capita times the number of enrolled beneficiaries (based monthly transfer) in participant health regions:
MFTm = 50 percent * BMTm
MFTm = monthlyfixed based transfer for the “m” month
BMTm = Monthly Based Transfer an “m” month = K*RBm (Fixed amount * registered beneficiaries)
23. The second tranche would be variable, calculated every four months based on the 50 percent pending to be transferred times the coefficient indicating compliance with the goals established by MOH. The formula to calculate variable tranches follows:
VTp = 50 percent*VTBp * NCI/N
VTp = Variable tranche for the period (p) previous to the evaluation date
VTBp = Base of the cumulative 4-month transfer for a regional health center during @)
NCI = Number of complied indicators during (p), defined in Annex 6.
N = Number of indicators evaluated (a total of IOindicators).
24. The participating RHSs would be responsible for the formal assignment of the eligible population and preparing the roster of beneficiaries that, once verified, would be the basis to determine the capitation payments, as established in the OM.
25. Loan proceeds would be disbursed against expenditure category given in table A 7.2.
66 Table A.7.2: Disbursements per Expenditure Category
Allocation of Loan Proceeds (USD)
1. Capitation for First Level of 1. Capitation Transfers (OBD) 14,523,750 Care in Public Sector Regional (Approximately Years Health Networks 1 &2) Up to US$1,350,000
Pari Passu 80%/20% (APP.Y3) Up to US$3,405,000
Pari Passu 70%/30% (APP. Y4) Up to US$7,380,000
Pari Passu 60%/40% thereafter (App. Y5)
2 Strengthening Capacity ofthe 2. Goods, non-consultant services, 7,000,000 70% MoHto Improve and Monitor consultants’ services, training and Health System Responsiveness operational costs under Component 2 of the Project
3. Improving Quality of Public 3. Goods, non-consultant services, 8,800,000 70% Spending on Health Care consultants’ services (including audits), training and operational costs under Component 3 of the Project.
4. Response to Public Health 4. Goods, non-consultant services, 100,000 100% Emergencies consultants’ services, training and operational costs under Component 4 ofthe Project Front-End-Fee Front-End Fee 76,250
Total Bank financing 30,500,000 69%
*Loan resources would be used for component 1 on a declining basis according to the schedule of estimated disbursements presented in Table A.5.1 in Annex 5. The Borrower would provide US$13,740,000 of Project costs with a pari passu of 69/31, within the countryjnancing parameters.
67 The following graphic shows the flow of funds:
Graphic No. 1 Flow of Funds -Dominican Republic: DO - Health Sector Reform APL II (PARSSP) ProJect Process for Withdrawal Applications' (See Notes 1-4) Process Steps t Step I Step II Step 111 Step IV [ Total of Days Comp. I institutions 1 1-3 2-4 I 1-2 I 5-09 10 Days SEEPYDl SSEPLANl I CERSS a Beginr~~ DDEl Procerr (Note 1) A
The Central Bank of the 2 Dominican prmparer a cheek (or Republic (BCRD)
DOODT and keep It untll National Treasury I I1 (TN) 1
National Ofice budget and UEPEX controls that WAS do 1 of Budgeting - not oxceod budaet I I I I1 (ONAPRES)
Reservas Bank of the 11 Account I denomlnatrd In RD$ 5 Dominican rvions Republic. I j fo;EyJ-zy (Notel) (BRRD) I I Notes: 1. The timing of the process in each step varies mainly due to errors, returned for corrections
2. Available for payments to vendors, providers. To process payments, units currently take from 5.8 working days, from the requests for payment to cutting checks. 3. The flow of funds process has been streamlined and the time significantly reduced as result of the new legal framework in place since 2007 and the automation of some process, such as the electronic transfer from the TN. As an example, the role of approving "lrbromrentosI' was taken out of the Comptroller General of the DR, an incompatible function with that of the internal auditor. 4. A Restricted Fund will be specialized at CERSS to process payments to participating health regions in Comp I. This will be detailed in the OM.
Internal Control
26. According to Law 10-07 promulgated in Jan. 2007 the government internal control consists of: (i)financial control embedded into SIGEF, FM regulations and practices established through the PFM legal framework; and (ii)internal audit, a responsibility of the Comptroller General. The Comptroller's internal auditors functioning at CERSS are performing ex-ante controls, incompatible with an internal audit function. Both units operate with a sound internal control environment and the external auditors did not found any material deficiency during FY2008. Region VI11 has a comptroller's internal auditor, although Region VI does not have an internal audit function in place. Internal control mechanisms specific for the project would be included in the OM.
68 External Audit Arrangements
27. Financial audits to project annual financial statements and concurrent audits every 4 months for component Iwould be performed by an independent auditor contracted by CERSS, following International Standards on Auditing (IS As) and specific terms of reference acceptable to the Bank. Financial Audit reports would be due within 4 months following the end of the reported year, with April 30th as due date; concurrent audits will be due within 30 days of the audited period. The scope of the financial audit and opinions would cover: (i)financial statements; (ii)internal controls; (iii)compliance with clauses, OM, laws and regulations; and (iv) SOE Statements, including payments made according to the unit cost set for the country’s subsidiary regime. The scope of the concurrent audit will cover: (i)certification and validation of the estimated number of Eligible Beneficiaries, and (ii),RHS’s performance against agreed targets from the Results Monitoring Indicators Audit costs would be financed from loan proceeds. CERSS would arrange for the audits within three months after loan effectiveness. The auditors would have a continuous engagement from the beginning ofthe project.
28. Actions to be implemented are summarized in the table below:
Table A.7.3. FM Action Plan
Action
Organizational Negotiation NHI and -Sign inter-institutionalagreement PROMESEICAL Staffing - Provide Training to FM staff in the new features for component I, CERSS/DDEI/W Effectiveness including the customized SOE format. B Information System CERSS- DDEI/WB - Implementation of the automated information system (UEPEX) Effectiveness Operational Manual CERSS- Prior to DDEI/WB negotiation. - Develop detailed procedures for key FM aspects in the OM. External & Concurrent Audits No later than three months Appoint the external audit firm for the financial and concurrent CERSS - after audits, to be performed according to International Standards on effectiveness Auditing and terms of references acceptable to the Bank Accounting System -PCU (at Effectiveness CERSS)-PIU (at Adapt the accounts classification to budget. - MOWDDEI) Implement SIGEF to account for uses offunds at the regional level. Effectiveness - -RHss Financial Reporting and Monitoring -PCU (at CERSS)-PIU (at -Submit IUFRs format and procedures for data collection & report Negotiation MOWDDEI) generation, including customized SOE format for component I
69 Supervision Plan
29. Project FM supervision plan is presented below and would be adjusted by the Bank according to the fiduciary performance and updated risk rating.
