New regulation regarding hospital replacement and reduction by healthcare plans

On August 24, 2023, the Brazilian Supplementary Health Agency (“ANS”) published Normative Resolution ANS No. 585, of August 18, 2023 (“Resolution”), which provides for:

• criteria relating to changes within the hospital network regarding the replacement of hospitals and reduction of the network; and
• the amendment of Normative Resolution No. 489, of March 29, 2022, which provides for enforcement of penalties regarding violations to the private healthcare plan regulation.

Below are the main innovations introduced by the new Resolution:

Hospital replacement:

Hospitals included in healthcare plans can be replaced with equivalent hospitals located in the same city as the excluded hospital, unless there are no other healthcare providers available. In the latter case, hospitals located in neighboring cities are eligible as a replacement.

The new equivalence rule states that the new hospital must match the conditions of hospital and emergency care that had been used for the beneficiaries for the past 12 months, at the hospital that will be replaced.

Such equivalence will be assessed in services whose data is provided to the ANS through the Supplementary Health Information Exchange Standard (TISS, in portuguese).

Additionally, if the substitute provider does not match all hospital services equivalent to the previous provider, supplementary providers (whether hospital or not) can be contracted to replace such services.

Reduction of the hospital network:

Reduction of the hospital network is allowed, if the hospital to be excluded is not responsible for up to 80% of hospitalizations in its service area over the last 12 months. Otherwise, hospital and emergency services can only be replaced, not excluded, given the significant impact to which the beneficiaries would be subject.

However, if the hospital provider to be excluded is responsible for up to 80% of the hospitalizations but is individually providing less than 5% of these hospitalizations, such provider is subject to exclusion.

These criteria will not apply in cases where the request for exclusion of hospital providers is due to the termination of hospital activities or due to termination of the contract between the hospital and the intermediary operator, in cases of indirect contracting. In such cases, the resizing of the hospital network will be authorized, provided that there is proof of the request’s motivation.

Temporary suspension of care at the hospital provider:

Temporary suspension of up to 180 days does not require healthcare plan operators to request permission for resizing or to report any replacements to the ANS.

However, if the hospital ends activities during such temporary suspension, the healthcare plan operator must provide a replacement hospital or resize the hospital network through reduction.

Grace period portability:

The new Resolution is more flexible in regard to portability, establishing that beneficiaries of the healthcare plan can transfer the grace period in case the hospital is excluded from the network, as well as if the hospital ceases to provide emergency care in the city where the beneficiary lives or where the plan was contracted, regardless of the retention period or the price range of the plan. The portability request must be submitted within 180 days from the date of exclusion.

Direct and individualized communication:

Another important advance is that the main beneficiaries of the plan must be individually informed by the operator whenever there is any replacement, exclusion or reduction of emergency services in their residing city.

In addition, the replacement, exclusion and reduction of hospital services must  be informed to the beneficiaries through the Corporate Portal, at least 30 days in prior to the termination of the service. Such information must remain accessible for 180 days, except provided otherwise in the Resolution.

Provision for new violation to private healthcare plan legislation:

Finally, the Resolution provides for a new type of violation subject to a BRL 40,000 fine for the partial exclusion of hospital or emergency services.

The Resolution will enter into force on March 01, 2024 and will be reassessed 24 months later.

Demarest’s Life Sciences team is monitoring the updates of the industry and is available to provide any further clarifications that may be necessary.