DOCUMENT OF THE WORLD BANK FOR OFFICIAL USE ONLY Report No. 84793-MD INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 20 MILLION (US$30.8 MILLION EQUIVALENT) TO THE REPUBLIC OF MOLDOVA FOR A HEALTH TRANSFORMATION OPERATION April 30, 2014 Human Development Sector Unit Belarus, Moldova and Ukraine Country Management Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.     CURRENCY EQUIVALENTS (Exchange Rate Effective: March 31, 2014) Currency Unit = Moldovan Leu (MDL) MDL 13.3 = US$1 US$0.08 = MDL 1 US$1 = SDR 0.65 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ACG Anti-Corruption Guidelines CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CIFMA Compulsory Insurance Funds for Medical Assistance CNAM National Health Insurance Company COFOG Classification of Functions of Government CoA Court of Accounts CoI Conflict of Interest CPS Country Partnership Strategy CSO Civil Society Organization DA Designated Account DALY Disability-Adjusted Life Year DLI Disbursement Link Indicator DRG Diagnostic-Related Groups ECA Europe and Central Asia EU European Union FM Financial Management GYTS Global Youth Tobacco Survey GDP Gross Domestic Product GFS Government Finance Statistics GOM Government of Moldova HCF Healthcare Facility HCSDS Health Care System Development Strategy HCWM Health Care Waste Management HDI Human Development Index IBRD International Bank for Reconstruction and Development HBS Household Budgetary Survey HCW Healthcare Wastes IBRD International Bank for Reconstruction and Development IDA International Development Association INTOSAI International Organization of Supreme Auditing Institutions IPF Investment Project Financing IRA Integrated Risk Assessment IRR Internal Rate of Return IT Information Technology KPR Key Program Result MDL Moldovan Leu ii   MHI Mandatory Health Insurance MIS Management Information System MOE Ministry of Environment MOF Ministry of Finance MOH Ministry of Health M&E Monitoring and Evaluation MTBF Medium-Term Budgetary Framework NADME National Agency for Drugs and Medical Equipment NAC National Anti-Corruption Center NCDs Non-communicable diseases NGO Non-Governmental Organization NHSDS National Health System Development Strategy NPV Net Present Value NDS National Development Strategy OOP Out-of-Pocket Payment OPRC Operational Procurement Review Committee PAD Project Appraisal Document PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PhW Pharmaceutical Wastes PP Procurement Plan PPA Public Procurement Agency PPL Public Procurement Law PMU Project Management Unit PforR Program for Results SSPHS State Service for Public Health Surveillance STEPS Stepwise Approach to Surveillance of Non-communicable Diseases TSA Treasury Account UNDP United Nations Development Programme WHO World Health Organization Vice President Laura Tuck Country Director: Qimiao Fan Acting Sector Director: Alberto Rodriguez Sector Manager Daniel Dulitzky Task Team Leader: Son Nam Nguyen iii   REPUBLIC OF MOLDOVA HEALTH TRANSFORMATION OPERATION Table of Contents I. STRATEGIC CONTEXT ................................................................................................ 1 A. Country Context ......................................................................................................... 1 B. Sectoral and Institutional Context.............................................................................. 1 C. Relationship to the Country Partnership Strategy (CPS) and Rationale for Use of Instrument ................................................................................. 4 II. PROGRAM DESCRIPTION ........................................................................................... 5 A. Program Scope ........................................................................................................... 5 B. Program Development Objective ............................................................................... 9 C. Key Program Results (KPRs) and Disbursement Linked Indicators (DLIs) ............. 9 D. Key Capacity Building and Systems Strengthening Activities................................ 10 III. PROGRAM IMPLEMENTATION .............................................................................. 11 A. Institutional and Implementation Arrangements ..................................................... 11 B. Results Monitoring and Evaluation ......................................................................... 12 C. Disbursement Arrangements and Verification Protocols ........................................ 12 IV. ASSESSMENT SUMMARY .......................................................................................... 13 A. Technical .................................................................................................................. 13 B. Fiduciary .................................................................................................................. 16 C. Environmental and Social ........................................................................................ 18 D. Integrated Risk Assessment Summary..................................................................... 19 E. Program Action Plan ................................................................................................ 20 iv   Annexes Annex 1: Detailed Program Description ...................................................................................... 21 Annex 2: Results Framework Matrix ........................................................................................... 28 Annex 3: Disbursement Linked Indicators, Disbursement Arrangements and Verification Protocols ..................................................................................................................... 31 Annex 4: Summary Technical Assessment.................................................................................. 39 Annex 5: Summary Fiduciary Systems Assessment .................................................................... 53 Annex 6: Summary Environmental and Social Systems Assessment ......................................... 80 Annex 7: Integrated Risk Assessment ......................................................................................... 91 Annex 8: Technical Assistance and Capacity Building Component (IPF Instrument) ............... 93 Annex 9: Program Action Plan .................................................................................................... 98 Annex 10: Implementation Support Plan ..................................................................................... 99 Annex 11: Organizational Diagram of the Health System in the Republic of Moldova ............ 102 MAP: IBRD 33448 v   PAD DATA SHEET Republic of Moldova Health Transformation Operation PROGRAM APPRAISAL DOCUMENT Europe and Central Asia ECSH1  . Basic Information Date: April 30, 2014 Sectors: Health (100%) Country Director: Qimiao Fan Themes: Health System Performance (P); Sector Manager: Daniel Dulitzky Public Expenditure, Financial Sector Director: Alberto Rodriguez Management and Procurement (P), Non-Communicable Diseases (P) Program ID: P144892 Financing PforR and IPF instruments: Environmental C category (for IPF portion) Team Leader(s): Son Nam Nguyen Program Implementation Start Date: May 27, 2014 End Date: March 30, 2019 Period: Expected Financing Effectiveness Date: October 1, 2014 Expected Financing Closing Date: September 30, 2019 . Program Financing Data [ ] Loan [ ] Grant [ ] Other [x] Credit For Loans/Credits/Others (US$ million): Total Program Total Bank Financing : 113.7 30.8 Cost: Total Financing Gap : 82.9 0.0 Cofinancing:     vi   . Financing Source Amount BORROWER/RECIPIENT 82.9 IBRD/IDA 30.8 (28.7 PforR and 2.1 IPF) Total 113.7 Borrower: Republic of Moldova Responsible Agency: Ministry of Health (MOH) Contact: Mr. Andrei Usatii Title: Minister of Health Telephone No.: +373 22 26 88 85 Email: ausatiimd@gmail.com Responsible Agency: National Health Insurance Company (CNAM) Contact: Mr. Mircea Buga Title: Director General Telephone No.: +373 22 22 31 66 Email: mbuga@cnam.md Expected Disbursements (in US$ Million) Fiscal Year 2015 2016 2017 2018 2019 Annual 7.9 8.1 5.5 7.0 2.3 Cumulative 7.9 16.0 21.5 28.5 30.8 . Program Development Objective(s): The Program Development Objective is to contribute to reducing key risks for non-communicable diseases and improving efficiency of health services in Moldova. Compliance Policy Does the program depart from the CAS in content or in other significant respects? Yes [ ] No [x] . Does the program require any waivers of Bank policies applicable to Program-for-Results Yes [ ] No [x] operations? Have these been approved by Bank management? Yes [x] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [x] Does the program meet the Regional criteria for readiness for implementation? Yes [x] No [ ] Does the IPF Component trigger any safeguard policies? Yes [ ] No [x] If so, which one(s)? Overall Risk Rating: Moderate     vii   Legal Covenants Name Recurrent Due Date Frequency Ministerial Order Yes N/A Description of Covenant No later than 30 calendar days after effectiveness the Recipient, through the MOH shall issue a ministerial order designating the NCPH (Ministerial Order) for purposes of implementing the activities under Part I.5 of the Operation, under terms and conditions acceptable to the Association. Name Recurrent Due Date Frequency CNAM Implementation Agreement Yes N/A Description of Covenant No later than 30 calendar days after effectiveness the Recipient, through the MOH shall enter into an agreement with the CNAM (CNAM Implementation Agreement) for the purposes of implementing the activities under Part I.2, I.3 and I.4 of the Operation, under terms and conditions acceptable to the Association. Name Recurrent Due Date Frequency Appointment of Technical Verification No No later than 6 months after N/A Agencies effectiveness Description of Covenant The Recipient shall not later than six (6) months after the Effective Date, appoint independent verification agencies under terms of reference acceptable to the Association to carry out the verification of compliance of DLIs/DLRs 1, 2, 3, 4 and 8 which are set forth in the table in Section IV.A.2 of Schedule 2 of the Financing Agreement. Name Recurrent Due Date Frequency Technical Verification Yes Description of Covenant The Recipient shall cause the appointed independent verification agencies to, not later than thirty (30) calendar days after the verification of compliance of DLIs/DLRs 1, 2, 3, 4 and 8 has been completed, prepare and furnish to the Recipient and the Bank, a report on the results of said verification of compliance process of such scope and in such detail as the Association shall reasonably request. Name Recurrent Due Date Frequency MOH Yes N/A Description of Covenant The Recipient shall carry out the Project (including the procurement and financial management aspects), through the MOH and to this end shall, through the MOH: (a) maintain a unit staffed with adequate professional, fiduciary, administrative and technical personnel (including a Project coordinator and procurement and financial specialists), with qualifications, experience and terms of employment acceptable to the Association; and (b) ensure that any additional staff of said unit to be financed out of the proceeds of the Project Financing is selected and hired in accordance with Section III of Schedule 3 of the Financing Agreement. Name Recurrent Due Date Frequency Procurement Report Yes Annually Description of Covenant No later than September 30 of every year during the implementation of the Project, beginning on September 30, 2015, prepare and furnish to the Association, a procurement progress report (Procurement Report), in form and substance acceptable to the Association, which shall include, inter alia: (i) a description of issues arising during the viii   full procurement cycle under the Project, from design through planning, bidding, contract implementation and completion; (ii) a list of proposed measures and actions to be taken to resolve the issues identified under (i) above; and (iii) a proposed timeline for the implementation of the said measures and actions. Name Recurrent Due Date Frequency Exchanges on Procurement Report Yes Annually Description of Covenant No later than October 31 of every year during the implementation of the Project, beginning on October 31, 2015, exchange views with the Association on the results of the Procurement Report completed for the Recipient’s previous calendar year and thereafter, implement such recommended measures, as agreed with the Association. . Team Composition Bank Staff Name Title Specialization Unit UPI Paolo Belli Sector Leader Human Development ECCU2 187618 Arcadie Capcelea Senior Environmental Environmental Safeguards ECSEN 213724 Specialist Bogdan Constantinescu Senior Financial Financial Management ECSO3 192932 Management Specialist Elena Corman Procurement Specialist Procurement ECSO2 184638 Anna Goodman Program Assistant Administration ECSHD 162801 Zinaida Korableva Program Assistant Administration ECSHD 374489 Klavdiya Maksymenko Social Development Social Safeguards ECSSO 443691 Specialist Kate Mandeville Public Health Specialist Public Health ECSH1 411682 Son Nam Nguyen Senior Health Specialist Health, Task Team Leader ECSH1 173710 Marvin Plötz Junior Professional Cost-benefit Analysis ECSH1 452789 Associate Tamara Ursu Program Assistant Administration ECCMD 218699 Lingzhi Xu Senior Operations Officer Operations ECSH1 082688 Non-Bank Staff Name Title Office Phone City Irina Guban Consultant Chisinau Suzana Abbott Consultant Washington, D.C. Zlatan Sabic Consultant Washington, D.C. Victor Druga Consultant Bucharest Andrew Mackie Consultant Washington, D.C. ix   I. STRATEGIC CONTEXT A. Country Context 1. Moldova is a lower middle-income country (GNI per capita of US$2,070 in 2012)1 with medium ranking in the Human Development Index (HDI rank of 113 in 2013). In 2011, 45 percent of its 4.2 million population was living below the Europe and Central Asia (ECA) poverty line of US$5 at Purchasing Power Parity (PPP) per day2 . Around 7 percent of the population was living in extreme poverty (less than US$2.5 per day at PPP). Economic opportunities are particularly limited in rural areas where 70 percent of the poor reside. The country’s low endowment of institutional, human and natural capitals prevents it from taking full advantage of wealthier regional markets. 2. Moldova weathered the global financial crisis well, with an average Gross Domestic Product (GPD) growth rate of 6 percent during 2010-11. However, growth came to a halt in 2012, exposing Moldova’s vulnerability to the Eurozone crisis and climate events, such as droughts. Moldova returned to growth in 2013, with a GDP growth rate of 8.6 percent. 3. In 2011, around 40 percent of the Moldovan working-age population was living abroad.3 Overseas remittances account for more than a quarter of GDP and most of the consumption-led growth between 2000 and 2008. Large-scale labor emigration coupled with negative population growth has led to an aging population. The age dependency ratio stood at 38 percent in 2012 and is likely to rise further.4 4. Moldova’s National Development Strategy (NDS) 2020 sets seven strategic priorities: (i) justice and corruption; (ii) tertiary education; (iii) social insurance and pensions; (iv) business environment; (v) roads infrastructure; (vi) accessible and inexpensive finance; and (vii) energy efficiency. Adopted as a national law in 2012, the NDS prioritizes government interventions to achieve the overarching goal of qualitative economic development and, implicitly, of poverty reduction. B. Sectoral and Institutional Context 5. Moldova’s health outcomes are moderately better than expected for its level of economic development (Table 1). Over the last 20 years, while good progress has been made in reducing death rates in younger age groups, mortality in adult males has increased (Figure 1). Non- communicable diseases (NCDs) have become the major burden of mortality and illness for the population. High blood pressure (hypertension) and smoking are among the leading NCD risks. Around 50 percent of Moldovan adults have high blood pressure.5 Adult smoking prevalence is                                                              1 World Development Indicators, World Bank. 2 Estimates of ECA Poverty Reduction and Economic Management Unit, World Bank. 3 Estimates of ECA Poverty Reduction and Economic Management Unit, World Bank. 4 Age dependency ratio is the ratio of people older than 64 to the working-age population between 15 and 64. 5 WHO STEPS survey. 1   43 percent, compared to the regional average of 31 percent, and half of youth smokers started before they were 10 years old.6 The NCD burden is associated with a significant annual welfare and economic cost of around 5.7 billion Moldovan Leu or MDL (US$440 million).7 6. With total health expenditure per capita at around US$360, Moldova spends significantly more on health than comparable countries (Table 1). However, Moldova’s health outcomes are not as good as expected of its level of health expenditures. This discrepancy points to the need to improve the effectiveness and efficiency of health expenditures in delivering outcomes. 7. Despite repeated changes in political leadership over the last decade, health has remained a priority of the Moldovan Government. There has been a series of significant reforms to modernize the health sector. A key development was the introduction of national health insurance in 2004 and the establishment of the National Health Insurance Company (commonly known as CNAM). Approximately 80 percent of the population is currently covered by health insurance. 8. Primary care has been strengthened through the creation of family medicine. Family medicine providers are paid on a capitation basis to provide primary care for a defined population and act as gate keepers to specialist care. Citizens have free access to selected primary care services regardless of insurance status. 9. There has also been progress in hospital reform. The number of public hospitals was reduced from over 300 after independence to 73 in 2012, and the number of hospital beds was halved in the same period. There has been a gradual shift from a line-item based payment method to the prospective payment system of Diagnostic-Related Groups (DRGs).8 10. The Ministry of Health (MOH) is gradually moving away from service delivery to focus on its regulatory and stewardship functions. The capacity of MOH and its affiliated institutions has been incrementally improved. Soviet-era sanitary-epidemiological services have been reformed to place more emphasis on health promotion and NCD prevention, with the adoption of national programs for tobacco and alcohol control in 2012. Despite this progress, major challenges remain for the health sector. 11. First, out-of-pocket (OOP) payments remain high at 45 percent of total health expenditures. Most OOP payments are for outpatient drugs, with reimbursable medicines accounting for only 4.3 percent of CNAM expenditures. High level of co-payments by patients for drugs presents financial barriers to the management of chronic diseases such as hypertension. Informal payments are also a significant source of OOP payments in the sector.                                                              6 Global Youth Tobacco Survey Factsheet: Moldova, 2008. 7 Globally, it has been estimated that NCDs and their risk factors cost countries up to 6.7 percent of their GDP (Marc Suhrcke, Rachel A. Nugent, David Stuckler and Lorenzo Rocco. Chronic Disease: An Economic Perspective. London, 2006: Oxford Health Alliance). 8 DRGs are a way to classify patients into groups with similar characteristics and diagnoses, through which episodes of care at different hospitals can be compared to benchmark their use of resources. DRGs used as a basis for hospital payments can help improve efficiency of care. 2   Figure 1: Decline in age-specific mortality from 1990 Table 1: Benchmarking of Moldova’s health to 2010 in Moldova (%) outcomes and health expenditures against 14 other comparator countries Indicator Moldova’s rank Economic Development GDP per capita 8 Health outcomes Age-standardized death rate 7 Premature deaths (YLL) 5 Years lived with disability (YLD) 2 Life expectancy at birth 6 Health-adjusted life expectancy at birth 5 Health expenditures Health expenditure per capita, PPP 1 Total health expenditures as % of GDP 1 Public expenditure on health as % of 4 Source: Institute for Health Metrics and Evaluation (IHME) 2013 GDP Note: Points below 0 indicate an increase in mortality rate between Public expenditures on health as % of 3 1990 and 2010 government budget Source: IHME 2013 and WDI 2013 Note: Comparators are 14 other countries close to Moldova in the global ranking of economic development (7 immediately above and 7 immediately below). In the ranking, 1 indicates the best rank, 15 the worst. For Moldova, a rank above 8 means better performance than expected of the country’s level of development. 12. Second, hospital reform is incomplete. Overcapacity and duplication of specialized services are still an issue, particularly in the capital Chisinau. Funds for hospital services (accounting for more than 50 percent of total public expenditures on health) are spread thinly over 73 facilities, many of which are underutilized and unsafe with dilapidated infrastructure and obsolete equipment. 13. Third, providers’ accountability for results remains limited at all levels. Effective mechanisms are not fully in place to systematically hold providers accountable for the quality and efficiency of services. The existing performance-based incentive scheme in family medicine requires strengthening, and such a scheme for hospitals has not yet been introduced. DRGs are currently being used as a method of recording activities combined with historical budget allocations, rather than a basis for strategic purchasing by CNAM, and DRGs prices need to be updated using country data. Limited provider accountability leads to less than optimal results. For example, among Moldovans with high blood pressure, only 55 percent are aware of their condition, only 40 percent are treated with anti-hypertensive drugs, and just 10 percent have blood pressure under control. 14. Addressing these challenges is critical for Moldova’s health system to achieve better value for money and deliver better health outcomes. The proposed operation will support the GOM to address such challenges through a US$28.7 million Health Transformation Program- for-Results (the Health Transformation Program or Program) which is a subset of the government health sector work plan. 3   C. Relationship to the Country Partnership Strategy (CPS) and Rationale for Use of Instrument 15. The proposed operation is fully aligned with the second pillar of the Moldova Country Partnership Strategy (CPS) for FY14-17.9 This second pillar seeks to “enhance human capital and minimize social risks”. According to the CPS, the widening gap with the 28 European Union (EU) Member States in health outcomes should be stopped and progressively closed. The proposed operation’s strong focus on governance and results is also in line with the CPS objectives to support the Government in improving transparency, accountability and openness in public service delivery. 16. WB has a good track record in supporting Moldova’s health sector. Building on the ongoing Moldova Health Services and Social Assistance Project (HSSAP), the proposed operation will continue and deepen WB engagement in the sector and help Moldova address the next challenges in health reform. With its regional and global experiences in supporting client countries in health system strengthening, WB is in a good position to assist Moldova in applying delivery science for better outcomes. 17. A key lesson from HSSAP is that Investment Project Financing (IPF) is not the best instrument to promote reforms in Moldova’s health sector as the focus in an IPF project inevitably shifts towards transactions and specific investments, rather than overall sector reforms. On the other hand, health reforms in Moldova tend to be incremental rather than a “big bang”, making the Development Policy Lending instrument less suitable for the health sector. 18. The choice of the new Program-for-Results (PforR) financing instrument is strongly justified on the following grounds: (i) By linking disbursements to achievement of tangible, transparent and verifiable results, PforR can be a better instrument as it shifts focus away from specific inputs; (ii) PforR will be aligned with Moldova’s commitment to results as shown in the National Health System Development Strategy (NHSDS); (iii) By supporting the Governments' own agenda, using country systems with due attention to system strengthening, PforR will enhance development impact and sustainability; and (iv) PforR motivates country stakeholders to find locally relevant and sustainable solutions for results. 19. The Program includes necessary technical assistance and institutional capacity building activities for the attainment of Program objectives and its sustainability. Most of such activities will follow GOM’s procedures under the Program. However, as per past experiences, there have been challenges in the recruitment of international consultants using government systems while                                                              9 Country Partnership Strategy for the Republic of Moldova for FY14-17, Report No. 79701, discussed at the Board on 09/05/2013. 4   there have been no issues with recruiting such experts for technical assistance in WB-financed operations in the country using Bank procedures. 20. For this reason, to ensure adequate and timely technical assistance, the operation will have two complementary parts – a US$28.7 million PforR component (OP/BP 9.0) and a US$2.1 million IPF component (OP/BP 10.0). The latter will fund a set of selected, discrete technical assistance and capacity building activities which are complementary to those undertaken directly by the Government under the Program, and support the achievement of the Program’s objectives. II. PROGRAM DESCRIPTION A. Program Scope The Government’s program 21. Health sector development in Moldova is guided by the 2007-21 National Health Policy (NHP or the Policy). The Policy is further elaborated and operationalized by the 2008-17 NHSDS which constitutes the Government’s comprehensive program with the following objectives: (i) continuous improvement of population health; (ii) enhancement of financial risk protection; (iii) reduction of inequalities in the use and distribution of health care services; (vi) enhancement of user satisfaction; and (v) restructuring the health system to improve performance and population health in the context of limited resources. 22. A three-year Medium-Term Budgetary Framework (MTBF) is prepared on a rolling basis to finance NHSDS implementation. MTBF has five programs: (i) Health Policy and Management for policy development, implementation management and monitoring through MOH, CNAM and other state institutions; (ii) Priority Public Health Interventions for disease surveillance and control; (iii) Personal Health Services for the delivery of a range of personal health care services rendered by family medicine, hospitals, specialized outpatient and community care providers; (iv) Development of Health System Resources for investments in the health sector; and (v) Special Health Programs for special issues such as forensic services, tuberculosis, HIV/AIDS and tobacco control. 23. The MTBF’s five programs are further divided into 17 sub-programs. MTBF is funded by the state budget (59 percent), health insurance fund (40 percent) and local governments’ contribution (1 percent). Total cost of the Government’s program for the next four years (2014- 17) is estimated at MDL 26,115 million or US$1,964 million. The Health Transformation Program 24. Among the priorities of the Government’s program, the proposed Health Transformation Program will focus on NCD risks and health system inefficiencies. This choice was based on the following criteria: (i) strategic importance of the issues; (ii) level of WB’s past engagement and added value; and (iii) need for a focused Program. In this regard, while the Program does not 5   explicitly focus on financial protection or informal payments, it will contribute to improvements in these important sectoral issues as part of its broader objectives. 25. These priorities align well with the WB Group’s Twin Goals of reducing poverty and promoting shared prosperity. Expansion of the outpatient drugs benefit package is expected to benefit the poor. Improving hospital efficiency, especially in Chisinau where there is an oversupply of hospitals, will allow more resources to be reallocated to lower levels of care and to rural areas, thus promoting equity. Better control of NCD risk factors will support shared prosperity by reducing the burden of disease on the poor and increasing economic benefits for the poor through improved productivity. 26. The Health Transformation Program is based on the Government’s program and there is no ambiguity over its boundaries, which are defined by selected MTBF subprograms, and in some cases, portions of sub-programs. The Program corresponds to 5 of 17 sub-programs of the MTBF, namely: (i) Sub-program I. Policies and management in health care (Implementing agency: MOH). This sub-program represents the operating budget for MOH to carry out its functions which include: (a) health policy and strategy formulation; (b) coordination, regulation and quality assurance for all health providers; (c) planning of health resources; (d) management of national health programs; and (e) coordination of multi-sectoral collaboration in health. (ii) Sub-program II. Administration of mandatory health insurance fund (Implementing agency: CNAM). This sub-program represents the operating budget for CNAM to carry out its functions which include: (a) managing the health insurance fund; (b) contracting health providers for the provision of services; and (c) verifying the provision of services by providers. (iii) Sub-program V. Primary Care Services (Implementing agency: CNAM). This sub-program includes the following CNAM activities: (a) reimbursing family medicine providers for primary care services; and (b) reimbursing pharmacies for the outpatient drug benefit package.10 The Program is limited to two sub-program activities: (a) performance-based incentives in family medicine; and (b) CNAM reimbursement of hypertensive drugs in the outpatient drug benefit package. For performance-based incentives in family medicine, the Program will provide incentives on top of the capitation-based payment for primary care providers based on the achievement of a set of revised indicators related to the coverage and quality of selected family medicine services, including those for NCDs. With regard to the outpatient drug benefit package, the Program will increase the reimbursement rates for selected anti-hypertensive drugs with the aim to improve patients’ compliance with hypertension drug therapy.                                                              10 There is no public procurement of drugs for the outpatient drug benefit package in Moldova. Instead, private pharmacies procure drugs from distributors. CNAM signs contracts with pharmacies and on that basis reimburses out-patient drug costs according to reimbursement rates in the drug benefit package. 6   (iv) Sub-program IX. In-patient Care (Implementing agency: CNAM). This sub- program includes reimbursing hospitals for inpatient care. The Program is limited to one sub-program activity – performance-based incentives for hospitals. It will provide incentives on top of the DRG payment mechanism for hospitals. The amount of incentive payment will correspond to each hospital’s achievement of a set of performance indicators related to quality and efficiency of selected hospital services. (v) Sub-program XVII. National Special Health Programs (Implementing agency: MOH). Under this sub-program, the Program is limited to National Tobacco Control Program (NTCP) which is Moldova’s comprehensive tobacco control work plan. 27. The choice of sub-programs and activities within sub-programs is driven by two factors: (i) the most important interventions in the Government program which can help achieve the Program objectives, and (ii) the need to limit the Program to a reasonable scope within the total Government program. Figure 2 presents a simplified conceptual framework which summarizes the rationale of the choice of sub-programs, their activities and links to Program results and objectives (please see Annex 1 for a detailed result chain and Annex 4 for further elaboration on Program activities). 28. The total cost of the Program is US$113.7 million, or 6 percent of the GOM’s 2014-2017 National Health Program. Program scope and funding requirements are summarized in Table 2. Within the boundaries of the Program, there is no other source of funding from other development partners. International Development Association (IDA) funding for the Program using the PforR instrument would be US$28.7 million or 25 percent of the Program’s cost. 29. The scope of the proposed Program includes recurrent and operating costs, goods, works, incentives for health providers and reimbursement for the drug benefit package (Table 3). However, it excludes high-risk activities, defined as those that: (i) are judged to be likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected the population; or (ii) involve procurement of goods, works, and services under high-value contracts. 7   Figure 2: Conceptual framework and results chain Table 2: Expenditure requirements Planned (US$ million) Health Transformation Program 2014 2015 2016 2017 Policies and management in health care 0.71 0.80 0.87 0.91 Administration of national mandatory health insurance fund 5.06 4.80 5.37 5.64 Primary care (performance-based incentives for family medicine providers under CNAM contracts and CNAM reimbursement of the outpatient drug benefit package only) 17.88 19.53 20.86 22.10 Inpatient care (performance-based incentives to hospitals for inpatient services under CNAM contracts only) 0.00 0.36 0.38 6.59 National special health programs (tobacco control activities only) 0.39 0.47 0.47 0.50 Total 24.04 25.96 27.95 35.73 Table 3: Estimated Program expenditure by categories Amount Category % of total (US$ million) Salaries and benefits (for MOH, CNAM and relevant NCPH staff) 16.6 15 Goods 0.9 1 Civil works 2.2 2 Performance based incentives for health providers 58.0 51 Reimbursement of out-patient hypertensive drug benefits 29.7 26 Other operating costs 6.3 6 Total 113.7 100 8   B. Program Development Objective 30. The proposed Program Development Objective (PDO) is to contribute to reducing key risks for non-communicable diseases and improving efficiency of health services in Moldova. C. Key Program Results (KPRs) and Disbursement Linked Indicators (DLIs) 31. The Key Program Results indicators include: (i) Smoking prevalence among adults (DLI 1); (ii) Percentage of adults with hypertension whose blood pressure is under control (DLI 2); (iii) Annual acute care hospital discharges per 100 persons (DLI 3); (iv) Number of acute care hospital beds (DLI 4); and (v) Average length of stay in acute care hospitals. 