As Standoff Between EPS Sanitas and Cruz Verde Comes to a Head, Colombian Government Steps in to Mediate

Colombia’s inspector general has been forced to step in to mediate a standoff that threatens more than 33,000 people who could be affected by pharmacy chain Cruz Verde’s decision to stop supplying certain medications and health items to members enrolled with EPS Sanitas, a leading public health coverage provider within the national EPS system.

Photo: Colombian Inspector General Margarita Cabello has summoned the involved parties to a technical meeting in hopes of resolving the conflict. (Photo credit: Office of the Inspector General of Colombia)

Colombian Inspector General Margarita Cabello indicated that resolving this issue will require a series of meetings “for the purposes of achieving points where the best interest, which is the benefit of citizens, especially those affiliated with Sanitas, can be resolved quickly.”The first meeting was planned for November 9, but it was canceled after Health Minister Alfonso Jaramillo questioned the representative assigned for that meeting by the inspector general. 

While the dispute between the firms has been simmering longer, the crisis came to a head when Cruz Verde claimed on October 30 that Sanitas, which in total serves more than five million people, owes the pharmacy around $100 million USD that has been accumulating gradually over several years, month by month, for certain medications and supplies. For this reason, beginning November 15, the pharmacy has said it will stop supplying Sanitas members with these medications that are included in the nation’s Health Basic Plan.

Regarding the deadline, Sanitas said in a statement that it has reached an agreement with Audifarma, pharmaceutical management firm, to distribute these medicines and avert the feared crisis.

The Health Basic Plan (PBS) generally dictates which medications are covered and paid for by the public system and therefore mandated to be distributed by the private administrators. By contrast, non-PBS medications and supplies are those that are not included in the plan. 

Although the list is updated regularly, broadly speaking, the non-PBS medicines, supplies, or technologies fall outside of the core mission of prevention, diagnosis, treatment, rehabilitation or palliation of disease. Since they are not covered by the government, these items must be first authorized by the health providers before pharmacies distribute them to the patients.

The list is extensive, but some non-PBS items include diapers, vitamins, supplements, contact lenses, wheelchairs, orthopedic insoles, sunscreen, and certain skin remedy creams.

According to Sanitas, the reason for the debt is because the Colombian government  has had a payment delay of $619,000 USD in the maximum budgets, which are the payments that the state makes in advance to companies for medications not included in the Basic Health Plan.

“Unfortunately,” wrote Sanitas in a statement, “the issue of maximum budgets with which this decision is related is one of the reasons why we have been alerting the government for months about the importance of finding solutions to the current situation without, until now, having had a response in this regard.”

Colombian Health Minister Downplayed the Financial Struggles of EPS Providers

In August, Colombia’s health minister downplayed the claims from the nation’s largest public EPS health coverage providers — including Sanitas, along with Sura and Compensar — that they are suffering a financial crisis that could affect the provision of services to patients if the government does not increase the budget they are allocated to fulfill their mission.

“They want to make a storm in a glass of water, and we cannot accept that either,” said Guillermo Alfonso Jaramillo, head of the Ministry of Health (MinSalud), during an August press conference. “Except for some debts from the former government related to COVID issues, we can say that we do not have financial obligations to them. Now, they tell us about losses, but they never told us about the profits they had in 2020 and 2021.”

Despite the comments, Jaramillo did commit in August to set up technical tables with the EPS providers and other industry stakeholders. As a result of the discussion, Jaramillo announced that his ministry will transfer another $2.4 million USD to the Sanitas, Sura and Compensar, the three organizations that sent him the missive, until the end of the year. 

He agreed to this compromise despite, as he pointed out, the fact that the government had already distributed more than $3.3 million USD to the companies.

EPS Providers Claim Claimed that Funding Was Insufficient

The companies expressed their concerns in a formal letter to Jaramillo on July 27 that was signed by top executives of the three largest EPS providers: Pablo Otero, general manager of EPS Sura; Andrés Barragán, health director of EPS Compensar; and Juan Pablo Rueda, president of EPS Sanitas. They stated that their companies are suffering major losses because the public funding they rely on is insufficient to attend to the 13 million combined patients they have, a total that represents more than half of the patients affiliated to the Health Contributory Regime (22 million in total). 

This regime covers the people who work and make their payments for health care. This is the opposite of the Health Subsidized Regime, in which the state is the one that assumes this obligation (they are 24 million Colombians).

The text attracted the attention of three main topics. The first critical request is that the value of the Capitation Payment Unit (UPC) is insufficient to meet the real demands of sick people. This value corresponds to a calculation that purportedly responds to what it costs each EPS to care for each patient. Once this figure is defined, the government gives them money that corresponds to the number of people the EPS have under its responsibility.

Regarding this subject, the health companies have pointed out that the cost for taking care of a patient with cancer is not equal to a patient who has temporary food poisoning, for example, in terms of medical staff, equipment, laboratory tests, bed occupation, etc.

The second element is the equitable redistribution of resources given that some EPS have to attend to a greater number of cases of serious illnesses and others present better financial results because their patients do not suffer from such catastrophic ailments, so the expenses are lower. As an example, the letter senders assured that they spend $102 USD for every $100 USD that they receive for this concept.

And the last one is the payment of maximum budget debts, recoveries, COVID related conditions, licenses and disabilities and pending compensation processes. Concerning this point, the Health and Social Protection Ministry office promised that the money is on its way in the next few weeks.

Petro’s Quest for Health Reform and Potential Changes to the Public Healthcare System

President Gustavo Petro campaigned on a promise of reform. The health system was one of his most important areas to change, and he has been attempting to make progress in this area for the whole year since he took office. So far, however, things have been moving slowly and he has lost a lot of political support to enact any changes due to a series of controversies and a major defeat for his party all across the country in local and regional elections.

Nevertheless, the president has put forth a reform package, and some of the ideas have gained some support. The one thing many people — even his political opponents — agree on is that the system is in need of improvements.

While it’s hard to know what the final form of any reform may be, at this moment, in what has been discussed in Congress, it is known the health provider companies would change their names to Health and Life Managers. If the health reform were to be approved, according to the text, the proposal is that the money for the patients would be transferred directly to the Health Care Institutions (known by Colombians as IPS), such as clinics, hospitals and health care facilities.

This name change responds to the fact that, per arguments from the Petro administration, the EPS unnecessarily delays the payments of the funds they receive from the government and this affects the users’ attention. Under the reform, the System of Social Security in Health (ADRES), the state entity that is currently in charge of transferring the budget, would instead transfer funds without intermediaries and, supposedly, this adjustment in the procedure would end the pending debts the EPS providers have with the IPS.

If the reform were to pass, the current EPS would have two years to become Health and Life Managers, and the Superintendence of Health (SuperSalud) would have the power to authorize which Health and Life Managers comply with the government’s requirements and would have the green light to operate.

The Current State of Colombia’s Healthcare System

Despite a desire for improvement from most stakeholders in Colombia, the national healthcare system is generally regarded well compared to its regional peers and many critics have campaigned against the president’s reform proposals, saying that they could push the country toward economic instability due to its anti-private practice measures.

According to a survey conducted by Cifras y Conceptos early this year, 80% of the Colombians indicated that they do not agree with the elimination of the current health providers, and more than half (51%) do not agree that the national government should manage the entities that provide healthcare.

Finally, the Colombian health users differ with Gustavo Petro’s argument that assures that the state would manage health services more efficiently than private firms. In this matter, 85% of those consulted disagree with governors or mayors at the national level having any type of interference in the territorial health funds, as it could exacerbate the menace of corruption among politicians.