Table A.7.4: Financial Management Supervision Plan
Type Timing Mechanism ' *Objective . Visit General Full on-site supervision I + Review FM performance. Supervision. If missions twice a year + Review controls/staffing. Audit opinion is for the first year and 1 clean, bi-annual. annually thereafter. + Update assigned risk in PRIMA Desk Semi-annual Over the IUFRs + Review IUFRs consistency review + Raise/follow-up issues disclosed. Audit Once a year the Over the audit reports + Review audit reports. Reviews financial audit; submitted to the Bank. Update ARCS three times a , year the + Raise/follow-up on issues disclosed recurrent audits. in the audit reports.
Summary and Conclusion
30. The financial management (FM) arrangements for loan implementation at both entities, meet Bank's FM minimum requirements. The overall control FM risks for the operation are substantial and would be rated moderate once the entity, with Bank support, implements a time- bound action addressing identified measures to mitigate risks.
31. The FM Supervision Plan defined the scope as a comprehensive supervision, including full on-site supervision covering all areas specified in the FM supervision checklist, including review ofthe annual financial audit reports, review of the recurrent audit reports and IFRs every 4 months, plus spot checks of specific areas of concerns. The frequency of FM supervision would be semiannual the first year. The intervals and scope would be revised with the supervision results as indicated in the FM ISR rating.
70 Annex 8: Procurement Arrangements DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2)
A. General
1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits," dated May 2004 revised October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers," dated May 2004 revised October 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the procurement plan. The procurement plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
2. Procurement of Works: No works will be procured as part of this project.
3. Procurement of Goods: Goods procured under this project would include equipment, IT software and hardware, among others, included in components 2 and 3. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to the Bank.
4. Procurement of non-consulting services: Non-consulting services under this project will be procured for strengthening monitoring and enforcement of quality standards of primary health care at the regional level and to improve planning, procurement and overhauling supply chain of pharmaceuticals, among others and would be procured under the same methods and thresholds provided for goods. The procurement will be done using the Bank's Sample Procurement Document for all ICB and National SBD, as agreed with or satisfactory to the Bank. In the case of the acquisition of antiviral medicines and re-active laboratory testing under Sub-Component 2.3, these purchases may be done through the Pan American Health Organization (PAHO) under the method of Procurement from the United Nations Agencies (Para. 3.9 of the Procurement Guidelines). If procurement of these inputs is done through PAHO, the Government of the Dominican Republic and PAHO will sign a contract agreement agreed with (or satisfactory) to the Bank. The operational manual provides details for implementation of these activities.
5. Selection of Consultants: The project will finance consultant services for the strengthening of existing monitoring and information systems, developing new information tools, supporting of selected activities of the process of organizational re-engineering of the MOH, strengthening the MOH institutional capacity and technical assistance. The project would finance annual overall project financial audits. The project also is expected to finance concurrent technical and financial audits under Component 1. Short lists of consultants for services estimated to cost less than $200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. The selection of consultants will be done using the Bank's SRFP.
71 6. Operating Costs: The project would finance selectively incremental operational costs incurred by the PIU at the MOH for the implementation of Component 2 and 4, and also incremental operational cost incurred by the PCU at CERSS needed for the implementation of Components 1 and 3. These costs will be procured using the implementing agency’s administrative procedures which were reviewed and found acceptable to the Bank.
7. Others: Since the project will use capitations payments (a specific disbursement category to be included in the loan agreement for which there are no Bank-specific procurement guidelines) Component 1 would not be subject to Bank procurement rules and would follow strictly the Financial Management arrangements indicated in Annex 7 and referred to in detail in the project’s Operational Manual.
8. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for goods, non-consulting services and consulting services procured, are included in the project Operational Manual.
B. Assessment of the agency’s capacity to implement procurement
9. The project will have two implementing agencies. The DDEI will have the fiduciary responsability for Component 2, while the UCP in CERSS will be responsible for components 1 and 3. Procurement activities will be carried out by the procurement teams ofthe PCU at CERSS and ofthe PIU at DDEI.
10. An assessment of the capacity of the DDEI and CERSS to implement procurement actions for the project was carried out by the Bank in May 2009. The assessment reviewed the organizational structure for implementing the project and the overall procurement capacity ofthe implementing agencies. The main findings ofthe assessment are: i)the procurement capacity in DDEI is weak, the procurement team is composed by a procurement officer in charge of all procurement activities, supported by an assistant. Based on the recent experience in the implementation of the Global Alliance for Improved Nutrition Trust Fund (GAIN) administred by the Bank, it is neccesary to strengthen the procurement team in DDEI to ensure that they are able to independently carry out all their procurement processes; and ii) the Procurement Department in CERSS is staffed with eight professionals hired as individual consultants. The overall findings of the procurement capacity assessment is that the team has qualified staff, capable of carrying out complex procurement processes, however, the quality of procurement processes has been low in some cases and has lead to recent cancellation of contracts subject to post review. As noted in the last post review report of the Health Sector Reform Support APL I, the procurement team does not have sufficient involvement with other technical teams on procurement planning and bid evaluation.
11. The key issues and risks concerning procurement for implementation of the project have been identified and include: (i)need to improve procurement capacity and processing within the procurement units; (ii)overall weak procurement environment at the local level; (iii)limited planning and follow-up capacity, including supervision of contracts; and (iii)lack of standard
72 bidding documents, rules and procedures. All of these issues result in delays in the project implementation.
12. The corrective measures which have been agreed are:
0 By effectiveness the DDEI shall appoint a procurement specialist with relevant experience in Bank’s procurement, to be dedicated full time to the project. TORS of the proposed specialist to be submitted to the Bank’s approval by negotiations. The process for the selection ofthe procurement specialist shall be approved by the Bank. 0 The internal processes in CERSS shall be revised to ensure a more effective participation of the procurement team in all phases of the procurement cycle. An action plan for the improvement of internal procurement processes to be. presented to the Bank for its approval by negotiations. 0 Submission to the Bank ofa preliminary procurement plan to cover the first 18 months of the project. 0 Preparation ofan operational manual with a specific chapter on procurement, detailing all the procedures and channels ofresponsibilities and flow ofdocumentation. 0 Organizing a launch seminar before project effectiveness.
13. The overall project risk for procurement is HIGH.
C. Procurement Plan
14. The Borrower developed a procurement plan for project implementation agreed between the Borrower and the PCU and PIU on August 5, 2009, which provided the basis for the procurement methods. This plan is available at DDEI and CERSS, respectively. It will also be available in the project’s database and in the Bank’s external website. The procurement plan will be updated in agreement with the project team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
D. Frequency of Procurement Supervision
15. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the implementing agencies has recommended at least one post-review mission per year, when not less than 1 in 5 contracts should be reviewed. Additionally, during the second year of implementation it is recommended to have one procurement audit in conjunction with the financial audit ofthe project.
16. Thresholds.: Thresholds for the use of the procurement methods specified in the project procurement plan are identified in the table below, which also establishes the notional thresholds for prior review. The agreed procurement plan determines which contracts will be subject to Bank prior review.