32. The first two KPRs relate to reduction in NCD risks. The last three focus on improvement in efficiency of health services. All PDO-level indicators are supported by several intermediate results. These represent key stages in the results chain required for the achievement of the PDO. 33. Ten DLIs were chosen to address the bottlenecks along the results chain that require incentivizing, with both ambition (“stretch”) and feasibility (“realism”) taken into account. The share of IDA financing allocated to each DLI corresponds to the level of effort required for its achievement and/or the prominence of its role in the attainment of the PDO (Table 4). Table 4: Disbursement Linked Indicators Value Disbursement Linked Indicators (US$ million) 1 Smoking prevalence in adults 4.0 2 Percentage of adults with hypertension whose blood pressure is under control 4.0 3 Annual acute care hospital discharges per 100 persons 3.0 4 Number of acute care hospital beds 4.7 5 Revision of the average reimbursement rate of generic, first line medications for 2.0 the three main categories of antihypertensive drugs in the drug benefit package from 50 percent to 70 percent 6 Revision and implementation of performance-based incentive scheme in 2.0 primary care 7 Introduction of performance-based incentives to improve (i) efficiency and (ii) 2.0 quality of care in hospitals 8 Use of DRGs for acute care hospital payments 2.0 9 Proportion of public hospitals in Chisinau which are under common 4.0 management 10 Approval of the new national health strategy which includes hospital 1.0 rationalization measures Total 28.7 9   34. Reduction in smoking prevalence among adults. This PDO-level DLI will be supported by one intermediate result, namely approval of the new tobacco control legislation. The new legislation, which is being presented to Parliament, will lay the foundation for the National Tobacco Control Program (NTCP). NTCP interventions include an increase in tobacco taxation,11 bans on tobacco advertising, smoking in workplaces and tobacco sales to under-18 year olds, introduction of warning labels on tobacco products and smoking cessation services, and public education campaigns. These synergistic activities will make smoking more expensive, less available to youths, less attractive, and easier to quit. The public will also be more knowledgeable about the risks of smoking. 35. Increase in the percentage of adults with hypertension whose blood pressure is under control. Internationally, this is a commonly used indicator to measure the success of hypertension management. This PDO-level DLI will be supported by progress in two intermediate DLIs. The first is the revision of the outpatient benefit package to increase the reimbursement rate for antihypertensive drugs. This is expected to increase affordability of the most common anti-hypertensive drugs and therefore treatment adherence. The second is the performance-based incentive scheme in primary care, which can improve management of chronic diseases such as diabetes and hypertension through bonus payments for doctors to deliver best practice care. 36. Reduction in annual acute care hospital discharges. This PDO-level DLI will be supported by results in three intermediate DLIs. First, primary care performance-based incentives can reduce referrals to higher levels as more cases are successfully managed in primary care. Second, performance payments in hospitals can increase adherence to guidelines and admission criteria. This can reduce hospital admissions/readmissions and, subsequently, discharges. Third, the strengthening of DRG payment mechanism for hospitals can provides incentives for hospitals to adopt alternative models of care without hospital admission, such as day care surgery. 37. Reduction in the number of acute care public hospital beds. This PDO-level DLI will be supported by three intermediate DLIs. The approval of the hospital rationalization measures as part of the revised national health strategy will facilitate the establishment of common management structures for hospitals in Chisinau. A common management structure will allow hospitals to work together to decrease duplication of services within their network, consolidate acute care beds for more savings and increase hospital efficiency. Strengthening DRGs can also support this DLI through encouraging hospitals to adopt alternative models of care without hospital admission D. Key Capacity Building and Systems Strengthening Activities 38. Moldova’s key capacity constraints to implement the Program pertain to the following technical areas: (a) strengthening the DRG payment mechanism; (b) development of                                                              11 Increases in tobacco taxes are part of the legislation as well as Moldova’s harmonization of EU directives. There is a road map to increase tobacco excises taxes (from 30 percent to 50 percent in 2016, and further increases to be discussed annually) 10   performance-based incentives for efficiency and quality of care; (c) development of strategies to optimize hospitals (especially how to reorganize public hospitals under common management); and (d) monitoring and evaluation of DLIs through special surveys or technical audits. Key capacity building activities are further elaborated in Annex 8 and Annex 9. 39. The envisioned activities under the TA component include, inter alia: (i) implementation and analysis of two rounds of the STEPS survey; (ii) verification of other selected results by independent agencies; (iii) development of new business processes and workflows for hospitals under common management structure; (iv) DRG costing exercise using country data; (v) development of performance-based incentive scheme to improve quality and efficiency in hospitals; (vi) development of an accountability framework and mechanisms for health workers; and (vii) development of a manual for quality management in family medicine. III. PROGRAM IMPLEMENTATION A. Institutional and Implementation Arrangements 40. The Program’s implementation will be based on the current institutional arrangements for the Government program. At the national level, the key stakeholders are the Ministry of Finance (MOF), MOH (including the National Center for Public Health or NCPH which is subordinated to MOH) and CNAM. 41. MOH will sign implementation agreements with CNAM and NCPH for the purposes of implementing CNAM and NCHP respective activities under the Program, under terms and conditions acceptable to the WB. 42. MOF is responsible for regular and timely channeling of adequate funds to MOH and CNAM for implementation of Program activities. In addition, MOF will play a key role in the adoption and implementation of increases in the tobacco tax for tobacco control in the context of the Program. 43. MOH, as the steward of the health system, is responsible for health policies, strategies, regulations, coordination and oversight for the sector and the Program. It takes the lead in the development of the MTBF for health on a rolling basis, which is the key document used for negotiation with MOF on the health sector budget allocation. Under the Program, MOH will take the lead in coordinating and implementing activities related to NTCP and rationalization of hospitals. 44. CNAM, a state agency with financial autonomy subordinated to the Prime Minister’s office, is the purchaser of health services and responsible for pooling contributions, managing health insurance funds and purchasing of services through contracts with providers. Under the Program, CNAM will take the lead in activities related to reimbursement of the drug benefit package and provider payment reforms. 45. Service providers such as hospitals and family medicine are regulated by MOH and contracted by CNAM to deliver health services. Therefore, they play an important role in 11   helping the Program to achieve its objectives. Regulatory frameworks are in place for the management of service providers. 46. Procurement and financial management under the Program will be carried out by MOH and CNAM for Program activities which they are respectively responsible for. MOH and its subordinated agencies will be responsible for the Program’s compliance with environmental requirements. Both MOH and CNAM have a role in addressing social aspects of the Program. 47. A small team consisting of a few consultants reporting to MOH will help MOH manage the IPF component. This team will also assist MOH fiduciary staff in the Program’s procurement and financial management activities using government procedures. Currently, there is a MOH unit supporting the implementation of the ongoing WB-financed HSSAP. This unit will be maintained but most likely with fewer staffs. 48. A Program Steering Committee with representatives from MOF, MOH, CNAM, the Prime Minister’s Office and other relevant stakeholders will be established to provide Program guidance and oversight. It will meet at least twice a year. In addition, key health reforms related to the Program and its implementation progress will also be discussed in the quarterly meetings of the Health Sector Coordination Council for External Assistance. This Council is the venue for policy dialogue and coordination between the GOM and all the external development partners active in health. B. Results Monitoring and Evaluation 49. DLI 1 (adult smoking), DLI 2 (adults with hypertension under control) and Intermediate Result Indicator (IRI) 3 (adults with hypertension receiving treatment) will be monitored by the STEPS survey. This is a special survey designed to be an entry point for low and middle income countries to begin NCD surveillance activities while strengthening country monitoring capacity. The first STEPS survey was conducted in November 2013 by NCPH with WHO technical support. This survey (or a streamlined version of STEPS with blood pressure measurement) will be repeated in Year 2 and Year 4 of the Program. 50. The remaining DLIs and other indicators in the results framework will be monitored through routine, administrative data from MOH and CNAM. During the life of the Program, electronic health information systems will be further strengthened in CNAM, MOH and health facilities as part of the Government program and will facilitate the monitoring of various indicators in the results framework. C. Disbursement Arrangements and Verification Protocols 51. The disbursement arrangements are elaborated in Annex 3, with the following key features:  Downscaling will be applied to five out of the ten DLIs. This mechanism recognizes partially achieved DLIs through a proportional reduction in the agreed monetary value. 12    Most DLIs will still trigger disbursements if achieved earlier or later than the agreed dates. However, the timing of achievement for selected intermediate indicators has been set in order to progress along the results chain.  Advances of up to 25 percent of the total disbursement value will be available to support the GOM in designing and/or implementing elements which can benefit from earlier funding to increase the likelihood of timely achievement of results. 52. Verification protocols for the Program’s DLIs can be summarized as follows (see also Annex 3 for a detailed discussion):  For DLI 1 and 2 (measured by the STEPS survey), verification will be done by an independent entity with relevant survey expertise.  For DLI 3, 4 and 8 (monitored through routine, administrative MOH or CNAM data), verification will be done by an independent entity (or entities) with relevant expertise.  For the remaining DLIs (related to administrative/regulatory changes or completion of certain deliverables), documents and records will be submitted to WB as proofs of DLI achievement by MOH and CNAM. 53. MOH will be in charge of: (i) coordination of DLI monitoring with inputs from relevant stakeholders; and (ii) reporting on DLI achievements in writing with supporting documents/data to the WB and the verification entity (or entities) as required. Within six months after the effectiveness of this operation, MOH shall appoint independent verification entities under terms of reference acceptable to the WB to carry out the verification of results related to DLIs 1, 2, 3, 4, and 8. IV. ASSESSMENT SUMMARY A. Technical Program’s strategic relevance and technical soundness of the approach 54. The GOM’s health reform program is comprehensive and technically sound. The Health Care System Development Strategy for 2008-17 follows WHO health system framework (as defined in the World Health Report 2000) and is accompanied by an action plan and a monitoring framework. The Program represents a specific portion of the Government’s broader health reform program and aims to address some of the most critical challenges in the health sector. 55. First, without effectively addressing NCDs, Moldova will not be able to significantly improve health outcomes and reduce NCD-related economic costs. Smoking and hypertension are among the most important NCD risk factors for which cost-effective interventions exist. The Program encompasses such interventions. For tobacco control, NTCP is in line with the Framework Convention on Tobacco Control and includes comprehensive demand and supply- side interventions to reduce tobacco consumption as recommended by WHO. For hypertension, screening for hypertension and managing it with anti-hypertensive drugs in the primary care 13   setting is one of the “best-buys” in NCD control.12 While less than one in three patients with hypertension in Moldova is taking medication daily, studies elsewhere show that reducing copayment level for antihypertensive drugs would significantly increase the level of treatment compliance. 13 The Program will provide the incentive for the Government to: (i) improve hypertension screening and management by providers; and (ii) further reduce the co-payment level for anti-hypertensive drugs to increase treatment adherence. 56. Second, to address health service inefficiency, the Program focuses on a set of results and interventions related to: (i) hospital rationalization; (ii) strengthening DRG payment mechanism for hospitals; and (iii) performance-based incentives. For hospital rationalization, background technical work was already carried out with WB support. The revision of the national health strategy, which is underway at the time of Program preparation, to include hospital rationalization measures will lay the foundation for the implementation of such interventions. DRG has been demonstrated in many countries as an advanced payment method to improve hospital efficiency. Globally, there is a growing body of evidence on the effectiveness of performance-based incentives in improving health workers’ performance. In this context, Program support for such incentive schemes is expected to enhance efficiency and quality of services at both primary care and hospital levels. Governance structure and institutional arrangements 57. Adequate governance structure and institutional arrangements are in place to implement the Program. Mechanisms for MOH and CNAM to collaborate with each other, as well as to coordinate with country stakeholders and external development partners are well-established and will be further enhanced under the Program (see section III.A).     58. MOH and NCPH have moderate to high capacity to undertake their activities under the Program, but will benefit from technical assistance and capacity building in (i) communication and stakeholder engagement and (ii) special surveys. CNAM also has moderate to high capacity for Program activities; but will require selected technical assistance related to provider payment mechanisms (see Annex 8). Results framework and monitoring and evaluation capacity 59. A set of specific, measurable and relevant indicators was agreed with the GOM to monitor the Program. As discussed, the STEPS survey was successfully carried out in Moldova before with the support of WHO and is therefore feasible to repeat, although additional technical assistance will be required in order to ensure quality and timeliness of data. Such assistance will be financed by the IPF component. The remaining indicators either: (i) are straightforward to monitor and do not call for special M&E capacity or sophisticated information system; or (ii) have been successfully monitored by MOH and CNAM for many years as part of standard                                                              12    From Burden to “Best Buys”: Reducing the Economic Impact of Non-Communicable Diseases in Low- and Middle-Income Countries. WHO 2011.  13    Copayment Level and Compliance with Antihypertensive Medication: Analysis and Policy Implications for Managed Care. Tara et al. Am J Manage Care. 2006; 12:678-683. 14   reporting. Therefore, no major issue is expected with regard to the country’s capacity for M&E of Program indicators. Expenditure frameworks 60. The GOM is highly committed to the health sector. For the last five years, annual public expenditures on health have been at least 5 percent of GDP and 12 percent of total government expenditures. This trend is expected to continue during Program implementation. However, further increases in the health sector’s portion in government budget are not likely. The 2013 government health budget was MDL 1,415 per capita (MDL 77 more than in 2012). The largest shares of expenditures are for individual health services (80.5 percent), public health (8 percent) and investment (7.4 percent). 61. The Program’s estimated cost is reasonable and represents around 19 percent of the estimated cost of total government expenditures on health. The majority (97 percent) of Program’s costs are recurrent and operating costs. MTBF forms the cornerstone of expenditure management and its quality has been gradually increasing. MTBF allows for the tracking of expenditures by administrative units. Estimated allocations of Program funding are 4 percent for MOH and NCPH, 18 for CNAM, 6 for hospitals and 45 for family medicine providers. 62. As per the 2011 assessment using Public Expenditure and Financial Accountability (PEFA) methodology, Moldova scores relatively well on budget credibility, comprehensiveness and classification, treasury operations, in-year reporting and public access to government budget and financial information. With WB support (under the BOOST14 initiative), Moldova became one of the few countries in the world to publish budget and budget execution data for all public institutions on the internet. 63. A detailed economic analysis was conducted as part of the Program technical assessment (Annex 4) to estimate the Program’s development impact. The Net Present Value (NPV) of Program interventions is largely positive with the estimated internal rate of return (IRR) ranging between 6.13 and 9.10 percent, depending on the projected GDP growth rates. This clearly shows the positive development impact of the proposed Program. The analysis is inclusive of the costs and benefits of technical assistance under the IPF component. 64. The Program does not involve the introduction of new programs that could be alternatively implemented by the private sector. Instead, it aims to strengthen existing publicly financed programs (NCD prevention and management, performance-based contracting with service providers, rationalization of hospitals in Chisinau, etc.) and ongoing reforms in order to alleviate binding constraints to public sector performance. The case for public provision and financing of interventions under the Program is therefore justified.                                                                14 BOOST is not an acronym. It is the name of a new data tool developed by the World Bank to help enhance public sector performance. 15   B. Fiduciary 65. A fiduciary systems assessment was carried out in accordance with OP/BP 9.00 (for the PforR part) and OP/BP 10.00 (for the IPF part). It concluded that the overall fiduciary and governance frameworks are adequate to support Program implementation and provide reasonable assurance for (i) appropriate use of Program funds, with due regard to the principles of economy, efficiency, effectiveness, transparency, and accountability and (ii) safeguarding of its assets. Overall fiduciary risk for the operation is rated as "moderate". 66. Program Planning and Budgeting. The Program's expenditure framework is comprehensive, clearly defined, and managed as part of the Borrower’s regular budget and fiduciary management processes. Program budgets are realistic, prepared with due regard to relevant policies, and executed in an orderly and predictable manner. MOH, NCPH and CNAM budgets are presented in sufficient details to capture Program expenditures and regularly monitored through budget reports. The Parliament rigorously scrutinizes the Budget Law and the Law on Mandatory Health Insurance on an annual basis. 67. Accounting and financial reporting systems. MOH, NCPH and CNAM accounting and reporting systems are adequate. The quality and timeliness of key financial reports, record management and reconciliation of accounts, and the use of financial reports for managerial decision making are satisfactory. A modified accrual basis of accounting is used. Actual expenditures are compared to the budget on a monthly basis, and explanations for significant budget variations are provided to MOF. Budget execution reports do not yet include information on commitments. 68. Treasury and funds flow mechanisms. Adequate funds are available to finance the Program. The Treasury system operated by MOF is a key element to ensure proper authorization and exert expenditure controls. The Government operates a Treasury Single Account which functions in a comprehensive and satisfactory manner. Budgetary entities register contracts and payment orders with the Treasury. Arrears are extremely low. 69. Internal controls. There are adequate controls over Program funds. MOH, NCPH and CNAM internal control framework is sound for the Program. Both MOH and CNAM have well- performing internal audit units which will include the Program in their annual work plans. 70. Public Sector Audit. Independent and reliable external audit arrangements are in place. The Court of Accounts (CoA or Supreme Audit Institution) performs annual audits adequately, using INTOSAI standards. Its reports are publicly available. For 2012, CoA issued a clean audit opinion for the health sector. CoA will annually audit the Program in conjunction with its audits of MOH, NCPH and CNAM, based on audit terms of reference agreed with the WB. 71. Procurement. Procurement under the Program will be carried out in accordance with the Public Procurement Law (PPL) No. 96 dated April 13, 2007 (amended periodically) and Regulation for public procurement of small value. A new draft PPL, better aligned to EU requirements, has been developed and is pending approval. The legal framework (PPL and the secondary legislation) is published and easily accessible to the public. 16   72. The procurement framework is based on clear rules and generally appropriate for achieving competition and cost effectiveness. All information needed to properly conduct a procurement activity, including Standard Bidding Documents, is available on the Public Procurement Agency (PPA) website. Procurement processes are well-established and duly followed by MOH, CNAM, and NCPH through an electronic procurement system. The default procurement method is open bidding. Other methods are used solely under conditions expressly provided in the law. All the procurement notices are published in the Public Procurement Bulletin and on the respective institutions’ websites. Overall, each agency has the capacity to conduct procurement under the Program. 73. Although the majority of Program costs are recurrent and operating costs, the Program will also finance procurement of goods, works, consulting and non-consulting services. The size of contracts will be small and there will be no Operational Procurement Review Committee (OPRC) threshold procurement. 74. The following procurement risks are identified: (i) implementation of multi-year contracts is problematic if funds are not available beyond the budget year; (ii) there are no Standard Bidding Documents for consulting services; (iii) contract implementation is weak; and (iv) the complaint review body is not yet independent. 75. For the IPF component, WB fiduciary procedures will apply.  As discussed above, a small unit located in MOH will be handling such fiduciary matters. MOH and, to a somewhat lesser extent, CNAM are familiar with WB fiduciary requirements through the implementation of previous WB-financed health projects. Both MOH and CNAM will benefit from experienced fiduciary consultants hired to support implementation of the Program. 76. Procurement under the IPF component will be carried out in accordance with the Guidelines for Procurement of Goods, Works and Non-Consulting Services under International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits and Grants by the WB Borrowers, edition of January 2011, and Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by WB Borrowers, edition of January 2011 and with the latest Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits. Bank Standard Documents will be used. MOH and CNAM will jointly develop the required Procurement Plan (PP) for the first 18 months which will provide the basis for procurement/selection methods. 77. To address the fraud and corruption risks, the Anti-Corruption Guidelines (ACG) for PforR operations will be applicable to the Program. As per the ACG, the GOM will timely and appropriately: (i) investigate allegations and indications of fraud and corruption; and (ii) take action, satisfactory to the Bank, to address fraud and corruption in connection with the Program. The GOM will also cooperate fully in any investigation conducted by the Bank into allegations or other indications of fraud and corruption in connection with the Program. Appropriate measures will be taken by the GOM to ensure the full cooperation of relevant persons and entities subject to the Borrower’s jurisdiction in such an investigation. The GOM will ensure that no entity debarred or suspended by the WBG will be awarded a contract under, or otherwise be allowed to participate in, the Program. The National Anti-Corruption Center and the Public 17   Procurement Agency will take the lead in ensuring that the ACG are followed under the Program. C. Environmental and Social 78. Potential adverse environmental effects of the Program might be indirectly generated by two subprograms: “Primary Care Services” and “Inpatient Care” through health care wastes (HCWs)15 and pharmaceutical wastes (PhWs). 79. For HCWs, Moldova has relatively sufficient legal and regulatory frameworks as well as an overall adequate institutional system. Procedures for segregation, handling, transportation, storage, and disposal of HCWs have been established, with clear roles and responsibilities of relevant parties. Based on the regulation, health facilities adopt institution rules for health workers. However, two challenges remain. First, the HCWs regulation lacks clarity in environmental requirements for various treatment and disposal technologies. It therefore needs to be updated, taking into consideration international best practices and EU legislations. Second, funding for HCW management is still inadequate. 80. For PhWs, Moldova also has a good legal and regulatory basis. As per the regulation, all facilities assess PhWs individually and transport them to the National Agency for Drugs and Medical Equipment (NADME) for disposal. PhWs disposal is the responsibility of a special Division under NADME, which is self-financed by payments from users for its services. With growing volumes of PhWs, it will be difficult for this Division to fulfil its functions with the current number of staff. 81. Based on the assessment, an action plan was proposed to strengthen HCWs and PhWs management with three types of activities: (i) improving the regulatory framework (including the regulation for possible public private partnership in PhWs management) and capacity building for health facilities; (ii) conducting feasibility studies on new approaches and technologies for HCWs and PhWs management; and (iii) mobilizing further investments and funding for HCWs and PhWs management. The proposed activities are discussed in Annex 6. 82. Access to Services. Access to emergency, primary care, and special services (HIV/AIDS, TB and immunization) is universal regardless of insurance status. The Government pays health premiums for the non-working population (pensioners, students, children, registered unemployed, etc.). About 20 percent of the population is uninsured, and most of them are self- employed agricultural workers or informally/partially employed individuals. From 2010, households benefitting from the safety net program Ajutor Social automatically receive health insurance coverage from CNAM. The CNAM package of benefits covers specialized outpatient and hospital care and a very limited range of pharmaceuticals. Informal payments occur at all levels but they are much more widespread for inpatient care. In addition, inadequate numbers of                                                              15 These do not include radioactive waste which according to opinions of national specialists and international organizations are produced in a very limited amount and are relatively well managed in the country. 18   doctors, nurses and pharmacies in rural areas reduce access to services by remote rural populations. 83. Gender Aspects. The 2012 Household Budgetary Survey (HBS) for health revealed that women utilize healthcare services 1.6 times more often than men. On the provider side, more than 80 percent of health workers in Moldova are women. Any reform which could potentially affect health care workers needs to take the gender composition of the health work force into account. 84. Social Accountability. The MOH made more than 180 datasets available to the public on the website www.date.gov.md as part of the government accountability initiative. Patient satisfaction surveys have been conducted as part of the HBS Health module funded by the World Bank-supported HSSAP. 16 Moldovan legislation has sufficient provisions for petitions and complaints, and the MOH has established an electronic complaint submission channel. However, the MOH has neither a specialized unit for patient complaints nor a system in place to monitor cases of infringement of patient rights. In February 2014, CNAM installed a hotline to receive complaints regarding quality of care or OOP payments. 85. Involuntary Resettlement. The Program is not expected to cause any permanent or temporary physical or economic displacement. 86. Social Effects on the Stakeholders. The Program’s immediate effects will be felt by hospitals put under common management structures. Patients in the longer term will benefit from improved efficiency and quality of health services. 87. As the result of the Environmental and Social Systems Assessment, a list of actions was developed to strengthen complaint mechanisms, public accountability, and communication with stakeholders under the Program (Annex 9). The IPF component will be for surveys, studies, and design/revision of performance-based incentive schemes. No negative environmental and social impacts are expected. D. Integrated Risk Assessment Summary Table 5: Integrated Risk Assessment Summary Risk  Rating Technical  Moderate Fiduciary Moderate Environmental and Social Moderate Disbursement Linked Indicator Moderate Overall Risk Moderate                                                              16 The results of the last survey conducted in 2012 showed that the majority of patients’ dissatisfaction is associated with a physical condition, e.g., sanitary block, rooms, water supply, food of the medical facilities and OOP payments. 19   Risk Rating Explanation 88. Based on the integrated assessment carried out during preparation, the overall risk of the Program is considered moderate for the following reasons:  The GOM’s commitment to the health sector has been consistently high despite past changes in the Cabinet;  The National Health System Development Strategy of which the Program is a subset is technically sound and relevant. The Program is focused and encompasses evidence-based, cost effective interventions.  Overall, implementation capacity of the Program’s key implementers is adequate (although some technical assistance needs have been identified and will be financed in selected technical areas);  Country fiduciary and safeguard systems are robust; and  The single potential key risk would be resistance to interventions to enhance hospital efficiency (e.g. putting hospitals under common management structure). E. Program Action Plan 89. On the basis of the assessments, a Program Action Plan (PAP) was developed to address the most critical steps for the Program to achieve its objectives (Annex 9). 20   Annex 1: Detailed Program Description A. Overview 1. The proposed PDO is to contribute to reducing key risks for non-communicable diseases and improving efficiency of health services in Moldova. The proposed Program focuses on a subset of priorities of the GOM’s on-going health program as defined in the NHSDS 2008-2017 which serves as the policy, strategic and operational framework for the proposed operation. The proposed PforR covers a “time slice” of a portion of the GOM program. It is expected to contribute to the government program and, therefore, health system as a whole, by disbursing funds against achievement of a subset of its key results. B. Government’s program 2. Health sector development in Moldova is guided by the 2007-2021 National Health Policy (the Policy). The Policy is further elaborated and operationalized by the 2008-2017 NHSDS. Together, they form a robust reform agenda for the coming years with the following objectives: (a) improving population health; (b) increasing financial risk protection; (c) reducing inequalities in the use and distribution of health care services; (d) enhancing user satisfaction; and (e) restructuring the health system to improve performance and population health regardless of limited resources. 3. To achieve such objectives, the NHSDS identifies four groups of priority activities (also known as “sections”): (i) Section 1: Improve the management/stewardship of the health system. This section includes interventions to: (a) increase the capacity of the MOH, the MOH-affiliated institutions and local health authorities; (b) improve communications mechanisms; (c) strengthen multi-sectoral collaboration for better health; (d) increase the involvement of civil society; and (e) bring national health legislations to the level of European Union (EU) standards; (ii) Section 2: Improve the funding and payment mechanisms for health services. This section includes interventions to improve: (a) health funding; (b) mechanisms for payment and contracting of services; and (c) equity and transparency of resource allocation, as well as financial protection; (iii) Section 3: Organize and provide health care services to meet the people’s health care needs. This section includes interventions to: (a) promote integration and continuity of health services; (b) develop priority sectors of the health system with large impacts on population health; and (c) improve quality of care and level of patients’ satisfaction; and (iv) Section 4: Generate and ensure the necessary resources of for the health system. This section includes interventions to: (a) efficiently manage human resources for health through rational use of existing staff, as well as other pre-service and in- 21   service activities; (b) strengthen the technical and material base of the institutions and facilities; and (c) rationally manage the drugs provision. 4. A three-year MTBF is prepared on a rolling basis to finance the implementation of the NHSDS and other relevant programs. The MTBF has five programs: (i) Health Policy and Management which supports policy development, implementation management and monitoring through the MOH, CNAM and other state institutions; (ii) Priority Public Health Interventions which focuses on disease surveillance and control for infections as well as for non-communicable diseases; (iii) Personal Health Services which concentrates on the delivery of a range of personal health care services rendered by family medicine, hospitals, specialized outpatient and community care providers; (iv) Development of health system resources which focuses on investments in the health sector and rational drug management; and (v) Special medical programs which focuses on special issues like forensic services, etc. 5. The MTBF’s five programs are further divided into 17 sub-programs. The main sources of financing for MTBF are the state budget (59 percent) and health insurance fund (40 percent). Total cost of MTBF for the next four years (2014-2017) has been estimated at MDL 26,115 million or US$1,964 million. C. Scope of the Health Transformation Program and Typology of Program Activities 6. Among the sectoral priority issues, the proposed four-year Health Transformation Program will focus on addressing NCD risks and health system inefficiencies. This choice was based on the following criteria: (i) strategic importance of the issues; (ii) level of WB’s past engagement and added value; and (iii) the need for a focused Program. In this regard, whilst the Program does not explicitly focus on financial protection or informal payments, it will contribute to improvement in these important sectoral issues as part of its broader objectives. 