JANUARY

GERMANY
The 16 state governments determine hospital capacity, while ambulatory care capacity is subject to rules set
by the Federal Joint Committee. Inpatient care is paid per admission through a system of diagnosis-related
groups (DRGs) revised annually, currently based on around 1,200 DRG categories. DRGs also cover all physician
costs. Other payment systems like pay-for-performance or bundled payments have yet to be implemented
in hospitals.
Mental health care: Acute psychiatric inpatient care is largely provided by psychiatric wards in general (acute)
hospitals, while the number of hospitals providing care only for patients with psychiatric and/or neurological
illness is low. In 2014, there were a total of 32,872 office-based psychiatrists, neurologists, and psychotherapists
working in the ambulatory care sector (paid FFS) (Federal Association of SHI Physicians, 2015). Qualified GPs
can provide basic psychosomatic services. Ambulatory psychiatrists are also coordinators of a set of SHIfinanced
benefits called “sociotherapeutic care” (which requires referral by a GP), to encourage the chronically
mentally ill to use necessary care and to avoid unnecessary hospitalizations. To further promote outpatient care
for psychiatric patients (particularly in rural areas with a low density of psychiatrists in ambulatory care), hospitals
can be authorized to offer treatment in outpatient psychiatric departments.
Long-term care and social supports: LTCI is mandatory and usually provided by the same insurer as health
insurance, and therefore comprises a similar public–private insurance mix. The contribution rate of 2.35 percent
of gross salary is shared between employers and employees; people without children pay an additional 0.25
percent. The contribution rate will increase further by 0.2 percentage points in early 2017. Everybody with a
physical or mental illness or disability (who has contributed for at least two years) can apply for benefits, which
are: 1) dependent on an evaluation of individual care needs by the SHI Medical Review Board (leading either to
a denial or to a grouping into currently one of three levels of care); and 2) limited to certain maximum amounts,
depending on the level of care. Beneficiaries can choose between in-kind benefits and cash payments (around
a quarter of LTCI expenditure goes to these cash payments). Both home care and institutional care are provided
almost exclusively by private not-for-profit and for-profit providers. As benefits usually cover approximately 50
percent of institutional care costs only, people are advised to buy supplementary private LTCI. Since 2013,
family caregivers get financial support through continuing payment of up to 50 percent of care payments if they
provide care.
Hospice care is partly covered by LTCI if the SHI Medical Review Board has evaluated a care level. Medical
services or palliative care in a hospice are covered by SHI. The number of inpatient facilities in hospice care has
grown significantly over the past 15 years, to 200 hospices and 250 palliative care wards nationwide in 2014
(German Hospice and Palliative Association, 2015). Legislation has recently been discussed to improve hospice
and palliative care with the aim of guaranteeing care in underserved rural areas and linking long-term care
facilities more strongly to ambulatory palliative and hospice care.
What are the key entities for health system governance?
The German health care system is notable for two essential characteristics: 1) the sharing of decision-making
powers between states, federal government, and self-regulated organizations of payers and providers; and 2)
the separation of SHI (including the social LTCI) and PHI (including the private LTCI). SHI and PHI (as well as the
two long-term care insurance systems) use the same providers—that is, hospitals and physicians treat both
statutorily and privately insured patients, unlike many other countries.
Within the legal framework set by the Ministry of Health, the Federal Joint Committee has wide-ranging
regulatory power to determine the services to be covered by sickness funds and to set quality measures
for providers (see below). To the extent possible, coverage decisions are based on evidence from health
technology assessments and comparative-effectiveness reviews. The Federal Joint Committee is supported
by the Institute for Quality and Efficiency (IQWiG), a foundation legally charged with evaluating the costeffectiveness
of drugs with added therapeutic benefits, and the newly formed Institute for Quality and
Transparency (IQTiG). The Federal Joint Committee has had 13 voting members: five from the Federal
Association of Sickness Funds, two each from the Federal Association of SHI Physicians and the German
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The Commonwealth Fund