Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2518 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF US$60 MILLION TO THE REPUBLIC OF NICARAGUA FOR A INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES PROJECT February 22, 2018 Health, Nutrition, and Population Global Practice Latin America and the Caribbean 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 February 8, 2018 Currency Unit = Nicaraguan Córdobas Oro US$1 = NIO 31.10 FISCAL YEAR January 1 - December 31 Regional Vice President: Jorge Familiar Country Director: Y. Seynabou Sakho Senior Global Practice Director: Timothy Grant Evans Practice Manager: Daniel Dulitzky Task Team Leader(s): Amparo Elena Gordillo-Tobar ABBREVIATIONS AND ACRONYMS CEMED Medical Equipment Maintenance Center (Centro de Mantenimiento de Equipos Médicos) CNDR Center for Diagnosis and Reference (Centro Nacional de Diagnóstico y Referencia) CPF Country Partnership Framework DAs Designated Accounts DFIL Disbursement and Financial Information Letter DGAF General Financial and Administrative Division (Dirección General Administrativa y Financiera) DGPD General Division of Planning and Development (Division General de Planificación y Desarrollo) DGSS General Directorate of Health Services (Dirección General de Servicios de Salud) DGVSP General Directorate of Epidemiological Surveillance (Dirección General de Vigilancia de la Salud Pública) ENSDIA Adolescent Sexual and Reproductive Health Strategy (Estrategia Nacional de Salud y Desarrollo Integral para Adolescentes) ESMF Environmental and Social Management Framework GBV Gender-based Violence GDP Gross Domestic Product GHG Green House Gas HWM Hospital Waste Management IDA International Development Association IFRs Interim Financial Reports IPP Indigenous Peoples Plan IPPF Indigenous Peoples Planning Framework IRR Internal Rate of Return LAC Latin American and the Caribbean MDGs Millennium Development Goals MIFAN Ministry of Family (Ministerio de la Familia) MINJUVE Ministry of Youth (Ministerio de la Juventud) MINED Ministry of Education (Ministerio de Educación) MOH Ministry of Health (Ministerio de Salud) MOSAFC Family and Community Health Model (Modelo de Salud Familiar y Comunitario) M&E Monitoring and evaluation NCDs Non-Communicable Diseases NPV Net Present Value OOPS Out-of-pocket Spending PAHO Pan-American Health Organization PDO Project Development Objective PIU Project Implementation Unit PPSD Project Procurement Strategy for Development PTC Project Technical Committee PVC Project Verification Commission SCD Systematic Country Diagnostic SDGs Sustainable Development Goals SIGAF Integrated Financial Management System (Sistema Integrado de Manejo Financiero) SILAIS Local Systems of Integral Health Care (Sistema Local de Atención Integral de Salud) SOE Statement of Expenditure SORT Systematic Operations Risk Tool WHO World Health Organization The World Bank NI - Integrated Public Provision of Health Care Services (P164452) BASIC INFORMATION Is this a regionally tagged project? Country(ies) Financing Instrument No Investment Project Financing [ ] Situations of Urgent Need of Assistance or Capacity Constraints [ ] Financial Intermediaries [ ] Series of Projects OPS_BASICINFO_TABLE_3 Approval Date Closing Date Environmental Assessment Category 15-Mar-2018 30-Aug-2023 B - Partial Assessment Bank/IFC Collaboration No Proposed Development Objective(s) The objective of the Project is to extend the coverage and improve the quality of care for the most prevalent health conditions with an emphasis on vulnerable groups. Components Component Name Cost (US$, millions) Results based financing for quality improvement in prevention and provision of health 14.00 care services to the poorest 66 municipalities Support to the implementation of National Health Strategies for the provision of 44.50 quality health services under the MOSAFC Provision of contingency financing in the case of a Public Health Alert, or a Public 0.00 Health Emergency Project management 1.50 Organizations Borrower : Republic of Nicaragua Page 1 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Implementing Agency : Ministry of Health - Nicaragua PROJECT FINANCING DATA (US$, Millions) FIN_TABLE_DAT [ ] [ ] IBRD [ ✔] IDA Credit [ ] IDA Grant [ ] Trust [ ] A Counterpart Funds Parallel Funding Financing FIN_COST_OLD Total Project Cost: Total Financing: Financing Gap: 60.00 60.00 0.00 Of Which Bank Financing (IBRD/IDA): 60.00 Financing (in US$, millions) FIN_SUMM_OLD Financing Source Amount IDA-61990 60.00 Total 60.00 Expected Disbursements (in US$, millions) Fiscal Year 2018 2019 2020 2021 2022 2023 2024 Annual 0.55 4.46 7.35 13.21 15.53 15.79 3.10 Cumulative 0.55 5.01 12.36 25.57 41.10 56.90 60.00 INSTITUTIONAL DATA Practice Area (Lead) Health, Nutrition & Population Page 2 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Contributing Practice Areas Gender Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  Moderate 2. Macroeconomic  Moderate 3. Sector Strategies and Policies  Low 4. Technical Design of Project or Program  Low 5. Institutional Capacity for Implementation and Sustainability  Low 6. Fiduciary  Moderate 7. Environment and Social  Moderate 8. Stakeholders  Moderate 9. Other 10. Overall  Moderate Page 3 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✔ ] No Does the project require any waivers of Bank policies? [ ] Yes [✔ ] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description Schedule 2. Section I. Implementation Arrangements A. Institutional Arrangements 3. By no later than six (6) months after the Effective Date, the Recipient shall amend the PAHO MoU, and thereafter carry out Part 2(b)(ii) of the Project in accordance with the PAHO MoU. Sections and Description Schedule 2. Section I. Implementation Arrangements A. Institutional Arrangements 4. By no later than six (6) months after the Effective Date, the Recipient shall, through MOH appoint, and thereafter maintain, throughout Project implementation, a Project Verification Commission, with composition, qualifications, experience, and terms of reference satisfactory to the Association, for purposes of the verification and third-party, independent certification of the activities being carried out under Parts 1 of the Project, as further detailed in the Operational Manual. The Project Verification Commission shall include representatives of the Page 4 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Technical Council, the Citizen Council and an External Independent Certification Institution. Sections and Description Schedule 2. Section I. Implementation Arrangements D. CEMED Agreement 1. For purposes of implementing Part 2(f)(ii) of the Project, the Recipient, through MOH, shall, not later than six (6) months after the Effective Date, amend the CEMED Agreement and thereafter make part of the proceeds of the Financing available to the CEMED under such agreement, under terms and conditions satisfactory to the Association. Sections and Description Schedule 2. Section III. Withdrawal of the Proceeds of the Financing B.1 No withdrawal shall be made: (a) for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed twelve million Dollars US$12,000,000 may be made for payments made prior to this date but on or after December 7, 2017 but in no case earlier than twelve (12) months from the date of this Agreement for Eligible Expenditures under Category (3). Conditions Type Description Effectiveness Article IV - Effectiveness; Termination 4.01. The Additional Condition of Effectiveness consists of namely that the Operational Manual has been adopted by the Recipient, through MOH, in a manner satisfactory to the Association, in accordance with Section I.E of Schedule 2 to the Financing Agreement. Type Description Disbursement Withdrawal Conditions. Section B.1.(b) under Category (4) unless the Recipient has provided a letter to the Association including: (i) evidence, satisfactory to the Association, that a Public Health Alert, or a Public Health Emergency has occurred; (ii) legal evidence, satisfactory to the Association, of the declaration of a Public Health Alert, or a Public Health Emergency; (iii) designation of, terms of reference for, and resources to be allocated to, the entity to be responsible for coordinating and implementing Part 3 of the Project (“Coordinating Authority”); (iv) a list of the goods, works, consulting services and Operating Costs proposed to be financed under Category (4) of the Project to address the needs of the Public Health Alert, or a Public Health Emergency (including a procurement plan) acceptable to the Association; (v) the estimated flow of funds needs; and (vi) the assessments and plans that the Association may require under Section I.G.3 of Schedule 2 to this Agreement. Page 5 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) PROJECT TEAM Bank Staff Name Role Specialization Unit Amparo Elena Gordillo- Team Leader(ADM Task Team Leader GHN04 Tobar Responsible) Procurement Specialist(ADM Carlos Lago Bouza Procurement Specialist GGOPL Responsible) Financial Management Financial Management Enrique Antonio Roman GGOLF Specialist Specialist Andre C. Medici Peer Reviewer Senior Economist GHN19 Diana Jimena Arango Team Member Senior Gender Specialist GTGDR Enrique O. Alasino Team Member Senior Education Specialist GED04 Massetti Escarlata Baza Nunez Counsel Legal Counsel LEGLE Fernando Lavadenz Peer Reviewer Senior Health Specialist GHN13 Lead Social Development John R. Butler Social Safeguards Specialist GSU04 Specialist Marco Antonio Zambrano Environmental Safeguards Senior Environmental OPSES Chavez Specialist Specialist Maria E. Colchao Team Member Operations Analyst GHN04 Maria Virginia Hormazabal Team Member Finance Officer WFACS Miriam Matilde Senior Social Protection Team Member GSP04 Montenegro Lazo Specialist Viviana A. Gonzalez Team Member Program Assistant GHN04 Extended Team Name Title Organization Location Evelyn Rodriguez Knowledge Management Infrastructure and Medical Santiago de Chile, Marcos Miranda Equipment Consultant CHILE, Ximena Traa-Valarezo Social Development Specialist Washington DC, Page 6 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) REPUBLIC OF NICARAGUA NI - INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES TABLE OF CONTENTS I. STRATEGIC CONTEXT ...................................................................................................... 9 A. Country Context ............................................................................................................... 9 B. Sectoral and Institutional Context ................................................................................... 9 C. Higher-level Objectives to which the Project Contributes............................................. 12 II. PROJECT DEVELOPMENT OBJECTIVES ............................................................................ 13 A. Project Development Objective (PDO)........................................................................... 13 B. Project Beneficiaries....................................................................................................... 13 C. PDO-Level Results Indicators ......................................................................................... 13 III. PROJECT DESCRIPTION.................................................................................................. 14 A. Project Components....................................................................................................... 14 B. Project Cost and Financing ............................................................................................. 19 C. Lessons Learned and Reflected in the Project Design ................................................... 19 IV. IMPLEMENTATION........................................................................................................ 20 A. Institutional and Implementation Arrangements .......................................................... 20 B. Results Monitoring and Evaluation ................................................................................ 22 C. Sustainability .................................................................................................................. 22 D. Role of Partners .............................................................................................................. 23 V. KEY RISKS ..................................................................................................................... 23 A. Overall Risk Rating and Explanation of Key Risks ........................................................... 23 VI. APPRAISAL SUMMARY .................................................................................................. 24 A. Economic and Financial Analysis .................................................................................... 24 B. Technical......................................................................................................................... 24 C. Financial Management ................................................................................................... 24 D. Procurement .................................................................................................................. 25 E. Social (including Safeguards).......................................................................................... 25 F. Environment (including Safeguards) .............................................................................. 26 G. World Bank Grievance Redress ...................................................................................... 26 Page 7 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) ANNEX 1: DETAILED PROJECT DESCRIPTION ....................................................................................... 36 ANNEX 2: IMPLEMENTATION ARRANGEMENTS ................................................................................. 48 ANNEX 3: IMPLEMENTATION SUPPORT PLAN .................................................................................... 60 ANNEX 4: ECONOMIC AND FINANCIAL ANALYSIS ............................................................................... 63 Page 8 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) I. STRATEGIC CONTEXT . A. Country Context 1. Nicaragua remains one of the poorest countries in Latin America and the Caribbean (LAC), despite the notable poverty and inequality reduction of the past decade. Nicaragua’s real gross domestic product (GDP) grew between 1994 and 2016 by an average of 4 percent, with an average of 5.3 percent being recorded from 2010 to 2015 (compared with an average of 2.9 percent in the LAC region as a whole). Extreme poverty decreased from about 17 percent in 2005 to about 8 percent in 2014. Similarly, the overall official poverty rate decreased from about 48 percent in 2005 to about 30 percent in 2014.1 Two- thirds of this poverty reduction was due to increased labor income. Despite the robust growth that the country has achieved, it will take it 79 years to catch up with the average per capita income in LAC if current average growth rates continue. While high by international standards, inequality in Nicaragua is lower than in other LAC countries. The Gini coefficient decreased from 0.49 to 0.44 between 2005 and 2009, before increasing slightly to 0.47 in 2014. Official data suggest that inequality has declined again since 2014. This data makes Nicaragua’s economy the second most egalitarian in the region, after Uruguay. 