7. The Program is based on the government program and there is no ambiguity over its boundaries, which are defined by selected MTBF subprograms, and in some cases, portions of the sub-programs. It corresponds to 5 out of 17 sub-programs of the MTBF, namely: (i) Sub-program I - Policies and management in health care (Implementing agency: MOH). This sub-program represents the operating budget for the MOH to carry out its functions which include: (a) health policy and strategy formulation; (b) coordination, regulation and quality assurance for all health providers; (c) planning of health resources; (d) management of national health programs; and (e) coordination of multi-sectoral collaboration in health. 22   (ii) Sub-program II - Administration of mandatory health insurance fund (Implementing agency: CNAM). This sub-program represents the operating budget for CNAM central and regional offices to carry out its functions which include: (a) managing the health insurance fund; (b) contracting health providers for the provision of services; and (c) verifying the provision of services by providers to be in line with the contracts. (iii) Sub-program V - Primary Care Services (Implementing agency: CNAM). This sub-program includes the following activities implemented by CNAM: (a) contracting family medicine providers to deliver primary care services and (b) reimbursing pharmacies for the out-patient drug benefit package.17 The Program is limited to two categories under this sub-program: (a) performance-based incentives for Family Medicine providers under CNAM contracts; and (b) CNAM reimbursement of hypertensive drugs in the outpatient drug benefit package. For performance-based incentives in family medicine, the Program will provide incentives on top of the capitation-based payment for primary care providers. Amount of incentive payment will correspond to each provider’s achievement of a set of revised payment indicators related to the coverage and quality of selected family medicine services, including those for NCDs. With regard to the out- patient drug benefit package, the Program will increase the reimbursement rates for selected anti-hypertensive drugs in the package with the aim to improve patient’s compliance with hypertension drug therapy. (iv) Sub-program IX - In-patient Care (Implementing agency: CNAM). This sub- program includes the contracting of hospitals to deliver in-patient care by CNAM. The Program is limited to one category under this sub-program - the performance- based incentive for hospitals. It will provide incentives on top of the DRG payment mechanism for hospitals. Amount of incentive payment will correspond to each hospital’s achievement of a set of performance indicators related to quality and efficiency of selected hospital services. (v) Sub-program XVII - National special health programs (Implementing agency: MOH). Under this sub-program, the Program is limited to National Tobacco Control Program which is Moldova’s comprehensive tobacco control work plan. NTCP was developed in line with the Framework Convention on Tobacco Control of the World Health Organization and approved by the GOM in 2012. Its activities include demand-side and supply-side activities to control tobacco. 8. The choice of the sub-programs and activities within sub-programs is driven by two factors: (i) the most important interventions in the government program which can help achieve the Program objectives; and (ii) the need to limit the Program to a reasonable scope within the total government set of interventions and investments. Figure 1 presents a detailed conceptual                                                              17 There is no public procurement of drugs for the drug benefit package in Moldova. Instead, private pharmacies procure drugs from distributors. CNAM signs contracts with pharmacies and on that basis reimburses out-patient drug costs according to reimbursement rates in the drug benefit package. 23   framework which explains the rationale of the choice of the sub-programs, their activities and linkages to Program results and objectives. More information on Program activities are also discussed in Annex 4 (Technical Assessment). Figure 1: Detailed conceptual framework and results chain Table 1: The Government heath program vs. the Health Transformation Program Health Transformation Program The GOM health program (the Program supported by PforR) Objective - improving population health; - reducing risks for non- - improving financial protection; communicable diseases, - reducing inequalities in the use - and enhancing efficiency of health and distribution of health care services services; - enhancing user satisfaction; and - restructuring the health system to improve performance and population health in the context characterized by limited resources. 24   Health Transformation Program The GOM health program (the Program supported by PforR) Activity types (MTBF - Health policies and management - Health policies and management subprograms) - Administration of health - Administration of health insurance insurance funds funds - Monitoring and evaluation of - Primary care (only performance- health system based incentives and - Public Health (Laboratory reimbursement of outpatient activities) drugs) - Primary care - Hospital care (performance-based - Specialized outpatient healthcare incentives only) - Home-based and community- - National Tobacco Control based care Program - Pre-hospital emergency services - Hospital care - Highly specialized medical services - Maternal and child health Rehabilitation and recovery" Forensic medicine - Rational Management of Medical Devices - Management reserve fund of obligatory medical insurance - National programs and special health care - Development and modernization of health care institutions Geographic scope Nation-wide Nation-wide Implementation period 2008-2017 2014-2017 Cost (2014-2017) in US$ 1,964 million 113.7 million Table 2: Program expenditure requirements according to MTBF Planned (US$ million) PROGRAM 2014 2015 2016 2017 Policies and management in health care 0.71 0.80 0.87 0.91 Administration of national mandatory health insurance fund 5.06 4.80 5.37 5.64 Primary care (performance-based incentives for Family Medicine providers under CNAM contracts and CNAM reimbursement of the outpatient drug benefit package only) 17.88 19.53 20.86 22.10 In-patient care (performance-based incentives to hospitals for in-patient services under CNAM contracts only) 0.00 0.36 0.38 6.59 National special health programs (tobacco control activities only) 0.39 0.47 0.47 0.50 Total 24.04 25.96 27.95 35.73 9. Total cost of the Program is US$113.7 million or 6 percent of the GOM 2014-2017 health program. In the boundaries of the Program, there is no other source of funding from other development partners. IDA financing of the Program would be US$28.7 million or 25 percent of the Program’s cost. An incremental US$2 million in technical assistance is also needed to strengthen capacity for the Program and would be provided through a Technical Assistance Credit. 25   Table 3: Program Financing Amount Source % of total (US$ million) Government 82.9 75 IDA (PforR) 28.7 25 Other Development Partners 0.0 0 Total Program Costs 111.6 100 IDA (IPF) for Incremental TA 2.1 Total Program Costs, including TA 113.7 D. Institutional Arrangements for the Program 10. Program implementation will be based on the current institutional arrangements for the NHSDS. At the national level, the key stakeholders are the MOF, the MOH and CNAM. Under this operation, implementation agreements with be signed: (i) between the Recipient and CNAM; and (ii) between MOH and NCPH for the purposes of implementing CNAM and NCHP respective activities under the Program, under terms and conditions acceptable to the WB. 11. The MOF allocates annual government budget to the health sector, which is then approved by the Parliament through the annual Law on State Budget and Law on Mandatory Health Insurance. On the basis of the approved budget, the MOF is responsible for regular and timely channeling of funds to the MOH and CNAM for implementation of Program activities. In addition, the MOF will play a key role in the adoption and implementation of increases in the tobacco tax for tobacco control in the context of the Program. 12. The MOH, as the steward of the health system, is responsible for health policies, strategies, regulations, and oversight for the sector and the Program. It takes the lead in the development of the MTBF on a rolling basis, which forms the basis for negotiation with the MOF on the health budget and ensure adequate funding for the Program. Under the Program, MOH will take the lead in implementing activities related to NTCP and rationalization of hospitals. Among various MOH-subordinated bodies, the NCPH will have a particularly important role in Program implementation NCPH takes the lead in development and implementation of strategies for health promotion, and disease prevention and control and is therefore critical to activities related to NCD control under the Program. 13. CNAM, a state agency with financial autonomy subordinated to the Prime Minister’s office, is the purchaser of health services and responsible for pooling contributions, managing health insurance funds and purchasing of services through contracts with providers. Under the Program, CNAM will take the lead in activities related to hospital payment reform (DRG), performance-based incentives, and reimbursement of drug benefit package. The MOH and CNAM have been working closely to implement NHSDS; this continued collaboration is required for Program implementation. 14. Procurement and financial management under the Program will be carried out by the MOH and CNAM for Program activities which they are respectively responsible for. The MOH and its subordinated agencies will be responsible for Program’s compliance with environmental requirements. Both the MOH and CNAM have a role in addressing social aspects. 26   15. Third-party independent entities will be used to conduct verification of results for selected DLIs. 16. A small unit consisting of a few consultants reporting to the MOH will help the MOH manage the selected technical assistance (TA) and capacity building activities required for the Program’s implementation, which will follow WB’s IPF procedures. This unit will also assist fiduciary staff of the MOH in the Program’s procurement and financial management activities using government procedures. Currently, there is a unit under the MOH which supports the ministry in the implementation of the ongoing WB health project. Such a unit will be maintained, though possibly downsized in terms of staffing based on the needs of the Program. 17. A Program Steering Committee with representatives from MOF, MOH, CNAM, the Prime Minister’s Office and other relevant stakeholders will be established to provide Program guidance and oversight over its implementation. In addition, the Health Sector Coordination Council for External Assistance is one key venue for policy dialogue and coordination between the GOM and all the external development partners active in health. It is chaired by the Minister of Health with support from WHO country office. Key health reform issues related to the Program and its implementation progress will be discussed in the quarterly Council meetings. 27   Annex 2: Results Framework Matrix Program Development Objective: The proposed PDO is to contribute to reducing key risks for non-communicable diseases and improving efficiency of health services in Moldova Core Target Values Responsibility Unit of Data DLI Indicators Baseline Frequency for Data Measure Yr. 1 Yr. 2 Yr. 3 Yr. 4 Source/Methodology Collection PDO Level Results Indicators PDO Indicator 1: Percentage 28 (2008)18 Baseline Baseline Twice Household survey MOH Smoking prevalence minus 1 minus 2 during with questions on among adults percentage percentage program tobacco use (disaggregated by point points period (streamlined STEPS gender and quintile) survey) PDO Indicator 2: Percentage 1019 Baseline Baseline plus Twice Household survey MOH Adults with plus 2 5 percentage during with blood pressure hypertension whose percentage points program measurement blood pressure is points period (streamlined STEPS under control survey) (disaggregated by gender and quintile) PDO Indicator 3: Number 17.6 17.0 16.5 16.0 15.6 Annual Administrative data MOH Annual acute care (2011) during hospital discharges Program per 100 persons period PDO Indicator 4: Number 17,586 (2012) 17,000 16,500 16,000 15,000 Annual Administrative data MOH Acute care hospital during beds Program period PDO Indicator 5: Day 8.0 7.8 7.6 7.4 7.2 Annual Administrative data MOH Average length of (2012) during stay in acute care Program hospitals period Intermediate Results Area 1: Reducing NCD risks Intermediate Yes/No No Yes Once Self-reported data MOH Results Indicator 1: during                                                              18 Baseline will be updated once the results of the 2013 STEP survey become available. 19 Baseline will be updated once the results of the 2013 STEP survey become available. 28   Approval of the new Program tobacco control period legislation Intermediate Yes/No No Yes Once Self-reported data CNAM Results Indicator 2: during Revision of the Program outpatient drug period benefit package with regard to anti- hypertensive drugs Intermediate Percentage 3920 Baseline Baseline plus Twice Household survey MOH Results Indicator 3: (2012) plus 3 6 percentage during with blood pressure Adults with percentage points Program measurement hypertension points period (streamlined STEP receiving treatment survey) (disaggregated by gender and quintile) Intermediate Results Area 2: Improved efficiency of health services Intermediate Text No revision Revision of Performance Performance- Performance- Annual Self-reported data CNAM Results Indicator 4: of incentive -based based based during Revision and performance- scheme for incentive incentive incentive Program implementation of the based family agreements agreements agreements period performance-based incentives in medicine signed with signed with signed with incentive scheme in family all primary all primary all primary family medicine medicine care centers care centers care centers contracted contracted by contracted by by CNAM in CNAM in CNAM in Year 2 Year 3 Year 4 Intermediate Text No Design of Pilot of the Evaluation of Performance- Annual Self-reported data CNAM Results Indicator 5: performance incentive scheme in at the pilot and based during Introduction of based scheme for least 3 revision of the incentive Program performance-based incentives for hospitals multiple- scheme agreements period incentives to improve hospitals profile design signed with (i) efficiency; and (ii) hospitals all multiple- quality of care in profile hospitals hospitals                                                              20 Baseline data will be updated once the results of the 2013 STEPS survey become available. 29   Intermediate Text DRG DRG DRG DRG DRG updated Annual Self-reported and CNAM Results Indicator 6: accounting accounting accounting accounting for using country during administrative data Use of updated DRG for less than for at least for at least at least 60% data Program prices for payment by 40% of total 40% of total 50% of total of total period CNAM to acute care payment by payment by payment by payment by public hospitals CNAM to CNAM to CNAM to CNAM to acute care acute care acute care acute care public public public public hospitals hospitals hospitals hospitals Intermediate Yes/No No Yes Once Self-reported data MOH Results Indicator 7: during Approval of the Program revised national period health strategy which includes hospital rationalization measures Intermediate Percentage 0 10 20 30 50 Annual Self-reported data MOH Results Indicator 8: during Public hospitals in Program Chisinau which are period under common management Intermediate Yes/No No Yes Once Self-reported data MOH Results Indicator 9: during Establishment of Program university hospital period Intermediate Percentage 36 (2011) 38 40 42 44 Annual Administrative data MOH Results Indicator during 10: Annual Program hospitalizations period through referrals by family medicine providers   30   Annex 3: Disbursement Linked Indicators, Disbursement Arrangements and Verification Protocols Disbursement Linked Indicator Matrix Share in total Indicative timeline for DLI achievement Total financing financing DLI allocated to DLI amount Baseline Year or Period 1 Year or Period 2 Year or Period 3 Year or Period 4 (US$ million) (in percentage) DLI 1: Smoking prevalence 4 14 28%21 Baseline minus 1 Baseline minus 2 among adults percentage points percentage points Allocated amount (US$ million): 2.0 2.0 Definition/description of achievement: Prevalence of tobacco use (including smoking, oral tobacco and snuff) on more than one occasion in the 30 days preceding the survey, among adults (age 18 and above) as measured by a nationally representative household survey. The sampling strategy of this survey should be the same as those in the 2013 Moldova STEP survey. DLI allocation is US$0.2 million for every 0.1 percent point reduction of prevalence from the previous survey, for a maximum of US$ 4 million in total disbursement for this DLI in the project cycle DLI 2: Adults with hypertension 4 14 10%22 Baseline plus 2 Baseline plus 5 whose blood pressure is under percentage points percentage points control Allocated amount (US$ million): 1.6 2.4 Definition/description of achievement: Increase in the share of hypertensive adults (age 18 and above) with blood pressure under control is measured by a nationally representative household survey with blood pressure measurement. The sampling strategy and blood pressure measurement protocol of this survey should be the same as those in the 2013 Moldova STEP survey. DLI allocation is US$0.08 million for every 0.1 percent point increase from the previous survey, for a maximum of US$ 4 million in total disbursement for this DLI in the project cycle. DLI 3: Annual acute care 3 10 17.6 17.0 16.5 16.0 15.6 hospital discharges per 100 (2011) persons Allocated amount (US$ million): 0.9 0.75 0.75 0.6 Definition/description of achievement: Numerator: Number of hospital admissions for acute care in the past year as reported by health information system. Denominator: Mid-year population x 100 taken from National Bureau of Statistics data. DLI allocation is US$0.15 million per a reduction of every 0.1 annual admission for acute care per 100 persons compared to the previous year, for a maximum of US$3 million in total disbursement for this DLI in the project cycle. DLI 4: Acute care hospital beds 4.7 16 17,586 17,000 16,500 16,000 15,000 (2012)                                                              21 Baseline will be updated once the results of the 2013 STEP survey become available. 22 Baseline will be updated once the results of the 2013 STEP survey become available. 31   Allocated amount (US$ million): 1.1 0.9 0.9 1.8 Definition/description of achievement: Number of beds in acute-care hospitals contracted by CNAM in a given year. DLI allocation is US$1,817 for every reduction of one acute hospital bed compared to the previous year, for a maximum of US$4.7 million in total disbursement for this DLI in the project cycle DLI 5: Revision of the outpatient 2 7 No Revised benefit drug benefit package with regard package: Yes to anti-hypertensive drugs Allocated amount (US$ million): 2 Definition/description of achievement: A joint MOH and CNAM order to formally adopt a revised drug benefit package in which the average reimbursement rate for generic, first line medication for the three main categories of anti-hypertensive is at least 70 percent. DLI 6: Revision and 2 7 No revision Revision of Performance- Performance-based Performance- implementation of performance- of incentive incentive scheme based incentive incentive based incentive based incentive scheme in primary scheme for for family agreements agreements signed agreements signed care family medicine signed with all with all primary with all primary medicine primary care care centers care centers centers contracted contracted by contracted by by CNAM in CNAM in Year 3 CNAM in Year 4 Year 2 Allocated amount (US$ million): 0.5 0.5 0.5 0.5 Definition/description of achievement: For achievement of family medicine incentive scheme design revision, two results are required: (i) a paper describing the revisions of the scheme satisfactory to the WB which should include (a) revision of performance indicators and (b) introduction of spot check methods and (ii) a ministerial order to formally adopt such revisions to the scheme. For annual implementation of the revised scheme, there should be satisfactory proofs that all primary care facilities contracted by CNAM will have signed annual performance-based incentive agreements. DLI 7: Introduction of 2 7 No Design of Pilot of the Evaluation of the Performance- performance-based incentives to incentive incentive scheme scheme in at least pilot and revision based contracts improve (i) efficiency and (ii) scheme for for hospitals 3 multiple- profile of the scheme signed with all quality of care in hospitals hospitals hospitals design multiple-profile hospitals Allocated amount (US$ million): 0.5 0.5 0.5 0.5 Definition/description of achievement: For achievement of hospital incentive scheme design in Year 1, a paper describing the scheme design satisfactory to the WB is required. For the pilot in Year 2; copies of performance-based incentive agreements signed with all pilot hospitals are required. For pilot evaluation in Year 3, a report on (i) pilot evaluation and (ii) updated scheme design is required. For implementation of the scheme in Year 4, there should be copies of performance-based incentive agreements signed with all multi-profile hospitals. 32   DLI 8: Use of updated DRG 2 7 DRG DRG accounting DRG accounting DRG accounting DRG updated prices for payment by CNAM to accounting for at least 40 for at least 50 for at least 60 using country data public acute care hospitals for less than percent of total percent of total percent of total 40 percent payment by payment by payment by of total CNAM to public CNAM to public CNAM to public payment by hospitals hospitals hospitals CNAM to public hospitals Allocated amount (US$ million): 0.5 0.5 0.5 0.5 Definition/description of achievement: For annual implementation of the updated DRG prices in the first three years, a reputable independent entity will review annual hospital payment data and confirm share of updated DRG in total CNAM payment for public hospitals. For achievement of updating DRG prices in Year 4, a DRG costing report using country data satisfactory to the WB is required. DLI 9: Public hospitals in 4 14 0% 10% 20% 30% 50% Chisinau which are under common management Allocated amount (US$ million): 0.8 0.8 0.8 1.6 Definition/description of achievement: A formal letter from MOH/CNAM is sent to the WB with satisfactory proof of the share of public hospitals in Chisinau which are under common management and contracted as a group by CNAM. DLI allocation is US$0.08 million for every 1 percent point increase compared to the previous year, for a maximum of US$4 million in total disbursement for this DLI in the project cycle. DLI 10: Approval of the revised 1 3 No revised Revised strategy national health strategy which strategy approved includes hospital rationalization measures Allocated amount (US$ million): 1 Definition/description of achievement: A copy of the strategy (translated into English) and proof of government’s formal approval of the strategy sent to the WB. Strategy should address the following hospital rationalization measures, among others: (i) regionalization of hospitals (ii) common management for public hospital in Chisinau; and (iii) establishment of a university hospital Total Financing Allocated 28.7 100 7.3 7.6 4.0 9.9   33   DLI Verification Protocol Table No. DLI Scalability of Protocol to evaluate achievement of the DLI and data/result verification Disbursements (Yes/No) Data source/agency Verification Entity Procedure 1 Smoking prevalence in adults Yes Data source: survey using Reputable independent Review of survey instrument and the same sampling entity with sufficient protocol, primary data and analysis strategy and questions on technical expertise tobacco consumption as in the 2013 Moldova STEPS survey Agency: MOH 2 Adults with hypertension Yes Data source: survey using Reputable independent Review of survey instrument and whose blood pressure is under the same sampling entity with sufficient protocol, primary data and analysis control strategy and blood technical expertise pressure measurement protocol of those in the 2013 Moldova STEPS survey. Agency: MOH 3 Annual acute care hospital Yes Data source: National Bureau of Audit for a random 10% of discharges per 100 persons Administrative data from Statistics or a reputable hospitals with acute beds health information system independent entity with Agency: MOH sufficient technical expertise 4 Acute care hospital beds Yes Data source: National Bureau of Audit for a random 10 percent of Administrative data from Statistics or a reputable hospitals with acute beds health information system independent entity with Agency: MOH sufficient technical expertise 5 Revision of the outpatient drug No Ministerial order to adopt MOH Review of Ministerial order benefit package with regard to the new benefit package anti-hypertensive drugs Agency: MOH and CNAM 6 Revision and implementation No Data source: Self-reported (i) and (iii) CNAM (i) Review of report on the revised of performance-based incentive administrative data (ii) MOH incentive scheme (Year 1) scheme in family medicine Agency: CNAM (ii) Review of ministerial order to adopt the revised scheme (Year 1) (iii) Review of annual performance- based incentive agreements signed 34   No. DLI Scalability of Protocol to evaluate achievement of the DLI and data/result verification Disbursements (Yes/No) Data source/agency Verification Entity Procedure with all family medicine providers (Year 2,3,4) 7 Introduction of performance- No Data source: Self-reported (i), (ii) and (iii) CNAM (i) Review of report on the scheme based incentives to improve: administrative data (iv) CNAM and MOH design (Year 1) (i) efficiency; and (ii) quality Agency: CNAM (ii) Review of contracts signed for of care in hospitals pilot hospitals (Year 2) (iii) Review of evaluation report of the pilot and updated scheme design (Year 3) (iv) Review of annual performance- based incentive agreements signed with all multi-profile hospitals (Year 4) 8 Use of DRG prices for No Data source: Self-reported (i) Reputable (i) Review of annual hospital payment by CNAM to public administrative data independent entity with payment data (Year 1, 2 and 3) acute care hospitals Agency: CNAM sufficient technical (ii) Review of report on DRG expertise costing study using country data (ii) CNAM (Year 4) 9 Public hospitals in Chisinau Yes Data source: Self-reported (i) MOH (i) Review of proof of hospital which are under common administrative data (ii) CNAM  under common management management Agency: MOH (ii) Review of common contracts for hospitals under the same management structure 10 Approval of the revised No Data source: copy of MOH Review of strategy and official national health strategy which strategy in English and gazette includes hospital proof of government rationalization measures adoption of the strategy Agency: MOH 35   Bank Disbursement Table No. DLI Bank financing Of which Financing Deadline for Minimum DLI value to Maximum DLI value(s) Determination of Financing allocated to the DLI available for DLI be achieved to trigger expected to be achieved Amount to be disbursed against (US$ million) Prior Achievement disbursements of Bank for Bank disbursements achieved and verified DLI Advances Financing purpose values results 1 Smoking 4 0 1 September 0.1 percent point 2 percent point reduction Formula: Disbursement amount prevalence in 30, 2018 reduction of prevalence from baseline is US$0.2 million for every 0.1 adults from the previous percent point reduction of survey prevalence from the previous survey, for a maximum of 4 million in total disbursement. First and second portions disbursed when results of first and second household surveys become available (expected to be Year 2 and Year 4). 2 Percentage of 4 0 1 September 0.1 percent point 5 percent point increase Formula: Disbursement amount adults with 30, 2018 increase from the from baseline is US$0.08 million for every 0.1 hypertension previous survey percent point increase from the whose blood previous survey, for a maximum pressure is of 4 million in total under control disbursement. First and second portions disbursed when results of first and second household surveys become available (expected to be Year 2 and Year 4) 3 Annual acute 3 0 0.75 September Reduction by 0.1 Reduction by 2 Formula: Disbursement amount care hospital 30, 2018 admission for acute admissions for acute is US$0.15 million for every discharges per care per 100 persons in care per 100 persons in reduction by 0.1 admission for 100 persons the past year compared the past year compared acute care per 100 persons in the to preceding year to baseline past year compared to preceding year, for a maximum of US$3 million in total disbursement. Disbursement is once a year, when verified results are available 36   No. DLI Bank financing Of which Financing Deadline for Minimum DLI value to Maximum DLI value(s) Determination of Financing allocated to the DLI available for DLI be achieved to trigger expected to be achieved Amount to be disbursed against (US$ million) Prior Achievement disbursements of Bank for Bank disbursements achieved and verified DLI Advances Financing purpose values results 4 Number of acute 4.7 0 1.18 September Reduction by one acute Reduction by 2,586 Formula: Disbursement amount care hospital 30, 2018 care hospital bed acute care hospital beds is US$1,817 for every reduction beds compared to the compared to baseline by one acute care hospital bed preceding year compared to the preceding year, for a maximum of US$4.7 million in total disbursement. Disbursement is once a year, when verified results are available 5 Revision of the 2 0 0.5 September Revision of drug N/A Disbursement amount is US$2 outpatient drug 30, 2018 benefit package million and made when this benefit package result is achieved and verified with regard to anti- hypertensive drugs 6 Revision and 2 0 0.5 September Achievement of agreed N/A Disbursement amount is US$ 0.5 implementation 30, 2018 milestones million per each of the four of performance- milestones based incentive scheme in Disbursement for the first family medicine milestone is made whenever the first milestone is achieved, Disbursement for the other three is made once a year, when verified results are available 7 Introduction of 2 0 0.5 September Achievement of agreed N/A Disbursement amount is US$ 0.5 performance- 30, 2018 milestones million per each of the four based incentives milestones to improve: (i) efficiency and Disbursement for the first (ii) quality of milestone is made whenever the care in hospitals first milestone is achieved. Disbursement for the other three is made once a year, when verified results are available. 37   No. DLI Bank financing Of which Financing Deadline for Minimum DLI value to Maximum DLI value(s) Determination of Financing allocated to the DLI available for DLI be achieved to trigger expected to be achieved Amount to be disbursed against (US$ million) Prior Achievement disbursements of Bank for Bank disbursements achieved and verified DLI Advances Financing purpose values results 8 Use of DRG 2 0 0.5 September Achievement of agreed N/A Disbursement amounts are prices for 30, 2018 milestones US$0.5, 0.75 and 0.75 million payment by respectively for milestones 1, 2 CNAM to and 3. public hospitals Disbursement for the first milestone is made whenever it is achieved. Disbursement for the other two is made once a year, when verified results are available. 9 Proportion of 4 0 1 September One percent point 50 percent point increase Formula: Disbursement amount public hospitals 30, 2018 increase from the from the baseline is US$0.08 million for every 1 in Chisinau previous year percent point increase compared which are under to the previous year, for a common maximum of US$4 million in management total disbursement. Disbursement is made once a year, when verified results are available. 10 Approval of the 1 0 0.25 June 30, 2018 Approval of the new N/A Disbursement amount is US$1 revised national strategy million and made when this health strategy result is achieved and verified which includes hospital rationalization measures TOTAL 28.7 0 7.18 Note: From the total value disbursement against verified results for each year, an amount of US$ 1.344 million will be subtracted to compensate for the advance. 38   Annex 4: Summary Technical Assessment A. Strategic relevance and technical soundness of the proposed Program 1. The Government’s health reform program, which has continued since the introduction of national health insurance in 2004, is comprehensive and technically sound. Its priority actions correspond to the key challenges in the health sector. In spite of the flux in the political situation over the last 10 years, the Government is committed to improving health for the population. The national health program’s objectives and key priorities remain constant despite the turn-over of senior management in the MOH. 2. The Health Care System Development Strategy 2008-2017 is the cornerstone of the Government program. This comprehensive strategy follows the WHO’s health system framework (as defined in the World Health Report 2000) and is accompanied by an action plan and a monitoring framework. The government program has a strong focus on efficiency and quality of health services. The proposed Program represents a focused slice of the government’s robust program, which aims to address some of the most critical challenges in the health sector. 3. One of the foremost challenges facing Moldova is a growing burden of NCDs. NCDs account for the main causes of mortality and morbidity in the population, with the top causes of premature deaths being heart attacks, stroke, cancers and liver cirrhosis (Table 1). Table 1: Top causes of life years lost (YLLs) in Moldova Rank and disorder 2010 # YLLS in thousand dollars (% of total) 1. Ischemic heart disease 247 (25.4) 2. Stroke 116 (11.9) 3. Cirrhosis 91 (9.4) 4. Lower respiratory infections 36 (3.7) 5. Self-harm 31 (3.2) Source: Institute for Health Metrics and Evaluation 2013. 4. Without effectively addressing NCD, Moldova will not be able to significantly improve health of its people and reduce NCD-related economic costs. Globally, it has been estimated that NCDs and their risk factors cost countries up to 6.7 percent of their GDP.23 For this reason, NCD control is prominent in the government program. Smoking and hypertension are two of the most important NCD risk factors, and ones for which cost-effective interventions exist. In order to target the challenge of NCD directly, the Program encompasses such interventions where outlined in the Government program. 5. With a prevalence of 43 percent for adults, Moldova has one of the highest rates of smoking in the region. NTCP was approved in 2012 and is in line with the WHO Framework                                                              23 Marc Suhrcke, Rachel A. Nugent, David Stuckler and Lorenzo Rocco. Chronic Disease: An Economic Perspective. London, 2006: Oxford Health Alliance. 39   Convention on Tobacco Control, to which Moldova is a signatory. It includes proven interventions on both demand and supply side to reduce tobacco consumption, such as provision of smoking cessation services, warning labels on cigarette packaging, and restriction on tobacco publicity and promotion. In particular, it encompasses tobacco tax increases which represent the most cost-effective measure to reduce smoking according to the global evidence base.24 Due to its technical soundness, NTCP is a subset of the proposed Program, which will provide the incentive for the Government to implement such interventions and drive down smoking rates. 