73 Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review / Estimated Total Value Subject to Prior Review US $ thousands 1. Goods >250 ICB All 50-250 NCB First two contracts of each year <50 Int’l & Nat.. Shopping None
2. Services 2.A Firms >loo QCBS All 2.B Individuals >50 Comparison of All <50 3 cv TOR by TTL only. E. Details of the Procurement Arrangements Involving International Competition 1. Goods, and Non-Consulting Services (a) List of contract packages to be procured following ICB and direct contracting: Ref. Contract Estimate Procurement P-Q Domestic Review Expected Comments No. (Description) d Method Preference by Bank Bid- cost (yesho) (Prior I Opening Post) Date 01 Hardware and US$400 ICB No No Prior 2010 Software ,000 02 Equipment of US$400 ICB No NO Prior 2010 vehicles for ,000 PROMESE 03 Production US$525 ICB No No Prior 2010 and printing ,000 (b) ICB contracts estimated to cost above more than US$250,000 per contract and all direct contracting will be subject to prior review by the Bank. 74 (c) The first two NCB contracts for goods and non-consulting services each year will be subject to prior review by the Bank. 2. Consulting Services (a) List of consulting assignments with short-list of international firms. Description of Estimated Selection Review Expected Comments Assignment Cost Method by Bank Proposals 1 1 1 (Prior / Submission 1 1 Post) 1 Date 1 01 Design of a US$150,000 QCBS Prior 2010 Geo-reference I system 02 I Household I US$400,000 I QCBS I Prior I2010 (b) Consultancy services estimated to cost above US$lOO,OOO per contract and all single source selection of consultants (firms) will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 75 Annex 9: Economic and Financial Analysis DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2) 1. This annex presents the results of the economic and financial analysis for the Dominican Republic's Health Sector Reform APLII (PARSS2). The analysis is based upon the costs and quantifiable economic benefits of the project. The results of this cost-benefit analysis indicate that, under reasonable parameters and expectations, the net present value ofthe project would be positive. 2. The economic and financial analysis for PARSS2 consists of a) the computation of the net present value (NPV) of a chronological stream of quantified benefits and costs derived from the implementation of PARSS2, and b) sensitivity analysis of the project's NPV using varied parameters, including discount rate and reduced rates ofmortality and disability. 3. There are two major categories of quantifiable benefits from all the components of PARSS2. The first category is the benefit derived from reduced deaths among pregnant women, puerperal mothers and infants. The second category is the decrease in deaths and disabilities from hypertension and diabetes. 4. The analysis is based upon the expected future stream of income from labor during the lifetime of each individual directly affected by the project in order to quantify the benefit derived from avoiding a death or a life with disability. These calculations are performed using the current distribution of labor income for the age and gender groups that make up the targeted population (Poor People, Levels Iand I1 in the Regions VI and VIII, according to the nomenclature of the Dominican Republic's Ministry ofHealth). 5. The dataset used in the computations is the Demographic Survey of Health of the Dominican Republic (2007). For the sake of accuracy, all relevant variables and parameters are restricted to the subsample that corresponds with the targeted population, except where the size of that subsample implies very large sample errors for certain indicators or parameters. In those cases, the national sample for levels Iand I1 of poverty will be used to impute values for the targeted population. 6. All monetary values are expressed in US dollars, and the exchange rate for converting present value Dominican pesos to US dollars is 36.00 Dominican pesos per US dollar. 7. The future flows of each category of quantified benefits will be discounted at an appropriate rate to compute its Present Value. In this regard, the literature on the evaluation of health projects recommends a discount rate that is comparable to the social investment opportunity cost in the country where the project will be implemented. The yield of Dominican sovereign bonds is around 8 percent. 8. The ranges of reduction in the rates of infant mortality, maternal mortality, and disabilities from chronic diseases due to the implementation ofthe project will be (1 0 percent, 25 percent ); (40 percent, 50 percent); and (40 percent, 50 percent), respectively. 76 Table A.9.1: Estimated Present Value of the Future Benefits (US$) at a discount rate of 8 percent when the rates of reduction of infant mortality, maternal mortality, and disabilities from chronic diseases are at the middle of their respective ranges. Present Value of Benefit from Present Value of Benefit from Present Value of Benefit from Year Maternal Deaths Avoided Infant Deaths Avoided Disabilities Reduced 1 24,257 33,839 2,976 2 1,134,226 1,582,273 139,148 3 1,909,280 2,663,492 234,233 4 2,380,707 3,321,145 292,068 5 755,442 1,051,855 87,680 9. The same exercise is performed upon the stream ofthe costs ofthe implementation ofthe project to compute the Present Value of the costs. The difference between the present value of the stream of quantified benefits and the present value of the stream of expenditures yields the net present value ofthe project. Table A.9.2: Number of Projected Formal Assignment of Individuals and Estimated Costs Number of Number of Total Number of Nominal Cost Formally assigned Formally assigned Year Formally assigned individuals Region individuals Region individuals (US$) VI Vlll 1 1,000 1,000 2,000 58,778 2 50,000 50,000 100,000 2,938,889 3 90,000 90,000 180,000 5,290,000 4 120,000 120,000 240,000 7,053,333 5 40,770 40,770 81,540 2,396,370 n. Year Present Value of Total Benefit Present Value of Total Costs Net Present Value of the Project 1 61,071 58,778 2,293 2 2,855,646 2,721,193 134,453 3 4,807,005 4,535,322 271,682 4 5,993,919 5,599,163 394,756 5 1,894,978 1,761,403 133,574 N PV 936,759 IRR 8.35% 77 10. The sensitivity analysis consists of the re-computation of the NPV of the project using different values for the discount rate and the reduction of the rates of mortality and disability from the illnesses and conditions that will be addressed by the implementation of the program. The result of this sensitivity analysis summarizes the conditions and assumptions under which the project will be economically sound. Table A.9.4: Estimated Present Value of the Project (US%) at different discount rates and different reduction of infant mortality rates when the reduction rates of maternal mortality and disabilities from chronic diseases are 40 percent and 40 percent