2. The country’s economic growth has sustained increased public spending on the social sectors in general and - in particular - the health sector, which accounts for a little more than half of all public social spending.2 Public social spending in Nicaragua increased from an annual rate of 10 percent of GDP in 2007 to 13.5 percent in 2014, approaching the average Central American level of 13.9 percent; in per capita terms it is still among the lowest in the LAC region (US$145 dollars). From 2007 to 2014, total public health expenditure in Nicaragua increased from 3.8 to 5.1 percent of GDP (a 34 percent increase), placing the country just behind Costa Rica in Central America. Public health expenditure accounted for 52 percent of all public social expenditure in 2013 (up from 38 percent in 2007), making Nicaragua the country that allocates the highest share of its total social expenditure to the health sector in Central America. However, it lags its neighbors in terms of the quality of its essential services, especially water, electricity, and sanitation. Poor access to these services results in greater health problems, especially among children under the age of five. Fiscal policy in general, and social assistance programs, have played a modest role in reducing income inequality. In addition, the country’s vulnerability to climate shocks and natural disasters puts at risk the gains that have been made in terms of poverty reduction and more widely shared prosperity. B. Sectoral and Institutional Context 3. Nicaragua has reduced maternal mortality but, despite these efforts, it is still high in some areas of the country.3 The maternal mortality rate declined from 63 to 38 deaths per 100,000 live births 1 Source: World Bank estimates based on 2005 and 2014 Living Standards Measurement Studies Surveys ( Encuesta Nacional de Hogares sobre Medición de Nivel de Vida). 2 World Bank Central America Social Expenditure and Institutional Review, August 30, 2016. 3 Data used in this paragraph comes from the Statistics Unit at the Ministry of Health. This national data allows to see disaggregated data and therefore the inequalities among municipalities. These data differ from the International data (maternal Page 9 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) between 2009 and 2014. Government efforts made in pursuit of the Millennium Development Goals (MDGs) and subsequently the Sustainable Development Goals (SDGs) included increasing the number of deliveries in medical facilities, providing women and their babies with immediate post-delivery checkups, and implementing a multi-sectoral strategy to provide maternal houses in rural areas as places for women to go to have safe and assisted deliveries and to receive postnatal care. Despite this progress, Nicaragua has the fourth highest maternal mortality in LAC and the highest in Central America.4 Challenges persist across different Local Systems of Integral Health Care (Sistema Local de Atención Integral de Salud, SILAIS), particularly related to quality of care and inequity. For instance, Boaco, Jinotega, and the Caribbean Coast have significantly higher maternal mortality rates than the national average (78.5, 55.9, and 160 maternal deaths per 100,000 live births respectively). 4. There are striking differences in the reduction of under-5 mortality rates across Nicaragua. The national average under-5 mortality rate declined from 42 to 17 per 1,000 live births between 1998 and 2011-2012 due to improvements in living conditions, the quality of water, access to health care, and the provision of preventive measures such as vaccinations. However, rates in rural areas remain more than 10 percentage points higher than those in urban areas and are highest in the neonatal period. These disparities, as well as the high rate of neonatal mortality, are due in part to the persistent high share of babies born to adolescent mothers in Nicaragua, which ranged from 19 to 37 percent across municipalities between 2005 and 2016.5 Many young girls either drop out of school and become pregnant, or drop out of school because they have become pregnant, both of which affect their education attainment and reduces their earning potential. In addition, their daughters are more likely to become teenage mothers themselves, thus perpetuating the vicious cycle of poverty.6 5. Nicaragua now faces a triple burden of disease that includes non-communicable diseases (72.3 percent), maternal conditions and communicable diseases (14.7 percent), and injuries (13 percent). Communicable diseases include climate-sensitive diseases such as malaria that are transmitted by mosquitoes (the disease vector), which thrive in warm temperatures. Declines in deaths from infectious diseases and maternal conditions have led to an increase in life expectancy (from 70.8 years in 2000-2005 to 74.5 years in 2010-2015), but morbidity and mortality due to chronic conditions and external causes are on the rise (see Figure 1 below). Modern lifestyles,7 disorganized urbanization, and pollution contribute to the increased number of deaths from chronic conditions (such as vascular diseases, and cancer), and external causes (such as self-inflicted injuries, violence or accidents). In addition, the incidence of climate-sensitive diseases, such as malaria, dengue, and yellow fever that have always been present in Nicaragua, have increased in recent years due in part to globalization. Viruses once circumscribed to distant countries have been spread globally and these trends will only continue. The Chikungunya and Zika viruses have become endemic in the country, presenting the health system with additional challenges due to the complexity of the secondary effects of these diseases. mortality declined from 170 to 100 per 100,000 live births, and the under-5 mortality rate declined from 67 to 24 per 1,000 live births between 1990 and 2015.WHO: http://www.who.int/countries/nic/en/) 4 World Health Organization (2016). http://www.who.int/countries/nic/en/ 5 http://vision2017.csis.org/addressing-adolescent-pregnancy-and-maternal-mortality-in-nicaragua/ 6 The national issue of adolescent pregnancy prompted the MOH to support the preparation and implementation of the National Strategy for the Integral Health and Development of Adolescents 2012-2015. 7 Modern lifestyles include smoking, lack of exercise, consumption of highly processed foods rich in fats and sugar, etc. Page 10 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Figure 1: Burden of Disease in Nicaragua, 2014 14.7% 72.3% 72.3% 13.0% Injuries Communicable, maternal, neonatal, and nutritional diseases Non-communicable diseases Source: Burden of Disease. Institute for Health Metrics and Evaluation 2016, http://www.healthdata.org/nicaragua 6. The Government’s flagship health program is the Family and Community Health Model (Modelo de Salud Familiar y Comunitario, MOSAFC), which was established in 2006. The program provides free access to health care services and primarily serves the poorest and most vulnerable segments of the population, protecting them from falling further into poverty due to catastrophic health expenditures. The MOSAFC has been a pillar of the Government’s reform program aimed at widening access to care to rural and remote areas. The model is based on the participation of the community as an agent of change, and on respecting natural medicine as well as western knowledge and advanced medicine. The model has contributed to an 11 percent decrease in out-of-pocket spending (OOPS) as a share of total health expenditure from 42.01 percent in 2007 to 37.5 percent in 2014.8 Nevertheless, OOPS remain high, and the growing incidence of chronic diseases will increase the demand for pharmaceuticals, which already account for the majority of OOPS, and this is likely to put in peril recent progress in alleviating the financial burden of health expenditures on households. In addition, challenges remain in both the coverage and quality of care. There is a need to ensure that services reach the Caribbean Coast and rural populations that are still underserved. On the question of quality, there is a need to improve the safety, effectiveness, timeliness, efficiency, and equity of health care provision and to ensure that services take a patient- centered approach. MOSAFC will need to be further strengthened if Nicaragua is to achieve the health- related SDGs. Also, its focus will need to extend beyond maternal and child health care to include chronic conditions and communicable diseases to ensure that Nicaragua has a healthy working population and to protect the human capital of the generations to come. 7. The World Bank has supported the Government in its efforts to implement MOSAFC since 2007. World Bank-financed projects have supported the expansion of coverage, the modernization of health care provision, and, lately, the systematic introduction of results-based financing in the municipal health networks. Specifically, within the ongoing Strengthening the Health Care System Project (P152136), the World Bank has supported: (a) institutional strengthening to transition from historical to results-based budgeting and from external technical audits to national certification procedures; (b) the development and introduction of health care plans in 66 municipalities that later were adopted nationwide; (c) 8 PAHO/WHO Core Indicators. http://www.paho.org/data/index.php/en/indicators/visualization.html Page 11 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) investments in hospital waste management (HWM) that also fostered a dialogue about non-hazardous waste management and the disposal of hazardous waste; (d) more equitable health access among different ethnic groups; (e) the implementation of the Adolescent Sexual and Reproductive Health Strategy (Estrategia Nacional de Salud y Desarrollo Integral para Adolescentes, ENSDIA) 2012-2017; and (f) efforts to increase Nicaragua’s epidemiological preparedness and ability to respond to health emergencies. 8. The Ministry of Health (Ministerio de Salud, MOH) has produced positive results in terms of increased coverage of care, wider provision of services, and improvements in some health outcomes, but some challenges remain. The proposed Integrated Public Provision of Health Care Services Project will support the MOH in implementing MOSAFC in the following ways: (a) achieving wider coverage of and inclusion in the provision of health care; (b) establishing a sustainable mechanism for monitoring the quality of care; and (c) conducting a long-term transformation of how services are provided to increase the efficient delivery of care. These efforts have been developed under the quality of care framework, which includes structural and process elements of quality, and cultural sensitivity.9 The Project will support a critical government investment in the country’s human capital by: (a) preserving and restoring the health of the working age population; and (b) protecting the health of generations to come, emphasizing the first 1,000 days of life and the preservation and restoration of health during childhood to ensure that the young can develop to their full potential. The Project will invest in: (a) a national system for monitoring quality of the implementation of municipal health care plans, which will cover (i) the delivery of prenatal care, delivery, postnatal care and well-visits for children during the first year of life,10 (ii) the promotion of healthy lifestyles, (iii) the identification of risk factors and early onset of diseases, and (iv) the treatment of illnesses; (b) the quality of water accessible to communities; (c) the extension of coverage to the Siuna municipality in the Atlantic Coast, to rural populations, and to vulnerable ethnic groups; (d) health-related aspects of multisector interventions to prevent adolescent pregnancy; and (e) the identification of risk factors for non-communicable diseases (NCDs) to inform public policies for the prevention of these diseases. C. Higher-level Objectives to which the Project Contributes 9. Considering that Nicaragua is one of the poorest countries in the LAC Region, the World Bank’s support to the country is relevant and fully aligned with the Bank’s Twin Goals of ending extreme poverty and boosting shared prosperity. It is also aligned with the efforts to achieve SDGs 3.1, 3.2, 3.3, and 3.4 (on maternal mortality, child mortality, communicable diseases, and NCDs) and SDG 5 on gender equality. The Project is also aligned with the goals of the Bank’s Health, Nutrition, and Population Global Practice of achieving universal health service coverage and protecting households from catastrophic health care costs, focusing particularly on women, children, indigenous peoples, the elderly, and vulnerable families. MOSAFC has shown promising results in terms of improving health indicators and reducing the financial burden of health care, but more support is needed to integrate services to address communicable diseases and NCDs, and hence increase their efficiency and improve their quality. Finally, the Project is aligned with the proposed Nicaragua Country Partnership Framework (CPF) for the Period FY18-22 to be 9 Institute of Medicine of the National Academy of Sciences (2001). Crossing the Quality Chasm: A New Health System for the 21st Century. 10 The Project supports the National Immunization Program. Although current immunization rates in Nicaragua are higher than 90 percent, moving from there to full coverage (achieving the “last mile”) is a challenge. Page 12 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) presented to the World Bank’s Board of Executive Directors on March 15, 2018 together with this Project. In particular, the Project is designed in accordance with Pillar 1: Investing in Human Capital Particularly for Disadvantaged Groups (which will take a lifecycle approach to human capital investment starting with health and education in early childhood) and Pillar 3: Improving Institutions for Resilience and Sustainability. The Project will support the achievement of Pillar 1’s Objective 1 (Improved learning conditions and employability) and Objective 2 (Improved health and early childhood development) by improving the quality of preventive and curative health care services with a particular focus on women, children, and indigenous population. II. PROJECT DEVELOPMENT OBJECTIVES A. Project Development Objective (PDO) 10. The objective of the Project is to extend the coverage and improve the quality of care for the most prevalent health conditions with an emphasis on vulnerable groups. B. Project Beneficiaries 11. Component 1 will be implemented in the poorest 66 municipalities (1.3 million people), and Component 2 will be implemented nationwide, covering all 19 SILAIS, including the Alto Wangki Bocay.11 For the purpose of the Project, vulnerable groups are defined as indigenous peoples, children, adolescents who are pregnant or at risk of becoming pregnant, and those at risk of acquiring NCDs in the poorest municipalities. 12. The Project will improve the quality of health care services nationwide with emphasis on the following population throughout their lifecycles: (a) women at reproductive age; (b) children under five years of age; (c) adults over 50 years of age with identified risk factors; (d) adolescents (both girls and boys); and (e) indigenous population. C. PDO-Level Results Indicators  Percentage of health centers certified for hypertension screening (as an indicator of quality).  Percentage of adolescents (under 20 years of age) with institutional birth delivery (as an indicator of coverage). 13. Both PDO indicators will be measured in three groups of the 66 poorest municipalities defined by their performance level. Those in Group 1 (G1) need to increase coverage and improve the quality of their care, those in Group 2 (G2) need to improve the quality of their care, and those in Group 3 (G3) need to demonstrate the sustainability of the improvements that they have already made (see Table A1.1 in Annex 1). 