6. Hypertension is the second leading health risk factor in Moldova, contributing to high rates of strokes and heart attacks. Screening of hypertension and managing it with anti- hypertensive drugs in the family setting is one of the “best-buys” in NCD control, by avoiding the most costly complications of untreated hypertension.25  The Government program has been addressing this risk by: (i) including hypertension screening and management in the basic benefit package; (ii) developing evidence-based clinical practice guidelines (standardized workplace protocols) and disseminating them to all primary care providers; and (iii) reimbursing around 50 percent of the cost of out-patient hypertensive drugs. 7. However, less than one in three patients with hypertension in Moldova is taking medication daily. 26 Consequently, only around 10 percent of people diagnosed with hypertension have their blood pressure under control (Figure 1). It is likely that poor patient education combined with financial barriers lead to this low adherence rate, with 53 percent of respondents to a 2010 survey only taking antihypertensive medication “when needed” (rather than daily) and 5 percent only “when affordable.”27  8. International studies show that reducing copayment levels would significantly increase the level of compliance with antihypertensive medication. 28 The Program will provide the incentive for the Government to: (i) reinforce hypertension screening and management interventions by providers as per the clinical protocols and mandates of family medicine; and (ii) further reduce the co-payment level for anti-hypertensive drugs to achieve better results in hypertension control. .                                                              24 Gilbert A, Cornuz J (2003). Which are the most effective and cost-effective interventions for tobacco control? WHO Regional Office for Europe, Health Evidence Network report; 2003. 25    From Burden to “Best Buys”: Reducing the Economic Impact of Non-Communicable Diseases in Low- and Middle-Income Countries. WHO, 2011. 26     New Research: Irregular Treatment of Hypertension in Moldova. HITT-CIS, 2013. 27 Roberts, B, Stickley, A, Balabanova, D, Haerpfer, C, McKee, M (2012) “The persistence of irregular treatment of hypertension in the former Soviet Union” Journal of Epidemiology and Community Health. 28    Tara et al. Copayment Level and Compliance with Antihypertensive Medication: Analysis and Policy Implications for Managed Care. American Journal of Managed Care. 2006; 12:678-683. 40   Figure 1: Hypertension is not under control Source: World Bank 20013. 9. OOP payments at 45 percent of total health expenditures remain high. The major expense for Moldovan citizens is the cost of pharmaceuticals; spending on medicines accounted for 73.1 percent of all OOP expenditure in 2010.29 While inpatient drugs are covered under MHI, reimbursement of outpatient drugs remains very limited. The main focus of CNAM has been expanding population enrollment in MHI, while the depth of coverage has been constrained by the fiscal situation. This may discourage further enrollment from the uninsured unless more “value” is associated with MHI by the public. It also undermines the effectiveness of population health programs, in particular NCD control, through lack of adherence to prescribed medications due to affordability, which is likely to be more pronounced among the poor. In this context, the Program will support the government to revise the drug benefit package, with specific focus on reducing copayments for antihypertensive drugs as described above. With this approach, the Program is expected to contribute to improving financial protection of health services and enhancing equity. 10. Hospital inefficiency is another major challenge in Moldova. Hospital services account for more than 50 percent of total public expenditures on health, threatening sustainability of funding, with 73 hospitals serving a population of 4.2 million. 11. While hospital overcapacity and inefficiency is a common problem in the region due to the Semashko legacy, other countries (Estonia, Croatia) have managed to overcome resistance from multiple stakeholders through innovative approaches in order to achieve hospital reforms. In order to incentivize further action in this priority area, the Program focuses on a set of results and interventions related to: (i) further reduction in acute care beds and hospital admissions for acute care; and (ii) strengthening the DRG provider payment mechanism in hospitals. For the reduction of acute care beds, the background technical work has already been carried out with WB support with priority actions identified for: (i) regionalization of hospitals; (ii) common management for public hospitals in Chisinau; and (iii) establishment of a university hospital as                                                              29 Health Systems in Transition: Moldova. European Observatory, 2012. 41   part of restructuring/consolidation of selected public hospitals in Chisinau. However, these actions still need to be formalized and enacted by the GOM. 12. Globally, there is a growing body of evidence confirming the effectiveness of performance-based incentives in improving results delivered by health service providers. In this context, the development and introduction of the performance-based incentive scheme for hospitals supported by the Program is expected to enhance hospital efficiency. Although plans for hospital performance payments were drawn up in 2008, they were never implemented. Similarly, strengthening the on-going performance-based incentive scheme in primary care is likely to contribute to improving overall sector efficiency, for example by reducing referral rates to secondary care, as well as better results in NCD management at the primary care level.30 Clinical pathways, already introduced in primary care, should be used as a basis for performance-based financing to promote quality and efficiency of care. While CNAM has stipulated 22 indicators since 2013, the existing formula rewards volume of care in a few selected areas rather than holistic quality of care and in particular the need for strong primary prevention for NCDs. Therefore, a priority action supported by this Program will be revision of the performance-based incentive scheme in primary care, including: (i) performance indicators; and (ii) verification methods. 13. In summary, the proposed Program has many of the critical building blocks required for delivering results. These include:  Strong political commitment to achieving agreed results;  Focus on the key challenges facing the health sector in Moldova;  Harmonization with existing policy frameworks (here the Health Care System Development Strategy 2008-2017);  Technical soundness and alignment with international evidence and best practice;  Clearly defined interventions, which are supported by relevant international experiences; and  An agreed set of SMART (Specific, Measurable, Attainable, Relevant, and Time- bound) results indicators to assess Program performance, described further in the next section. B. Expenditure framework 14. As evidenced by budget allocations, the GOM is highly committed to health. During the last five years public expenditures on health amounted to no less than 5 percent of GDP and at least 12 percent of total government expenditures. This trend is expected to continue in the medium term during the Program’s implementation. However, further increases in the health sector’s share in government budget are not likely. The 2013 government health budget was 1,415 MDL per capita (77 MDL more than in 2012). The largest part of expenditure was for individual health services (80.5 percent), followed by public health (8 percent) and health system resources investment (7.4 percent). MTBF forms the cornerstone of the expenditure                                                              30 WHO Health Policy Paper Series No. 2 Cost, Health Effects and Cost-Effectiveness of Tobacco. 42   management and its quality has been gradually increasing. The Program expenditure framework under MTBF allows for the tracking of expenditures according to administrative units. Over the next four years, the MOH and its subordinate central institutions will receive 4 percent of total Program expenditures, CNAM 18 percent, hospitals 6 percent and family medicine providers 45 percent. Program expenditures can be classified by the MTBF sub-programs which correspond to specific functions and activities. 15. At US$113.7 million, the Program’s estimated cost is reasonable and represents around 19 percent of the estimated cost of the total government expenditures for the health sector. The majority (97 percent) of Program’s cost is recurrent and operating costs (Table 2). Table 2: Estimated expenditures by categories Category Amount % of total (US$ million) Salaries and benefits (for MOH, CNAM and relevant NCPH staff) 16.6 15 Goods 0.9 1 Civil works 2.2 2 Performance based incentives for health providers 58.0 51 Reimbursement of out-patient hypertensive drug benefits 29.7 26 Other operating costs 6.3 6 Total 113.7 100 16. As noted in the 2011 assessment based on Public Expenditure and Financial Accountability methodology, Moldova scores relatively well on budget credibility, comprehensiveness and classification, treasury operations (including budget, payroll and expenditure controls), in-year reporting and public access to government budget and financial information. With the WB support (under the BOOST initiative),31 Moldova became one of the few countries in the world to publish budget execution data at the item level for all institutions on the internet. The BOOST database, available on the MOF website, is a useful analytical tool to monitor the efficiency and transparency of the use of public funds. In line with the new Classification of Programs approved by the MOF, starting in 2014, the Sector Strategy of Expenditures in Health will cover 17 subprograms, by priority intervention areas. C. Program’s results framework and monitoring 17. In order to monitor progress toward achieving the PDOs, the Program’s Results Framework details PDO-level Results Indicators and 10 Intermediate Results Indicators, all of which have been agreed with the GOM to monitor progress of the Program. In particular, the intermediate results DLIs have been chosen to address the bottlenecks along the results chain that require incentivizing, with both ambition (“stretch”) and feasibility (“realism”) taken into                                                              31 BOOST is not an acronym. It is the name of a new data tool developed by the World Bank to help enhance public sector performance. 43   account. All PDO and six Intermediate Results Indicators were selected as Disbursement-Linked Indicators (DLI) because of their ability to measure and incentivize key intended changes in the health sector. Surveys 18. Two PDO-level indicators will be monitored through two rounds of a special survey. They pertain to the monitoring the prevalence of adult smoking (DLI 1) and the percentage of adults with hypertension under control (DLI 2). 19. The STEP-wise approach to chronic disease risk factor surveillance is a survey designed to be an entry point for low and middle income countries to begin NCD surveillance activities while strengthening country monitoring capacity. The survey has three “steps” for monitoring risk factors such as blood pressure and cholesterol levels: questionnaire, physical measurement and biochemical (biomarker) measurement. 20. The first STEPS survey was conducted in November 2013 by NCPH with the technical support of WHO. This survey included the questionnaire and physical measurement elements, but not biochemical measurements. Evaluation of this survey is still ongoing, but initial reports from WHO indicate that data collection was undertaken successfully and data quality meets the required standards. This “streamlined” survey will be repeated in Year 2 and Year 4 of the Program, using the pool of data collectors trained for the 2013 survey. 21. The survey will be commissioned by MOH and coordinated by NCPH Past experience of Moldova in conducting these surveys indicates that repeating the surveys are possible in the future. Routine monitoring systems 22. Existing administrative information systems in the MOH and CNAM have full capacity to monitor the remaining Program indicators. The other two PDO-level indicators, reduction in the number of annual hospital admissions for acute care (DLI 3) and reduction in the number of acute hospital beds (DLI 4), are collated and reported by the National Centre for Health Management on an annual basis. 23. The Results Framework includes several indicators that can be more efficiently monitored through electronic reporting, in order to incentivize the institutionalization of these systems in CNAM and MOH and build upon the activities of the previous WB Project. 24. The remaining intermediate indicators (mainly Yes/No) rely on self-reported data from CNAM and the MOH. Independent entities will be contracted to follow agreed verification protocols to confirm achievement of submitted results. Given its stewardship role, the MOH will ultimately be responsible for monitoring progress on these indicators and for ensuring timely collection and reporting of monitoring data and provision of necessary verification documents to the WB and MOF. 44   25. As part of monitoring progress towards the PDO, the Bank team will conduct regular implementation support missions based on the detailed Implementation Support Plan (Annex 9), whose focus would be on timely implementation of the agreed Program Action Plan (Annex 8), provision of necessary technical support, conduct of fiduciary reviews, and monitoring adherence to verification protocols, where appropriate. D. Governance structure and institutional arrangements 26. The two most critical stakeholders involved in implementing the proposed Program are the MOH and CNAM, with responsibility for the Program scope of activities rather equally divided between MOH and CNAM. In the context of the proposed Program, the MOH and CNAM are the primary beneficiaries that will be responsible for using the funds available through the proposed Program to implement the healthcare reforms according to priorities and directions defined in the National Healthcare Development Strategy 2007–2021. Their commitment to the Program activities is high as the scope of activities is based on nationally identified priorities and/or ongoing reforms supported under the previous WB project. 27. The MOH is well placed and empowered to carry out its stewardship functions for the health sector. Its ability to work across sectors and collaborate with various stakeholders in health has been steadily increasing. The MOH therefore is able to design and implement national-level interventions related to the Program. However, three is still room to further strengthen MOH’s capacity in some strategic areas, including: (i) implementation of hospital rationalization measures; (ii) communication with stakeholders to galvanize their support for key health reforms; and (iii) monitoring and evaluation of results. One of the key challenges in MOH institutional capacity is high staff turnover. For instance, the Policy Analysis and Monitoring unit in the Ministry of Health is currently missing two thirds of its staff. Continued high turnover may affect institutional memory and the achievement of the Program’s results. 28. NCPH, as a subordinated agency of the MOH, has increased its mandate in recent years beyond the Soviet-era sanitary-epidemiological functions to include the development and implementation of population-level health promotion and disease prevention activities (including NCD control). Nevertheless, NCPH still needs to strengthen its analytical capacity, as well as the ability to conduct well-coordinated public information campaigns. 29. CNAM is the sole purchaser of public healthcare services responsible for revenue raising through mandatory health insurance and contracting providers in line with a defined benefits package. CNAM plays a key role in the achievement of PforR results related to healthcare efficiency and financial protection of population, although as an independent agency directly subordinated to the Government it must coordinate extensively with MOH. In particular, CNAM is responsible for review and deepening of the antihypertensive drugs benefits (in consultation with the MOH) and ensuring its adequate funding. By further strengthening of the DRG payment mechanism to hospitals, CNAM will ensure transparency and efficiency in financing healthcare providers, as well as provide better evidence on the efficiency and quality of healthcare treatment. Although making hospitals accountable for quality of care is a broad function that involves many stakeholders (the MOH, accreditation agency), CNAM plays a 45   major role by using its contracting leverage to stimulate hospitals and primary care providers to produce the desired results. 30. CNAM has significantly built up its capacity since the introduction of social health insurance in 2004. By and large, CNAM has been able to fulfill its mandates of contracting services with providers. The on-going performance-based incentive program in primary care is a good example of CNAM capacity in service purchasing. It also provides a good foundation for expansion of this approach to the hospital sector. However, CNAM still needs to further build its capacity to: (i) strengthen provider payment mechanisms; (ii) regularly analyze utilization data, identify cost outliers and address such cases; and (iii) negotiate with and contract providers as well as hold them accountable for results in a more effective manner. Currently CNAM is going through a restructuring in order to strengthen its core functions of strategic purchasing of health services, while ensuring effectiveness, efficiency and cost control of its internal organization. 31. The MOH and CNAM are committed to drawing on technical assistance to build capacity in key areas identified above in order to strengthen institutional capability to implement the Program and proposed Program Action Plan. These capacity building measures are placed into the context of the regular program of training and capacity building in each institution 32. An adequate governance structure and coordination arrangements are in place to implement the Program. Coordination mechanisms for the MOH and CNAM to collaborate with each other as well as to coordinate with country stakeholders and external development partners are well established. At an executive level, CNAM’s Administrative Council includes a representative from the Ministry of Health along with other relevant stakeholders. In order to implement this Program, a Steering Committee will be established between the key implementing agencies that will meet biannually. E. Economic analysis of the Program 33. The proposed PDO is to contribute to reducing key risks for NCDs and improving efficiency of health services in Moldova. Therefore, the development impact considered in the economic analysis of the Program is the improvement in the population health status as well as the efficiency gains deriving from the interventions. The analysis is inclusive of the benefits of the IPF component, since it mainly consists of technical assistance to achieve the main benefits of the PforR component. Costs of the Program 34. The costs of the Program are considered the entire costs of the Government supported through the PforR operation of the Bank. (i.e. the five sub-programs from the NHSDS chosen for support through the PforR). These costs amount to about US$113.7 million from 2014 to 2017, of which US$30.8 million (28.7 million PforR and 2.1 million IPF) will be financed by the Bank. Since the majority of Program costs is expected to be recurrent, the cost-benefit analysis is based on the assumption that the entire yearly Program costs (inflation-adjusted) will accrue as recurrent costs beyond the end of the NHSDS implementation phase in 2017 until 2030 (the time period considered in the cost-benefit analysis). This assures that the proposed NPV and IRR estimations are conservative. 46   Benefits of the Program 35. The benefits from a higher share of patients controlling their high blood pressure will be measured through Disability Adjusted Life Years (DALYs) averted, which represent the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability. The revision of the outpatient drug benefit package in order to increase the reimbursement rate of generic anti-hypertensive drugs to 70 percent will not be considered separately. Rather, it is assumed that this intervention will help to achieve the target of a higher control rate of hypertension among the population. The benefits from this intervention are therefore already incorporated through the estimated reduction in DALYs caused by hypertension. 36. The beneficial effect of more efficient primary healthcare services (through a performance-based incentive scheme), as well as the improved efficiency and quality of care in hospitals (through a performance-based incentive scheme in hospitals) will be estimated using the impact on population health status measured in terms of the DALYs averted. 37. The benefits from the reduction in smoking prevalence among young people and the ensuing reduction in DALYs related to smoking will not be accounted for. The effects of tobacco consumption are cumulative and take place over time. Hence the current burden of disease reflects the consumption of tobacco in previous decades and not in current ones.32 Changes in tobacco-related mortality follow the changes in prevalence and consumption only a significant period of time (17-20 years) after tobacco consumption has been restrained. There are (substantial) long-term benefits from policy interventions aimed at reducing tobacco consumption, but they will not accrue in the period of time (2014-2030) considered in this analysis. The achievement of greater efficiency in the hospital sector is linked to two of the key results of the Program, namely the reduction of the number of acute hospital beds from 17,586 to 15,000 per 100,000 persons and the reduction of annual hospital admissions from 17.6 to 15.6 per 100 persons by the end of the Program in 2017. The expected savings related to the reductions in acute care beds and annual admissions constitute the first source of monetary benefits considered in this analysis. The update of the DRG payment mechanism in hospitals can be expected to contain the future growth of public expenditures for acute hospital care (e.g. growth through medical technology improvements). However, this cost containment is not expressively being modelled in the performed cost-benefit analysis to allow for a more conservative estimation of the overall benefits from the hospital reform interventions. 38. The additional benefits deriving from reduced out-of-pocket expenditure among the poorest 40 percent of the population mainly consist in better equity outcomes of the health system. The possibly beneficial impact on population health outcomes due to less self-rationing and underutilization (in particular of cost-effective preventive treatment of NCDs) among the poor is considerable, but is not part of the considered benefits, since it is hard to monetize. Furthermore, the establishment of autonomous hospital networks is not expressively considered as a benefit either, but rather considered to support the overall reforms initiated by the Program.                                                              32 WHO: The global burden of disease: 2004 update, 2008. 47   Therefore the estimated profitability of the Program (i.e. NPV and IRR) is likely to be conservative. 39. The assumptions used in the cost-benefits analysis are listed below:  Basic discount rate. Financial costs and financial savings are discounted at 8 percent to account for inflation (5 percent)33 and the time value of money (TVM) (3 percent). A higher discount rate of 11 percent (reflecting a 6 percent discount rate accounting for the TVM) is also applied to verify the sensitivity34 of the results to this assumption. A higher inflation estimate would decrease the present value of the financial costs (increasing the estimated benefit as measured by the NPV) more than the present value of the benefits 35 and is therefore not considered in a sensitivity analysis.  Period of time considered. The cost-benefits of the interventions are calculated over the 2014-2030 period in order to account for the long-term benefits in terms of reduced DALYs from the interventions aiming at: (i) a better control of conditions of hypertension; and (ii) a higher efficiency and quality of care at both the primary and secondary level.  Population covered. In general it is assumed that all interventions will be implemented nationwide. The interventions targeting a better control of hypertension only affect a subgroup of the population. 36 Other than that, the interventions will affect health results for the entire population, (around 3.6 million people in 2012) or the efficiency level of all facilities. Population growth up to the year 2030 is based on the WB HNP Statistics.  Expected disbursements of investments. When discounting the financial costs of the Program, it is assumed that the funds provided by both the Government and the Bank are disbursed according to the estimated disbursement schedule (see Program Financing Data).  Benefits of reforms beyond 2030. Although the benefits from the Program will likely persist beyond Program completion in 2030, benefits beyond the year 2030 are not accounted for in this analysis due to the increasing uncertainty about the counterfactual scenario without the Program. This approach contributes to the overall conservativeness of the estimated benefits.                                                              33 The IMF World Economic Outlook, October 2013 estimates an average inflation rate of 4.79 percent for the 2013-2018 period. 34 The estimated benefits are sensitive to a higher TVM, since it decreases the present value of the more distant benefits from averted DALYs. The related reforms are long-term oriented, and it takes some time until benefits materialize. 35 The benefits of the interventions to reduce the smoking prevalence among young people are not considered. 36 World Bank. 2008. “Romania Human Development Program Knowledge Note - Health Sector.” World Bank, Washington, D.C. The evidence in table A4.1 reflects this estimate. 48    Due to the inter-correlation of the supported interventions and the PforR nature of the project (making disbursements for a given intervention less related to the actual cost of implementing this particular intervention), the NPV and IRR are only calculated once for the whole package of interventions. Expected Benefits from Hospital Reforms 40. The calculation of the benefits from the reduction in the number of acute care beds and the reduction in annual admissions (Table 3) is based on the following additional assumptions:    The annual cost per bed equals hospital costs divided by total number of beds.37 Costs for the hospital sector are assumed to grow by 5 percent (in order to account for future expected inflation) plus 1 percent (in order to account for price increases due to improvements in medical technology).  Fixed costs account for 75 percent of total hospital sector costs and variable costs account for the remaining 25 percent.38  The reduction in acute care beds leads to a proportionate reduction in the overall costs of hospital costs, whereas the reduction in annual hospital admissions only leads to a proportionate reduction in the variable costs of the hospital sector.  The counterfactual in the absence of the Program is that the number of acute hospital beds and the admission rates do not change until 2030. Table 3. Benefits from the Reduction in the Number of Acute Hospital Beds and in Annual Hospital Admissions (USD ’000s) 2014-2030 2014-2030 Discount Factor Benefits from Acute Bed Reductions Benefits from Annual Admissions Reductions (in US$) 3% 249,596 USD 82,788 6% 199,957 USD 68,402 Expected Benefits from More Efficient Primary Healthcare Services, Improved Efficiency and Quality of Care in Hospitals, and a Better Control of Hypertension among the Population 41. The benefits deriving from the above-listed interventions are estimated using the impact on the population health status measured in terms of DALYs from NCDs (the proposed PDO of the PforR is to reduce risks for non-communicable diseases. Although the interventions aimed at increasing the efficiency and quality of care at healthcare institutions could also contribute to a reduction in the burden of disease due to injuries or communicable diseases, these potential benefits are not taken into account).                                                              37 Roberts RR, Frutos PW, Ciavarella GG, Gussow LM, Mensah EK, Kampe LM, Straus HE, Joseph G, Rydman RJ JAMA 282(7) 630. Distribution of variable vs. fixed costs of hospital care and see: http://www.post- gazette.com/business/Biz-opinion/2013/10/06/Regional-Insights-How-hospitals-are-driving-up-the-cost-of-health- care/stories/201310060112. 38 Marc Suhrcke, Rachel A. Nugent, David Stuckler and Lorenzo Rocco. Chronic Disease: An Economic Perspective. London, 2006: Oxford Health Alliance. 49   42. The additional assumptions made in the economic analysis of these interventions are:  Reduction in DALYs: DALYs, which represent the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability, have a built-in age weighting and discount rate of 3 percent. The reduction in DALYs from the integrated interventions on healthcare efficiency and quality supported by the Program are set at 0.3 percent across all NCDs and expected to become effective in 2020 after the completion of the Program. The adverse health effects of hypertension are estimated to account for 20 percent of the global burden of disease. 39 Assuming that this proportion is representative of the situation in Moldova as well, an increase of the rate of cases of hypertension being under control from 10 to 15 percent over the course of the Program would reduce the burden of disease and hence DALYs in Moldova by 1 percent. It is assumed that the rate of hypertension cases under control increases according to the specified DLI target rates. To allow for a delayed evolution of the beneficial impact, it is assumed that the stepwise reduction in DALYs due to hypertension sets in with a lag of three years.  Counterfactual Scenario for DALYs: The baseline DALYs were calculated for the various conditions from WHO estimates for the Eastern and Central Asia region, adjusted for the population size of the project (around 3.6 million people) and the age structure of Moldova (from the WB HNP Statistics). These include the forward projections of DALYs averted (that is, healthy life years gained) from 2013 to 2030 (Figure 2).  Valuation of DALYs: A very simple rule was used. Each DALY saved is valued at yearly per capita income (using a starting value of about US$2,387 for 2014). The Disease Control Priorities Project and Copenhagen Consensus guidelines mention three times per capita income as a still conservative estimate for the value of each DALY averted.40 Studies of valuation of life in the United States even utilize much higher values for a year of life that would produce more extreme results.  Discount Rates for DALYs: The monetary value of future stream of health benefits (i.e., annual DALYs saved) is discounted at 3 percent (a higher rate of 6 percent is used for the sensitivity analysis), per guidelines from WHO and the Disease Control Priorities Project (Table 4).41                                                              39 See: D. Jamison, P. Jha, and D. Bloom, “Copenhagen Consensus 2008 Challenge Paper: Diseases,” 2008; http://www.givewell.org/files/DWDA%2 02009/Stop%20TB/Copenhagen%20Consensus%20Paper-Diseases.pdf. 40 The IMF World Economic Outlook, October 2013 estimates a growth rate of 4.8 percent for the 2014-2018 period. 41 Net of inflation. 50    GDP Growth: An annual growth rate of 4.5 percent in real per capita GDP is used, being slightly more conservative than the estimates provided by the IMF.42 The reduced growth rate of 3 percent is used for the sensitivity analysis. Figure 2. Total DALYS averted by year compared to Europe and Central Asia counterfactual projections, baseline scenario 9000 8000 7000 6000 DALYs averted 5000 4000 3000 2000 1000 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Year Table 4. Benefits from DALYs averted (USD ’000s), baseline scenario Discount 2014-2017(US$) 2018-2030 (US$) Factor (%) Benefits from DALYs Benefits from DALYs averted averted 3 3,366 272,889 6 4,009 202,460 Expected benefits from the interventions 43. Table 5 presents the NPV and the estimated IRR of the considered interventions. The sum of costs and benefits (i.e. the NPV of the interventions) is largely positive and the estimated IRR ranges between 6.13 and 9.10 percent, depending on the GDP growth rate used, which clearly shows the positive development impact of the considered Program interventions.                                                                  42 Net of inflation. 51   Table 5. Net Present Value and Internal Rate of Return of the Program (USD ’000s) for different GDP growth scenarios TVM Baseline GDP growth Low GDP growth Discount Factor NPV IRR43 NPV IRR44 3% 70,005 USD 31,467 USD 9.10% 6.13 % 6% 31,189 USD 3,446 USD The rationale for public sector involvement 44. The Program does not involve the introduction of new programs that could be alternatively implemented by the private sector. Instead, it aims to strengthen existing publicly financed programs (NCD prevention and management, performance-based contracting with service providers, rationalization of hospitals in Chisinau, etc.) and ongoing reforms in order to alleviate binding constraints to public sector performance. The case for public provision and financing of interventions under the Program is therefore justified.                                                              43 Net of inflation. 44 Net of inflation. 52   Annex 5: Summary Fiduciary Systems Assessment   1. The fiduciary systems assessment has been carried out in accordance with OP / BP 9.00 to determine whether the Program fiduciary systems provide reasonable assurance that the Program expenditures will be used appropriately to achieve their intended purposes.  The findings of the fiduciary assessment conclude that the overall fiduciary and governance framework is adequate to support the implementation of the proposed Health Transformation Program for Results and includes a summary table of the key risks and corresponding mitigation actions to be undertaken. 2. The Program’s fiduciary systems and institutions provide reasonable assurance that the financing under the Program is used for intended purposes, with due regard to the principles of economy, efficiency, effectiveness, transparency and accountability. Specifically, Moldova’s fiduciary management systems for the Program (planning, budgeting, accounting, procurement, internal controls, funds flow, financial reporting, and auditing arrangements) provide a reasonable assurance on the appropriate use of Program funds and safeguarding of its assets. Furthermore, the Program’s fiduciary management systems perform at a satisfactory level to support the achievement of Program results (for full details please see the separate Fiduciary Systems Assessment report). A. Background and Institutional Arrangements Institutional Framework 3. The Program’s implementation will be based on the current institutional arrangements for the NHSDS. At the national level, the key stakeholders are the MOF, the MOH, NCPH and CNAM. NCPH is a secondary budget holder subordinated to the MOH. The MOF provides political support and allocates annual government budget to the health sector, which is then approved by the Parliament through the annual Law on State Budget and Law on Mandatory Health Insurance Fund. On the basis of the approved budget, the MOF is responsible for regular and timely channeling of funds to MOH, NCPH, and CNAM for implementation of Program activities. In addition, the MOF will play a key role in the adoption and implementation of increases in the tobacco tax for tobacco control in the context of the Program. 