respectively. Discount Reduction of Infant Mortality Rate 10% 15% 20% 25% 7.00% (843,918) 1,581,490 4,006,899 6,432,308 7.25% (1,451,187) 788,166 3,027,520 5,266,873 7.50% (2,009,993) 59,566 2,129,124 4,198,683 7.75% (2,524,618) (610,188) 1,304,241 3,218,671 8.00% (2,998,918) (1,226,372) 546,173 2,318,719 8.25% (3,436,367) (1,793,729) (151,092) 1,491,546 8.50% (3,840,098) (2,316,528) (792,958) 730,611 8.75% (4,212,943) (2,798,617) (1,384,291) 30,036 9.00% (4,557,462) (3,243,467) (1,929,471) (615,475) 9.25% (4,875,976) (3,654,215) (2,432,454) (1,210,693) 9.50% (5,170,586) (4,033,699) (2,896,811) (1,759,924) 9.75% (5,443,203) (4,384,488) (3,325,773) (2,267,058) 10.00% (5,695,562) (4,708,914) (3,722,266) (2,735,617) 78 Table A.9.5: Estimated Present Value of the Project (US$) at different discount rates and different reduction of infant mortality rates when the reduction rates of maternal mortality and disabilities from chronic diseases are 50 percent and 40 percent respectively. Discount Infant Mortality Decreases Rate 10 percent 15 percent 20 percent 25 percent 7.00 percent 1,161,298 3,586,707 6,012,116 8,437,524 7.25 percent 479,553 2,718,906 4,958,260 7,197,613 7.50 percent (149,683) 1,919,876 3,989,434 6,058,993 7.75 percent (730,964) 1,183,466 3,097,896 5,012,325 8.00 percent (1,268,398) 504,148 2,276,694 4,049,240 8.25 percent (1,765,690) (123,052) 1,519,585 3,162,223 8.50 percent (2,226,190) (702,620) 820,949 2,3443 19 8.75 percent (2,652,928) (1,238,602) 175,724 1,590,050 9.00 percent (3,048,648) (1,734,653) (420,657) 893,339 9.25 percent (3,415,841) (2,194,080) (972,319) 249,442 9.50 percent (3,756,766) (2,619,878) (1,482,991) (346,103) 9.75 percent (4,073,480) (3,014,765) (1,956,050) (897,335) 10.00 oercent (4,367,853) (3,381,205) (2,394,557) (1,407,908) 79 Table A9.6: Estimated Present Value of the Project (US$) at different discount rates and different reduction of infant mortality rates when the reduction rates of maternal mortality and disabilities from chronic diseases are 40 percent and 50 percent respectively. Discount Reduction of Infant Mortality Rate 10 percent 15 percent 20 percent 25 percent 7.00percent (519,895) 1,905,513 4,330,922 6,756,331 7.25 percent (1,132,746) 1,106,608 3,345,961 5,585,315 7.50 percent (1,697,006) 372,552 2,442,111 4,s 11,669 7.75 percent (2,216,964) (302,534) 1,611,896 3,526,325 8.00 percent (2,696,476) (923,931) 848,615 2,621,161 8.25 percent (3,139,021) (1,496,384) 146,254 1,788,892 8.50 percent (3,547,735) (2,024,165) (500,595) 1,022,974 8.75 percent (3,925,452) (2,511,126) (1,096,800) 317,526 9.00 percent (4,274,737) (2,960,742) (1,646,746) (332,750) 9.25 percent (4,597,912) (3,376,151) (2,154,390) (932,629) 9.50 percent (4,897,081) (3,760,194) (2,623,306) (1,486,418) 9.75 percent (5,174,158) (4,115,443) (3,056,728) (1,998,013) 10.00 percent (5,430,881) (4,444,232) (3,457,584) (2,470,936) 80 Table A9.7: Estimated Present Value of the Project (US$) at different discount rates and different reduction of infant mortality rates when the reduction rates of maternal mortality and disabilities from chronic diseases are 50 percent and 50 percent respectively. Discount Reduction of Infant Mortality Rate 10% 15% 20% 25% 7.00% 1,485,321 3,910,730 6,336,139 8,761,547 7.25% 797,994 3,037,348 5,276,701 7,516,055 7.50% 163,304 2,232,862 4,302,421 6,371,979 7.75% (423,309) 1,491,120 3,405,550 5,319,980 8.00% (965,956) 806,590 2,579,136 4,351,682 8.25% (1,468,344) 174,293 1,816,931 3,459,569 8.50% (1,933,827) (410,257) 1,113,312 2,636,882 8.75% (2,365,438) (951,112) 463,215 1,877,541 9.00% (2,765,923) (1,451,928) (137,932) 1,176,064 9.25% (3,137,776) (1,916,015) (694,254) 527,506 9.50% (3,483,261) (2,346,373) (1,209,486) (72,598) 9.75% (3,804,435) (2,745,720) (1,687,004) (628,289) 10.00% (4,103,171) (3,116,523) (2,129,875) (1,143,227) Conclusions 11. The results ofthis analysis indicate that: (i)The largest contribution to the net present value of the project comes from the reduction in infant mortality, followed in order of importance by the reduction in maternal mortality, (ii)There is a positive net present value of the implementation of this project at a discount rate of8 percent when the rates ofreduction ofinfant mortality, maternal mortality, and disabilities from chronic diseases are at the middle of their respective expected ranges. 81 Annex 10: Safeguard Policy Issues DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2) Environment 1. Substandard biomedical waste management is a persistent issue in the Dominican Republic. If managed improperly, the wastes produced by health establishments pose health risks for the public and personnel as well as environmental contamination. Past projects have included measures related to biomedical waste management, and while discrete advancements have been noted there is a clear need for macro-level engagement on the issue to support long-term improvements on a national scale. Though the types of risks posed by improper waste management are indirectly related to the proposed project’s actual activities, the project is well- placed to provide technical assistance in support of better practices at a strategic level, framing the issue as not only environmental but as one facet ofimproving the quality ofhealth care. 2. The project was originally classified as a Category B at the PCN stage, but as project preparation progressed the team found that a Category C would be more appropriate given that the project activities would cause no adverse environmental impacts and no civil works would be financed. OP 4.0 1 (Environmental Assessment) is the only safeguard policy triggered, which reflects that technical assistance related to environmental aspects will be supported during project implementation. The Bank will work with the client to develop a strategic approach to address biomedical waste management in the health sector, which will capitalize on past analytical work from APLl and other projects, as well as the approval of recent legislation specific to biomedical waste management. The aim is to have a positive impact on public health, worker safety, and link the notion of improved environmental management to quality health service delivery. 3. Following is a discussion of the relevant legal framework, prior diagnostic work under other Bank projects, and the strategy for building capacity to mainstream environmental management in the health sector under the proposed project. Legal Framework 4. The main legislation related to environmental management in the health sector is the General Law on the Environment and Natural Resources (Law No. 64-2000), the General Health Law (Law No. 42-2001), and recent regulations promulgated under the General Health Law specific to wastes generated by health centers (2009). The enactment of these laws and the approval of the new regulation indicate that environmental protection and improving the management ofbiomedical waste are growing priorities for the GODR. As discussed below, the laws also provide a clear legal and institutional framework for addressing the management of potentially hazardous, infectious, contagious, or toxic waste produced in health facilities. 