11 Alto Wangki Bocay is considered a territory and not SILAIS. Page 13 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Box 1. Quality of Care: Definition and Frame of Reference for the Project As defined by the U.S. Institute of Medicine study committee, quality of care is the degree to which health services for individuals and populations increase the likelihood of achieving desired health outcomes and are consistent with current professional knowledge. The challenge is to achieve the proper balance in six key dimensions. Health care systems should be: • Safe—avoiding injuries to patients from the care that is intended to help them; • Effective—providing services based on scientific knowledge to all who could benefit from them and refraining from providing services to those who are unlikely to benefit (avoiding underuse and overuse respectively); • Patient-centered—providing care that is respectful of and responsive to individual patients’ preferences, needs, and values and ensuring that patient values guide all clinical decisions; • Timely—reducing waits and sometimes harmful delays for both those who receive and those who give care; • Efficient—avoiding waste, including waste of equipment and supplies; and • Equitable—providing care that does not vary in quality because of the personal characteristics of the patient, such as gender, ethnicity, geographic location, and socioeconomic status. A health care system that meets all of these goals is well prepared to meet patients’ needs. Patients experience care that is safer, more reliable, more responsive, more integrated, and more available. Patients count on receiving the full array of preventive, acute, and chronic services from which they are likely to benefit. The application of these dimensions in the Project components is presented in Annex 1. Table A.1.4 -------------------------------------- Sources: Institute of Medicine (US) Committee to Design a Strategy for Quality Review and Assurance in Medicare (1990). K.N. Lohr editor. Medicare: A Strategy for Quality Assurance: VOLUME II Sources and Methods . National Academies Press: Washington D.C. Institute of Medicine (2001). Crossing the Quality Chasm: A New Health System for the 21st Century, National Academies Press: Washington D.C. Note: The results framework below presents the dimensions to be measured by each indicator. III. PROJECT DESCRIPTION A. Project Components 14. Component 1: Results-based financing for quality improvement in prevention and provision of health care services to the poorest 66 municipalities (US$14 million). The purpose of this Component is to ensure quality in the prevention of disease and the provision of care for communicable diseases and NCDs at the primary health care level in the public sector for the 66 most vulnerable municipalities of the country, including Alto Wangki Bocay and the municipalities of the Caribbean Coast. Targeted interventions will include: (a) the early identification of health risk factors; and (b) monitoring of the provision and quality of health care services. 15. This Component will finance results-based capitation payments to support the improvement of maternal and child health care services and to promote the prevention of NCDs. Capitation payments Page 14 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) are the marginal financial resources transferred by the MOH to selected municipalities to ensure that the population has access to quality health care services. Capitation payments will fund the widespread coverage of health promotion efforts; prevention of diseases at the primary and secondary levels (Box 2); and the prevention of risk factors. The results-based capitation mechanism increases the efficiency of public spending by making recipients accountable for their use of the funds and by delaying or preventing the onset of chronic diseases and their complications. The annual amount to be transferred to each municipality will be based on the per capita incremental recurrent expenditure on health care services (the current estimate is US$5.05) and on the size of the rural population in each municipality. Recurrent expenditures consist of the cost of the medical supplies (gauze, alcohol, etc.) needed to provide services in primary health care facilities. The fixed costs of the provision of care are covered by the Government, and this transfer is not meant to replace the normal budget provision to the municipalities. The MOH will transfer these annual payments to the municipalities using a 60/40 percent formula. The 60 percent will be calculated based on the size of the rural population in each municipality and the 40 percent will be paid on condition that the municipality meets its targets for tracer indicators that will be defined in the Quality Health Care Plan agreed upon with the SILAIS each year. As noted above, the 66 municipalities will be divided into three groups based on the respective levels of coverage, quality, and sustainability of services. The latest data held by the MOH statistics office as of December 2016 will provide the baseline for monitoring the performance of the municipalities. Box 2. Levels of Prevention and Definitions Prevention plays a dominant role in public health. Its definition covers a wide array of activities that prevent, delay the onset of, or reduce the seriousness of diseases and their complications. Prevention can be either primary or secondary. Primary prevention activities promote health and protect people against exposure to the risk factors that lead to health problems. Primary prevention focuses on reducing or removing risk factors by changing the environment and the community, as well as family and individual lifestyles and types of behavior. Examples include nutrition education and guidance on how to develop and maintain healthy eating and exercise habits. Secondary prevention focuses on stopping or slowing the progression of diseases. It includes screening and detection for early diagnosis, treatment, and follow-up. Secondary prevention activities target people who are more susceptible to health problems because of family history, age, lifestyle, health conditions, or environmental factors. Examples include the early detection and treatment of cervical cancer, blood lipid screening, and referrals. Source: Anita Yanochik Owen, Patricia L. Splett, George M. Owen - 1999 Nutrition in the Community: The Art and Science of Delivering Services. 16. The SILAIS will draw up and maintain annual performance agreements with the municipal health networks (Acuerdos sociales por la salud y el bienestar con el nivel municipal) to govern their provision of services. The agreements will specify a Quality Health Care Plan and performance indicators to be used to measure the progress made by each network. There will be three mandatory indicators, and each SILAIS will have the discretion to select additional indicators based on the geographic, demographic, and epidemiological profiles of each network (as defined in the Project’s Operational Manual). These Page 15 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) indicators, along with the Quality of Care Plan, will be used to monitor improvements in health services and to mitigate risk factors in each SILAIS. The MOH will continue to use its own system of incentives and support based on the network’s performance. Municipalities will report every six months to the relevant SILAIS on its progress towards achieving the Project indicators and towards the implementation of the Quality Health Care Plan. The SILAIS will be responsible for collecting, revising, and consolidating all municipal reports and sending them to the MOH. The Technical Council and Citizen Councils will continue to be responsible for reviewing the quality of care that will ultimately be certified by an external organization such as Pan-American Health Organization (PAHO). They will review the bi-annual reports from the SILAIS and discuss their results. 17. Component 2: Support to the implementation of national health strategies for the provision of quality health services under the MOSAFC (US$44.5 million). This Component will support the implementation of several national strategies aimed at improving the quality of health care provision nationwide, the expansion of coverage in the Caribbean Coast, and the provision of public goods targeted to vulnerable population groups. These national health strategies are a key instrument for implementing the MOSAFC health care model. This Component will finance goods, consulting, and non-consulting services, minor works, training and operation costs to implement the strategies. Specifically, it will support: a. Implementation of the National Chronic Disease Strategy to promote good health care practices and prevent and control major chronic diseases, as well as risk factors. The Project will work closely with the National Directorate of Health Services that prepared the first National Strategy for NCDs. The new strategy encompasses previous efforts to prevent and provide early treatment for chronic diseases such as cervical cancer and hypertension. Specifically, this subcomponent will support the MOH in: (i) disseminating information about the strategy and updating all relevant norms, guidelines, and technical documents; (ii) implementing the strategy, including carrying out the first survey of risk factors to establish a baseline for monitoring future progress; (iii) acquisition of medical supplies and medical and non-medical equipment, including information technology equipment to fill existing gaps in the primary and secondary levels of care; and (iv) designing and implementing the technology needed to monitor and follow up on the implementation of the Municipal Quality Health Care Plans. b. Strengthening the capability of the MOH to prepare for and respond to epidemics and epidemiological alerts in the country. This subcomponent will support: (i) the National Entomological Surveillance Program for the prevention of climate-sensitive diseases; (ii) the National Immunization Program; and (iii) the implementation of the National Medical Waste and Water Quality Management Programs. Page 16 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) c. Implementation of the National Program for the Inclusion of Holistic Medicine and Traditional Therapeutic Medicines. This subcomponent will continue the Bank’s support for the National Program of Natural Medicine12 by integrating Western and traditional medicines in line with the Project’s Indigenous Peoples Plan (IPP). Activities will include: (i) supporting the holistic management of pain through the use of natural medicine and complementary therapy clinics at the primary care level; (ii) continuing to support training for health personnel; (iii) strengthening the municipal offices of natural medicine and complementary therapies; (iv) acquisition of general equipment and furniture for the natural medicine clinics; and (v) strengthening the research strategy in this area. d. Implementation of the National Intersectoral Adolescent Health Strategy for the Prevention or Delay of Adolescent Parenthood13 with emphasis on the concepts of agency and prevention of gender-based violence (GBV). This effort will be built on the ENSDIA 2012-2017, for which the Bank supported the MOH in creating a national vision with an emphasis on cross-cultural populations. It will involve multisector coordination between the Ministry of Education (Ministerio de Educación, MINED), the Ministry of Family (Ministerio de la Familia, MIFAN), the Ministry of Youth (Ministerio de la Juventud, MINJUVE), and the Offices of Children and the Family aimed at preventing adolescent pregnancies nationwide. In addition, it will use existing methodologies, such as the Strong Family Program used by MIFAN, adolescent-oriented events, national life skills campaigns as well as public awareness campaigns, teacher training workshops, and community spaces for adolescents. e. Expanding health care coverage in Nicaragua’s Caribbean Coast region. In an effort to reduce inequities in the quality of care between regions, and to increase the capacity of the delivery network to provide care to distant areas of the country, this investment will fund the structural design and procurement of equipment for the planned hospital in Siuna in the Las Minas SILAIS. This municipality is one of the five municipalities of the Caribbean region and is isolated from the rest of the country due to a lack of proper roads. The catchment area of this hospital will cover the municipalities of Siuna, Rosita, Boanaza, Mulukuku, and the municipality of Paiwas (on the Atlantic South), with a combined population of approximately 251,000 inhabitants (3.9 percent of the country’s total population), of whom 74 percent live in rural areas and around 12 percent belong to the Miskitur and Mayanga ethnic communities. The proposed hospital is intended to be a general hospital, providing tertiary-level care for urgent cases and maternal emergencies. At the moment, the Caribbean Coast has just one primary care hospital with 48 beds and the capacity to deliver only basic care. The most complicated cases are referred to Bilwy (located 265 kilometers away) or Managua (339 kilometers away), which, in addition to being costly, means that patients cannot be provided with care in a timely manner. In 2016 alone, the Las Minas SILAIS referred 1,068 cases to higher-level hospitals. f. Cross-strategy investments for the implementation of the national strategies. Activities under this subcomponent will include: (i) training programs for health workers at the central and local levels; (ii) support for the implementation of the national plan for the maintenance and repair of medical and non-medical equipment throughout the country by strengthening the Medical 12 Ley de Medicina Tradicional Ancestral No. 759, approved in July 2011. 13 Preventing first pregnancies and delaying second pregnancies among adolescents. Page 17 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Equipment Maintenance Center (Centro de Mantenimiento de Equipos Médicos, CEMED); and (iii) ensuring that the MOH’s information systems at all levels of care are connected and compatible. 18. Component 3: Provision of contingency financing in case of a public health alert or public health emergency (US$0.00 million). The objective of this Component is to enable critical resources to be used in the event that a public health alert or public health emergency is officially declared by a Health Ministerial Resolution or a Presidential Decree. The Project allocates no funds to this Component. The World Bank will reallocate funds from elsewhere in the Project budget and disburse them only after an alert or emergency has been declared and the Government has provided the World Bank with documentation that includes: (i) legal evidence, satisfactory to the World Bank, for the declaration of the public health alert, or public health emergency; (ii) a list of the required goods, minor rehabilitation works, consultancies, or other services needed and operating costs (including a procurement plan) acceptable to the World Bank; (iii) a clear indication of the activities that will be affected by the reallocation of funds; and (iv) any assessments and plans that the World Bank might require. 19. Component 4: Project management (US$1.5 million). This Component will finance efforts to strengthen the capacity of the MOH to administer, implement, supervise, and evaluate Project activities, including support for carrying out external financial audits. 20. Gender. The Project will address gender-related aspects of health care with the aim of benefitting children, adolescents (both girls and boys), adults, and the elderly with a special emphasis on indigenous peoples. The Project aims to: (i) provide quality care to mothers, adolescents, children, and populations with risk factors for NCDs; (ii) prevent adolescent parenthood, with an emphasis on the concept of agency and the prevention of GBV; and (iii) provide a gender-sensitive agenda to medical staff working with culturally diverse ethnic groups. 21. Citizen Engagement. The Project engages the population by involving citizens of the municipality as active participants in the implementation and evaluation of most Project activities. The Citizen Councils, existing MOH administrative bodies in every SILAIS, are directly involved in overseeing the health services delivered at the municipality level. Through the Project, the Citizen Councils will be part of the Project Verification Commission and will review the performance of the 66 municipalities participating in the capitation mechanism. In addition, as part of the Project Verification Commission (PVC), the Citizen Councils will participate in the review of the output-based disbursement mechanism. Also, this Project will strengthen the implementation of the social agreements and certification processes that enable community members from the municipalities to be involved in deciding which health care services should be available in their communities each year. Finally, the Project is designed to encourage communities to participate in project activities, such as vaccination campaigns and public communication campaigns aimed at changing risky types of behavior. 