4. The MOH, as the steward of the health system, is responsible for health policies, strategies, regulations, and oversight for the sector and the Program. It takes the lead in the development of the MTBF on a rolling basis, which forms the basis for negotiation with the MOF on the health budget and ensures adequate funding for the Program. Under the Program, MOH will take the lead in implementing activities related to National Tobacco Control Program (together with NCPH), rationalization of hospitals, development and roll-out of primary health care information system. Among various MOH-subordinated bodies, one national center will have particularly important role in Program implementation, namely the National Center for Public Health. NCPH takes the lead in development and implementation of strategies for health promotion, and disease prevention and control and is therefore critical to activities related to NCD control under the Program. 53   5. CNAM, a state agency with financial autonomy subordinated to the Prime Minister’s office, is the purchaser of health services and responsible for pooling contributions, managing health insurance funds and purchasing of services from providers. Under the Program, CNAM will take the lead in activities related to hospital payment reform, performance-based incentives, and reimbursement of drug benefit package. The MOH and CNAM have been working closely to implement NHSDS; this continued collaboration is required for Program implementation. Program Activities 6. The project will be a PforR operation with a technical assistance component (IPF, with implementation details in Annex 8). This will follow the existing fiduciary framework in the country. The program will be implemented by the MOH and CNAM, and both will be conducting procurement and financial management on their own as each have the established structures and the required authority. 7. Policy and Strategy in the Health Sector. Health sector development in Moldova is guided by the 2007-2021 National Health Policy (the Policy). The Policy is further elaborated and operationalized by the 2008-2017 National Health System Development Strategy (the Strategy). Together, they form a robust reform agenda for the coming years with the following objectives: (a) continuous improvement of population health; (b) financial risk protection; (c) reducing inequalities in the use and distribution of health care services; (d) enhancing user satisfaction; and (e) restructuring the health system to improve performance and population health regardless of limited resources. 8. A three-year Medium-Term Budgetary Framework is prepared on a rolling basis to finance the implementation of the Strategy. The MTBF has five programs: (i) “Health Policy and Management”; (ii) “Priority Public Health Interventions"; (iii) “Personal Health Services”; (iv) “Development of health system resources”, and (v) “Special medical programs”. The MTBF’s five programs are further divided into 17 sub-programs. The main sources of financing for MTBF are the state budget (59 percent) and health insurance fund (40 percent). Total cost of MTBF for the next four years (2014-2017) has been estimated at 26,115 million Moldovan Leu (MDL) or US$1,964 million. Out of 17 subprograms included in the MTBF, five sub-programs were identified for the PROGRAM to support. The assessment does not cover the fiduciary processes in the entire public health sector, but it was limited to the boundaries of the program. Assessment of Program Expenditure Framework 9. For the last four years, MHIF resources have registered 9.7 percent average growth and MHIF expenses have registered 11.4 percent average growth. More prominent growth of expenses is attributed to the measures taken with regard to full and efficient execution of planned expenses. In the context of gradual increase of MHIF contribution in the share of percentage, there is registered a tendency of growth of the rate of the MHIF contributions sum collected from employers and employees, in the total savings of MHIF, from 41.7 percent (2008) to 44.5 percent (2012), and there is also recorded decrease in the rate of transfers from the state budget for the categories of insured persons by the Government, from 54.9 percent (2008) to 52.8 percent (2012). 54   10. MHIF contributions in the fixed sum had one of the biggest growths – 24.1 percent – within the framework of 2012 MHIF incomes, in comparison to the previous year. It may be regarded as an important realization in the process of incomes accumulation in MHIF, due to the fact that in 2009-2010, growth of these contributions accumulations was from 4 percent to 5 percent. 11. The revenues collected in CNAM’s single account during the year are distributed in accordance with the following standards: basic fund – at least 94.0 percent; reserve fund – 1.0 percent; fund for prophylactic measures – 1.0 percent; development fund – 2.0 percent; administration fund – up to 2.0 percent. 12. The basic fund has the biggest rate (95.6 percent) in the total amount of MHIF expenses in 2012, being used for coverage of expenses necessary for realization of the MHIF Program; it is followed by the development fund (2.8 percent), also having the biggest deviation in comparison to 2011, being used for modernization and optimization of public medical-sanitary institutions’ buildings and infrastructure, for provision with high-performance medical equipment and for information systems and technologies implementation. 13. Evolution of consolidated structure budget of health protection during the 2008-2012 period reflects certain tendencies regarding the basic financing sources. Public health expenses are formed from expenses of the state budget, MHIF expenses and expenses of the territorial administrative units’ budgets. In 2012, CNAM controlled 83.2 percent of public health expenses and the rate of these expenses grew up to 7.4 percentage points in relation to 2008. Sub- programs within healthcare sector are financed from the following main sources: State Budget; Mandatory Health Insurance Fund (MHIF); Budgets of territorial administrative authorities; and Financial assistance official donors. The main share of the amount of financial resources for the health sector in 2012 came from the state budget, which is 59 percent, followed by the first of compulsory healthcare largest percentage and fixed amount (40 percent). Administrative- territorial units budgets contribute 1 percent of financial resources in the sector. In 2012, Moldova national public budget expenditures (NPB) for health care were more than MDL 4.7 billion, or 13.5 percent of NPB (compared to 10.9 percent in 2005), and 5.4 percent of GDP (compared to 4.2 percent in 2005. In the same period, for services related to compulsory health insurance was spent 83 percent of total allocations to health from NPB (over MDL 3.9 billion). 14. Within the top public healthcare expenditure, Moldova allocates more funds than neighboring Romania and Ukraine (both 4.4 percent in 2010), but less than the average Organization for Economic Cooperation and Development countries (OECD) and the European Union, 8.2 percent and 8.1 percent respectively. However, in 2012, Moldova was lower than the OECD average and the European Union regarding the health index of the United Nations Development Program, with 0.783 points to 0.941 and 0.945, respectively. Program Financing (US$ Million) Source Amount Government 82.9 IDA 30.8 TOTAL 113.7 55   Estimated Profile of Program Expenditures (US$ Million) Amount Category % of total (US$ million) Salaries and benefits (for MOH, CNAM and relevant NCPH staff) 16.6 15 Goods 0.9 1 Civil works 2.2 2 Performance based incentives for health providers 58.0 51 Reimbursement of out-patient hypertensive drug benefits 29.7 26 Other operating costs 6.3 6 Total 113.7 100 B. Summary of Fiduciary Risks and Mitigation Actions 15. The assessment findings conclude that the overall fiduciary framework for the program is adequate to support its implementation and to achieve its desired results. Financial management risk for the operation is assessed as "moderate" and procurement risk is assessed as “moderate”. Overall fiduciary risk for the operation is assessed as "moderate". 16. The key institutions, the MOH, NCPH and CNAM, have well-functioning financial management systems, adequate financial and accounting staff to plan budgets, execute and record transactions and produce in-year and year-end financial reports. 17. In each of these institutions, an appropriate internal control framework is in place, with clear rules and procedures (for the segregation of and articulation of individual duties and responsibilities for key financial management functions). 18. With regard to external audit and oversight, the Court of Accounts conducts annual audits of the health sector (MOH, NCPH and CNAM). CoA is independent of the executive and accordingly is able to fulfill their duties and responsibilities free from interference. 19. The basic procurement legislation is in place which emphasizes the open competition as the basis for public procurement and further institutional improvements are envisaged in a draft law which is in an advanced stage of enactment. The main procurement concerns relate to the lack of qualified staff to administer contracts, lack of a contract monitoring mechanism, and implementation of multi-year contracts which depend on the availability of funds for years other than the budget year. 20. Notwithstanding the adequacy of existing financial management and procurement systems to plan, execute and report on the use of the resources for the components of the Program, there are some areas that could negatively impact program performance. A number of key fiduciary performance indicators are presented below to allow monitoring during Program implementation. The reporting on each indicator will be part of the regular reporting to the Bank. 56   21. The main risk relate to the adequacy of funds allocations for the Program, and this could be influenced by possible future changes in the country’s fiscal and macro situation and impact from abroad. Adequate funds need to be available on a timely basis to finance Program implementation. The MOF expressed its commitment to ensure availability of funds needed for the successful program implementation. Although past years’ experience does not suggest that the health sector has been affected by significant shortages, there is a risk of underfunding of some of the subprograms within the Program, such as the Tobacco Control sub-program, for which no funds are currently included in the 2014 NCPH budget. Since the health sector is not among the top priority sectors defined by the legislation to receive funding with priority in case of shortages, the Bank would monitor carefully the annual Program budgets, and the revisions within the year. One of the key actions included in the Program Action Plan is for the Bank team to work closely with MOF, MOH, NCPH, and CNAM to monitor the annual budgets for the availability of sufficient funds for the Program implementation. 22. Another important risk relates to the overall impact of the audit reports prepared by the CoA. One of the key actions included in the Program Action Plan is for the Bank team to work with the CoA and Parliament to strengthen oversight and the overall impact of CoA audits in the health sector. This could be scaled up later on to cover other sectors, as well. Other risks relate to the MOH’s limited ability to procure consultant services, which will be mitigated by the technical assistance component, and limitations in the complaint handling effectiveness, which will be mitigated by sharing with the Bank the information on complaints received and actions taken and/or by the approval of the new PPL which foresees the creation of an agency to handle complaints. Summary of the risks and mitigation measures Description of Description of Risk Responsible Party Timeframe Mitigation Measure Adequacy of funds Ensure that funds are MOH, CNAM, WB Throughout project allocations for the made available for such implementation period Program. contracts; Bank team will closely monitor the yearly and multi-annual allocations and signal at the early stages any possible funding limitation to the MOH and MOF Strengthen oversight and Bank team to work CoA, MOH, CNAM, Throughout project the overall impact of CoA with the CoA and Parliament and WB implementation period audits in the health sector Parliament There are no Standard Under the IDF Grant Public Procurement Shortly after project Bidding Documents for funded by the Bank for Agency for the effectiveness consulting services. The the Public Procurement development of the SBD IA are currently using the Agency, a firm was hired “Goods and Services to update/develop the (non-consulting)” Standard Bidding document duly adjusted. Documents. One of the tasks is to develop the SBD for consulting 57   Description of Description of Risk Responsible Party Timeframe Mitigation Measure services. The contract is currently under implementation. MOH has limited ability Major consulting MOH Throughout project to procure consulting assignments will be implementation period services procured as part of the TA component Lack of qualified staff to Qualified staff will be MOH and CNAM Throughout project monitor contract hired as needed under the implementation period implementation in the TA component; MOH and lack of a Staff of MOH and contract monitoring CNAM to attend regional mechanism in the country workshops organized by the Bank on contract management C. Performance of Program Fiduciary Systems and Arrangements Program Planning and Budgeting Overview Description Rating Aggregate Expenditure Out-turn Compared to Original Approved Budget B Composition of Expenditure out-turn Compared to Original Approved budget B+ Aggregate Revenue Out-turn Compared to Original Approved Budget B 23. Summary. The Program budgeted expenditures are realistic, prepared with due regard to relevant policies, and executed in an orderly and predictable manner. The structure and purpose of Program expenditures captured on the MOH’s, NCPH, and CNAM budgets is part of the consolidated state budget, therefore the Program progress will be monitored through regular budget reports. The budgets of the two entities are presented in sufficient detail to capture Program expenditures. 24. The Parliament rigorously examines and debates the budget law in terms of scope, procedures and adequacy of time. Program expenditure framework is comprehensive, clearly defined, and part of the borrower’s regular budget and FM processes. 25. Ministry of Health. The MOH is responsible45 for the estimation and justification of the financial resources for the operation of the healthcare system, including the MHIF budget, as well as for the development and approval of the Rules for its implementation. Together with the CNAM, the MOH is ensuring the acquisition of medical equipment and means of transportation for the medical institutions, ensuring technical and material support and control of the efficient                                                              45 According to the Government Decision No. 397 of 31.05.2011. 58   and rational use of budgetary funds and state property management, located in public medical institutions. 26. The MOH develops a three-year strategic development program. For operational planning of its activities annual work plans are developed, which provide concrete measures to achieve which is an instrument for monitoring implementation of the program. For aligning the planning activity with the budget construction, the MOH uses the Government-wide budgetary classification of strategic programs and sector expenditure plans. The MOH budget is prepared in accordance to the Law 847-XIII “The budgetary system and budgetary process”. 27. The MOH Budget structure and approval. The MOH’s budget is developed and implemented based on a unified budget classification: functional classification of budget expenditures groups expenditures that reflect the use of funds to implement the basic functions; organizational classification of budget expenditures budget expenditures by type of enterprises, institutions, organizations and measures that reflect the distribution of allocations between the direct beneficiaries of budget resources; economic classification of budget expenditures groups and details budget expenditures in accordance with their exact destination. 28. The budget classification has not been fully compliant with international standards set out by GFS 2001 (and COFOG). Starting with 2015 the current budget classification will be updated to ensure international comparability of budgetary indicators, containing similarities with the classification systems used by international financial institutions. 29. NCPH is a secondary budget holder subordinated to MOH. Its budget represents only a small fraction of the MOH budget, and the same budgetary procedures are in place. Most of NCPH budgets relate to transfers from MOH, however the institution also has small budgets generated from grants, own-source revenues and other sources. 30. CNAM. CNAM was founded through Government Decision no. 950 of 7 September 2001 in order to implement the Law No. 1585-XIII of 27 February 1998 on Mandatory Health Insurance. The CNAM’s Statute was approved through GD no. 156 of 11 February 2002. 31. After implementing the Mandatory Health Insurance, the public expenditures on health have increased by 4 times, from 1.105,2 million MDL in 2003 to 4.259,6 million MDL in 2011 and this represents 13.3 percent from the total expenditures of consolidated budget of Republic of Moldova. Lately, public expenditures on health, reported to GDP are decreasing, slightly overcoming to 5 percent. The funds represent 85 percent of public expenditures for health system. 32. CNAM Budget structure and approval. In CNAM, planning and budgeting is the responsibility of the Economics and Planning Division, which performs the following: reports on the execution of mandatory health insurance funds in order to present to the CNAM management and Board and the MOF, monthly and quarterly; and reports on the execution of MHIF mandatory health insurance fund for approval by the Board of Directors of the Company and presentation to the MOF by May 1 of the following year. 59   33. Parliamentary oversight of the budget. Before submitting the budget to the approval of the Parliament, MOH must initiate a rigorous process. Through inter-ministerial working groups led by one of the MOH’s vice-minister, which includes the MOH, the MOF, CNAM; as well as representatives of unions and employers the strategic plan, budget and MTBF are developed, analyzed and measures are prioritized. 34. After the public consultation process is fulfilled, the MOH’s budget (and MTBF) is included in the budget law that is sent to the Parliament for examination, debate and approval. Strengths Weaknesses and Ongoing Reforms  Moldova has performed well in budgeting  The budget classification is not fully compliant with area under the PEFA 2011 and there has international standards set out by GFS 2001 (and been a marked improvement since the COFOG); a new integrated budget classification and previous PEFA assessment. chart of accounts is being developed in line with  Budgets of MOH, NCPH and CNAM are GFS2001 standards; presented in sufficient detail to capture  Moldova’s on-going PFM reform program PROGRAM expenditures. (supported by the WB) includes training and skill  Parliament rigorously examines and development, strategic planning, medium-term debates the budget law in terms of scope, budget planning, macroeconomic forecasting and procedures and timeliness. introduction of modern costing techniques. Risk assessment Moderate Program Procurement Overview Description Rating Transparency, competition and complaints mechanism in procurement B 35. The Program will finance procurement of goods, works, consulting and non-consulting services. The size of contracts will be small and there will be no Operational Procurement Review Committee (OPRC) threshold procurement. 36. Procurement under the program will be conducted in accordance with the Public Procurement Law (PPL) and the Regulation for public procurement of small value. A new PPL which is better aligned to EU practices and standards has been developed and is pending approval of the Government and Parliament. It is foreseen that procurement under the program will be initially carried out in accordance with the 2007 PPL but will change to the new PPL as soon as it is approved and becomes effective. Generally both IAs and NCPH have considerable capacity to conduct procurement. All these agencies follow the same procurement processes which are established by the relevant legislation. These refer to procurement planning, development of the bidding documents, publication of procurement notices, evaluation procedures and contract management. Details on procurement processes are provided below. Institutional Arrangements  Public Procurement Agency. PPA is the institution subordinated to the MOF which ensures the implementation of the national public procurement policies. 60    Ministry of Finance – The MOF’s role in public procurement, through the Division for national economy funds, capital expenditures and public procurement, is to develop and promote policies.  The MOH and CNAM (Contracting Authorities). Given that the procurement function is decentralized to contracting authorities with the PPA being an oversight body, each institution is responsible for conducting its own procurement and signing of contracts. However, the PPA reviews the entire set of documents, including the Evaluation Report and the signed contract, related to a procurement activity of above a certain threshold. Once the review is finalized and the PPA agrees with the outcome of the evaluation process and contract award, the contract is registered, duly stamped and signed by the PPA Director. Once the contract is registered with the PPA, it is considered effective and can be registered at the Treasury to enable disbursements. Procurement processes in Program Implementing Agencies and Program Procurement 37. There is no separate procurement department under the MOH. Procurement is conducted by different divisions depending on the nature of the procurement activity based on the yearly approved Procurement Plan for the entire institution. The Evaluation Committee for each procurement includes the Minister and Deputy Ministers. The Ministry has extensive experience in conducting procurement of civil works and goods, but has limited ability to procure consulting services by applying the national procedures. 38. Procurement volume for year 2012 was around US$2.9 million and included: capital investments (mainly construction, re-construction or rehabilitation of hospitals)/IT system for primary healthcare MEDEX, consumables, office supplies, maintenance services, and others. 39. Sub-program I which will be implemented by the MOH includes the operating budget for the MOH to carry out its functions which includes mainly salaries, medical insurance charges, communication, utilities, rent of equipment, bank charges and others. Procurable items include, but not limited to: consumables, office supplies, office equipment, transportation services, renovation/construction works of small value. Under sub-program XVII, the Program is limited to the National Tobacco Control Program. In the implementation of this sub-program, the MOH will be supported by the National Center for Public Health (NCPH) which is a MOH subordinated agency. This sub-program includes the operating budget of NCPH and the following procurable activities: public awareness campaigns, development of promotion materials, logistical services, surveys, training of relevant bodies to monitor tobacco consumption and others.   National Center for Public Health (NCPH) 40. There is Procurement Division in the agency which includes three specialists. The procurement volume for year 2013 was around MDL 20 million (equivalent of US$1.5 million). The activities procured by the agency were: minor renovation works of the office and laboratories, office supplies, minor office equipment for the agency and its laboratories, logistical services, consumables for laboratories. Since the agency implemented various programs funded by the WHO, it has extensive in conducting public awareness campaigns, 61   developing promotion materials, conducting surveys, and procuring logistical services. To deliver the training to various institutions responsible for monitoring tobacco consumption, the agency will hire trainers. National Health Insurance Company (CNAM) 41. The CNAM is an autonomous, including financially, state institution of a national level which carries out non-profit activities in the field of mandatory health insurance. The company has the following main sources of income: (i) Percentage-based Mandatory Health Insurance (MHI) contributions paid by employers and employees; (ii) MHI in the fixed sum paid by individuals residing or domiciled in the country; (iii) transfers from the state budget for health insurance of the categories of persons insured by the Government; and (iv) transfers from the state budget for compensation of foregone incomes. 42. CNAM has a separate Procurement Division which includes two specialists. The procurement volume for year 2013 was US$4 million and included activities such as: procurement of vaccines, drugs, IT equipment and software, vehicles, renovation works for the HQ office and its territorial agencies, and various consulting services, including public awareness campaigns which promote healthy life style. CNAM has extensive experience in conducting procurement of various size, complexity, and nature. The entire procurement process follows the national procedures. No delays have been reported in the evaluation process and contract award. Procurement of vaccines and drugs is done from the fund for prophylactic measures which, among others, is used to purchase, in accordance with Government Decrees, medical devices and equipment, drugs and expendable materials for taking the measures for diseases risk reduction and for treatment in case of public health emergencies. In all other cases, the procurement of drugs and medical equipment is being carried out by the Drug Agency. 43. CNAM will be responsible for implementing the sub-program II (Administration of mandatory health insurance fund), sub-program V (Primary Care Services) which is limited to the following categories: (a) performance-based incentives for family medicine providers; and (b) CNAM reimbursement of hypertensive drugs in the outpatient; and sub-program IX (In- patient Care) which is limited to one category – performance-based incentives for hospitals. Sub-program II represents the operating budget of CNAM central and regional offices which includes as well small-value procurable activities, such as consumables, office supplies, minor office equipment, renovation works. Under sub-program V, the first activity will be financed through the TA component, while the second activity which refers to the increase in the average reimbursement rate of generic, first line medications for the three main categories of antihypertensive drugs relates to the compensated drugs which are purchased individually by patients. 44. The procedures of compensating the cost of drugs under the mandatory medical insurance are described in the Government Decision No. 1372 dated December 23, 2005. Once the patient is issued a prescription, he/she can purchase the prescribed compensated drugs at any authorized pharmacy which has a contract with CNAM. The price that the patient is paying for the compensated drug is already the price discounted in line with the percentage established in the drug benefit package. There are no restrictions for any private pharmacy to file a request with 62   CNAM to sign a contract for selling compensated drugs. Currently CNAM has contracts with all private drugstore chains in the country (there are no public pharmacies in the country). Both CNAM and pharmacies are following the reporting requirements established in the national legislation. Pharmacies submit monthly reports to CNAM on the volume of compensated drugs sold enclosing as well copies of prescriptions based on which CNAM reimburses the cost to the pharmacies. In its turn CNAM submits to the MOF on quarterly basis reports on the use of funds for covering the cost of compensated drugs. 45. Procurement of drugs for hospitals is carried out centrally by the Drug Agency in accordance with the Government Decision No. 568 of September 10, 2009. CNAM may procure vaccines and drugs from its prophylactic measures fund only for taking actions to reduce diseases risks and to treat in case of public health emergencies. Procurement of drugs and medical equipment is not foreseen under the Health Transformation Program.     (a) Procurement Planning: On annual basis, MOH, CNAM and NCPH (agencies) develop a Procurement Plan. Procurement planning follows budget planning and annual procurement plans are developed on the basis of the approved financing plans and budget allocations. Findings: The national budget is prepared and approved on annual basis and it reflects the expenditures to be incurred during one calendar year only. This fact has certain implications on multi-year contracts. The procurement planning is made on the basis of the approved budget allocations. Therefore only payments for the current budget year are guaranteed and contract provisions state that payments for subsequent years are subject to budget allocations. This results in contract implementation delays. Most of the capital investment contracts implemented by the MOH are multi-year contracts and as such funds secured only for the budget year. (b) Procurement procedures: While the PPL provides for 10 procurement methods, only a few are currently used. The default method (above a defined threshold) applied by agencies is the open bidding and request for quotations. Other methods are used solely under conditions expressly provided in the law. (c) Procurement activities of small value (subject to the Regulation on small value procurement) are conducted by the agencies without tender provided that the activity is included in their annual or quarterly plan of activities or in response to emergency situations. (d) Electronic procurement: All three agencies are using the e-procurement application to conduct procurement above the defined threshold. (e) Publication of procurement notices and transparency: Procurement Plan and all procurement notices, including contract awards, are published in: (i) the Public Procurement Bulletin published two times per week on the PPA’s website (www.tender.gov.md); and (ii) on implementing agency’s website (www.ms.gov.md or www.cnam.md). In the case of large value contracts (above MDL 2.5 million (equivalent 63   of US$0.2 million) for goods and services, and MDL 99 million (equivalent of US$7.5 million) for works), the PPL mandates the publication of procurement notices also in the “Official Journal of the European Community”. However, in practice publication in this journal is not done as Moldova is not yet a member of EU. As such the usual procedures apply. No contracts which would require international publication are foreseen under the program. (f) Bidding Documents, Evaluation and Contract Award: Technical specifications/Terms of references are developed by specialized departments/experts within agencies. The evaluation is carried out by the Working Group (Evaluation Committees) which is created through the Decision of the head of the institution. The working group comprises staff of the relevant division and is normally chaired by the head of the institution. For activities which are of specific nature and for which the institution does not have the expertise, experts in the field are invited to provide advice and guidance. (g) Record Keeping: Agencies keep the procurement files for a period of 5 years from the day the tender was launched. In the MOH, procurement records are kept in different units which conducted procurement. In CNAM the filing is well-maintained and is kept in the procurement unit. The file includes all documents starting from the Bidding Document and ending with copies of contracts and payments made.  . (h) Contract Monitoring: Contract monitoring function at the MOH has been observed to be weak due to limited capacity of human resources, financial resources, lack of relevant legislation, knowledge and experience. Each unit which has conducted procurement is responsible for monitoring the implementation of the contract. Most of the times, staff of these units are monitoring the implementation of contracts even if they lack technical knowledge to do so. In CNAM and NCPH this function is carried out by the procurement division with the support of the technical specialists who developed the specifications and terms of references.. Findings: There is no formal control of how contracts are implemented, especially for small value contracts and for procurement of goods. Lack of adequate information available with regard to contract administration and monitoring of implementation. 46. Complaint Handlin Mechanism.    One of the functions of the PPA is the review and approval of documents related to procurement activities (above a defined threshold) conducted by contracting authorities. 47. On the other hand, it is also the responsibility of the PPA to handle procurement-related complaints. These two functions are considered conflicting as PPA cannot be responsible for handling complaints related to those cases which have already been reviewed and approved by the agency. Although the complaints review department of the PPA is a functionally independent unit within the PPA, it is not administratively independent from other units, and this 64   apparent conflict in responsibilities may impose constraints in its freedom of action when handling complaints. 48. The draft PPL somewhat addresses the issue of conflicting responsibilities by taking the complaints review function away from the PPA through the establishment of the Agency for Solving Complaints (ASC). According to the draft PPL, the ASC is defined as a specialized administrative authority subordinated to the MOF. The agency is clearly independent of the PPA and the issue of conflict of responsibilities related to the review of complaints and registration of contracts by the same body seems to be addressed. However, it is not clear how independent this new agency can be from the rest of the system being in the subordination of the MOF, a concern raised as well by the donors who provide support to the Government of Moldova in its public procurement reform agenda. Program Accounting and Financial Reporting Overview Description Rating Timeliness and regularity of accounts reconciliation A Availability of information on resources received by service delivery units A Quality and timeliness of in-year budget reports C+ Quality and timeliness of annual financial statements C+ 49. The assessment confirmed that reasonable Program records are maintained and financial reports produced and disseminated for decision-making, management, and reporting. The MOH, NCPH and CNAM accounting and reporting systems are appropriate, and the quality and timeliness of key financial reports, record management and reconciliation of accounts and the usage of financial reports for managerial decision making are satisfactory. Since the Government wide IFMIS is not yet fully implemented, there is no automated commitment management system at the budget holders, however information on commitments is maintained in the Treasury system. The lack of commitment reports explains the relatively weak PEFA scores in reporting. The introduction of the new chart of accounts and GFS 2001 advanced well, but it is unclear when it will be finalized. According to internal procedures in the MOH, NCPH and CNAM, as well as in practice, the actual expenditures are compared to the budget on a monthly basis, and explanations for significant variations from the budget are provided to the MOF. 50. Background. Routine data collection or accounting systems provide reliable information on all types of resources received in cash and in kind by primary health clinics across the country. The information is compiled into reports at least annually. 