5. General Law on the Environment and Natural Resources: The purpose of the General Law on the Environment and Natural Resources was to establish guidelines for the conservation, protection, improvement, and restoration ofthe environment and natural resources, thus assuring their sustainable use and to create institutions to take the lead in addressing issues related to the 82 protection of the environment and natural resources. The law created the State Secretariat of Environment and Natural Resources (SEMARN) as the lead agency for environmental management, and designated the National Council for the Environment and Natural Resources as the body responsible for programming and evaluating policies and for a biodiversity conservation strategy. The law also considers the environmental impacts of waste, mandating that handlers of hazardous waste must be trained, and establishes coordination between SEMARN and MOHto create regulations for hazardous waste management. 6. General Health Law: The General Health Law introduced major changes in the Dominican Republic’s health care organization and financing. Provisions of the General Health Law pertain to the management of medical waste - this was previously covered through several other laws, but the current legislation supersedes them. Article 46 of the General Health Law mandated that MOH, in coordination with SEMARN and other relevant institutions, should prepare official regulations that govern the disposal and management of solid waste whose use, collection, treatment, holding, reconversion, industrialization, transport, storage, elimination, or final disposal may be hazardous to the population’s health. 7. These regulations to the General Health Law (Decreto No. 126-09) were approved in February 2009. They establish clear procedures and an institutional framework specifically for biomedical waste management and outline a comprehensive set of procedures for the entire waste management cycle, from generation to final disposal that takes into account inputs from Bank during PARSS 1 and is consistent with international good practice. The regulations mandate that all health centers form an Environmental Committee on Hygiene and Hospital Waste (Art. 16), which is charged with internal management of solid waste and hazardous wastes. This committee is responsible for compliance monitoring and must report to SEMARN, which is responsible for conducting periodic compliance audits; MOH is also charged with auditing each facility’s waste registry and can issue sanctions to facilities that do not comply with the law (Art. 7(h)). Moreover, each facility must design an Environmental Management Plan and obtain the relevant environmental license from SEMARN (Art 61-2). Facilities that do not currently meet the law’s standards have two years from the regulation’s approval to comply (that is, until February 20 11). Prior Diagnostic Work 8.. Provincial Health Systems Project: In 1999, MOH requested that CERSS, through the Provincial Health Systems Project and a parallel project financed by the Inter-American Development Bank, support the provision of technology for the treatment and final disposal of waste in the main health facilities around the country. As a result, the Provincial Health Systems Project invested nearly US$1 million to strengthen the medical waste management capacity of some of MOH’s main health care facilities. The vast majority of the resources (apart from about US$50,000 devoted to civil works) were used to helped several hospitals purchase incinerators to treat medical waste and to support training of staff in operating this equipment and the management of medical waste. 83 9. HIV/AIDS Prevention and Control Project: One of the main concerns regarding medical waste in the DR is the possible transmission of diseases such as HIV/AIDS or hepatitis B through contaminated needles. The population groups at greatest risk from this are: (i)patients and health personnel; (ii)staff of hospital support services (trash collectors, treatment plant operators, etc.); and (iii)patients at high risk ofcontracting infections (e.g., people with diabetes, people with AIDS; drug addicts). 10. The HIV/AIDS Prevention and Control Project, building upon and complementing the activities supported under the Provincial Health Services Project supported: (i)an assessment of medical care waste handling and disposal related to HIV/AIDS programs and activities under the project; (ii)the revision and updating by COPRESIDA (the Presidential Commission for HIV/AIDS), through the MOH’s General Directorate of Sexually Transmitted Infections and AIDS (DIGECITSS) and other specialized institutions, ofthe existing manual for medical waste handling and disposal; and (iii)the training of health personnel associated with HIV/AIDS programs and activities under the project in the application ofthese standards to protect high-risk human groups such as patients as well as health staff in the participating facilities. 11. The resulting manual addresses procedures for health center staff with regard to the handling, transport, treatment, and final disposal of medical waste, as well as the provision of required equipment and inputs, with special attention to the handling of sharp and pointed objects (the main risk of viral contamination inside hospitals), beginning at the point where the waste is generated, through the use of receptacles for the collection, storage, and disposal of sharp and pointed objects. The project also supported staff training in these procedures. 12. Health Reform Support Program (PARSSl): The PARSSl project intended to build upon and expand the scope of activities related to biomedical waste management began under the Provincial Health Systems Project. This project also financed civil works, and the corresponding environmental procedures were included in the project Operational Manual. On the side of waste management, the diagnostic work and preparation of procedures was a slower process, mainly due to a timing disconnect with the new regulation, but procedures for waste management have also been included in the Operational Manual. 13. An Environmental Assessment was produced in 2007, which examined current biomedical waste practices in the DR using a sample of ten facilities. The study employed field visits (using a verification checklist), questionnaires, and interviews to survey practices in the field and compliance with norms. In general, the study found that separation, storage, transport and final disposal is not compliant with the procedures set forth in the law, though there is a divergence in waste management practices across the various health regions. Biomedical waste is often managed in the same way as non-hazardous waste, and is generally not tracked in any way. Most ofthe surveyed facilities did not have procedures, were not aware ofthe laws, and did not have trained personnel. Treatment ofhazardous waste was the most alarming aspect, with proper treatment ofwaste before final disposal seriously lacking. 