22. Climate Co-benefits. The Project is expected to have moderate climate co-benefits largely related to reductions in greenhouse gas (GHG) emissions, emissions of dioxin14 and the Project’s investments in response to climate-sensitive diseases. Dioxin, a GHG, is one of the most toxic and persistent pollutants 14EPA-1994. The Environmental Protection Agency of the USA, announced that the hospital incinerators were responsible for 40 percent of the atmospheric pollution in the country. In this regard, the World Health Organization recommends not to incinerate hospitals waste containing polyvinyl chloride and copolymer. Page 18 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) in Nicaragua, and will be reduced as a result of using the autoclave instead of incinerators to dispose hospital waste.15 Dioxins refers to a group of toxic chemical compounds that share certain chemical structures and biological characteristics. Several hundred of these chemicals exist and are members of three closely related families: chlorinated dibenzo-p-dioxins, chlorinated dibenzofurans and certain polychlorinated biphenyls. Chlorinated dibenzo-p-dioxins and chlorinated dibenzofurans are not created intentionally, but are produced as a result of human activities like the backyard burning of trash. The Stockholm Convention on Persistent Organic Pollutants signed by more than 150 countries, including Nicaragua, promotes the use of better environmental practices to reduce the volume of dioxin generated from waste incineration. Additionally, the implementation of the Waste Management Plans in health centers, including good environmental practices for reducing and disposing of medical waste, will reduce the volume of medical waste to be managed and treated, hence reducing greenhouse gas emissions and contamination. In addition, a substantial part of Nicaragua’s burden of disease is related to climate- sensitive conditions such as malaria, Zika, dengue, and chikungunya. In recent years, some of those diseases have either been introduced (Zika) or have spread in part because of recent climate variability, such as longer dry seasons, general droughts and floods cause by increased rain intensity, and higher average temperatures. Considering that climate change is expected to increase rainfall, floods and droughts, it is also expected that these climate sensitive diseases will increase. The Project will support the implementation of the National Entomological Surveillance Program for the prevention of these climate-sensitive arbovirus-related diseases. The Project will have a direct positive impact on the environment by supporting efforts to educate the population on ways to stop mosquitos from breeding, thus reducing the need for spraying. B. Project Cost and Financing Components Amounts US$ million Component 1: Results-based financing for quality improvement in prevention and provision of health care services to the poorest 66 municipalities 14.0 Component 2: Support for the implementation of national health strategies for the provision of quality health services under the MOSAFC 44.5 Component 3. Provision of contingency financing in the case of an eligible public health alert or a public health emergency 0.0 Component 4. Project management 1.5 Total cost 60.0 C. Lessons Learned and Reflected in the Project Design 23. The Project design incorporates lessons learned from previous and ongoing World Bank and donor-funded projects in Nicaragua and world-wide. These include: a. Health care models such as MOSAFC work well in their own context. Experience from previous 15WHO- Health – Care Waste http://www.who.int/mediacentre/factsheets/fs253/en/ https://www.healthcare-waste.org/ Page 19 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) projects demonstrates that the MOSAFC model works in Nicaragua. The World Bank will continue to support this approach in the Project, seeking to innovate within the existing MOSAFC model, while continuing to focus on the long-term goal of reducing the country’s burden of disease. The Bank’s contribution to implementing and strengthening the MOSAFC ensures its sustainability. b. The benefit of implementing a project without a project implementation unit. This Project, as well as the one currently being implemented, Strengthening the Health Care System Project (P152136), have been designed to be implemented directly by the MOH. Implementing without a PIU has made it possible to build institutional capacity within the MOH by means of the close coordination between its technical units and divisions and the World Bank. c. Results-based capitation payments and annual performance agreements, along with effective monitoring, have introduced a new concept of accountability in the public health sector. The Nicaragua Community and Family Health Care Project (P106870) and the Strengthening the Health Care System Project (P152136) have both fostered a sense of accountability at the SILAIS level. It is evident that marginal funding of the cost of service along with consistent monitoring and evaluation (M&E) of outcomes are effective in holding service providers accountable for their performance. d. Performance agreements are a useful tool for establishing a results-oriented culture. These agreements have proven to be a powerful tool for managing decentralized health programs at the municipal level. The Project will strengthen the MOH’s M&E system so that the Project Technical Committee (PTC) within the MOH can complete the technical reports in a timely manner and can make any necessary changes to the Project promptly. e. In countries vulnerable to natural disasters or other emergencies, projects should be designed to allow for a flexible response to a public health alert or health emergency. This Project will use the same activation and disbursement procedures as defined in the emergency contingency subcomponents of the Nicaragua Community and Family Health Care Project (P106870) and the ongoing Strengthening the Public Health Care System Project (P152136), which have been successfully used in the past. f. Using national-level technical and administrative directorates and councils to supervise and monitor project activities has been demonstrated to foster ownership of the project activities, build local technical capacity, and ensure the sustainability of the outcomes. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 24. The MOH will be responsible for the implementation of the Project through its various national directorates and technical units. The Project will follow similar implementation arrangements to those in the ongoing Strengthening the Health Care System Project (P152136), which have proven to be successful. Page 20 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Implementation will be overseen by the PTC,16 which already exists. The PTC will be responsible for: (a) coordinating project activities, including those carried out by the SILAIS and the municipal health networks; (b) monitoring project results indicators at the macro level; (c) coordinating with the General Directorate of Epidemiological Surveillance (Dirección General de Vigilancia de la Salud Pública, DGVSP), the Procurement Division and the General Division of Financial Management within the MOH, and with PAHO on procurement of vaccines; (d) overseeing the implementation of the Indigenous Peoples Planning Framework (IPPF) and the Environmental Management Framework; (e) preparing technical and financial progress reports; and (f) ensuring that technical reports are presented to the Technical Council and Citizen Councils for certification. The PTC is led by the MOH’s Division of External Cooperation and consists of technical staff from each participating technical and administrative directorate and division within the MOH. 25. The Technical Council will be responsible for the technical oversight of activities implemented by the municipalities. The Technical Council is an established MOH structure that oversees the performance of MOH’s technical units and is responsible for reviewing health reports and for ma king executive decisions on the technical aspects of health implementation plans. Its role in the Project will be to review the performance of the 66 municipalities every six months, to monitor their progress towards achieving the indicators and their implementation of quality of care plans and output-based disbursement arrangements and to issue a statement on its findings. The Technical Council consists of the directors of all the General Directorates of the MOH at the central level, a representative of the Health Workers Federation, and the Minister of Health. 26. In every SILAIS, the existing Citizen Councils will be responsible for monitoring the provision of care, the achievement of health indicator targets, the judicious use of funds, and other related issues at the SILAIS level. The Citizen Councils are also an established structure of the MOH at the SILAIS level, with the membership consisting of the SILAIS director, representatives of the local hospitals, the SILAIS epidemiologist, a representative of the local branch of the Health Workers Federation, a representative of the Community Cabinet (Gabinete de la Familia Comunidad y Vida), and community leaders. A representative of the Citizen Councils will participate in the Technical Committee’s review of the SILAIS’s bi-annual progress reports, as well as its review of the municipality’s Quality of Care Plan. 27. Finally, the existing PVC will continue working on the verification and certification of capitated payments and output-based disbursements. The PVC consists of representatives of the Technical Committee and the Citizen Councils, together with a representative of an external independent institution, which, in the current Bank-financed Project is PAHO. These PVC members will visit a randomly selected number of municipalities to verify the implementation of their Quality Health Care Plans and, for those municipalities receiving capitation payments, their progress towards achieving their indicator targets. The PTC will coordinate and organize these verification visits by the PVC. The PVC will be responsible for reviewing municipalities’ indicators, results, and implementation of activities according to the Project implementation Plan. Every year the PVC will present a technical report to the World Bank with the certified documentation. The certified documentation will consist of the signed document from the independent entity or agency who has done the verification supported by the Technical Council report on the municipalities’ achievement of the indicators and compliance with the Quality of Care Plans. Once the World Bank has reviewed and accepted this report and its documentation, it will make the annual 16 The Project Technical Council Committee includes all the Directors (technical staff) of the MOH’s Directorates. Page 21 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) disbursement. The detailed process will be explained in the Operational Manual and is outlined in Annex 2. 28. Under Component 1, the MOH will continue its annual performance agreements (Acuerdos sociales por la salud y el bienestar) with participating SILAIS for the implementation of MOSAFC. Under these renewable annual arrangements, the SILAIS will be responsible for: (a) guaranteeing the delivery of the health services by the municipal health networks; (b) supervising and monitoring the performance of the health services that are delivered; (c) transferring the funds received from the MOH as capitation payments to the selected municipalities; (d) entering into individual municipal agreements with each selected municipality; (e) supervising and keeping records of the health services provided by the municipal health networks and compiling the municipalities’ progress reports on the performance indicators targets set out in each municipal agreement; and (f) complying with the provisions of the Operational Manual (including the IPPF and the Environmental Management Framework), as well as the Anti-Corruption Guidelines. 29. The SILAIS in turn will enter into municipal agreements with the municipal health networks (Acuerdos Sociales por la salud y el bienestar con el nivel municipal). These renewable annual agreements between the director of the municipal health network and the director of the SILAIS will stipulate the terms under which the standard set of basic health care services will be delivered by providers in the network. These agreements will, among other things, require the MOH (through the SILAIS) to transfer the pertinent capitation payments to the selected municipalities on a per capita basis to finance the delivery of health services. They will also require each municipality to: (a) prepare and implement a Quality Health Care Plan and to meet the agreed mandatory indicator targets; (b) keep records of which health services are being provided and create progress reports on the performance indicators; (c) comply with the provisions of the Operational Manual and the Anti-Corruption Guidelines; and (d) list its performance indicators and their corresponding targets, and the mechanism for periodically adjusting these indicators and targets. B. Results Monitoring and Evaluation 30. The M&E system of the MOH will be used to monitor progress on the indicators specified in the results framework. The system will contain data from multiple sources including: (a) the monthly reports submitted to the SILAIS by the municipal health networks; (b) biannual reports presented by SILAIS to the central MOH; (c) project management reports prepared by the PTC twice a year; (d) annual certified municipal performance technical reports; and (e) annual social consultations, an existing mechanism to monitor the implementation of MOSAFC, in which the SILAIS requests comments, addresses complaints and seeks suggestions for improvements from the local community and beneficiaries in each municipal health network. The Project will support technical assistance, supervision, and the monitoring of activities under Components 1 and 2, and 4, all of which will build managerial capacity at both the local and national levels. C. Sustainability 31. The Project builds on the experience and satisfactory results of past World Bank-financed health projects implemented in Nicaragua. Most importantly, a strong focus on sustainability is embedded in Page 22 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) the Project’s demand-driven design, which involves: (a) supporting MOSAFC, the Government’s own health services provision model; (b) using the technical units of the MOH to implement the Project with no external PIU; (c) relying on the fiduciary and procurement divisions of the MOH for the Project’s implementation; (d) using the national M&E system to monitor the Project’s implementation instead of external technical audits; (e) enabling community-based participation and empowerment; (f) contributing to public policy discussions based on the identified progress and gaps; and (g) fostering coordination among sectors in the implementation of the Project. D. Role of Partners 32. Coordination with other agencies. The World Bank has a longstanding commitment to coordinating with other international agencies working in Nicaragua. As part of this Project, the Bank will cooperate with the MOH, PAHO, and Nicaraguan universities to contribute or execute in at least three activities: (a) procuring vaccines; (b) improving quality of medical care; and (c) providing high-level training and internships. During the Project’s implementation period, PAHO will be a key partner for the Bank in the procurement of vaccines using a competitive mechanism that it has already established in the LAC region. The Project also builds on the ongoing Strengthening the