51. The allocation of budgets to primary health clinics is per capita based. Amounts allocated to each primary health clinics are adopted by their respective Administrative Territorial Units authorities, in the frame of the budget of the relevant parent budget institution. 52. Inter-governmental transfers are made from the State budget to the Administrative Territorial Units (ATU) for the purpose of filling the gap between local income (local tax and other revenue and revenue from shared taxes) and expenditure needs calculated on the basis of a 65   per capita formula. The formula is regulated by Article 10 of the Law on Local Public Finances. This “Financial Support Fund” is funded from the State budget and from resources of those ATUs where revenue collection exceeds by more than 20 percent the national average of per capita expenditure. 53. All inter-governmental transfers are made by the MOF to the Level 2 ATUs. Level 2 ATUs are then responsible for transferring to ATUs of Level 1 their corresponding share of the fiscal transfer. The allocation of transfers from the State budget to Level-2 ATUs is regulated by the Law on Local Public Finances (No. 397 of the 16th of October 2003). The amounts transferred from Level 2 to Level 1 ATUs are regulated by the same formula according to the Law on Local Public Finances. 54. Comparison to budget is possible only for main administrative headings. Expenditure is captured either at commitment or at payment stage (not both). Reports are prepared quarterly or more frequently, and issued within 4 weeks of end of period. There are no significant concerns regarding data accuracy. 55. Budget Execution Reporting. MOF prepares monthly and annual budget execution reports. The monthly budget execution reports are cumulative and structured by component of the budget (main component, capital projects funded from external sources, special funds and special means), for the State Budget and for the ATUs (consolidated overall ATUs). They contain planned figures for the year and for the period, executed amounts, deviations in amount and percentage. Reports on the National Public Budget contain also comparative figures for the corresponding period of the previous year. Reports are provided in aggregated form with the main headings, as well as on the detail level by administrative, economic and functional classification. CNAM submits monthly and quarterly reports to the MOF which prepares a consolidated monthly budget execution report on the National Public Budget covering the State Budget, the ATUs, as well as SSIF and CIFMA. 56. All monthly and annual reports are published on the MOF website. The MOF additionally prepares quarterly budget execution reports for internal monitoring use. The reports on the State budget and on the ATU budgets are generated from the FMIS. The monthly ATU budget execution reports are submitted to the MOF by the Territorial Treasury (TTs), whereas the quarterly and annual ATU budget execution reports are submitted to the MOF by the ATU Finance Departments after approval by the local councils. 57. The evidence on budget execution is kept in the TTs. The TTs prepare daily account statements for each budget institution in their territory on expenditure and revenues, and provide them electronically and on paper base to the institutions. At the end of the month, the TTs prepare monthly budget execution reports for each budget institutions in their territory, broken down by budget classification on line item level, and by subordinated institutions. These reports are provided on paper base to the institutions, and electronically to the State Treasury who uses them to prepare the consolidated report. 58. The budget execution reports include information on commitments which are generated by the existing Treasury FMIS. Besides, the information on commitments related to public 66   procurement contracts is maintained at the level of the TTs. The monthly budget execution reports on all components of the budget are generally prepared within three weeks of the end of the month and published on the MOF website. 59. The budget execution reports are generated by the existing Treasury FMIS, containing planned and executed amounts, deviations and comparative data. 60. There is assurance that the information presented in these reports is reliable, given that: (i) all expenditure and revenue is processed through the TSA, held in the Central Bank, and financial transactions are performed in real-time through the RTGS (Real Time Gross Settlement); (ii) the robustness of the existing Treasury FMIS; (iii) the segregation of duties and the four-eyes principle applied for any financial transaction; and (iv) the centralized processing and additional layer of control by the TTs 61. Government financial statements. The State Treasury prepares, based on the format and instructions provided by MOF, the annual budget execution report. Then, MOF submits the State Budget Execution Report to the Government by the 1st of May of the forthcoming year and the Government submits the Report to the Parliament by the 1st of June. After adoption by the Parliament, the Report is published in the Official Gazette. Separate budget execution reports are prepared by the ATUs, SSIF and CNAM, which are consolidated by MOF into one single document covering the State, the ATUs, CIFMA and SSIF, i.e. the whole national public budget. 62. The budget execution report itself is structured by component of the National Public Budget and lists expenditure and revenue by functional and economic classification. There are sections on capital investments, on the reserve fund, on the deficit, on the public debt and on inter-budgetary relations. 63. In addition to the budget execution report, the MOF prepares an explanatory note containing information on policy matters (tax, customs, expenditure, salaries, debt); public debt; capital investments; reserve fund; deficit; state debt; inter-budgetary relations; monitoring results on state enterprises; privatization proceeds; arrears. 64. The complete report is published in the Official Gazette. It is broadly in line with international standards for cash based accounting. It does however not include a disclosure of accounting policies, nor information on fiscal risk and contingent liabilities. The quality of the report is reliable, since it is generated from the existing Treasury FMIS. The Report is not formally submitted to the CoA (and there is no legal stipulation for such submission), but the CoA starts auditing budget execution already during the budget year, generally in October, based on data available. The audit by the CoA is generally completed by June of the forthcoming year. 65. Financial statements of the budget institution. All budget institutions (at central and local level) as well as SSIF and CNAM, maintain accounting systems on modified accrual basis. They all keep records for each of their subordinated tertiary institutions (such as primary health clinics across the country), prepare quarterly and annual consolidated reports and send annual financial statements, which also include a balance sheet, to their parent institutions which sends them further on to the MOF. These reports are however not consolidated nor published by the MOF. 67   Several budget institutions do not have modern IT systems and maintain their accounts in a mix of paper base and Excel sheets, reporting to the MOF on paper basis. 66. MOH and NCPH accounting and reporting. For MOH and NCPH, as for any public institution in Moldova, budget expenditures are classified under three aggregate-type of headings of the general budget (economic, organizational and functional). First is an economic classification (operating costs, investment, and public debt). An organizational classification is also cross-cutting expenditures according to the level of the administrative authority by which expenditures are implemented (ministry, central or local authorities). A third classification, derived from the two other classifications, provides for functional classification in line with COFOG norm. 67. The MOH and NCPH accounting system is based on the Accounting Law and modified accrual basis used. The accountants maintain separate accounting systems, i.e., administrative accounting and treasury accounting, as described above. All these data are recorded and reported in details and aggregated level. These two types of accounting systems are reconciled on a monthly and annual basis to compare payments made and the Single Treasury Account. All these budget transactions from commitments until payments are reflected in financial management system managed by the State Treasury, as the systems allows full commitment control. The current information system has been developed to optimize the use of financial information; however it does not provide adequate standard procurement reporting. 68. The ongoing upgrades of the government information system would allow better functionality of the tool, provide regular reports on procurement and contract progress, and provide the ability to extract customized synoptic data including selected statistical indicators. However, given the delays in the implementation of the IFMIS, the MOH would continue to use its existing systems and it is unclear when these upgrades would be fully implemented. 69. CNAM accounting and reporting. CNAM and its twelve subordinated units (branches) keep the accounting records for state social insurance budget execution and mandatory health insurance funds according to rules approved by the MOF, and use modified accrual basis. The entities ensure recording of transactions on revenue and expenditures budget execution state social insurance and mandatory health insurance funds and the debts paid before December 31 (fiscal year’s end), records of transfers from the state budget, social security budget execution of the returns State and compulsory health insurance funds by closing the revenue and expenses. Also, all public institutions financed from the budget of the state social insurance and the mandatory health insurance funds, whose managers are budget holders, have to maintain appropriate accounting records under the approved budget. 70. Budget execution reports are accurate, comprehensive and produced in a timely manner. The consolidated annual budget execution report is the basis for the annual financial statements which are prepared on cash basis, using a national methodology which is not fully compliant with IPSAS. A unified single chart of accounts and a new GFS 2001 compliant budget classification is being used. 68   71. Moldova envisaged implementing a Government-wide Integrated Financial Management Information System (IFMIS), with the support of a Bank-financed PFM project (P082916), which closed at end of 2013, and the IFMIS implementation has been incomplete, due to reasons related to the contract of the system provider. A number of line ministries, including MOH, would thus have to continue to use their existing systems, until a Government wide solution is found to address the remaining implementation challenges. Since the solution depends on the entire Government approach and it is beyond the control of the Program entities, the relevant action on the IFMIS implementation has not been included in the Program action plan. Strengths Weaknesses and Ongoing Reforms  Moldova scored very well on PI-22 (Timeliness  The unified single chart of accounts and a new and regularity of accounts reconciliation) and PI- GFS 2001 compliant budget classification which 23 (Availability of information on resources was originally planned to be used from the 1st of received by service delivery units) January 2012 for 2013 budget preparation is  MOH, NCPH and CNAM accounting and currently under implementation but it is unclear reporting systems are appropriate, and the quality when it will be finalized; given delays in and timeliness of key financial reports, record implementing the Government wide IFMIS, management and reconciliation of accounts and MOH, and NCPH will continue to use their the usage of financial reports for managerial existing systems. decision making are satisfactory Risk assessment Moderate Program Treasury Management and Funds Flow Overview Description Rating Predictability in the availability of funds for commitment of expenditures C+ Recording and management of cash balances, debt and guarantees A 72. The assessment confirmed that adequate funds are available to finance the Program, although there is a risk that for some sub-programs (such as Tobacco control), funds might be allocated with delay. An action related to the Program funding has been included in the Program action plan. 73. The Treasury system operated by the MOF is well managed providing strong authorization processes and controls over expenditure through ensuring that budget institutions do not exceed the available appropriations and their monthly allocations. The move to a Single Treasury Account (TSA) was completed in 2007. All revenues are collected, and budgets (including the local level, SSIF and CIFMA) are executed through the TSA, which is held in the National Bank of Moldova. Beginning with 2008, Treasury introduced zero balance accounts46 for spending units that further tightened the spending ability for the following three years.                                                              46 According to this process end-of-the-day cash balances in the accounts of spending units are cleared back into the treasury single account, and the Treasury may impose a cash disbursement limit (for a given spending unit) on a particular transaction account, enabling proper monitoring. Thus, the payment orders sent by spending units will be accepted up to a certain limit defined by Treasury - Public Expenditure and Financial Accountability (PEFA) Assessment update for Moldova (2008-2010) of October 2011. 69   Budgetary entities currently register contracts and payment orders, including payment plans, with the Treasury. Arrears are extremely low and Moldova has consistently scored the maximum A score for PI-4 on arrears monitoring in both 2011 and 2008 PEFA assessments. 74. Cash flow problems can happen primarily due to the shortfalls in revenue collection rather than a failure in financial and cash flow planning/management. However, these cash flow disruptions (due to revenue shortfalls) do not appear to have resulted in the generation of arrears. Although availability of funds has not been a major issue for the health sector in the last years, there is a risk that given internal and/or external causes it may represent a risk, and this area is included in the Program Action Plan. Adequate funds need to be available timely basis to finance Program implementation. MOF expressed its commitment to ensure availability of funds needed for the successful program implementation. 75. Background. After the State Budget is approved by Parliament, MOH and CNAM are informed of their budget ceilings by MOF and on that basis, both institutions prepare annual and monthly financial plans. These plans are forwarded to the MOF where the Treasury enters them into the existing financial management system operated by Treasury. The MOF furthermore estimates the monthly funding requirements (and hence expenditure limits) for the CNAM. The MOH and CNAM are required to submit monthly financial plans (which however are not cash flow plans). These are not forecasts, but requests for monthly spending quotas. This means that the aggregate expenditure forecast produced by the Treasury may to some extent be incomplete or not fully accurate. 76. The Treasury uses the financial plans and estimated funding requirements received by all central government entities together with the revenue forecasts from the State Tax Inspectorate and the Customs Service to prepare a cash flow forecast for the upcoming fiscal year. In this process the Treasury also takes into account historical revenue and expenditure trends so as to assess whether the consolidated financial plans and expenditure (cash flow) patterns correspond with earlier years. This enables the Treasury to produce a regular overall cash flow forecast for the fiscal year. The Treasury prepares weekly aggregate cash forecasts which are in effect updated daily as soon as there is a change in circumstances. 77. Reliability of periodic in-year information. Annual financial plans prepared by central government entities (including MOH and CNAM) includes separately all subordinate units and are broken down by monthly cash plans based on clear in-year expenditure plans for the fiscal year. These plans enable MOH and CNAM to plan and commit expenditures for the full fiscal year in accordance with their appropriations. However, when cash shortages could arise, this information may not be systematically communicated to spending units. In such situations, the MOF prioritizes non-discretionary spending in a transparent manner, with debt/interest payments, salaries and pensions, scholarships and energy payments being given priority. 78. Frequency and transparency of adjustments to budget allocations. Adjustments to budget allocations, which are beyond the virement rules, are specified in the Law on the Budgetary System and the Budgetary Process (No. 847 XIII of the 24th of May 1996 with later amendments). 70   79. In the case of a major revenue shortfall, the MOF would ration cash and withhold discretionary expenditure. Changes in the budgetary allocations have always received Parliamentary approval through a revision in appropriations. 80. Quality of debt data recording and reporting. The legal basis for borrowing of the State is set out by the Law on Public Debt, State Guarantees and On-lending from State Borrowings no. 419 from the 22nd of December 2006 (hereinafter: PDL) and secondary legislation regulating its implementation. 81. The Public Debt Department in the MOF is responsible for management of and reporting on the State debt. The Debt Management Financial Analysis System (DMFAS) version 5.3 from UNCTAD is used for monitoring, settlement and accounting of the foreign debt, whereas accounting and settlement of the domestic State debt is carried out with in-house software (since DMFAS is not adequate for the purpose) and data is periodically migrated into DMFAS for reporting. On-lending is managed as well with an in-house developed software tool. 82. Reconciliation of domestic and foreign State debt is carried out on a monthly basis. 83. A detailed report with information on state guarantees and on-lending, is prepared on quarterly and annual basis and published on the MOF website. This report contains a debt stock analysis, data on debt servicing and sources for debt financing. The quarterly report contains comparative figures, but no risk analysis, whereas the annual report additionally includes trends in macro-economic indicators, debt sustainability indicators and contingent risks (market risk, liquidity risk, credit risk and operational risks) without however identifying mitigation strategies. IMF’s Special Data Dissemination Standard (SDDS) Reporting is used for reporting. 84. Complete records of the domestic debt are also maintained by the NBM, given its function as fiscal agent for the execution of auctions of Government Bonds. 85. Consolidation of the government’s cash balances. The development of the Treasury Single Account (TSA) system was carried out progressively starting in 1993. Initially, the 38 Territorial Treasuries (TTs), SSIF and CIFMA maintained accounts of budget institutions in commercial banks. Since the 1st of March 2007 all budgets, including the whole local level as well as SSIF and CIFMA, are executed via the TSA. SSIF and CNAM budgets are processed using a specialized Treasury client software for submission of payment orders to the State Treasury. All revenue is thus collected on the TSA and all payments are executed from there. The TSA is held in the NBM. 86. Every TT has three accounts within the TSA corresponding to the budget components: (i) one for State Budget - main component; (ii) one for State Budget - special means and special funds; and (iii) for ATU budget. 87. State Treasury has, like the commercial banks, real-time access in the Interbank Payment System operated by the NBM for executing all domestic payment transactions directly in the real-time. The State Treasury has real-time access to the consolidated cash position on the TSA. 71   Account statements on foreign exchange transactions on the accounts held in NBM are provided by the NBM to MOF on a daily basis. 88. The MOH and CNAM accounts are maintained in Banca de Economii for cash operation and projects funded from external sources. Banca de Economii operates a special electronic payments system designed specifically for CNAM. All bank accounts are reconciled on a daily basis by the institution holding the account and on a quarterly basis by the MOF. 89. Monitoring and forecasting the cash flows. The Government forecasts cash flow for the purpose of planning budget execution based on the estimated revenues, which determines the aggregate expenditure level. After the State Budget is approved by Parliament, the line ministries are informed of their budget ceilings and on that basis all institutions prepare annual and monthly financial plans. These plans are consolidated by the line ministries and forwarded to the MOF where the Treasury enters them into the existing financial management system operated by Treasury. The MOF furthermore estimates the monthly funding requirements (and hence expenditure limits) as required transfers to the CNAM. MOH is required to submit monthly financial plans. 90. Program Funds Flow. The operation includes two components, and there will be two different funds’ flow mechanisms. For the main component (US$28.7 million), credit funds will be disbursed by the MOF, once the Disbursement Linked Indicators will be met. Each DLI has been allocated a certain value, and achievement of a DLI allows MOF to request a credit disbursement for that value. Certification of DLIs achievement will be based on verified achievement of agreed specific results, the satisfaction of certain criteria, documented under the agreed verification protocols for DLIs. The TA component (US$2 million) uses traditional disbursement procedures and is not addressed in this Assessment, but in a separate annex. 91. Although the health sector has not been affected by significant cash shortages in the past, there is a risk of underfunding of some of the subprograms within the Program, specifically the Tobacco Control sub-program, for which no funds are currently included in the 2014 NCPH budget. Since the health sector is not among the top priority sectors defined by the legislation in case of shortages, the Bank will carefully monitor the annual Program budgets, along with in- year revisions within the year. One of the key actions included in the Program Action Plan is for the Bank team to work closely with MOF, MOH, NCPH, and CNAM to monitor the annual budgets for the availability of funds for the Program. 72   Strengths Weaknesses and Ongoing Reforms  Moldova scored very well on PI-17 (Recording  Although the health sector has not been affected by and management of cash balances, debt and significant cash shortages in the past, there is a risk guarantees). of underfunding of some of the subprograms within  Existing financial management information the Program, specifically the Tobacco Control sub- system of the MOF covers all Treasury program, for which no funds are currently included operations and is the main factor in providing in the 2014 NCPH budget. Since the health sector proper authorization processes and controlling is not among the top priority sectors defined by the expenditure, ensuring that budget institutions do legislation in case of shortages, the Bank will not exceed the available appropriation and the carefully monitor the annual Program budgets, monthly allocation. The financial control system along with in-year revisions within the year. One of can therefore be considered as sound. the key actions included in the Program Action  Moldova has a very good score (A) on arrears Plan is for the Bank team to work closely with monitoring indicator PI-4. MOF, MOH, NCPH, and CNAM to monitor the annual budgets for the availability of funds for the Program. Risk assessment Moderate Program Internal Controls and Internal Audit Overview Description Rating Effectiveness of payroll controls B+ Effectiveness of internal controls for non-salary expenditure B+ Effectiveness of Internal Audit C+ 92. The assessment confirmed that there are reasonable controls over Program funds.  Existing MOH, NCPH and CNAM internal control systems are considered sound and able to ensure an appropriate control framework for the Program. Both the MOH and CNAM have well performing internal audit units and these units would include in their annual work programs appropriate internal audit missions of the PROGRAM. 93. According to the consolidated annual report on public internal financial control in 2012, published on the website of the MOF, both MOH and CNAM were awarded the maximum possible 10 grade points. Based on the above total points accumulated, both entities MOH (with 55 points) and CNAM (with 56 points) out of a maximum of 56 points, comply completely with National Internal Audit Standards (NIAS) and Methodological Norms for the Implementation of Internal Audit in the Public Sector (MNIAPS). Background 94. Internal Control. Internal control is based on the 'four eyes' principle, stipulating that every transaction with a financial implication is reviewed by at least two officials and requires two signatures: by the head of the institution and by the chief accountant. Internal control procedures within budget institutions, including for the MOH and CNAM are stringent and form the basis of a strong and reliable control framework. 95. The new Law on Public Internal Financial Control (No. 229 of the 23rd of September 2010) is based on the PIFC framework and has entered in force in November 2011. 73   96. Some existing internal control deficiencies still exist, but mainly at the local level, which does not have a direct impact on the Program. At any rate, Moldova scored very well on Effectiveness of payroll controls.47 97. Internal Audit. The internal auditors in the public sector operate under Public Internal Financial Control Law.48 Internal audit units (IAU) submit49 reports on internal audit activity to MOF in the form and to deadlines set by the ministry. Besides, the manager of the public entity, as a result of self-evaluation, performs an assessment of the organization of financial management and control and issues annually for the previous year, a statement of good governance. 98. Internal audit units have been established within the MOH50 and CNAM.51 The MOH’s internal audit department has two staff – having average work experience of eight years of which 2 years in the internal audit function. The IA department prepares a regular audit plan – four audits were planned for 2012 and which had been carried out to completion. The IA department submitted 21 recommendations to the management, all accepted. The CNAM’s internal audit department also has two staff – having average work experience of 12 years of which 2.5 years in the internal audit function. The IA department prepares a regular audit plan – six audits were planned for 2012 and which had been carried out to completion. The IA department submitted 21 recommendations to the management, all accepted. The staff size within the internal audit departments is adequate to deal with the volume of work and level of risk in the MOH and CNAM. 99. NCPH has an internal auditor position included in its organogram, however, there are no internal auditors currently appointed. NCPH management plans to appoint an internal auditor in the coming months, and in the meantime will benefit from the support of the MOH internal audit unit. It has been agreed that MOH would continue to help strengthen the capacity of NCPH internal audit unit, and once the capacity of NCPH internal audit unit would increase, the unit would also be involved in the internal audit of the Program.                                                              47 PEFA Assessment update for Moldova (2008-2010) of October 2011 has reviewed the personnel and payroll systems at the Ministry of Education, Ministry of Health, SSIF, CIFMA and in the Finance Directorate of the Chisinau Municipality. Following the assessment a score of B+ was awarded for PI-18. Effectiveness of payroll controls. 48 NIAS approved by Order 113 of 12.10.2012, MNIAPS approved by Order 118 of 29.12.2008 and the Code of Ethics of Internal Auditor and Internal Audit Chart (Regulation – model functioning of the internal audit unit) approved by Order 139 of 20.10.2010. 49 According to art. 28 of the Law on public internal financial control. 50 Government Decision nr.777 of 27.11.2009, Government Decision 397 of May 31, 2011. 51 Government Decision 1432 of 07.11.2002 on measures for the implementation of mandatory healthcare. 74   Strengths Weaknesses and Ongoing Reforms  Moldova scored well on PI-18 (Effectiveness of  While MOH and CNAM IA units are performing payroll controls) and PI-20 (Effectiveness of well there is an ongoing program to improve further internal controls for non-salary expenditure). the quality of their work.  Both MOH and CNAM entities have well  Lack of internal audit function in NCPH. NCPH performing Internal Audits units.52 needs to appoint an internal auditor and receive support from the MOH to build up its internal audit capability. Risk assessment Moderate Program External Audit Overview Description Rating Scope, nature and follow-up of external audit B+ Legislative scrutiny of the annual budget law B+ Legislative scrutiny of external audit report C+ 100. The assessment confirmed that independent and reliable external audit arrangements are in place. The Court of Accounts (CoA), the Supreme Audit Institution is a member of the International Organization of Supreme Auditing Institutions (INTOSAI) and European Organization of Supreme Auditing Institutions (EUROSAI) and participates in some INTOSAI working groups. The CoA is responsible for the financial and performance audits in Moldova’s public sector. The CoA is considered strong and its external audit reports of the Government are publicly available, and the audits meet the requirements of INTOSAI auditing standards. The CoA has in place a medium-term development strategy to further strengthen its capacity and for developing more modern audit tools and practices. 101. CoA will audit the Program in conjunction with its audits of MOH and CNAM, based on audit terms of reference agreed with the WB. The annual Program audit reports will be provided within twelve months after the year end. As the CoA capacity develops, it is envisaged that the submission date of the reports is brought down to six months by the end of the Program. 102. Background. CoA conducts annual mandatory audits on the execution of the government budget: state budget, state social insurance budget and compulsory health insurance funds. CoA audits the administration and use of public funds and public property by: regularity audit; performance audit; and other types of audit, including operational reviews of some WB- supported programs. 103. Draft audit reports containing findings, conclusions and recommendations are presented for discussion in public meetings with the audited entity, stakeholders and the media. The audited entities may provide comments within five days, before the Plenary of the CoA approves                                                              52 Based on PEFA Assessment for Moldova from 2011, MOH and CNAM were nominated between the public institutions having the most developed IA units besides MOF, the Customs Service, SSIF, the National Bureau of Statistics and the Court of Accounts. 75   the final report by voting. The Report is then submitted to the Parliament, Government, MOF and President, and published in the Official Gazette and on the CoA website. In cases of fraud, the Report is submitted to law enforcement agencies (Prosecutor, Centre for Combating Crime and Corruption). 104. Parliament Oversight. According to the Law on the CoA, the review of the CoA Annual Report by the Parliament is undertaken in October, together with the review of the Report on Budget Execution submitted by the Government and the Budget and Fiscal Policy document. The Government submits the budget execution report for the State budget to the Parliament by the 1st of June, and the Parliament examines and approves it by Parliament Decision by the 15th of July. The review of the Budget execution report is carried out by a Parliamentary commission with participation of the concerned central public authorities. A working group is established to scrutinize the three documents. In general the Plenary completes the review of the CoA Report within three months, and usually before the review of the next Draft Annual Budget Law. It is this review which results in the adoption of a Parliament Decision. 105. In addition to the Annual Report, the CoA submits other reports and since February 2011, monthly reports to the Budget Committee which include reports of audits carried out. Whenever the Budget Committee considers that a topic is of significant public interest, it selects it for discussion in the plenary session. Moldova scored only a C+ on PI-28 in the 2011 PEFA. While this represents an improvement compared to the D score in the 2008 PEFA, it shows that the capacity of the Parliament to analyze audit reports still needs strengthening to ensure proper Parliament oversight. In-depth hearings are only rarely used as an instrument of parliamentary supervision. Members of Parliament have relatively little experience in interpreting CoA reports, and capabilities in this regard still need to be strengthened. 106. CoA Health Sector Audits. Court of Accounts audits the budget execution for the health sector on an annual basis, covering MOH, NCPH, CNAM, and subordinated units. The CoA issued a clean audit opinion and the main recommendations for the year 2012 do not indicate that there are serious internal control issues for the Program. 