14. Soon after the regulations to the General Health Law were passed, a Manual for Health Center Waste was sent to the Bank which was incorporated into the PARSSl Operational Manual. This document serves as a framework for the creation and responsibilities of each health 84 center’s Administrative Unit (the Environmental Committee on Hygiene and Hospital Waste as described in the regulation), and gives some guidance on procedures for waste management. The manual requires further strengthening, but is a positive step in addressing both institutional and practical aspects ofthis issue. PARSS2: Strategic Supportfor Biomedical Waste Management 15. Given the foundation of past analytical work (supported by the Bank and other donors) on practices for biomedical waste management in the Dominican Republic combined with the momentum of new legislation, PARSS2 is well-positioned to build capacity within the MOH to implement these procedures. Under the proposed project the client would build on previous work to apply lessons learned from past experiences and develop a strategy to implement measures from the new regulation. 16. The implementing agency currently has low capacity to implement biomedical waste management procedures, lacking staff, capabilities to monitor health facilities’ waste management practices and enforce standards, and coordination between other Government actors associated with these issues (e.g. environmental, solid waste, and regional health authorities). Authorities are supportive of capacity building activities and have in the past undertaken a limited initiative on training health care professionals on the proper care of biomedical waste management under the auspices ofthe Japanese aid agency JICA. The government has expressed interest in pursuing a more strategic approach to adopting safeguard measures in its health sector and has asked the Bank to provide technical assistance. 17. Rather than limit the initiative to specific activities of the proposed project, the planned strategy would apply more broadly to the health sector. Terms of reference have been prepared by the client for a consultancy that would include the design of a personnel training program, an environmental management plan, and create educational materials for health workers. The Bank will work closely with the client as the consultancy is carried out, as part ofan ongoing strategic engagement with the health sector. An initial workshop is planned with the MOH, which will bring together other relevant authorities linked to environmental issues and the health sector (e.g. SEMARN). A consultation with outside stakeholders (e.g. NGOs, academia, and public health organizations) would then take place after the consultancy is underway. Social 18. The proposed project is specifically intended to have a positive social impact in increasing access to health care and improving mechanisms to target and deliver health care. No social safeguard policies are triggered by the project activities. The main social development issues related to the proposed project refer to the inequality in access to health services, inequality of health status among different population groups and between urban and rural regions, high child and maternal mortality rates for the country as a whole, and the impoverishment impact of ill health and disability among the poor uninsured population. Of particular relevance is the issue ofundocumented Dominicans and access to health services. 85 19. In the Dominican Republic lack of individual documentation is a problem that disproportionately affects the poor. In 2006 the GODR, through the a proxy means test conducted in the areas with the largest concentrations of poor people, identified that roughly 24 per cent of individuals older than 16 years and older did not have legal documentation. Documentation is a major barrier to health insurance for approximately 700,000 Dominicans, often the poorest, as legal identity documentation is required for enrollment in social protection systems such as the national health insurance program. Although health insurance cannot be provided to undocumented individuals, the facilities of the Ministry of Health are obliged to provide emergency services to all individuals regardless oftheir documentation status. However, costs are often much higher (especially for pharmaceuticals) if not enrolled in the health insurance system. 20. In order to be effective and technically sound, public health interventions are carried out to ensure results are achieved for the entire population living in the DR. With the financial and technical assistance of the Bank, the GODR through the improvement of the Conditional Cash Transfers program (Solidaridad) implements several interventions providing legal documentation for the poorest households to include them in existing social safety nets. The Dominican Republic Social Protection Investment Project (2007) included a component specifically targeted to reaching 400,000 poor, undocumented Dominicans of which it is anticipated that 300,000 would then be eligible for enrollment for the health insurance program. 2 1, The current project, PARSS 1, has also had positive outcomes with respect to improving the situation of the undocumented, especially with respect to the official identification of children of undocumented parents in order to improve access to safety nets. The project supported the implementation of an automated birth registry that was rolled out to 34 hospitals covering 80 percent of births in the country, trained personnel in the use of these processes, and modernized the system to issue birth certificates in 35 hospitals. It should be noted that the system provides birth certificates to children regardless of the documentation status of their parents, ofparticular relevance to children born to parents of Haitian origin. 