Health Care System Project (P152136) in terms of continuing to use PAHO and the national universities to certify the quality of health services and of training and continuous education programs in the field of health. However, one new element in this Project is that it enlists international universities to certify teachers, graduates, courses and specialized internships. V. KEY RISKS A. Overall Risk Rating and Explanation of Key Risks 33. The overall risk has been assessed as Moderate. Key risks are related to: (i) the country’s limited capacity to administer the system of capitation payments and output-based disbursements; (ii) the sustainability of improvements made to the quality of services provided in public health care network; and (iii) the potential environmental and/or social risks associated with the construction of the hospital in the Siuna municipality. While the proposed Project would finance the design and equipment for the hospital, it would not finance the construction phase. Proposed measures to help manage these risks include: (i) strengthening the technical units of the Ministry of Health through capacity building and technical assistance; (ii) promoting ownership of the quality of care improvement process at the local level by ensuring the participation of community representatives in the Project Verification Commission; and (iii) close supervision to oversee the compliance with the Bank’s safeguards policies, including during the construction phase of the hospital in Siuna. Page 23 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 34. The Project investments of US$60 million over a five-year period are expected to benefit an estimated 1.3 million people in 66 selected municipalities. The Project will use the MOSAFC model to ensure the early identification of risk factors for communicable diseases and NCDs while investing in the prevention of pregnancy-related adolescent mortality. The MOH has estimated that the cost per person of the needed interventions within the health system is US$20, and the Project will fund US$5.05 annually per beneficiary during the five-year period. In addition, the Project will invest in intersectoral activities aimed at preventing adolescent pregnancies and at ensuring the early identification of risk factors for communicable diseases and NCDs at the primary care level with strong grassroots community involvement. For the purposes of the Project’s economic evaluation, a net investment of US$52.2 million is assumed and a 10 percent discount rate is applied. Recurrent costs are estimated to reach 20 percent of the total investment. Taking 2018 as year one, the Project has an estimated net present value (NPV) of US$4,320,320 and an expected internal rate of return (IRR) of 13.6 percent. A detailed cost-benefit analysis is presented in Annex 4. B. Technical 35. The improvements achieved in Nicaragua in the provision of health care and attainment of health outcomes in the last decade are remarkable. These advances have been possible due to the Government’s commitment to health. Nonetheless, challenges still remain and Nicaragua now faces a triple burden of disease. The MOSAFC program responds to this diagnosis and prepares the health system to expand service delivery and improve quality. As the steward of the public health provision in the sector, the MOH is uniquely positioned to design and implement the changes needed to expand services, improve quality and efficiency and, therefore, improve the financial sustainability of the health sector. The proposed Project has critical building blocks required for delivering results. These include: (a) strong political commitment, which is bolstered by the result based financing mechanism included in project design; (b) harmonization between the Project and the larger policy framework under the MOSAFC model, since the Project contributes to solving the main challenges identified in the National Pluri-Annual Health Plan 2015-2021; and (c) a technically sound MOH program oriented to addressing the strategic priorities facing Nicaragua’s health sector by introducing, through the primary health care network, comprehensive provision of health care, including early identification and prevention of diseases. C. Financial Management 36. Overall, the Project will benefit substantially from the MOH´s existing financial management arrangements, which were put in place for the implementation of the ongoing Strengthening the Health Care System Project (P152136). The performance of these financial management arrangements in terms of a financial recording system, financial reporting, cash flow, audit arrangements, an internal control system, and asset management are Moderately Satisfactory. Taking into account the additional activities envisioned under the proposed Project, and following the financial management assessment conducted in October 2017, financial management issues were discussed and proposed to be strengthened under Page 24 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) the proposed Project. The assessment identified the need: (a) for additional staff to strengthen the MOH’s General Financial and Administrative Division (Dirección General Administrativa y Financiera, DGAF); (b) to review of specific procedures to govern the funds flow arrangements for the capitation payments and output-based financing activities; and (c) to revise the implementation of a new financial management information tool that facilitates the recording, control and reporting of project transactions for the provision of required financial reports, which are currently prepared in Excel, after one year of project execution. The Operational Manual was updated to reflect these recommendations. 37. Retroactive financing. The Project will allow retroactive financing for up to 20 percent of the total amount of the credit (up to US$12 million) for eligible expenditures under Component 2, except for subcomponent 2(f)(i) on or after December 7, 2017, but in no case earlier than 12 months from the date of the Financing Agreement. D. Procurement 38. Procurement for the Project will be carried out by the MOH. The Procurement Division has more than five years of experience with externally financed operations, and a procurement capacity assessment carried out in September 2017 confirmed that MOH has the necessary capacity, adequate structure, and the requisite procedures in place to carry out the procurement for the Project. The MOH will be responsible for all procurement and contracting-related queries and processing, including the management of and compliance with fiduciary requirements. A Procurement Plan for the first 18 months of the Project was developed and agreed upon. The Project will be executed in accordance with the World Bank’s Procurement Regulations for Borrowers under Investment Project Financing of July 2016 and the provisions stipulated in the Procurement Plan and the Operational Manual. 39. A Project Procurement Strategy for Development (PPSD) was prepared and a series of mitigation measures will be carried out to ensure the satisfactory performance of procurement functions within the MOH. Based on the PPSD, which has identified the appropriate selection methods, market approach, and type of review to be conducted by the World Bank, most project activities will be carried out by contractors selected through national or international competition. The complete PPSD will be part of the Operational Manual. E. Social (including Safeguards) 40. The Project triggers OP/BP 4.10 on Indigenous Peoples given the presence of indigenous peoples in the Project area. The ongoing Nicaragua Strengthening the Public Health Care System Project (P152136) includes an IPP that was developed after the IPPF prepared for the Nicaragua Community and Family Health Care Project (P106870). The IPP was prepared, disseminated for consultation, and disclosed in March 2015 and is currently being successfully implemented by the Directorate of Health and supervised by the National Coordination of Indigenous Peoples and Traditional Medicine. The activities under Component 1 of this Project are a continuation of the ongoing Strengthening the Health Care System Project’s activities (P152136). Under Component 2 (c), the National Program for the Inclusion of Holistic Medicine and Traditional Therapeutic Medicines will be implemented to support Nicaragua in moving towards the integration of traditional ancestral medicine into Western health systems. Consultations and assessments were undertaken during Project preparation to ensure that the Project’s Page 25 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) maternal, adolescent, child, and reproductive care activities take into account the cultural practices of indigenous groups. Any intercultural health practices that end up being supported by the Project could be shared as models with other countries. The IPP was updated and disclosed on MOH’s website and was published on the World Bank’s website on December 7, 2017. F. Environment (including Safeguards) 41. The Project triggers OP/BP 4.01 on Environmental Assessment because it will finance minor rehabilitation works, including minor pre-installment works for the medical and non-medical equipment to be purchased by the Project for health facilities and technical studies for the construction of a hospital in Siuna. Any possible negative impacts are likely to be localized, minor, and reversible. In this regard, the Project has been classified as Category B according to the OP/BP 4.01. An Environmental and Social Management Framework (ESMF) was prepared for the previous World Bank-financed projects (P106870 and P152136); the ESMF and associated Action Plan has been updated for this Project. These updated versions of the ESMF and Action Plan have been consulted on according with the World Bank guidelines and have been disclosed on MOH’s website and on the World Bank’s website on December 7, 2017. With regards to the HWM plan, nine plans are currently being implemented under the ongoing Strengthening the Public Health Care System Project (P152136), and a few additional plans will be implemented under the proposed Project. These plans include the World Bank’s Environmental Health Safety Guidelines for Medical Facilities and procedures to manage radioactive waste associated with the medical equipment acquired under the projects. The technical specifications of the structural design of the Siuna Hospital will take into account the Environmental and Social Impact Assessment and its Environmental and Social Management Plan. The Environmental and Social Impact Assessment will be consulted again and disclosed once the final design for construction is confirmed. In addition, even though the Bank’s funds will not finance the construction of the Siuna hospital, the Bank will oversee compliance with safeguards policies during the construction phase, as part of Project supervision, considering that the Bank’s funds will finance the structural design and the Environmental and Social Impact Assessment of the Hospital. G. World Bank Grievance Redress 42. Communities and individuals who believe that they are adversely affected by a World Bank supported Project may submit complaints to existing Project-level grievance redress mechanisms or the World Bank’s Grievance Redress Service. The Grievance Redress Service ensures that complaints received are promptly reviewed in order to address Project-related concerns. Project affected communities and individuals may submit their complaint to the World Bank’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of World Bank non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and World Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. Page 26 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Results Framework COUNTRY : Nicaragua NI - INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES Project Development Objectives The objective of the Project is to extend the coverage and improve the quality of care for the most prevalent health conditions with an emphasis on vulnerable groups. Project Development Objective Indicators Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection Name: Percentage of Percentage 44.00 50.00 Annual Statistics Report DGPD/DGSS (MOH) adolescents (<20 years of age) with institutional birth delivery – G1 (Coverage) Percentage of adolescents Percentage 76.00 82.00 Annual Statistics Report DGPD/DGSS (MOH) (<20 years of age) with institutional birth delivery - G2 (Coverage) Percentage of adolescents Percentage 80.00 88.00 Annual Statistics Report DGPD/DGSS (MOH) (<20 years of age) with institutional birth delivery – G3 (Coverage) Description: Institutional birth delivery means that birth takes place in a health facility assisted by a medical professional. Page 27 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection Name: Percentage of health Percentage 34.00 53.00 Annual Project Report DGSS (MOH) centers certified on screening of hypertension – G1 (Quality) Percentage of health Percentage 45.00 69.00 Annual Project Report DGSS (MOH) centers certified on screening of hypertension – G2 (Quality) Percentage of health Percentage 50.00 80.00 Annual Project Report DGSS (MOH) centers certified on screening of hypertension – G3 (Quality) Description: Certification includes: equipment, trained health personnel and implementation of health prevention activities. Intermediate Results Indicators Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection Name: National Laboratory Number 0.00 1.00 Bi-annual Project Report CNDR (MOH)/ for the assessment of CEMED residual waters refurbished (Quality: safety, efficiency, Page 28 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection effectiveness) Description: It will be marked as accomplished once the National Laboratory is operating Name: Entomology areas Number 3.00 13.00 Bi-annual Project Report CNDR (MOH)/ fully equipped and providing CEMED services (Quality: timeliness) Description: Name: Number of health Number 27.00 63.00 Bi-annual Project Report DGVSP (MOH) facilities with updated and implemented waste management plans (Quality: safety, efficiency) Description: Name: Number of health Number 0.00 1000.00 Bi-annual Project Report DGPD (MOH) personnel receiving training (Quality: effectiveness ) Description: Training programs for health workers at the central and local levels Name: Percentage of Percentage 54.00 58.00 Annual Statistics Report DGPD/DGSS (MOH) women receiving prenatal Page 29 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection care coverage G1 (at least four visits) (Coverage) Percentage of women Percentage 67.00 72.00 Annual Statistics Report DGPD/DGSS (MOH) receiving prenatal care coverage G2 (at least four visits) (Coverage) Percentage of women Percentage 71.00 78.00 Annual Statistics Report DGPD/DGSS (MOH) receiving prenatal care coverage G3 (at least four visits) (Coverage) Description: Name: Percentage increase Percentage 0.00 1.00 Annual Statistics Report DGPD/DGSS (MOH) of women between 30-49 years of age with screening for cervical cancer G1 (Quality: timeliness) Percentage increase of Percentage 0.00 2.00 Annual Statistics Report DGPD/DGSS (MOH) women between 30-49 years of age with screening for cervical cancer G2 (Quality: timeliness) Percentage increase of Percentage 0.00 3.00 Annual Statistics Report DGPD/DGSS (MOH) women between 30-49 Page 30 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection years of age with screening for cervical cancer G3 (Quality: timeliness) Description: Incremental in relation to the baseline collected at the end of 2017. Baseline will consider the estimates at the end of 2017. Name: Number of municipal Number 12.00 48.00 Bi-annual Project Report Institute of health units implementing Traditional Medicine traditional medicine (Quality: patient-centered, equity) Description: Name: Citizen Council Number 0.00 3.00 Annual MOH - Project Verification DGSS/CE participation in the Project Commission Documents Verification Commission for the implementation of the Quality of Health Care Plan Description: Name: Percentage of Percentage 86.00 89.00 Annual Statistics