107. Over the past years, the Court of Accounts has performed audits of several WB financed operations. CoA issued clean audit opinions on these project financial statements and made a few recommendations which are detailed in Annex B of the Fiduciary Systems Assessment. The Bank will continue to support CoA through its long term engagement which also includes a recently approved grant to help strengthen the CoA institutional capacity. One of the key actions included in the Program Action Plan is for the Bank team to work with the CoA and Parliament to strengthen oversight and the overall impact of CoA audits in the health sector. This could be scaled up later on to cover other sectors as well. 76   Strengths Weaknesses and Ongoing Reforms  Moldova scored well on PI-26 (Scope, nature and  CoA works to improve the timeliness of the Audit follow-up of external audit) and PI-27 (Legislative Report by publishing public audits no later than six scrutiny of the annual budget law). months after the end of the fiscal year, and publish  Well established laws and regulations provide a the actions taken in response to audit findings. strong foundation for external audit, coverage and  Capacity of the Parliament to analyze audit reports independence. needs strengthening to improve oversight; The  Capacity of CoA to perform and deliver audits Bank will continue to work with the CoA and Parliament to increase oversight and overall impact of health related audit reports. Risk assessment Moderate Key Fiduciary Performance Indicators Indicator Measure Baseline Program Budget Variance (Program) 2013 Planning and Budgeting Program Audit Audited financial statements of the Program received within 6 Audited financial statements of months of the end of the previous fiscal year by the end of the the Program are received 2018 within 12 months of the end of the previous fiscal year Contract Percentage of contracts delayed due to available funds Multi-year contracts delayed Administration due to unavailability of the funds for years following the budget year MOH to develop an adequate contract administration and Lack of adequate information monitoring system which will provide information on contract available with regard to performance with regard to time, quality and cost, inspection of contract administration and quality of goods and services delivered, and timeliness of monitoring of implementation payments. Complaint Number of complaints received and description of actions taken Under the current PPL there is Handling no independent complaint review body D. Transparency Overview Description Rating Transparency of Inter-Governmental Fiscal Relations A Public Access to key fiscal information A Transparency of Taxpayer Obligations and Liabilities A 108. The State Budget is published in the in the official gazette (Monitorul Oficial) and posted on the website together with the MTEF. Budget execution reports are posted on the website of the MOF on a monthly basis and made available the press and mass media. Court of Accounts finalizes its report on the audit of the execution of the State Budget within one month from receiving the report from the Government. The report on the execution is published in the Monitorul Oficial within 15 days from the date of presentation to Parliament. The outcomes of 77   all audits are published on the website of the Court of Accounts. Tenders and contract are published quarterly in Buletinul de Achiziţii” (“Procurement News Bulletin”) and on the website of the Public Procurement Agency. Information regarding the resources of all primary service units is available both at the State Treasury and the subordinate territorial treasuries and can be provided. 109. Since 2010, there is a Regulation on information, consultation and participation in the development and decision-making in the MOH approved by the Ministerial Order no.173/2010.53 110. A special unit “Partnership Inter-sectorial Communication and Cooperation with Civil Society” has been established within MOH. It coordinates the process of public consultation and participation in the development and adoption and ensure the inter-sectorial communication and cooperation with civil society. In order to ensure transparency in decision making all budget and financial information is comprehensive and accessible to the public, through the MOH website. The general director of CNAM has issued a similar order no.75A/2010 on ensuring transparency in decision-making in the CNAM. Similarly CNAM’s budget and financial information are accessible to the public, through the CNAM’s website. 111. Both the MOH and CNAM entities are publishing, on their websites, the annual reports on the transparency of decision-making, as well as all key financial information (budgets, budget execution reports, year-end financial statements, audit reports, contract awards). 112. In the latest 2013 Transparency International (TI) corruption perceptions index, Moldova scored 35 points (out of 100 points). This placed the country on the 102nd place out of the 177 countries surveyed. Moldova's score has remained virtually unchanged compared to 2012, when it scored 36 points. At any rate, even if it is fairly low, the score reflects that the improvements of the past couple of years are stable and the achievements have not reversed course. Moldova's score for 2011 and 2010 TI index surveys was the same at 29 points. E. Alignment with the Anti-Corruption Guidelines 113. To address the fraud and corruption associated with fiduciary risk, the program implementation will be aligned to the Anti-Corruption Guidelines (ACG) applicable to PforR operations. The National Anti-Corruption Center and the Public Procurement Agency will take the lead in ensuring that the ACG are followed by providing the required support and information. 114. Sharing of debarment list of firms and individuals. The Borrower will use the WB’s List of Debarred and Cross-Debarred firms and individuals to ensure that persons or entities debarred or suspended by the Bank are not awarded contracts under the program during the period of such debarment or suspension. The list can be accessed on the WB’s website (www.worldbank.org/debarr). The bidding documents for goods, works and services financed                                                              53 According to Government Decision No. 96/ 2010 and Law No.239-XVI/2008. 78   under the program will include clauses to the effect that firms and/or individuals that have been debarred by the WB would not be eligible to bid under the program. 115. Sharing of information on fraud and corruption allegations. As part of the progress reports, the Borrower will share with the WB information on all complaints and actions taken or being taken on complaints and grievances received on fraud and corruption under the program. The WB will be also informed about the actions and decisions taken by the relevant institutions to address the matter raised in the complaint. 116. Investigation of fraud and corruption allegations. The implementing agencies will provide full support to the National Anti-Corruption Center when carrying out investigations related to fraud and corruption allegations made during the program implementation. As part of the progress reports, the WB will be informed of all credible and material allegations or other indications together with the investigative and other actions that the Borrower proposed to take with respect thereto. The GOM will also cooperate fully in any investigation conducted by the Bank into allegations or other indications of fraud and corruption in connection with the Program. Appropriate measures will be taken by the GOM to ensure the full cooperation of relevant persons and entities subject to the Borrower’s jurisdiction in such an investigation. 79   Annex 6: Summary Environmental and Social Systems Assessment 1. This Annex is based on the Environmental and Social Systems Assessment (ESSA) for the Moldova Health Transformation Program. It covers the environmental and social aspects of the Program in the following five sections: (a) potential environmental and social impacts and risks; (b) environmental and social management systems; (c) evaluation of the environmental and social management systems performance; (d) environmental and social Program Action Plan; and (e) findings from the consultation process. A. Program Environmental and Social Impact and Risks 2. The general ESSA finding is the Program will not generate adverse environmental and social impacts. With its focus on patients’ needs, reduction of out-of- pocket payments, removal of inefficiencies and improved quality of healthcare services, it should be considered an opportunity to improve the environmental and social performances of Moldova’s healthcare system and a framework to thoroughly integrate environmental and social considerations into the necessary reform processes. 3. The Environmental Assessment (EA) for the healthcare sector shows that the potential adverse environmental effects of the Program might be indirectly generated by two subprograms: “Primary Care Services” and “In-patient Care.” Any effects are likely to be related to the generation and management of health care wastes (HCWs)54 and pharmaceutical wastes (PhWs), which would have impacts on population health and the environment. Since the project will not support any new investments in construction or rehabilitation of the health care facilities (HCFs) and will not reduce their number, the EA does not include other environmental issues, such as sanitation, air emissions, energy conservation, and potential impacts of civil works, or environmental legacy in the case of HCFs closing. The EA study focused on the following issues: (a) analysis of the existing regulations and policies regarding HCWs and PhWs sector management; (b) assessment of the institutional capacity for ensuring implementation of relevant policies and regulations; and (c) effectiveness of implementation of HCWs and PhWs. Based on this EA, an action plan was prepared to strengthen institutional capacity to manage identified gaps and environmental impacts and risks. 4. The Social Risk Screening Exercise was structured around four main themes. The first relates to potential internal and external resistances to Program changes, notably  the upgrades in the provision of health care services according to defined healthcare path protocols and procedures, and accountability for services, e.g., quality monitoring and control. Program changes will require central level stakeholders to handle the complexity of the processes, including evaluating, planning, and implementing actions; adopting appropriate tactics and strategies; and ensuring the changes are worthwhile and relevant. Although the reform will ultimately lead to higher overall healthcare quality for the patients and a better organized and managed system for the employees, some employees may oppose specific systemic changes, since overall improvements often come at the cost of some objective local loses. Moving to                                                              54 These don’t include radioactive waste which according to the opinions of national specialists and international organizations are produced in a very limited amount and are relatively well managed in the country. 80   more efficient outpatient practices may create the perception in the population of reduced medical care. The introduction of performance-based payment and cross checking the quality of health services delivered to patients may create uncertainty and thus resistance in medical professionals. Effective change management is of critical importance, which includes effective public awareness and communication outreach about the reforms and their overall advantages and fairness. 5. Hospitals will face internal reorganization to comply with reform requirements and to ensure their economic and operational efficiency. While technocrats and policy-makers must obtain support to implement difficult reforms, politicians may in the short-term be lobbied by stakeholders who are affected by the reform process. Opposition may come from hospitals managers who need reduce acute care beds, medical personnel paid based on the new P4P schemes, medical institutions expected to comply with greater accountability and transparency and operate with reduced OOPs, etc. 6. Information Dissemination. Because patients might feel disoriented with the many changes introduced by the reforms, a broad and inclusive explanatory information campaign is needed. Local media, social networks, primary health centers, and Local Public Administrations all need to be engaged in information dissemination. Information should be provided in accessible languages to the non-Romanian speaking population living in Gagauz Yeri and on the left bank of the Nistru River and to the Roma population. Advocacy CSOs need to disseminate information to their clients. Hospitals should develop public charters to inform patients of their entitlements and rights, as well as the expected quality of services. The charters should be easily accessible and developed in collaboration with patients’ associations, especially hospitals providing tertiary medical services. 7. The second type of potential social impacts relates to social inclusion and equity in access to health care services. Significant inequalities exist in access to health care services based on the socioeconomic status in Moldova. Low income groups use significantly less specialist services than higher income groups. Equity issues also are raised by the growth in out-of-pocket payments (OOP), which are disproportionately paid by lower income groups, sometimes to catastrophic expenditure levels of their household budget. The main groups at risk for low access to quality health services are the self-employed (particularly in agriculture), the unemployed (or unofficially employed), youth and low income earners, large families, the elderly, and people living in remote areas. The main reason for not accessing healthcare by vulnerable social groups is the high cost of drugs or the lack of awareness. Since 2010, households registered as being below the poverty line automatically receive MHI coverage. Nevertheless, this coverage may not drastically improve equity in the system since 73.1 percent of all OOP payments in 2010 were for pharmaceuticals, and the list of medicines reimbursed by MHI is extremely limited. 8. Roma population. The barriers to Roma population accessing health insurance and healthcare are the same as for the general population, i.e., lack of awareness or employment or experience going to the doctor, and high OOP medication payments. Reducing OOP payments and increasing the health coverage for families below the poverty line will significantly increase their access. 81   9. A main goal of the PforR support is to remove existing inequalities and inequities in health care by: (i) increasing the average reimbursement rate of generic, first line medications for the three main categories of antihypertensive drugs in the drug benefit package from 50 percent to 70 percent; and (ii) reducing OOP payments as a percentage of household expenditure in the poorest 40 percent of the population. The MOH is committed to reducing informal system payments. Adding performance-related payment mechanisms combined with improving transparency through external auditing is expected to help achieve this goal. Other proposed changes are not expected to deepen the existing inequalities in health status outcomes between the richest and poorest income level groups. 10. The third type of potential social impacts is related to social accountability of the health care system. Improvements related to social accountability and transparency are ongoing. For example, the participatory approach was used to prepare and develop the National Health System Development Strategy 2008-2017. During preparation, a series of consultative meetings and public debates were held country wide. This practice was replicated in a series of policy consultations to elaborate the new Healthcare Strategy 2020. As part of the government-wide transparency mechanism, the MOH is participating in the open data initiative by disclosing numerous datasets from various agencies and institutions to the general public on its website.55 The MOH and the CNAM are good examples of government transparency by posting and communicating with the public all relevant health information. Their efforts are a good start for real public dialogue on the impact of the Program. 11. The fourth type of potential impact affects medical and non-medical staff within the reformed system. Because the rightsizing of the medical institutions mostly has been completed during the previous phase of the reform, the Program is unlikely to affect the employment of medical or non-medical staff in the health system. Nonetheless, the Program contains significant training and self-learning requirements, which will require time and resources and personnel support and cooperation. Since more than 80 percent of healthcare workers in Moldova are women, any major changes in work schedules, timing, and venues of the suggested training courses will need to accommodate their safety and family obligations. The communication campaign aimed at health care workers has to take into account the gender composition of the work force. B. Program Environmental and Social Management Systems 12. Moldova has established a relatively well functioning Environmental Management System. 56 The system is based on a series of environmental policies that generally cover                                                              55 The MOH’s datasets can be seen at its website at http://date.gov.md/raw/category/3. 56    This system has been reviewed by various international organizations, particularly by UNECE, see Moldova: Environmental Performance Review, 2005 and 2013, http://www.unece.org/fileadmin/DAM/env/epr/epr_studies/moldova%20II%20m.pdf; by UNDP, see National Report for UN CSD 2012 Rio+20. Chisinau, 2012, http://www.mediu.gov.md/images/Report_RIO20_ENG_12-06- 2012_NEW_OUT.pdf; and by the Environmental Action Program for Central and Eastern European Countries Task Force under the OECD, see Capacity Development for environmental management in Moldova: Drivers, links to planning and methods of assessment. Paris, 2010, http://www.oecd.org/dataoecd/30/44/45559222.pdf; Compliance and Enforcement Capacity Building in Moldova, http://oecd.hybrid.pl/finfo.php?layer_id=14&object_id=160.  82   environmental protection and health care and particularly HCWs and PhWs issues. The National Program for Environmental Security for 2007-2015 specifies the actions necessary to ensure environmental protection, including actions that have any direct implications for human health and relate to preventing environmental pollution, wastes and toxic wastes management, and enforcing EA rules and procedures. Several other GOM policy documents regulate particularly health and environmental issues, including a Health and Environment Action Plan, approved in 2001. A National Strategy for Waste Management adopted in 2013 contains a section devoted to HCWs management. Furthermore, during the last 20 years, Moldova has developed a comprehensive new regulatory framework that covers all environmental and health sector issues, including the laws governing environmental protection (1993), EIA (1996), solid waste management (1998), public health supervision (2009), etc. The framework was prepared based on best international practices and recommendations proposed by various International Development Institutions and Multilateral Environmental treaties. Furthermore, the country has recently started to harmonize its legislation with the EU Directives. The quality of Moldova’s policy and regulatory documents is adequate overall. However, the implementation of approved policy documents and environmental legislation is qualified as medium to low level, mostly due to inadequate funding and insufficient enforcement capacity of the MOH and the MOE. 13. For HCWs, Moldova has established a relatively well-developed environmental policy and legal framework with an adequate institutional system. A special regulation was promulgated for the safe management of HCWs with standardized definitions, segregation, handling, transportation, storage, and disposal procedures, and the main responsibilities in the domain assigned. Based on this regulation, the HCFs transposed its main requirements into hospital/medical institution rules that medical and paramedical staff attempt to respect and apply in the best way they can. The HCWs regulation nevertheless lacks clarity with regard to environmental requirements for various treatment and disposal technologies and needs to be updated, taking into consideration best international practices and EU legislation in the domain, adapting to the country’s conditions. Among the most important deficiencies in the domain is a lack of adequate funding for most of the HCFs to ensure the safe management of HCWs and disposal or treatment facilities throughout the country. These gaps jeopardize Moldova’s safe management of HCWs. 14. To safely manage all types of PhWs, e.g., solid, liquid, greases, etc., Moldova has established a well-developed legal basis. According to existing regulations, all private and public pharmaceutical facilities assess the PhWs individually and transport them for disposal to the National Agency for Drugs and Medical Equipment (NADME). The decision to dispose of PhWs is the responsibility of a special Commission under NADME, while the main controlling institution in the domain is the Pharmaceutical Inspectorate, which is also subordinated to NADME. The main responsibility for final disposal of PhWs disposal lies with the special NADME Division, which is self-financed based on payments from pharmaceutical units for its services. While the current tariff level is insufficient to generate additional revenues to invest in the domain, the current payments are sufficient to cover the costs of NADME Division staff and operations. Due to the growing volumes of PhWs, the NADME Division will be unable to execute its critical functions at the required level with its limited staff. 83   15. Social Management System and Legal Framework. The Republic of Moldova has been successful in reorienting the health system towards primary care and geared wholly to family medicine. In rural areas, primary care services are provided by family doctor offices and health centers. In urban areas, health services are provided through big family health centers, formerly known as polyclinics. Because of the method of health service purchases through the MHI system, family doctors act as genuine gatekeepers for patient referrals to specialist and inpatient services for insured patients. 16. The MOH is responsible for central level health care planning and is the key stakeholder in charge of system reforms. The Ministry also is responsible for any social issues or consequences related to health or health care system reform. For many years, the MOH implemented various health care reform projects, governed mainly by task force or working groups. The Ministry’s extensive experience with task forces and various planning and governing procedures and tools will enable it to implement the Program. 17. The Ministry’s long-term planning tool is the National Health Policy 2007-2021. The policy was developed in accordance with WHO’s recommendations and the active participation of all relevant ministries, authorities and institutions, civil society, professional health organizations, and international development partners. The GOM has encouraged public discussions about the National Health Policy. The policy is the key document determining national health care’s context, vision, priorities, goals, and key measures during the planning period. Based on this document, other planning documents are being developed. The policy is further elaborated and operationalized by the National Health System Development Strategy (NHSDS) 2008-2017. 18. The Government’s healthcare sector reform objectives were outlined in the Policy Roadmap for Acceleration of Healthcare Reforms. The objectives aimed at implementing reforms from 2012-2014 and are aligned with priority interventions stipulated in the Government Action Plan – European Integration: Freedom, Democracy, and Welfare 2011–2014. The GOM prepares a medium-term budgetary framework (MTBF) on a rolling basis to finance the implementation of all health sector strategies and programs. 19. The MOH approves the structure of the public network of primary care providers based on the population per family doctor. The MOH also establishes the profile of the services provided by the hospitals, including those belonging to the local authorities. The national health insurance company (CNAM) is a not-for-profit organization with financial autonomy created by the GOM in 2001. Its main responsibilities include: (i) providing Mandatory Health Insurance (MHI) for the population; (ii) contracting health service providers to provide services to the insured; (iii) verifying that the provisions of the contracts correspond to the actual volume, terms, quality, and costs of health care provided and managing the MHI resources within the limits of the contracted services; (iv) protecting the interests of insured individuals; (v) case validation; and (vi) concluding re-insurance contracts. The CNAM pools payroll and state budget contributions into a single pot for the reimbursement of health service provision. 20. The MOH approved a roadmap in February 2012 to accelerate health reforms emphasizing inter alia hospital sector optimization and networking. In December 2012, CNAM 84   approved its new institutional development strategy that in addition to institutional strengthening and reorganization also included health financing, access, and quality of healthcare reforms. 21. Health financing in the Republic of Moldova is organized as MHI. Based on revenue sources, 40.3 percent of total health expenditure was from MHI contributions and 44.9 percent from OOP payments (WHO, 2012). The working population’s health insurance contributions are predominantly through payroll deductions of a fixed percentage of salary: 7 percent in 2011 and 2012 with 3.5 percent paid by the employee and 3.5 percent paid by the employer. The self- employed are expected to purchase their own yearly health coverage at a fixed price. The non- working population, which includes 14 categories, e.g., pensioners, students, children, registered unemployed, etc., is covered through transfers from the central budget to the CNAM. 22. In 2010, the MOH together with other government authorities developed the means for public participation in the health system in accord with internal rules ensuring transparency in the decision-making process. These regulations include the Governmental Decision on the Actions for the Implementation of Law No. 239-XVI from 13 November 2008 Regarding the Transparency in the Decision-making Process (No. 96, 16 February 2010). These laws regulate information disclosure, consultation and participation in the process of developing and approving decisions, the contact details of the coordinator of the public consultation process, and the list of interested and informed parties - which includes most of the NGOs active in the health field. Moldovan legislation has sufficient provisions for petitions and complaints submission. Although the legislation stipulates the rights of patients to complain to territorial health authorities, the CNAM, medical and pharmaceutical facilities, professional doctors’ associations, patients’ associations and public associations for the protection of health service users’ rights, patients prefer to address their petitions directly to the MOH, due to non-existence of an integrated claim processing mechanism. C. Evaluation of the Environmental and Social Management Systems Performance 23. As previously discussed, the GOM has developed a substantial legal framework for the safe management and disposal of HCWs. Based on approved laws, it developed a series of regulations and standards, including: (a) Regulation for Medical Waste Management approved by the MOH and registered by the Ministry of Justice in January 2002; (b) Guidelines for supervision and control of nosocomial infections (2009); and (c) a 2010 GOM-approved sanitary regulation for hygienic conditions in HCFs (No. 663, 2010). Furthermore, specific standards were established for the location of HCW incinerators; the cleaning of hospital compound; the design of waste containers; and waste collection services. Most of these standards were approved during the Soviet era and need to be revised in harmonization with EU legislation. 24. Implementing state policies and regulatory framework are the main responsibility of the MOH and the National Centre for Preventive Medicine division of the Ministry. The main control functions are delegated to each rayon’s Center for Preventive Medicine, which conducts the required inspections of all HCFs and provides relevant conclusions and recommendations. The HCF staff is responsible for implementing the HCWM in the respective facility. 85   25. At the health care facility level, the responsibility for the different components of the HCWM system is shared between several professionals. The hospital director (or other medical facility) is directly in charge of the overall implementation of a safe HCWM system inside the HCFs. The hospital’s epidemiologist and the head nurse are responsible for supervising the HCWM plan. The medical doctors and nurses ensure the immediate segregation of the HCW. The medical staff is personally accountable for applying the Regulation for Medical Waste Management. Noncompliance with plan instructions can result in monetary fines drawn directly from their salary. 26. To neutralize infectious wastes, HCFs in some cases use autoclaving, burying or burning. While all these are generally accepted methods, the existing practice in Moldova is still quite dangerous since: (a) the autoclave equipment is absent or outdated; (b) burying HCWs at municipal cemeteries is well organized only in Chisinau HCFs. In most other localities, it is done from time to time and without using specially equipped HCW transportation; and (c) no well- functioning HCWs incinerators exist. In most cases, improvised stoves located on HCFs lands are being used for this purpose. Sometimes in an attempt to mitigate the lack of equipment and infrastructures for HCWM, the medical and paramedical staff disinfects hazardous HCWs before throwing it together with domestic waste. 27. The system for PhWs disposal works relatively well in Moldova. Pharmaceutical waste is collected separately from other categories of HCWs and is strictly controlled and monitored. For disposal, PhW is well-encapsulated in cardboard boxes in a central NADME facility. After encapsulating, the wastes are buried in the Chisinau City landfill. The chief of the Division observes the waste burying at the site landfill, and ensures that the buried PhWs are covered by soil. The NADME PhWs disposal Division keeps in e-format all associated documents about the quantity of wastes received, their composition, all decisions of the NADME PhWs Commission, payments made by the pharmaceutical facility owners, the type and quantity of disposed wastes, the payments made to the municipal landfill administration, etc. 28. The major structural reforms to the health care system began in 2001 with the creation of CNAM and the introduction of Mandatory Health Insurance at the national level in 2004. These steps were followed by primary care reform, family medicine promotion, and hospital network optimization. The National Health Policy 2007–2021 and the Health System Development Strategy 2008–2017 have served as the main guiding documents for subsequent reform initiatives in the Moldovan health system though three changes of government. The overall aims of these policies have been to reduce health inequalities for all social groups and to consolidate health system improvements and inter-sectoral collaboration to strengthen the population’s health. 29. The fundamental reform to public health beginning in 2010 aimed to transform the inherited sanitary-epidemiological services into a broader public health service, which was better equipped to deal with the current epidemiological profile of the Moldovan population. The new State Surveillance of Public Health Service (SSPHS) retained the communicable disease control functions but has been placed more emphasis on non-communicable disease control, health promotion, and disease prevention. The basic structures are now in place, but full implementation has yet to be supported. While the full potential of inter-sectoral collaboration 86   has not yet been realized, the national programs on tobacco and alcohol control introduced in 2012 are strong evidence that such inter-sectorality is a genuine new feature of health policy development. There is still much to be done but the pace of health reform has slowed in recent years. 30. The MOH has been benefitting from healthcare budget support assistance provided by the European Commission for the past few years and is therefore familiar with some PforR instrument features. The EU’s direct budget support was underpinned by the EU-funded technical assistance component channeled through WHO. Furthermore, over the last two years, the World Bank has launched two results-based financing projects in the social assistance and education sectors in Moldova. However, the transition from an input-based to a results-based operation could still be an issue, particularly because the healthcare sector is governed by a specific funding allocation mechanism of health insurance, and the budgetary rules for allocating funds are subject to change. 31. The MOH has established an electronic format channel for patient complaint submissions. However, the Ministry does not have a specialized unit for dealing with patient complaints or a system in place to monitor cases of infringement of patient rights and their review in courts. Complaints are currently delegated to the internal subdivisions responsible for policy development in the areas that correspond most closely to the subject of the petitions. Consolidation of the MOH’s capacity to deal internally with complaint monitoring and resolution is of crucial importance. 32. CNAM installed a hotline service in February 2013 to provide patients with information regarding their entitlements and the health institutions to address for claims with regard to quality of care or OOP payments. However, it will take time to gain public trust and demonstrate its effectiveness. D. ESSA Action Plan 33. Recommended measures to improve HCWM. A series of activities is needed to build capacity and provide necessary funds and investments in the sector. These measures are specified in Table 1 below. Their implementation will be monitored as part of the WB implementation support. The HCWs regulatory framework requires that the HCWM regulation be revised and updated and existing guidelines and relevant national standards be updated as well. To provide the HCFs with adequate equipment, suppliers, and to build up adequate disposal facilities, the GOM may prepare and adopt a special action plan. Because of the relatively high costs to provide the HCFs with the requisite infrastructure and materials, the GOM may choose to use part of the WB financing or formulate a well-targeted project to request assistance from multilateral or a bilateral donors. Such a project should be based on a feasibility study demonstrating the needs for the HCWM sector, and particularly for regionalization of relevant services, including options for developing public-private partnerships. The preliminary estimations specified in the National Waste Management Strategy for 2013-2025 indicate 3-4 regional autoclaves may be needed, with a total cost per unit of about Euro 0.5 million, including the costs associated to create regional networks to provide services. 87   34. Areas and options for improving PhWM. Based on the results of the ESSA, it is possible to conclude that the NADME PhWs Disposal Division is understaffed and has difficulties fulfilling its mandates in a timely manner. To accommodate demand for its services, it would be necessary to increase the number of its staff on a temporary or permanent basis. Other possible options to meet PHWs disposal demand might be to commercialize these services by creating the necessary regulatory basis, increasing the current level of tariffs to a feasible level, and/or by creating a public-private partnership in this area. A feasibility study would be necessary to assess options and to propose recommendations. 35. Ensuring political support for the reforms. The new health project will commence in FY15, which coincides with the pre-election period. The MOH’s leadership and some MPs may be reluctant to embark upon unpopular reforms during election season. Conversely, politicians may try to introduce some measures that are not necessarily cost-effective and efficient. It is therefore important to address capacity strengthening and accountability measures and to ensure that the project design includes inter alia some “low-hanging fruit” measures. 36. Enhancement of access to health care services. NGOs concerned with policy will be involved in promoting structural reforms at the central level. It would be helpful if advocacy organizations, such as health trade unions, provided information about the reforms to health institutions. Social networks and media will be used to communicate the reforms to the patients. Roma NGOs might be involved in improving their awareness of entitlements and health system changes related to the reforms. 