22. The planned reforms in the PARSS2 project are particularly relevant for vulnerable groups as access to health services would not be dependent on health insurance, and improved quality of care would also benefit all Dominicans. A proposed Development Policy Loan would also provide further support for the implementation of the Social Protection Investment project and PARSS2, specifically technical assistance for improving documentation of the Dominican poor. 86 Annex 11: Project Preparation and Supervision DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2) Milestone Planned Actual PCN review 0513 112008 03/03/2009 Initial PID to PIC 03/13/2009 03/25/2009 Initial ISDS to PIC 03/13/2009 03/24/2009 Appraisal 0611 712009 06/17/2009 Negotiations 08/05/2009 08/05/2009 BoardRVP approval 0911712009 Planned date of effectiveness 0710 1120 10 Planned date of mid-term review 0 111 5/20 13 Planned closing date 1013 1/20 15 Key institutions responsible for preparation ofthe project: 0 Consejo Ejecutivo para la Reforma del Sector Salud (CERSS) 0 Secretaria de Estado de Salud Psblica y Asistencia Social (SESPAS) 0 Secretaria de Estado de Economia, Planificaci6n y Desarrollo (SEEPyD) 0 Seguro Nacional de Salud (SENASA) 0 Programa de Medicamentos Esenciales y Central de Abastecimiento y Logistica (PROMESEICAL) Bank staff and consultants who worked on the project included: I Name Title Unit Fernando Montenegro Torres Economist (Health) LCSHH Andrea Guedes Senior Operations Officer LCSHE Nelson Gutikrrez Operations Officer LCSHS Catherine Abreu Rojas Procurement Analyst LCSPT Maritza Rodriguez Financial Management LCSFM Fabiola Altimari Sr. Counsel LEGLA Mariana Montiel Sr. Counsel LEGLA Ant6n Leis Garcia Counsel LEGLA Patricia De la Fuente Hoyes Sr. Finance Officer CTRFC Alfredo Perazzo Consultant LCSHH Isabella Bablumian Consultant LCSHH Veronica Jarrin Senior Program Assistant LCSHH Julie B. Nannucci Senior Program Assistant LCSHH Judith Williams Team Assistant LCSHH 87 Bank funds expended to date on project preparation: 1, Bank resources: US$135,458.00 2. Trust funds: 0.00 3. Total: US$135,458.00 Estimated Approval and Supervision costs: Remaining costs to approval: US$ 2,000 Estimated annual supervision cost: US$ 110,000 88 Annex 12: Documents in the Project File DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2) 1. Centro de Estudios Sociales y Demograficos (CESDEM). 2007. Encuesta Demogrbfica y de Salud: Repziblica Dominicana. Santo Domingo. 2. CERSS. 2008. Consolidacion de redes publicas de proveedores de servicios de salud a nivel regional, description de 10s antecedentes, situacion actual y perspectivas futuras de cara a las nuevas politicas sectoriales. 3. Consejo Nacional de Seguridad Social: Gerencia General. Preguntas Sobre el Sistema Dominicano de Seguridad Social. Organizacion Panamericana de la Salud. 4. Conte, Adriana. 2006. Una Reforma para estar en salud: claves para profesionales del sector sanitario. PROSISA. 5. Comision de Reforma del sector Salud: Coordinacion de redes y Provision de servicios de Salud. 2009. Desarrollo de la Description del paquete de servicios de atencion primaria del seguro familiar en el primer nivel de atencion. 6. Cornision de Reforma del Sector Salud: Coordinacion de redes y Provision de servicios de Salud. 2009. Documento descriptivo de 10s desafios del sector salud en relacibn a salud materno-infantil incluyendo el tema de mortalidad materna, las intervenciones actuales y aquellas cuyas brechas el proyecto ayudaria financiar. 7. Cornision ejecutiva para la reforma del sector salud. 2009. Logros proyecto de apoyo a la reforma del sector salud fase i (PARSS-1). Santo Domingo 8. Comision de Reforma del sector Salud. 2009. Enfermedades Cronicas en la Republica Dominicana 9. Pieter, Ana Manuela. 2008. Diagnostic0 de 10s Servicios Regionales de Salud, en el Marco de la Reforma del Sistema de Seguridad Social en Salud de la Republica Dominicana. World Bank. 10. Presidencia de la Republica Dominicana. 2005. Reglamentos de la ley general de salud: Volumen 11 Santo Domingo. 1 1. Programa Mundial de Alimentos (WFP). 2007. Atlas del hambre y la desnutricion de la Republica Dominicana. Santo Domingo 12. Secretaria de Estado de Salud Publica y Asistencia Social. 2000. Reglamento General de Hospitales: Decreto No. 351-99. Santo Domingo. 13. Vasquez Cabral, Matilde. 2008. Repziblica Dominicana: En el Camino Hacia la Erradicacidn de la Desnutricidn Infantil. Santo Domingo 14. Veras, Elisa, Rosa Maria Caiiete Alonso, Chanel Mateo Rosa Ch, and Jefrey Lizardo. 2004. Estudios Sociales: Priorizar el Seguro Social. Santo Domingo. 15. World Bank. 2009. Health System Performance and Recommendations: Dominican Republic. Policy Note Background Paper. 89 Annex 13: Statement of Loans and Credits DOMINICAN REPUBLIC: Health Sector Reform APL 2 (PARSS2) Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PO54221 2009 DO (AF'L1) WAT.&SANI.TOUR.AREAS 27.50 0.00 0.00 0.00 0.00 27.50 0.00 0.00 PO89866 2008 DO Electricity Distrib Rehabilitation 42.00 0.00 0.00 0.00 0.00 42.00 3.75 0.00 PO900 10 2008 DO Social Sectors Investment Program 19.40 0.00 0.00 0.00 0.00 18.90 8.40 0.00 P109932 2008 DO Emergency Recovery & Disaster Mgmt 80.00 0.00 0.00 0.00 0.00 80.00 0.00 0.00 PO96605 2006 DO Youth Development Project 25.00 0.00 0.00 0.00 0.00 23.07 17.11 -0.04 PO78838 2004 DO Financial Sector Technical Assistance 12.50 0.00 0.00 0.00 0.00 7.92 7.92 0.00 PO82715 2004 DO Power Sector TA Project 7.30 0.00 0.00 0.00 0.00 2.24 1.99 1.62 PO54937 2003 DO-EARLY CHILDHOOD EDUCATION 42.00 0.00 0.00 0.00 0.00 18.61 18.61 7.61 PROJECT PO76802 2003 DO-Health Reform Support (APL) 30.00 0.00 0.00 0.00 0.00 9.35 9.35 -0.22 Total: 285.70 0.00 0.00 0.00 0.00 229.59 67.13 8.97 DOMINICAN REPUBLIC STATEMENT OF IFC's Held and Disbursed Portfolio In Millions of US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2003 ADOPEM 0.00 1.oo 0.00 0.00 0.00 0.00 0.00 0.00 2005 Aerodom 45.00 0.00 0.00 15.00 45.00 0.00 0.00 15.00 2006 Aerodom 17.00 0.00 0.00 0.00 16.50 0.00 0.00 0.00 2003 Banco BHD 10.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 2005 Basic Energy 22.65 0.00 0.00 0.00 10.22 0.00 0.00 0.00 2002 CII 28.50 0.00 0.00 0.00 28.50 0.00 0.00 0.00 2004 Domicem S.A. 24.00 0.00 0.00 24.00 24.00 0.00 0.00 24.00 2005 Domicem S.A. 3.75 0.00 0.00 3.75 3.75 0.00 0.00 3.75 1998 Flamenco Bavaro 1.18 0.00 7.70 4.07 1.18 0.00 7.70 4.07 2004 Grupo M 20.00 0.00 0.00 0.00 12.95 0.00 0.00 0.00 2000 Hospiten 1.oo 0.00 0.00 0.60 1.oo 0.00 0.00 0.60 2005 Occidental Hotel 0.00 0.00 20.00 0.00 0.00 0.00 20.00 0.00 2005 Occidom 8.89 0.00 0.00 35.56 8.89 0.00 0.00 35.56 2002 OrangeDominicana 23.29 0.00 15.00 33.27 23.29 0.00 15.00 33.27 2000 Rica 5.63 0.00 3.00 0.00 5.63 0.00 3.00 0.00 Total portfolio: 210.89 1.00 55.70 116.25 180.91 0.00 55.70 116.25 ~~ ~~ ~~ Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. ~~ 2003 ADOPEM 0 00 0 00 0 00 0.00 Total pending commitment: 0.00 0.00 0.00 0.00 90 Annex 14: Country at a Glance Dominican Republic: Health Sector Reform APL 2 (PARSS2) Lath POVERTY and SOCIAL Domlnlcan America mlddle- Development diamond. Rewblic 8 Carib. 