Report DGPD/DGVPS children under 1 year of age (MOH) receiving three doses of pentavalent vaccine G1 (Coverage; Quality: safety) Page 31 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection Description: Improvements in the information system since the design of the Nicaragua Strengthening the Public Health Care System Project (P152136) allow for more accurate measurement of this indicator. The target takes into account that the population in G1 municipalities is dispersed and hard to reach, hence achieving immunization coverage levels similar to those in G2 and G3 areas will be a slow process. Name: Percentage of Percentage 95.00 95.00 Annual Statistics Report DGPD/DGVPS children under 1 year of age (MOH) receiving three doses of pentavalent vaccine G2 (Coverage; Quality: safety) Description: Given the high level of immunization coverage in G2, the aim is to at least maintain the current level. Name: Percentage of Percentage 97.00 97.00 Annual Statistics Report DGPD/DGVPS children under 1 year of age (MOH) receiving three doses of pentavalent vaccine G3 (Coverage; Quality: safety) Description: Given the high level of immunization coverage in G3, the aim is to maintain the current level. Page 32 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Target Values Project Development Objective Indicators FY Indicator Name Baseline YR1 YR2 YR3 YR4 End Target Percentage of adolescents (<20 years of age) 44.00 45.00 47.00 48.00 50.00 50.00 with institutional birth delivery – G1 (Coverage) Percentage of adolescents (<20 years of age) 76.00 78.00 80.00 81.00 82.00 82.00 with institutional birth delivery -G2 (Coverage) Percentage of adolescents (<20 years of age) 80.00 82.00 84.00 86.00 88.00 88.00 with institutional birth delivery – G3 (Coverage) Percentage of health centers certified on 34.00 40.00 49.00 51.00 53.00 53.00 screening of hypertension – G1 (Quality) Percentage of health centers certified on 45.00 55.00 65.00 67.00 69.00 69.00 screening of hypertension – G2 (Quality) Percentage of health centers certified on 50.00 60.00 74.00 76.00 80.00 80.00 screening of hypertension – G3 (Quality) Intermediate Results Indicators FY Indicator Name Baseline YR1 YR2 YR3 YR4 End Target National Laboratory for the assessment of residual waters refurbished (Quality: safety, 0.00 0.00 0.00 0.00 1.00 1.00 efficiency, effectiveness) Page 33 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Indicator Name Baseline YR1 YR2 YR3 YR4 End Target Entomology areas fully equipped and providing 3.00 3.00 5.00 9.00 13.00 13.00 services (Quality: timeliness) Number of health facilities with updated and implemented waste management plans 27.00 43.00 53.00 61.00 63.00 63.00 (Quality: safety, efficiency) Number of health personnel receiving training 0.00 250.00 500.00 600.00 750.00 1000.00 (Quality: effectiveness ) Percentage of women receiving prenatal care 54.00 55.00 56.00 57.00 58.00 58.00 coverage G1 (at least four visits) (Coverage) Percentage of women receiving prenatal care 67.00 68.00 69.00 71.00 72.00 72.00 coverage G2 (at least four visits) (Coverage) Percentage of women receiving prenatal care 71.00 73.00 75.00 77.00 78.00 78.00 coverage G3 (at least four visits) (Coverage) Percentage increase of women between 30-49 years of age with screening for cervical cancer 0.00 0.00 0.50 1.00 1.00 1.00 G1 (Quality: timeliness) Percentage increase of women between 30-49 years of age with screening for cervical cancer 0.00 0.00 1.00 1.50 2.00 2.00 G2 (Quality: timeliness) Percentage increase of women between 30-49 years of age with screening for cervical cancer 0.00 0.00 1.00 2.00 3.00 3.00 G3 (Quality: timeliness) Page 34 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Indicator Name Baseline YR1 YR2 YR3 YR4 End Target Number of municipal health units implementing traditional medicine (Quality: 12.00 18.00 22.00 36.00 48.00 48.00 patient-centered, equity) Citizen Council participation in the Project Verification Commission for the 0.00 0.00 1.00 2.00 3.00 3.00 implementation of the Quality of Health Care Plan Percentage of children under 1 year of age receiving three doses of pentavalent vaccine 86.00 86.00 87.00 88.00 89.00 89.00 G1 (Coverage; Quality: safety) Percentage of children under 1 year of age receiving three doses of pentavalent vaccine 95.00 95.00 95.00 95.00 95.00 95.00 G2 (Coverage; Quality: safety) Percentage of children under 1 year of age receiving three doses of pentavalent vaccine 97.00 97.00 97.00 97.00 97.00 97.00 G3 (Coverage; Quality: safety) Page 35 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) ANNEX 1: DETAILED PROJECT DESCRIPTION COUNTRY: Republic of Nicaragua INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES PROJECT 1. The Project will support the Government of Nicaragua with US$60 million of International Development Association (IDA) funds to be disbursed over a five-year period. Building on the experience of previous World Bank operations, the Project will finance four components: (a) results based financing for quality improvement in prevention and provision of health care services to the poorest 66 municipalities; (b) support the implementation of National Health Strategies for the provision of quality health services under the MOSAFC; (c) provision of contingency financing in the case of an eligible public health alert, or a public health emergency; and (d) project management. 2. Component 1: Results based financing for quality improvement in prevention and provision of health care services to the poorest 66 municipalities (US$14 million). The purpose of this Component is to ensure the quality of the provision of prevention and promotion care for communicable diseases and NCDs in primary-level public health care facilities in the 66 most vulnerable municipalities of the country, including Alto Wangki Bocay and the municipalities of the Caribbean Coast. This includes the early identification of health risk factors and monitoring the provision of quality health care services. 3. This Component will finance results-based capitation payments to support the improvement of maternal and child care services and to promote the delayed onset of NCDs. Capitation payments are the marginal financial resources transferred by the MOH to selected municipalities to ensure that the population has access to quality health care services and to fund the widespread coverage of health promotion efforts, the secondary prevention of disease, and the prevention of risk factors. The results- based capitation mechanism increases the efficiency of public spending by making recipients accountable for their use of the funds and makes long-term savings by delaying or preventing the onset of chronic diseases and their complications. The annual estimated amount to be transferred to each municipality will be based on the per capita incremental recurrent expenditures on health care services (the current estimate is US$5.05) and on the size of the rural population in each municipality. The MOH will transfer these annual payments to the municipalities using a 60/40 percent formula linked to their achievement of tracer indicators and their compliance with the agreed Quality Health Care Plan. 4. The 66 municipalities (out of 153) to be covered by the Project currently participate in the ongoing Strengthening Public Health Care System Project (P152136). They were initially selected because of their poor performance on maternal and child health indicators and because they were not included in the Integrated Health Care Networks Project financed by the Inter-American Development Bank.17 The baseline data for monitoring the performance of these municipalities will be the latest reported data from the ongoing project for December 2016. This distribution of municipalities was based on MOH’s data of their past performance and improvement goals for the ongoing project. Those in Group 1 need significant increases in coverage and improvements in quality, those in Group 2 need moderate increases in coverage and improvements in quality, and those in Group 3 need maintenance of the status quo or modest increases in coverage and some improvements in quality. 17 IADB, NI-1068 in the amount of US$56.2 million. Page 36 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Table A1.1: Municipalities Included in Component 1 (per capita) Total No. SILAIS Municipality Group Classification Score* 1 Jinotega Alto Wangki Bocay 12 2 Chontales Comalapa 12 3 Chontales San Pedro de Lóvago 12 4 León Nagarote 12 5 Caribbean Coast La Cruz de Río Grande 12 6 León El Sauce 12 7 Nueva Segovia Wiwilí (Nueva Segovia) 12 8 Caribbean Coast El Tortuguero 12 9 Managua Tipitapa 12 Group 1: significant increases in coverage 10 Madriz San José de Cusmapa 11 and improvements in 11 Madriz Palacagüina 11 quality 12 Madriz Telpaneca 11 13 Managua Ciudad Sandino 11 14 Managua Managua 11 15 Managua Mateare 11 16 Caribbean Coast Bluefields 10 17 Caribbean Coast Karawala 10 18 Managua Ticuantepe 10 19 Nueva Segovia El Jícaro 10 20 Madriz San Lucas 9 21 Madriz Totogalpa 9 22 Nueva Segovia Dipilto 9 23 Zelaya Central Muelle de los Bueyes 9 24 León León 9 25 Boaco Camoapa 9 26 Boaco Teustepe 9 Group 2: moderate increases in coverage 27 Madriz San Juan de Río Coco 8 and improvements in 28 Zelaya Central El Coral 8 quality 29 Nueva Segovia Ciudad Antigua 8 30 Chinandega Cinco Pinos 8 31 Managua San Rafael del Sur 8 32 Chinandega El Viejo 8 33 Boaco Boaco 8 34 Chontales Cuapa 7 Page 37 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Total No. SILAIS Municipality Group Classification Score* 35 Chontales Villa Sandino 7 36 Chontales Juigalpa 7 37 Nueva Segovia Quilalí 7 38 León Quezalguaque 7 39 León La Paz Centro 7 40 León El Jicaral 7 41 Nueva Segovia Jalapa 6 42 Zelaya Central Nueva Guinea 6 43 Chontales El Ayote 6 44 Zelaya Central El Rama 6 45 Chinandega Villanueva 6 46 Chontales La Libertad 5 47 Chontales Santo Domingo 5 48 León Achuapa 5 49 Madriz Yalagüina 5 50 Boaco San Lorenzo 5 51 Boaco San José de los Remates 5 Group 3: maintenance 52 Río San Juan Morrito 4 of the status quo or 53 Nueva Segovia Santa María 4 modest increases in 54 Chinandega Somotillo 4 coverage and some 55 Chinandega Posoltega 4 improvements in quality 56 Nueva Segovia Ocotal 4 57 Madriz Somoto 4 58 Río San Juan El Castillo 4 59 Río San Juan El Almendro 3 60 Madriz Las Sabanas 3 61 Chontales Santo Tomás 3 62 Chinandega Puerto Morazán 3 63 Chontales Acoyapa 3 64 Boaco Santa Lucía 3 65 Río San Juan San Juan del Norte 3 66 Río San Juan San Carlos 3 * The grouping of the municipalities is based on their level of achievement of coverage and performing indicators. Then, they were divided in three groups as presented above. Page 38 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 5. This Component will continue the World Bank’s support for results-based financing and will use capitation payments to cover the costs of providing promotion, preventive, and curative services, as has been the case in the ongoing project. Capitation payments are the financial resources transferred by the MOH to the selected municipalities to ensure that their population has access to quality health services. The per capita amount has been estimated at US$5.05 based on the incremental recurrent expenditures need to improve the quality of selected health services and on the size of the rural population in each municipality. The recurrent expenditures correspond to the cost of medical supplies (such as gauze and alcohol) needed to provide services at primary health care facilities. The fixed costs of the provision of care will be covered by the Government. This transfer is not meant to replace the normal budget provided to the municipalities. The annual transfers to each municipality will be constituted as follows: (i) a 60 percent transfer based on the estimated size of the municipality’s rural population and (ii) a 40 percent transfer based on the municipality’s achievement of the tracer indicators and its compliance with the Quality Health Care Plan as described in the Operational Manual. Those municipalities that do not reach their target indicators may receive the remaining balance of their transfer based on their implementation of the Quality Health Care Plan as defined in the Operational Manual, but the MOH will closely monitor and mentor those municipalities to help them identify any bottlenecks that may be preventing them from achieving their targets. This procedure has proven successful during the implementation of the ongoing Strengthening Public Health Care System Project (P152136) and has allowed the MOH to identify any problem municipalities and work closely with them to improve the quality of care. This resource allocation procedure was not designed to penalize less well-performing municipalities but instead to leverage their commitment to quality improvements by providing them with intensive technical assistance and monitoring. 6. Each municipality will execute the capitation payment funds and will report to the relevant SILAIS every six months on its progress towards achieving the Project indicator targets and in implementing the Quality Health Care Plan. There will be three tracer indicators, and each SILAIS will have the discretion to select additional indicators based on the geographic, demographic, and epidemiological profile of each network. These indicators will be used to monitor the performance of health service providers, to ensure that the facilities have all of the supplies and conditions necessary for the provision of care, and to mitigate risk factors in each SILAIS. The MOH will continue to use its own system of providing either incentives or support depending on the network’s performance. The SILAIS will be responsible for collecting, revising, and consolidating all municipal reports and submitting them to the MOH. The PVC, comprising representatives of the Technical Council, Citizen Councils, and PAHO or another academic or international institution, will be created to verify and certify these activities. The Technical Council will review and verify progress in each municipality and prepare a report for external certification. The Citizen Councils will act as observers of the Project’s implementation and will participate in the discussion of the Project results in the PVC.18 The external certifier, which will be an independent institution such as PAHO, a national university, or an international institution, will make random visits to municipalities to confirm the findings of the Technical Council and Citizen Councils, prepare a certification report, and send it to the World Bank for decision. The quality of care reviews carried out by the Technical Council and Citizen Councils will be participatory to ensure the sustainability of the accountability mechanisms supported by the Project. 18The Technical and Citizen Councils play distinctive roles in the Project Verification Commission, but the external certifier is the only official certifier of Project results. Page 39 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 7. Component 2: Support to the implementation of National Health Strategies for the provision of quality health services under the MOSAFC (US$ 44.5 million). This Component will support the implementation of national strategies aimed at improving the quality of health care provision nationwide, the expansion of coverage in the Caribbean Coast, and the provision of public goods targeted to vulnerable population groups. The national health strategies are the most effective way to protect the health of the population in the framework of the MOSAFC model that is already being implemented in Nicaragua. These strategies are described in detail below: a. Implementation of the National Chronic Disease Strategy to promote good health practices and to prevent and control major chronic diseases and risk factors. The burden of disease in Nicaragua has shifted from communicable diseases and maternal and neonatal conditions to NCDs. From 2005 to 2013, diseases of the circulatory system caused 27 percent of deaths, followed by external causes (13 percent) and neoplasms (10 percent). The leading causes of death from chronic NCDs are ischemic heart disease (47.9 per 100,000 population), cerebrovascular disease (22.8), and diabetes mellitus (28.7).19 Risk factors play an important role in the incidence of these NCDs, with data from 2012 showing that 46.1 percent of adults were overweight and 15.5 percent were obese (9.7 percent of men and 21.1 percent of women). Figure A1.1 below shows a 2014 estimate of the share of these diseases as a proportion of all deaths for all ages and both sexes. Figure A1.1: Burden of Diseases, 2014 Source: Pan American Health Organization (2017). Health In the Americas.  