37. Improvement of the current practices in securing social accountability. The project shall adopt measures aimed at strengthening quality management and ensuring accountability mechanisms to better deliver on the Bank’s fiduciary responsibilities. These include involving the Court of Accounts, CSOs and mass media throughout the project cycle, especially in verifying project DLIs, use of the Bank’s staff to raise awareness amongst the medical society and the general public about the need for and benefits of reforms, etc. The consolidation of the MOH’s capacity to deal internally with complaint monitoring and resolution must be ensured. To build trust and patients common use of the CNAM’s hotline, it is important to monitor the hotline’s performance and adjust the information supplied by the patients as well as responses to the complaints received through it. 38. Communicating reform effectively to the key stakeholders. The communication campaign for health care workers needs to take into account the gender composition of the work force which is 80 percent women. The communication campaign for the patients has to take into account their diverse languages. For example, Russian materials might be needed for Gagauz Yeri and Transnistria populations. Various channels of communication may be necessary to access different target groups, e.g., the vulnerable Roma population has a high level of adult illiteracy. E. Findings from the Consultation Process 39. All key stakeholders have been consulted on the draft ESSA and its summary. On March 10, 2014, the pertinent documents were posted on the MOH’s website for the public’s 88   information. In addition, a printed version of the ESSA summary was disseminated to the MOH and the Ministry of Environment (MOE). On March 19, 2014, a public briefing on the ESSA document was organized with the participation of representatives from the MOE, MOH, NCPM, CNAM, environmental NGOs, the trade union of medical workers, health policy think tanks, and others participated. About 20 participants were present at the public briefing. 40. After the study’s main findings and recommendations were presented, the participants raised a series of questions, mostly regarding of the details of the proposed operation. With respect to the main ESSA issues and proposed actions, the MOE representative proposed expanding the scope of the report to include toxic waste issues and specify the need for a regional HCWM approach. The MOE representative also emphasized the need to consider purchasing or constructing HCWs incinerators. The Deputy Minister of Health agreed that these are important issues and should be addressed jointly by the MOE and MOH but not only in the framework of this project. The final version of the ESSA was posted at the MOH website and submitted to the WB for disclosure through the Infoshop. 89   Table 1: Main Environmental and Social Issues under the Program and Proposed Activities Issues and risks Actions Responsibility Timeframe Costs (USD) Indicator Lack of relevant guidelines and outdated Revise HCWM regulations MOH 2014-2015 Within annual Documents adopted by the HCWM regulations Prepare HCWM technical guidelines NCPH budget GOM and MOH Create national guidelines for syringe safety Low population awareness of the CNAM- Broad public information campaign on MOH 2014 Within Number of calls to the hotline administered hotline the hotline CNAM allocated budgets Insufficient patient awareness of their Develop in collaboration with patients’ MOH 2015-2016 TA Funding Charters developed and placed rights and entitlements for secondary and associations an easily accessible public Hospitals in the hospitals tertiary medical services charter of patients’ entitlements, rights, Patient and expected quality of services associations Inadequate collection, treatment, and Carry out a detailed feasibility study on MOH 2014-2015 100.000 Study conducted and disposal of HCWs and associated health the options, costs, and technical issues alternative scenarios developed and environmental risks of creating regional networks for and approved by the separate collection of HCWs and their GOM/MOH treatment and disposal. Understaffed NADME Division and lack Analyze current legal basis, economic NADME 2014 Within the Study conducted and necessary of capacity to timely and efficiently incentives, and tariffs, and propose existing budget legal documents approved by conduct disposal of PhWs necessary adjustments and actions to and using GOM/NADME involve private service providers in funds received PhWs disposal from provided services Lack of facilities and/or relevant Purchase autoclave and other necessary MOH 2015-2016 To be Purchased equipment and/or equipment for treatment and disposal of equipment for major hospitals and for estimated by created regional HCWs infectious wastes and associated health regional facilities (based on the results the feasibility regional facilities risks of the feasibility study above) study57 Inadequate segregation, collection, and Ensure segregation of HCWs in all MOH, 2016-2017 To be HCWs segregation and safe transportation of HCWs for disposal due HCFs by a three-bin system; Supply Local Public estimated by transportation for final disposal to lack of equipment and necessary goods, public HCFs with necessary goods, Administration the feasibility is ensured in 100% of HCFs; and associated risk of contamination of transportation for separate collection of study Number of provided containers workers and the environment medical and domestic waste and their and other supplies for HCWM temporary storage before disposal                                                              57 Preliminary estimations done for the National Strategy for Waste Management 2013-2025 indicate the need for about Euro 4.0 million. 90   Annex 7: Integrated Risk Assessment MOLDOVA: Health Transformation Operation Stage: Board PROGRAM RISKS 1. Technical Risk Rating: Moderate Description: Risk Management : Despite the progress made so far in institution building in the The project design includes a TA/Capacity building component to strengthen the country’s capacity to health sector, the capacity of MOH and MOH-affiliated implement reforms. Special focus for TA will be MOH, CNAM and other affiliated agencies such as institutions remain limited, especially in light of the scope and National Public Health Institute, National Center for Health Management complexity of the reform agenda Resp: Bank, Client Stage: Preparation and Due Date : Recurrent Status: N/A implementation - There has been a series of TAs and ESWs carried out under the current health project to help the country address the “how” of reform. The use of their findings and recommendations for implementation and service delivery will be maximized under the proposed operation. National Health System Development Strategy is comprehensive about the “what” of reform, but not so detailed - The above-mentioned TA/Capacity component in the project design will provide technical assistance about the “how” to the Government and key stakeholders in areas where the help on the “how” is still needed. - The Bank will continue its close collaboration with other Development Partners active in the health sector (especially WHO) to coordinate TAs for the country The Bank will maintain a board policy dialogue and technical engagement not only with the MOH leadership but also staff at the technical working level and other key stakeholders in the sector to ensure Possible turn-over of MOH leadership during project broad-based buy-in of the program. implementation Resp: Bank, Client Stage: Preparation and Due Date : Recurrent Status: N/A implementation A stakeholder analysis will be carried out to understand the positions of different stakeholders. On that Local governments and hospital managers can be resistant to basis, a communication strategy will be developed the plan to organize hospitals into networks under common management structures Resp: Client Stage: Preparation Due Date : Before Status: N/A project appraisal     91   2. Fiduciary Risk Rating: Moderate Description: At the time of the PCN, program-level fiduciary Risk Management: Measures to manage country fiduciary risks are also applicable to the program. risks are deemed to be in line with country-level fiduciary Additional interventions specific to the program will be developed as part of the fiduciary assessment risks. Specific program fiduciary risks will be further elaborated by the fiduciary assessment. Resp: MOH; MOF; Stage: Preparation Due Date : Before Status: N/A WB appraisal Environmental and Social Risk Rating: Moderate Description: The project environmental risks relate to medical Risk Management: The identified environmental and social risks will be addressed by implementing a wastes management and construction and/or renovation of series of TA and capacity building activities which have been identified during the project design and medical facilities. Medical wastes generation and their outlined in the Action Plan which was disclosed and consulted in the country with all interested parties improper management, as well as improper disposal of expired and key stakeholders. medicines may cause health risks for the local population as well as localized environmental pollution. Inadequate construction and/or renovation of medical facilities can lead to Resp: WB; MOH; Due Date : Before a series of site specific environmental and social risks: dust Stage: Preparation Status: N/A MOE Appraisal and air pollution; noise; solid wastes; soil and water pollution; occupational safety, health risks; etc. 3. Disbursement-Linked Indicator Risks Rating: Moderate Description Risk Management : Poorly defined or improperly measured DLIs may lead to  Careful choice of DLIs to ensure that they are measurable and verifiable problems with their reporting and data inaccuracy  Development of detailed and clear protocols for the measurement of DLIs PforR is a pay-for-performance scheme at the national level. Just like any pay-for-performance scheme, there is always an  Independent third party will be used for the measurement of selected DLI where appropriate (e.g. inherent risk of over-reporting of results a survey firm will be used for the household survey to measure blood pressure) Resp: Bank, Client Stage: Preparation and Due Date : Recurrent Status: N/A implementation OVERALL RISK RATING Moderate 92   Annex 8: Technical Assistance and Capacity Building Component (IPF Instrument) A. Rationale 1. The MOH and CNAM will require technical assistance, including the contracting of international consultants, to provide support for the implementation and monitoring of key aspects of the Program. However, previous experience in hiring international consultants using government funding is not positive. Moldova’s Court of Accounts has often raised questions about the higher salaries of international consultants (in relation to public salaries). As the result, government entities are reluctant to hire international experts. For this reason, to ensure adequate and timely capacity building for the Program, US$2.1 million dollars in WB financing will be allocated for technical assistance under a separate component that will follow investment lending procedures. Thus, WB support for the proposed Health Transformation Program-for-Results Operation (the Program) will include both a PforR instrument (OP/BP 9.0) and an investment lending component (OP/BP 10.0). B. Description of Technical Assistance Activities 2. Moldova’s key capacity constraints to implement the Program pertain to the following technical areas that will be supported by various technical assistance activities including, inter alia:  implementation and analysis of two rounds of STEPS survey;  verification of other selected results by independent agencies;  development of new business processes and workflows for hospitals under common management structure;  DRG costing exercise using country data;  development of performance-based incentive scheme to improve quality and efficiency in hospitals;  development of an accountability framework and mechanisms for health workers; and  development of a manual for quality management in family medicine C. Institutional and Implementation Arrangements 3. The technical assistance component of the proposed Project would implemented by the MOH. A small unit consisting of a few consultants reporting to the MOH will help the MOH manage the selected technical assistance (TA) and capacity building activities. This unit will also assist fiduciary staff of the MOH in the Program’s procurement and financial management activities using government procedures. Currently, there is a unit under the MOH which supports the ministry in the implementation of the ongoing Health Sector and Social Assistance Project or HSSA (P095250) and Strategic Planning of Health Information Management Reform IDF grant (P131020). Such a unit will be maintained, though possibly downsized in terms of staffing based on the needs of the Program. 93   4. Funds for technical assistance will be provided directly to MOH, and CNAM, and would follow IPF procurement, financial management and disbursement mechanisms. These have been used by the MOH under the HSSAP. D. Financial Management and Disbursement 5. Country Issues. The WB has extensive knowledge of Moldova’s public financial management (PFM) system. The 2011 PEFA Assessment revealed significant improvements in most PFM dimensions compared to the [previous 2008 assessment. Regular updates of PFM reform activities have been carried out in recent years. 6. Moldova has continued to make considerable progress in the further development of its PFM systems and institutions. Previous recommendations have been addressed by the Government, including in the areas of budgeting, treasury management, harmonization of accounting standards and practices, internal control, and strengthening internal audit functions. The organization and effectiveness of the Court of Accounts has also been further improved. 7. In the latest 2013 Transparency International (TI) corruption perceptions index, Moldova scored a fairly low 35 points (out of 100). The country is thus on the 102nd place out of the 177 countries surveyed. Moldova's score has remained virtually unchanged compared to the 2012 TI index, when it scored 36 points. At any rate, even if it is fairly low, the score reflects that the improvements of the past couple of years seem solid and stable, and the achievements have not reversed course. Moldova's score for 2011 and 2010 TI index surveys was the same at 29 points. 8. To address the fraud and corruption associated with fiduciary risk, implementation of technical assistance will be aligned to the Anti-Corruption Guidelines for Investment Operations, rather than for the PforR instrument. 9. Financial Management Risk Assessment and Mitigation Measures. The financial management arrangements for the proposed Project are acceptable to the Bank. The Project would rely on Moldova’s public financial management systems. 10. The overall residual financial management risk for the proposed Project is rated as moderate. While corruption continues to be a significant problem in Moldova, the country’s public financial management systems and institutions are advanced, are based on and are using modern legal and operational frameworks (including reporting, audit, and oversight), and are performing well. The result is that the country’s own fiduciary framework (including regulations and reporting requirements, internal audit and internal control, and performance of the Supreme Audit Institution) provides sufficient inherent mitigation measures to support the financial management arrangements for the technical assistance component of this operation. 11. Strengths and Weaknesses. There are no significant weaknesses in the financial management system. The strengths that provide a basis for reliance on the financial management system include the well-developed country PFM systems, processes, and practices; and the extensive financial management experience of the MOH project team and satisfactory compliance on previous WB financed projects implemented by MOH. 94   12. Budgeting and Planning. The financial management dimensions (including budgeting and planning) would be the overall responsibility of the MOH, and the operation would rely heavily on the existing country public financial management systems. MOH project budgets would continue to follow the existing procedures for planning, approval, reporting (on budget execution), and monitoring. The approved project’s annual budgets would be entered into the accounting system and used for periodic comparison with actual results as part of the interim reporting. The process of compiling budget data and approval would continue in the same manner, with project budget data available by month and quarter. The past experience on the ongoing MOH projects has been satisfactory. 13. Accounting Staffing. The existing policy, budget and finance department within the Ministry of Health have the overall responsibility for the project financial management and contract management. The MOH finance department includes the Health Insurance, Budget and Finance Department (six staff) and Accounting and Reporting Division (three staff). The MOH project team is mainly working with the latter on project FM aspects, except for budgeting which is dealt by Health Insurance, Budget and Finance Department. Relating to project FM issues, MOH is assisted by a consultant from the PIU, who is experienced and holds necessary qualifications. Any additional training that may be needed would be provided during project implementation as part of overall technical assistance provided by the Bank team. 14. Accounting Policies and Procedures. The proposed operation would use existing Moldovan budgetary accounting policies, procedures, and systems. The Program’s accounting and budgetary transactions/records would continue to be maintained on an accrual basis and denominated in USD and in MDL. The operation would rely on the existing accounting procedures and internal control framework to ensure that all procedures and controls are adequately documented, and that contract monitoring and invoice payment procedures are consistently adhered to and documented. Existing controls are robust and closely monitored by PIU and MOH management. The PIU has in place a Financial Management Manual developed for the ongoing project and would further update it as needed for the specific aspects related to the new project. 15. Information Systems. The PIU is responsible for keeping detailed project accounting records, including distinct records for each project it manages. Accounting records are kept in the existing accounting software, 1C, widely used in the region. Additional software procedures are in place for the timely archiving of the monthly files and regular information backup. 16. Internal Controls and Internal Audit. Full reliance would be placed on the existing public sector internal control framework. This framework includes the use of checklists to ensure that required procedures are performed and data established during the processing of the invoices, including checking mathematical accuracy of the invoice, confirming legal conformity of the invoice, matching the invoice to the relevant contract, matching invoice to goods received notes or other evidence of completion of work, account numbers, and so forth. MOH has an internal audit department, managed by its director and including a number of internal auditors. Internal audit work complies with Moldovan legislation and as the MOH internal audit department continues to develop, increased reliance will be placed on its activities to also cover internal audit aspects for the new project. 95   17. Reporting and Monitoring. Semi-annually unaudited Interim Financial Reports (IFRs) would be used for monitoring and supervision of the technical assistance component of the project. The IFR reports would include the sources and uses of funds, designated account statement and other reports, based on the agreed format to be attached to the minutes of negotiations. MOH’s IFR compliance on the existing and previous projects has been satisfactory. 18. External Audit. The Court of Accounts would audit yearly the Project financial statements, including the technical assistance component. Currently, MOH is in compliance with the audit covenants of all existing Bank-financed projects. The audit reports on the existing projects have been received timely, with clean audit opinions and no internal control issues mentioned in the management letter. The format of the terms of reference for the audit would be agreed and attached to the minutes of negotiations. The project audit’s scope will include the project’s books and records as maintained by the MOH, including the statements of sources and uses of funds and the designated account statement. The audited project financial statements together with the auditor’s opinion thereon will be provided to the Bank initially within twelve months after closure of the reporting period, which ends on December 31. While the Supreme Audit Institution (Court of Accounts) is further developing, it is envisaged that before the end of the project, the audited project financial statements would be available within six months after the year end. The annual audit reports would be disclosed in a manner acceptable to the WB in accordance with its access to information policy. 19. Disbursements: Credit proceeds would be disbursed against project eligible expenditures related to the technical assistance component. The project would use advances to a designated account to be opened in a financial institution acceptable to the WB. Replenishments of the designated account would be requested on a regular basis, using the transactional method of disbursements. Withdrawal applications would provide details on eligible expenditures incurred, summary sheets, statements of expenditures, and any other relevant documents required. Category for the Project Amount of the Project Percentage of Expenditures to Financing Allocated be financed (inclusive of Taxes) Goods, non-consulting services, US$2,100,000 100% consultants’ services (including audits), Training and Operating Costs TOTAL AMOUNT US$2,100,000 D. Procurement 20. Procurement for activities to be financed under the TA component will be carried out by the PMU in accordance with the Guidelines for Procurement of Goods, Works and Non- Consulting Services under IBRD Loans and IDA Credits and Grants by the WB Borrowers, edition of January 2011, and Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by WB Borrowers, edition of January 2011. Bank Standard Documents will be used. 21. It is recommended that the procurement thresholds are set in accordance with the latest ECA regional thresholds (as provided below). The percentage of contract that will be reviewed is 10 percent of the total number of contracts signed, which were not subject to prior review. 96   Procurement Method Threshold Prior Review 1 ICB (Goods and Non-Consulting Services) ≥ US$1 million All 2 ICB (Works) ≥ US$5 million All 3 NCB (Goods and Non-Consulting Services) ˂ US$1 million First two 4 NCB (Works) ˂ US$5 million First two 5 Shopping (Goods, Non-Consulting services) ≤ US$100,000 First contract 6 Shopping (works) ≤ US$200,000 First contract 7 Direct Contracting* ˂ US$60,000 All * All contracts subject to justification Selection Method Threshold Prior Review 1 Competitive Methods (Firms) ≤ US$500,000 All 2 Single/Sole Source * ˂ US$5,000 All 3 Individual Consultants** ≤ US$200,000 All 4 Terms of References N/A All * All contracts subject to justification. ** With the exception of categories of individual consultants specified in para 5.4 of the Consultant’s Guidelines 22. Procurement plan. Both MOH and CNAM will develop a Procurement Plan (PP) for the first 18 months of technical assistance required, which will provide the basis for procurement/selection methods. 23. Frequency of Procurement Supervision. In addition to the prior review supervision to be carried out from Bank offices, a yearly external procurement audit, conducted by the TCE and acceptable to the Bank, will be required to assess and verify compliance with the Bank’s guidelines and the Legal Agreement. E. Environment and Social58 24. The TA and capacity building component under IPF procedures will be for surveys, studies and development of information and support systems. These activities have been screened as likely to have minimal or no adverse environmental impacts on environmentally sensitive areas or human populations (OP 4.01). Therefore, this component has been rated as environmental category C.                                                              58 For more detail refer to the technical assistance component ISDS. 97   Annex 9: Program Action Plan   Action Description DLI Covenant Due Date Responsible Completion Measurement Party 1. Provision of sufficient December 31 MOF Annual Program budget Program annual budget (annually) variance 2. Annual tobacco excise One year after MOF Share of tobacco excise duty duty increase as per the effectiveness in retail tobacco price roadmap in the tobacco and annually control legislation thereafter 3. Filling the vacancies in March 31, MOH The MOH Policy Analysis the MOH Policy Analysis 2015 and Monitoring Unit is fully and Monitoring Unit staffed 4. Completion of May 15, 2015 MOH Completion report of stakeholder analysis stakeholder analysis related to key health reforms supported by the Program 5. Annual public December 15 MOH Annual evaluation report of awareness and (annually, 2015 public awareness and communication campaigns onward) communication campaign on health reforms on the basis of the completed stakeholder analysis under Action 4 6. Adoption of sanction April 15, 2015 MOH and Government decision for mechanisms against CNAM adoption of mechanisms hospitals with confirmed informal payment cases 7. Implementation of April 15 CNAM Annual DRG audit report annual audit of Diagnosis (annually, for Related Group (DRG) audit of payment for hospitals previous year) 8. Training conducted by March 31, MOH Share of hospitals under hospital management (annually, 2015 common management of consultants for all onward) which hospital managers managers of hospitals received training under common management structures on reengineered business processes and workflows 9. Development of: (i) a June 1, 2015 MOH and MOE Completion of study and feasibility study on the action plan options, costs and technical issues of the creating regional networks for Health Care Waste Management (HCWM); and (ii) a four- year HCWM action plan 10. Annual monitoring of March 15 MOH and MOE Annual implementation the implementation of (annually, 2016 report HCWM action plan onward) 98   Annex 10: Implementation Support Plan 1. This Implementation Support Plan is in line with the Program-for-Results operational guidelines. The Borrower is in charge of the implementation of all Program activities in support of achievement of the agreed DLIs, as well as of elimination of inefficiencies/bottlenecks identified in the social, environment and fiduciary assessments. The Bank will tailor implementation support to ensure the following:  Provide technical advice to the implementation of Program Action Plan, the achievement of DLIs and elimination of other social, fiduciary or governance- related bottlenecks relevant to the Program;  Review program implementation progress, verify achievement of DLIs, review program progress reports, audit reports and such other relevant information;  Monitor health system performance with particular emphasis on the program result areas and monitoring compliance with legal agreements, keep records of risks and propose remedy actions to improve program performance, if and as needed;  Provide support in resolving any operational issues pertaining to the project, including review of grievance redress mechanisms 2. In particular, the Task Team will be working with the Government and other key stakeholders in the following main areas:  Monitoring and evaluation: the Team will provide technical support for building capacity at MOH and CNAM for monitoring Program results (DLIs) and verifying the achievement of DLIs in line with the agreed protocols. For the PDO-level indicators monitored through the STEPS survey, the Task Team will ensure that adequate internal quality control mechanisms are in place for accurate and trustworthy results reporting. The Team will co-operate with WHO to ensure standard methodology for surveys is applied, or to seek any ad hoc capacity strengthening support, if needed. For the DLIs monitored through a survey conducted at healthcare facilities, an independent entity will be contracted to perform a random audit in order to validate the submitted results. In case the DLIs are achieved partially, the Bank’s team will review the submitted documentation, request any other supporting information to verify the achievement of the reported DLIs (from MOH, CNAM or other counterparts) and will then communicate in written to MOH/CNAM and MOF on the achievement of particular DLI informing about the level of financial proceeds for disbursement or partial disbursement of each particular DLI.  Environment and social: in relation to environmental issues, the team will focus on the medical (and pharmaceutical) waste management capacity building (regulatory and institutional), although the Program does not support any specific activity that could have a direct link to it. Regarding social, the task team will focus on the following main areas: (i) change management and mitigation of resistance from health system players (ii) social inclusion and equity in access to healthcare services (iii) Social Accountability, Transparency and Responsiveness in the healthcare. 99   Given that some DLIs can have impact on employees and the way the healthcare services are rendered, the team will also pay special attention to the effect of specific DLIs implementation on the medical (and non-medical) staff within the healthcare system.  Fraud and corruption: the Task team will monitor implementation of fraud and corruption mitigation measures and will stay abreast of any developments that could potentially create conflict of interest situations thus providing guidance in resolving any emerging issues or early prevention of fraud and corruption practices.  Procurement: the project is of hybrid type which entails two-fold task for the procurement. First, the procurement filter is being applied at the assessment stage to identify country system risks related to implementation of project-related activities by the Borrower in a transparent and accountable manner; secondly, the SIL TA component will apply WB procurement rules and procedures to allow procurement of project-specific services that are key for achievement of project results and that otherwise would be difficult to contract out. In particular, the Bank team will ensure that terms of references are non-restrictive, well-defined and are in line with the existing needs. The team will use the project to transfer knowledge to MOH and CNAM on the procurement and contract management and will help to install adequate contract administration and monitoring system, evidence of contract performance in terms of time, quality and cost, enforcement of contractual remedies in cases of contract’s non-compliance.  Financial management: the Bank’s team will focus its support around the following key aspects: (i) ensuring appropriate flow of funds to MOH and CNAM for implementation of project-related activities; (ii) monitor the regular Program financial reports and audits; and (iii) continue to work with the CoA and Parliament for improving the overall impact of the audits in the health sector.  Inter-institutional cooperation and coordination: The Bank team will, wherever necessary, ensure that there is a good inter-institutional cooperation between MOH, CNAM and all the other relevant project counterparts (Mayor’s health department, Medical University, LPAs, etc). In order to mitigate the risk of resistance to reforms and raise awareness about some specific healthcare challenges, a well-targeted proactive information campaign will be held in the first six months of effectiveness to inform medical personnel and patients with the reforms in the sector as part of the Program Action Plan. 3. Furthermore, the Task Team will continue to stay engaged in the policy dialogue on health reform agenda with the Ministry of Health and CNAM, as well as with other development partners, particularly WHO. The major project risks concern the capacity of the Ministry of Health to absorb the assistance quickly and efficiently and the willingness of the hospitals staff to accept new working practices based on performance. However, by the time when the proposed PforR operation becomes effective, the WB will complete its ongoing SIL “Health Services and Social Assistance project” (HSSAP). Thus, the small team of consultants currently 100   working under HSSAP can continue providing their assistance thus ensuring continuity to the implementation support and knowledge transfer. 4. Key members of the Bank’s implementation support team (technical, fiduciary, M&E and social systems), are either based in the Country Office or in the Region (mostly Kiev, Ukraine). This will help to ensure timely, efficient, and effective implementation support to the MOH and CNAM. Table 1: Main focus of Implementation Support Time Focus Skills Needed Resource Estimate Partner Role First twelve Capacity strengthening Technical, M&E, Two full missions, WHO (country months in implementation of fiduciary first one to launch office) and other MOH and CNAM for the project and partners will also be DLIs monitoring and second one to invited to join the verification of results supervise and missions’ key provide meetings implementation support 12-48 months Timely implementation Technical, social, Regular mission WHO and other of program action plan M&E, fiduciary every six months. partners will be and elimination of invited to participate bottlenecks for in policy dialogue achievement of Program results Mid-Term Revisiting the Program Technical, Beginning of 2017 WHO and other Review design and making fiduciary, social and partners will be necessary adjustments environmental, invited to attend key based on the M&E meetings implementation progress and its likelihood to achieve the PDO within the project period Table 2: Task Team Skills Mix Requirements for Implementation Support Number of Staff Weeks Number of Trips Skills Needed Comments (per year) (per year) Task Team Leader 10 2-3 HQ based Technical specialists 20 2-3 International M&E consultant 6 1 Country-based Financial Management 4 0 Country-based Procurement 4 0 Country-based Social issues 2 2 Region-based Environmental safeguards 2 1 HQ-based Table 3: Role of Partners in Program implementation Name Institution/Country Role World Health Policy dialogue and capacity building Organization 101   Annex 11: Organizational Diagram of the Health System in the Republic of Moldova Source: Republic of Moldova: Health system overview. European Observatory on Health Systems and Policies, 2012.   102   IBRD 33448R 27°E 28°E 29°E 30°E Dnes tr To Vinnytsya UKRA INE To Chernivtsi Moghiliov- To Vinnytsya Ocnita Podolski Briceni MOLDOVA Donduseni B To Chernivtsi Edinet Soroca e Drochia s 48°N Camenca 48°N Rîscani s Floresti Nist ru a Costesti Soldanesti ˘ r Glodeni Balti Rîbnita Rezina Balatina a Pr Sîngerei ut To Voznesens'k r Falesti ˘ Telenesti 0 10 20 30 40 Kilometers a Chiperceni b Orhei 0 10 20 30 Miles RO MAN I A Sculeni Dubasari ˘ TRANSNISTRIA i To Pascani Mt. Balanesti Calarasi ˘˘ Criuleni (430 m) a Ungheni Straseni ˘ Grigoriopol Nisporeni ˘ Stauceni To Zhmerynka 47°N ˘ CHISINAU 47°N ˘ Lapusna Ialoveni Anenii Noi Tiraspol Hîncesti Bender Leuseni (Tighina) Slobozia ˘ Cainari Causeni ˘ To Odesa Plain Cimislia c ˘N Stefan-Voda ist To Birlad ea ru g Leova Bu This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Comrat Basarabeasca Group, any judgment on the legal status of any territory, or any To Birlad endorsement or acceptance of such boundaries. Cantemir 27°E ˘ ˘ GAGAUZIA Ceadîr- To Artsyz UKRA INE Lunga MO LDO VA 46°N 46°N Prut SELECTED CITIES AND TOWNS Cahul Taraclia AUTONOMOUS TERRITORIAL UNIT CAPITALS ˘ ˘ GAGAUZIA RAIONS OR MUNICIPALITIES CAPITALS* ˘ Vulcanesti NATIONAL CAPITAL RIVERS MAIN ROADS RAILROADS To Imayil B l ack AUTONOMOUS TERRITORIAL UNIT BOUNDARIES To Bucharest Sea and Constanta RAIONS OR MUNICIPALITIES BOUNDARIES INTERNATIONAL BOUNDARIES *Names of the raions or municipalities are identical to their capitals. 28°E 29°E 30°E MAY 2007