2007 9.8 3,437 Population, mid-year (millions) 563 Life expectancy GNI per capita (Atias method, US$) 3,550 5,540 1,887 GNI (Atlas method, US$ billions) 34.6 3,118 6,485 Average annual QrOwth, 2001-07 T Population I%) 1.5 1.3 1.1 GNI Gross Labor force (%) 2.4 2.1 1.5 per primary Most recent estlmate (latest year available, 2001-07) capita enrollment Poverty (W of population below national poverty line) 42 Urban population (% of total population) 68 78 42 Life expectancy at birth (years) 72 73 69 Infant mortality (per 1,OOOlive blrthsl 25 22 41 Child malnutrition (% of children under 5) 4 5 25 Access to improved water source Access to an improved water source (% ofpopulation) 95 91 88 Literacy (% of copulation age 15+) 87 90 89 Gross primary enrollment (% of school-age population) 98 118 111 "~ Dominican Republic Male 101 120 112 -Lower-middle-income group Female 96 116 109 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1987 1997 2008 2007 Economic ratios' GDP (US$ billions) 5.8 15.1 31.9 36.7 Gross capital formationlGDP 24.2 19.8 20.2 21.9 Trade Exports of goods and ServicesIGDP 25.6 46.8 33.2 34.5 Gross domestic savingslGDP 124 15.1 13.7 Gross national savings1GDP 19.3 18.7 17.5 19.9 T Current account balance1GDP 4.2 -1.1 -2.5 -1.8 Domestic Capital Interest payments1GDP 1.9 1.1 0.8 savings Total debtlGDP 67.3 28.1 27.9 Total debt servicalexports 18.4 5.5 9.6 Present value of debtlGDP 28.9 Present value of debtlexports 61.4 Indebtedness 1987-97 1997-07 2006 2007 2007-11 (average annual growth) GDP 3.4 5.2 10.7 8.5 5.3 ___C,-rDominican Republic GDP per capita 1.5 3.5 9.0 7.0 4.6 -Lower-middle-income group Exports of goods and services 7.5 3.6 5.8 7.6 3.7 STRUCTURE of the ECONOMY 1987 I997 2006 Growth of capltal and GDP (Oh) (% of GDP) 1 20 Agriculture 11.9 12.2 11.9 12.0 lndustrf 20.7 33.0 25.9 27.7 10 Manufacturing 12.8 17.5 13.8 13.2 0 Services 87.4 54.8 82.1 60.3 -10 Household final consumption expenditure 81.9 79.4 79.7 -20 1 General gov't final consumption expenditure 5.8 5.5 6.6 65 GCF Imports of goods and SeNlCBS 37.4 51.5 39.7 41 4 - 4GDP 1987-97 1997-07 2006 Growth of exporta and lmporta (Oh) (average annual growth) I I Agriculture 1.8 4.8 9.9 99 Industry 3.9 3.2 13.1 72 IO Manufacturing 3.3 3.0 7.4 45 %Nice5 3.6 6.3 9.7 80 O -lo Household final consumption expenditure 2.9 4.3 14.3 5 8 General gov't final consumption expenditure 4.8 4.4 9.7 4 0 -20 Gross capital formation 4.6 3.3 12.1 16 2 -_.1- Expons -0- imporb Imports of goods and services 6.5 1.6 12.6 ~ Note 2007 data are preliminary estimates This table was produced from the Development Economics LDB database 'The diamonds show four key indicators in the country (in bold) compared with its income-group average If data are missing, the diamond will be incomplete I 91 C Dominican Republic at a glance 9124108 Latin Lower- ~ POVERTY and SOCIAL Domlnlcan America mlddle- Davaiopment diamond’ RaDublic 8 Carib. income 2007 Population, midyear (millions) 9.8 563 3,437 Life expectancy GNI per capita (Mas method, US$) 3,550 5,540 1,887 GNI (Aflas mefhod, US$ billions) 34.6 3,118 6,485 Average annual growth, 200147 T Population (%) 1.5 1.3 1.1 Labor force (%) 2.4 2.1 1.5 GNI Gross per t primary Moat recent estimate (latest year avallable, 2001-07) capita enrollment Poverty (% of population below national poverty line) 42 Urban population (% of total population) 68 78 42 Life expectancy at birth (years) 72 73 69 Infant mortality (per 1,000 live births) 25 22 41 Child malnutrition (% of children under 5) 4 5 25 Access to improved water source Access to an improved water source (% ofpopulafion) 95 91 88 Literacy (% ofpopulation age 15+) 87 90 89 Gross primary enrollment f% of school-age population) 98 118 111 _--XI Dominican Republic Male 101 120 112 Lower-middle-income group Female 96 116 109 I- KEY ECONOMIC RATIOS and LONG-TERM TRENDS we7 1997 2006 2007 Economic ratios. GDP (US$ billions) 58 15.1 31.9 36.7 Gross capital formatiofVGDP 24 2 19.8 20.2 21.9 Trade Exports of goods and s~NIc~sIGDP 25 6 46.8 33.2 34.5 Gross domestic savings1GDP 12 4 15.1 13.7 Gross national savingslGDP 19 3 18.7 17.5 19.9 T Current account balancelGDP -62 -1.1 -2.5 -1.8 Interest paymentslGDP 19 1.1 0.8 Total debVGDP 67 3 28.1 27.9 Total debt servicelexports 18 4 5.5 9.6 Present value of debtiGDP 26.9 Present value of debtiexports 61.4 Indebtedness 1987-97 1997-07 2006 2007 2007-11 (average annual growth) GDP 34 52 10.7 6.5 5.3 Dominican Republic GDP per capita 15 35 9.0 7.0 4.6 -Lower-middloncome group Exports of goods and services 75 36 5.8 7.6 3.7 lgE7lgS7 Growth of capital and GDP (Oh) 20 119 122 119 120 207 330 259 277 10 128 175 138 132 o 674 548 62 1 603 1987.97 1997.07 Growth of exports and Imports (Oh) (average annual growth) Agriculture 1 8 4.8 9.9 9.9 2O Industry 3.9 3.2 13.1 7.2 Manufacturing 3.3 3.0 7.4 4.5 Services 3.6 6.3 9.7 8.0 O -lo 04 05 og 07 Household final consumption expenditure 2.9 4.3 14.3 5.6 General gov’t final consumption expenditure 4.8 4.4 9.7 4.0 -20 Gross capital formation 4.6 3.3 12.1 16.2 --..“.“1 Exports --O- Imports Imports of goods and services 6.5 1.6 12.6 6.7 , 92 72º W 71º W 70º W DOMINICAN ATLANTIC OCEAN REPUBLIC 20º N SELECTED CITIES AND TOWNS 20º N PROVINCE CAPITALS Luperón Monte Cristi NATIONAL CAPITAL Puerto Plata Sousúa Pepillo Imbert RIVERS Salcedo MONTE Villa Vásquez Co rd ESPAILLAT Ya il MAIN ROADS qu le PUERTO PLATA CRISTI e del No ra Cabrera rte Se Rio San To pte Juan RAILROADS Fort-LibertéFort Liberté Mao ntri Gaspar Dajabón 3 onal Hernández MARÍA PROVINCE BOUNDARIES Santigo TRINIDAD Sabaneta INTERNATIONAL BOUNDARIES 1 Moca 4 SÁNCHEZ 2 Jánico San Francisco Nagua Salcedo de Macorís Restauración San Jose This map was produced by the Map Design Unit of The World Bank. de las Matas The boundaries, colors, denominations and any other information HAITI La Vega SAMANÁ shown on this map do not imply, on the part of The World Bank Pimental Group, any judgment on the legal status of any territory, or any SANTIAGO Ca u Sánchez AC m DUARTE Samaná endorsement or acceptance of such boundaries. IÑ o Rincón P r d i l l e Pico Duarte Fantino Sabana de la Mar S r a (3175 m) Cotuí na A Monte Mijo C LA VEGA u 19º N Í e Y Sabana Grande Miches 19º N L (2266 m) n t Bonao 5 de Boya HATO E r a l Constanza MAYOR SAN JUAN 6 EL SEIBO To Elías Piña MONTE PLATA Lascahobas Monte Tina Cordiller San Juan a Orienta El Macao (2830 m) Yamasa Monte Bayaguana Hato l El Cercado Plata El Seibo O Mayor z a Villa m 7 a Higüey C Altagracia ordillera N eiba AZUA San Jose LA de Ocoa 9 r 10 u 8 S ALTAGRACIA BAORUCO l Lago e To d Azua Jimaní Enriquillo e San Cristóbal Port-au-PrincePort au Prince Neiba qu SANTO Ya Boca San Pedro I Boca de Yuma N Duverge DOMINGO Chica La Romana DE Vicente Nigua de Macorís PE Noble Bahía NDENCIA de Ocoa Baní DISTRITO NACIONAL B LA ROMANA ah ía d Ne e Cabral iba Punta Palenque To S PERAVIA Grand-Gosier P ie Barahona E r Polo Isla ra D d 1. DAJABÓN Saona E e R B BARAHONA Pedernales ao 2. SANTIAGO RODRÍGUEZ 18º N N ru 18º N A co 3. VALVERDE LE S 4. HERMANAS MIRABAL DOMINICAN 5. SÁNCHEZ RAMÍREZ REPUBLIC Caribbean Sea Oviedo 6. MONSEÑOR NOUEL 7. SAN JOSÉ DE OCOA 0 20 40 Kilometers IBRD 33398R Isla 8. SAN CRISTÓBAL MAY 2009 Beata 9. SANTO DOMINGO 0 20 40 Miles 10. SAN PEDRO DE MACORÍS 72º W 71º W 70º W 69º W