In an effort to ensure that awareness of and treatment for NCDs is integrated into primary- level services, the MOH has drafted the first national strategy for NCDs and risk factors in 19 Salud en las Americas. PAHO-WHO, 2017 Page 40 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Nicaragua. It promotes the early identification of risk factors, the prevention of early onset of disease, and prompt treatment in the early stages of disease to prevent advanced complications later. Given these considerations, the National Directorate of Health Services will implement the first risk factors survey, which will gather information to help health sector policymakers decide on the public policies that need to be introduced in the regions and nationwide. This effort will complement the newly drafted NCD Strategy.  Diabetes, hypertension, and cervical cancer are the sector’s main investment priorities, along with monitoring mechanisms to ensure that diagnosed beneficiaries receive the necessary care. Therefore, the Project will support the Government of Nicaragua in: (i) the socialization of the NCD strategy and corresponding updating of the norms, guidelines and technical documents; (ii) the implementation of the strategy, including the first risk factors survey; (iii) the procurement of medical and non-medical supplies and IT equipment to fill gaps in the primary and secondary levels of care; and (iv) the design and implementation of the virtual room to monitor and follow up on the implementation of the municipalities’ Quality Health Care Plans. b. Strengthening the capability of the MOH for the preparation and response to epidemics and epidemiological alerts in the country. The Project will: (i) strengthen the prevention of epidemics through its support for the National Entomological Surveillance Program for the Prevention of Climate-sensitive Diseases; (ii) support the National Immunization Program; and (iii) support the implementation of the National Medical Waste and Water Quality Management Programs. i. Strengthen prevention of epidemics through support the National Entomological Surveillance Program for the Prevention of Climate-sensitive Diseases. The DGVSP is responsible not only for arboviral climate-sensitive diseases but also for reviewing the quality of potable water and residual waters from the health facilities, for the sanitary surveillance of health risks, and for the protection of the environmental and its effects on the health of the population. Within this framework, the investments to strengthen this Direction based on an investment plan carried out by the MOH, PAHO, and the Bank in April 2016 were estimated at US$26.5 million. However, the funds had not been prioritized for this investment. Given their enormous responsibilities, DGSVP has planned to enhance their normative, diagnostics and implementation capacity in the prevention of communicable diseases caused by arboviruses, bacteria and other pathogens by strengthening the medical entomology units in the 19 SILAIS nationwide. The SILAIS are responsible for routine surveillance and for reporting on the health care situation in the municipalities, thus guaranteeing continued epidemiologic surveillance at the local level. In addition to this initiative, the directorate should also improve the quality and increase the efficiency of vector control to reduce the entomological risk of the transmission of climate- sensitive diseases, particularly those transmitted by the Aedes aegypti mosquito. The Project will prioritize: (i) providing training for medical staff in the 19 SILAIS in taxonomic and entomological techniques; (ii) rehabilitating and procuring equipment for 10 entomological units; (iii) facilitating the international exposure of personnel from the National Entomology Unit in the National Center for Diagnosis and Reference (Centro Nacional de Diagnóstico y Referencia, CNDR) and the SILAIS to new entomologic and molecular techniques; (iv) procuring the supplies required for the molecular surveillance of climate-sensitive diseases; and (v) Page 41 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) facilitating mobilization for the supervision of local sites. ii. Support to the National Immunization Program. This national program has been a priority of the Nicaraguan Government for the last 10 years. It has guaranteed the control and eradication of vaccine-preventable diseases, and the Government has shown its commitment to this goal with its annual budget allocation for vaccine purchases. The Bank’s contribution to this effort in 2017 represented less than 20 percent of the country’s total annual investment in the purchase of vaccines, syringes, and supplies, not covering other costs of the vaccination program, such as those associated with health personnel, the national vaccination campaign day, and workplace distributions of vaccines. Table A1.2 below shows the distribution among the SILAIS of the 1,032 health facilities responsible for the administration of vaccines. According to the last evaluation of the vaccine cold chain carried out in 2015, more than 40 percent of equipment was over 10 years old. The Project will support the purchase of influenza and pentavalent vaccines and the procurement of equipment to fill current gaps in the cold chain of the 19 SILAIS. Table A1.2: Immunization Program - 2017 Total Cost of Vaccines and Source of Funding Expected expenditure (US$) Cost of vaccines (Government budget) 4,277,167 73.82% Cost of syringes (Government budget) 312,604 5.40% Cost of supplies (Government budget) 127,592 2.20% Additional vaccines (World Bank funds) 1,076,392 18.5% Total cost of vaccines and supplies, 2017 5,793,755 100.00 Table A1.3: Health Facilities Responsible for the Administration of Vaccines by SILAIS SILAIS Puesto de Salud Familiar y Comunitario ESAFC MADRIZ 33 NUEVA SEGOVIA 62 ESTELI 48 CHINANDEGA 80 LEÓN 93 MANAGUA 106 RIVAS 39 GRANADA 25 CARAZO 27 MASAYA 32 CHONTALES 81 BOACO 33 JINOTEGA 61 MATAGALPA 100 BILWI 87 LAS MINAS 39 RAAS 47 RÍO SAN JUAN 39 NICARAGUA 1,032 Source: MOH, DGSVP. 2017. Page 42 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) iii. Support the National Medical Waste and Water Quality Management Programs. The National General Health Law in Nicaragua establishes that health includes “the regulation of the quality of water, the elimination and processing of liquids and solids to prevent contamination, the sanitary surveillance of risk factors, and education about health and the impact of the environment.” In this effort, the MOH will need to coordinate with the Nicaraguan Company of Aqueducts and Sewers (Empresa Nicaraguense de Acueductos y Alcantarillados) to ensure the adequacy of the quality of the water in health facilities and their communities. Hospitals in Nicaragua have to be environmentally certified by the Ministry of Natural Resources and the Environment (Ministerio del Ambiente y los Recursos Naturales). According to the certification, each health facility must comply with health waste management plans and have potable and residual water systems in place. In the last five years, the World Bank has supported the Government in introducing HWM in 59 hospitals and in developing 31 water plans. However, there is still work to be done to ensure that all facilities are in compliance with the national certification, to ensure the appropriate disposal of medical waste and used water, and to monitor the quality of the water that flows from the public network into health facilities. The Project will support: (i) the design and implementation of education programs at various levels in epidemiology, waste management, and hygiene; (ii) the procurement of equipment, furniture, supervision vehicles, and supplies for HWM/hygiene, including occupational safety supplies for health facilities; (iii) small-scale rehabilitation of physical structures that contain contaminating equipment, which needs to be contained, such as hospital kitchens; and (iv) the acquisition or rehabilitation of equipment for analyzing residual waters in the CNDR. c. Implementation of the National Program for the Integration of Holistic Medicine and Traditional Therapeutic Medicines. The Project will continue the Bank’s support for the National Program of Natural Medicine by integrating Western and traditional medicine, which is in line with the IPP that has been prepared for this Project. Activities will include: (i) support for the holistic management of pain in 181 natural medicine and complementary therapy clinics at the primary care level; (ii) continued support for traditional practices training for health personnel; (iii) strengthening of municipal offices of natural medicine and complementary therapies; (iv) the procurement of general equipment and furniture for the natural medicine clinics; and (v) strengthening of the research strategy in this area. This work will be implemented in accordance with the IPP. d. Implementation of the National Intersectoral Adolescent Health Strategy for the prevention or delay of adolescent parenthood, with emphasis on the concepts of agency and GBV. This sub- component will be built on the ENSDIA 2012-2017, for which the Bank supported the MOH in creating a national vision with an emphasis on cross-cultural populations. Adolescent fertility rate in Nicaragua remains high with rates from 4.1 in the north of the Caribbean Coast to 2.0 in Carazo, which demonstrates the need to focus these efforts on communities with ethnic populations (see Figure A1.2). Activities under this subcomponent will include: multisector coordination efforts between MINED, MIFAN, MINJUVE, and the National Office of the Family (Procuraduría Nacional de la Familia) to prevent adolescent pregnancies nationwide. The Project will also support awareness raising and education sessions with health personnel, parents, adolescents, and young adults (girls and boys). This will include the implementation of a national family strategy that will provide training for health workers, parents or guardians, and teachers on violence prevention and best practices in Page 43 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) working with adolescents. Adolescents and youths will receive formal and informal sexual and reproductive health education through adolescent-oriented events such as festivals, carnivals, the Liga del Saber Quiz Bowl, contests (such as poetry and song festivals), theater, and sports tournaments. Other Project-supported activities will include national life skills projects for adolescents and youths, as well as public awareness campaigns, including radio and TV spots with content in local languages; teacher training workshops focusing on sexual reproductive health and as adolescent promoter’s training; the revision and provision of education materials for reproductive health education sessions, including translating them into local languages; and strengthening of community spaces for adolescents. Figure A1.2: Nicaragua’s Fertility Rate, 2016 Source: MOH, 2016. (RAAN = Caribbean Coast North, RAAS = Caribbean Coast South) e. Expansion of health care provision to the Caribbean Coast. In an effort to reduce inequities in the quality of care between regions and to increase the capacity of the delivery network to provide care to distant areas of the country, this investment will fund the structural design and procurement of equipment for the hospital in Siuna in the Las Minas SILAIS. This municipality is one of the five municipalities of the Caribbean Coast and is therefore quite isolated from the rest of the country due to a lack of proper roads. The catchment area of this hospital will cover the municipalities of Siuna, Rosita, Boanaza, Mulukuku, and the municipality of Paiwas (in the Atlantic South) with a total population of approximately 251,000 (3.9 percent of Nicaragua’s total population) of whom 74 percent live in rural areas and around 12 percent belong to the Miskitur and Mayanga communities. The proposed hospital is intended to be a general hospital providing tertiary-level care for urgent cases and maternal emergencies. At the moment, the Caribbean Coast has just one primary care Page 44 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) hospital with 48 beds and the capacity to deliver only basic care. Most complicated cases are referred to Bilwy (located at 265 kilometers away) or Managua (339 kilometers away), which, in addition to the cost, means that patients cannot be provided with care in a timely manner. In 2016 alone, the Las Minas SILAIS referred 1,068 cases to higher-level hospitals in other SILAIS. The structural design of the hospital will take into account: (i) the medical functionality of the space with a detailed specification of equipment needs; (ii) hospital regulations governing the use of the facility; (iii) human resources needs; and (iv) the hospital environmental plan. f. Cross-strategy investments to support the implementation of the national strategies. Activities will include: (i) providing different levels of training programs for health workers at the central and local levels; (ii) supporting the implementation of the national plan for the maintenance and repair of medical and non-medical equipment in Nicaragua by strengthening CEMED; and (iii) ensuring that the MOH’s information systems at all levels of care are connected and compatible. i. Provide all levels of training programs for health workers at the central and local levels. Consistent with MOSAFC, this subcomponent aims to improve the quality of health care services by training the staff in the health networks. The training of MOH staff will involve the development of a master plan for the continuous education of the medical professionals in Nicaragua that must take into account the very specific skills needed by technicians responsible for the use of high-level medical technology.20 Specific training will include Masters, Diplomas, Certificate levels, and on-the-job training for all MOH staff at all different levels of responsibility and in all locations. The MOH is holding explorative discussions with the governments of Argentina, Mexico, El Salvador, and Chile as potential countries for training programs. This investment will help the MOH staff to become a high-performance team. In pursuit of this goal, the activities under this subcomponent are: (i) refurbishing and fitting out training facilities nationwide; (ii) implementing the MOH priority-based Continuing Education Plan;21 (iii) implementing the MOH’s Health Personnel Certification Education Plan;22 (iv) procuring basic medical instruments to be distributed nationwide and pedagogical materials and office supplies for MOH training courses; (v) organizing international internships for health personnel; and (vi) training staff of the central MOH office, the municipalities, and other sectors on M&E. ii. Support the implementation of the national plan for the maintenance and repair of medical and non-medical equipment in the country by strengthening CEMED. CEMED was created in 199223 as the entity responsible for maintaining, repairing, and ensuring the best performance and long-term duration of health sector equipment. The purpose of this subcomponent is to protect the Project’s investment in medical and non-medical equipment at the national level. In this effort and under this funding, the areas of investment will include: (i) rehabilitation of 12 regional Equipment Centers (Region I: Estelí- San Juan de Dios Hospital (1); Region III-SILAIS 20 The master plan will be based on the existing strategy for the continuous education for health professionals at the central and local level of the Government. 21 This includes training workshop for facilitators, medical doctors, nursing staff, and other professional profiles according to the training topics in question as well as national and international scientific symposiums, forums, meetings, and congresses, and the National Nurse Practitioner Symposium. 22 This includes training for SILAIS-based MOSAFC healthcare assistants, basic hygiene assistants, histotechnologists, janitorial clerks, technical staff, and health unit mangers. 23 CEMED was created by Decree No. 19-92, dated March 20, 1992 and published in the Official Gazette No. 65 on April 3, 1992. Page 45 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Managua (2); Region IV: Rivas- Gaspar García Laviana Hospital (3); Region V: SILAIS Chontales (4); SILAIS Matagalpa- Cesar Amador Molina Hospital (5); SILAIS Jinotega (6); SILAIS Caribbean Coast-Bilwi (7); SILAIS CC-Bluefields (8); SILAIS Las Minas- Siuna (9); Rosita (10); Mulukukú (11) and Muelle de los Bueyes (12)); (ii) refurbishment and outfitting of the building where the equipment repair center is located; (iii) career training for equipment maintenance staff, technical level (computing and English skills), 75 personnel in undergraduate studies (B.A. and Engineering), and 35 personnel in graduate studies (diploma and master degrees); (iv) tools and instruments for equipment maintenance center staff at the national and regional levels; (v) the procurement of two 15-seat minibuses; and (vi) operating expenses. iii. Strengthen the connectivity of information systems of the MOH at all levels of care. The purpose of this funding is to improve the connectivity of the central office of the MOH with its local offices and to ensure that information is available to inform appropriate and timely decision-making at the hospital, SILAIS, health directorate, and MOH levels. The Project’s activities in this area will include: (i) structured cabling for MOH information technology networks in 256 health centers, 64 departmental, regional, and primary hospitals, 30 laboratories, and 19 SILAIS nationwide; (ii) the procurement of two full-fledged containers to house the Secondary Data Center, which will provide the same services as the Primary Data Center;24 (iii) the procurement of computers and accessories for health units; (iv) the procurement of a network intrusion prevention system and of active network components for the National Health Complex; (v) the procurement of servers for the 19 SILAIS; (vi) the purchase of one vehicle for the MOH’s Information and Technology Division; (vii) an increase in the servers’ storage; (viii) a cyber security consultancy; and (ix) a specialized networking consultancy. 8. Component 3: Provision of contingency financing in the event of an eligible public health alert or a public health emergency, (US$0.00 million). The objective of this contingency emergency response component (CERC) is to facilitate the use of critical resources if the Government declares a public health alert, or a public health emergency through a Health Ministerial Resolution or Presidential Decree. There are no funds allocated under this Component. Funds will be re-allocated from other parts of the Project budget and disbursed only once an alert or emergency has been declared and the Government has provided the World Bank with a letter that includes: (i) satisfactory legal evidence of the declaration of a public health alert, public health emergency, or national emergency; (ii) a list of the goods, minor rehabilitation works, consultants’ and other services, and operating costs identified in a rapid needs assessment (that includes a procurement plan acceptable to the World Bank); (iii) a clear indication of the activities that would be affected by the reallocation of funds; and (iv) any assessments and plans that the World Bank may require. 9. Component 4: Project management (US$1.5 million). This Component will finance the strengthening of the MOH’s capacity for administering, implementing, supervising, and evaluating Project activities, including the capacity to carry out external financial certification. 24One container will be located in the National Health Complex and the other will be located in another region of the country yet to be decided. Page 46 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Page 47 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) ANNEX 2: IMPLEMENTATION ARRANGEMENTS COUNTRY: Republic of Nicaragua INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES PROJECT I. Key Project Implementation Arrangements 1. In line with the Government’s mandate, the MOH, as the lead agency, will implement the Project through its various technical units (Figure A2.1). This Project will benefit from the expertise gained by the MOH during the implementation of the ongoing Strengthening of the Public Health Care System Project (P152136). The MOH has a fiduciary unit and a procurement unit, both of which are familiar with the World Bank’s fiduciary and procurement procedures. Figure A2.1: Institutional Structure of the Ministry of Health Technical Ministerial Minister of Health Citizen Councils Council Legal Division Gender Technical Unit Office of Access to Public Internal Audit Division Information and Outreach Environmental Coordination Division for Management Unit the Caribbean Coast Technical Liaison Administration of the Unit for Disasters National Hospital Complex External Cooperation v Division General General General General General Division of Division of General Planning and Finance and Administration Division of Procurement Division of Human Division of Medical v Division of Infrastructure Development Resources Supplies General General General General General Public Health Directorate of Directorate Directorate Directorate of Directorate of Surveillance Technology of Health Health Health Services Directorate of Education Development and Information Regulation Maintenance Systems SILAIS Page 48 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 2. Figure A.2.2 below presents a schematic representation of the institutional arrangements for the Project’s implementation and specifies the National Directorates responsible for each Component. Figure A.2.2 Implementation Arrangements Office of the Minister of Health Office of Access to Division of Legal Services Public Information and Outreach General General General Division of General Division of Directorate of General Division of External Cooperation Finance and Division of Medical Planning and Division of Project (Coordinates the Administration Procurement Supplies Development Infrastruct Technical Committee- CTP) (C1-C2) ure (C2) (C1-C2) (c2) (C2) Committee (PTC) General General General Public General Directorate of Directorate Directorate Health Directorat Technology of Health of Health Surveillance e Development Information Directorate Education and Services (C2) (C2) Maintenance Systems (C2) (C1-C2) (C2) Execute Capitation Coordination Level SILAIS Note: C.1 = Component 1, C.2 = Component 2 3. Implementation will be overseen by a PTC, which is already operational under the ongoing Strengthening Public Health Care System Project (P152136). The PTC is led by the MOH’s Division of External Cooperation and is made up of technical staff representatives from each technical and administrative directorate and division within the MOH. The PTC will be responsible for: (a) coordinating project activities, including those carried out by the SILAIS and the municipal health networks; (b) monitoring project results indicators at the macro level; (c) coordinating with the Procurement Division and the General Division of Financial Management within the MOH and with PAHO on the procurement of vaccines; (d) overseeing the implementation of the IPP and the Environmental Management Plan, including minor rehabilitation works; (e) preparing technical and financial progress reports; and (f) ensuring technical reports are presented in a timely way to the Technical Council and Citizen Council for prompt certification by the relevant external institution. Page 49 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 4. Technical oversight of the activities to be implemented by the municipalities will be undertaken by the Technical Council, an established MOH structure that oversees the performance of MOH’s technical units. The Technical Council is comprised of the directors of all of the General Directorates of the MOH at the central level, a representative of the Health Workers Federation, and the Minister of Health. The Technical Council is responsible for reviewing health reports and for making executive decisions on the technical aspects of health implementation plans. In addition, the Technical Council periodically reviews the implementation of the national health budget and its compliance with the MOH’s annual goals. In this capacity, the Technical Council’s role in the Project will be to review the performance of the 66 municipalities every six months and their compliance with the output-based disbursement arrangements. The Technical Council will issue a statement on its findings to be attached to the report prepared by the Project Verification Commission (PVC) to be submitted to the World Bank. 5. At the SILAIS level, the Citizen Council will be responsible for monitoring the provision of care, the achievement of health indicator targets, the judicious use of funds, and other such issues. The Citizen Councils are also an established structure of the MOH at the SILAIS level, with one in every SILAIS to oversee how the SILAIS and the municipal health facilities relate to local communities. Each Council is comprised of the SILAIS director, representatives of the local hospitals, the SILAIS epidemiologist, a representative of the local branch of the Health Workers Federation, a representative of the Community Cabinet (Gabinete de la Familia Comunidad y Vida), and community leaders. The Citizen Councils will participate in the semi-annual review of the municipal performance indicators and of the municipalities’ compliance with their Quality Health Care Plans, and they will issue a statement of their findings to be attached to the report prepared by the PVC to be submitted to the World Bank. 6. Finally, the existing PVC will be responsible for the verification and certification of capitated payment and output-based disbursements as it is for the current ongoing project. The PVC will include representatives of the Technical Council and the Citizen Councils together with a representative of an external independent institution, such as PAHO or an academic institution. These commission members will visit a randomly selected number of municipalities to verify that they are implementing their Quality Health Care Plans and, in the case of those receiving the capitation payments, achieving their indicator targets. Every year the PVC will present a technical report to the World Bank with the certified documentation. Once the World Bank has reviewed and accepted this report and its documentation, it will make the disbursement. The detailed process is detailed in the Operational Manual. 7. The proposed implementation model has been designed to ensure the sustainability of the actions implemented or strengthened under the Project. The PTC and the Technical Council and the Citizen Councils will participate in the Project’s implementation, which will strengthen their roles and capacity for monitoring and evaluating health service delivery at the municipality level. The Project will closely coordinate with international institutions based in Nicaragua such as the local office of PAHO and with the national universities, both of which will play a key role in certifying the municipalities’ compliance with the agreed indicators and the quality of health care service plans. Page 50 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) II. Implementation Arrangements by Component Component 1: Results based financing for quality improvement in prevention and provision of health care services to the poorest 66 municipalities (US$14 million) 8. The MOH will continue the annual performance agreements (Acuerdos Sociales por la Salud y el Bienestar) with participating SILAIS for the implementation of MOSAFC. These annual, renewable arrangements mandate that the SILAIS are responsible for: (a) guaranteeing the delivery of health services; (b) supervising and monitoring the performance of the health services that are delivered; (c) transferring the funds received as capitation payments to the selected municipalities; (d) entering into separate municipal agreements with each selected municipality; (e) supervising and keeping records of health services and producing progress reports on the performance indicators and performance goals set out in each municipal agreement; and (f) complying with the provisions of the Operational Manual (including the IPPF and the Environmental Management Framework) and the Anti-Corruption Guidelines. 9. Each SILAIS will enter into a municipal agreement on health and welfare with each municipality25 (Acuerdos Sociales por la Salud y el Bienestar con el Nivel Municipal) governing the provision of health services. The municipal health care directors will act as guarantors of these agreements. Each SILAIS will be responsible for following up on these agreements and for consolidating the municipality’s performance reports. These annual, renewable agreements will establish a set of standard health care services to be delivered by the health network providers. The services agreed in the municipal agreements will be included in the Quality Health Care Plan that is drawn up every year by each municipality. The MOH will take advantage of these agreements, thus continuing its role of ensuring that municipalities are committed to providing quality health care. The General Division of Planning and Development (Division General de Planificación y Desarrollo, DGPD) and the General Directorate of Health Services (Dirección General de Servicios de Salud, DGSS) will lead the implementation of this Component. 10. The municipal agreements will enable the MOH (through the SILAIS) to transfer capitation payments to the municipalities selected for the Project on a per capita and results basis to support the delivery of health services. They will commit these municipalities to: (a) providing health care services according to their epidemiological profiles and meeting three tracer performance indicators specified in their municipal social and welfare agreement; (b) implementing the Quality Health Care Plans; (c) keeping records of the health services delivered and performance indicator reports; (d) fulfilling the provisions set forth in the Operational Manual (including the preparation of and compliance with relevant IPP and the environmental monitoring framework); and (e) establishing anti-corruption guidelines. 11. In addition to implementing the municipal social agreements, the SILAIS will also monitor and follow up on: (a) the annual per capita amount of Nicaraguan currency (Córdobas) to be transferred by the MOH to the relevant municipalities; (b) the municipalities’ compliance with the performance indicators and performance goals; (c) the incentives as defined by the MOH in the Operational Manual to be awarded when a municipal health network achieves at least 70 percent of its performance targets, including additional professional service training, and public acknowledgement for outstanding service based on a satisfactory performance assessment rating; and (d) any adjustments to the Quality Health 25 Municipal agreements are the social and welfare agreements at the municipal level. Page 51 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Care Plans. The MOH may also provide technical support to municipalities that are struggling to achieve their established goals. It will develop a national model Quality Health Care Plan for municipalities to use as a reference as they develop their own plans. The Plan will cover, for example, setting standards for health care provision, including promotion and prevention measures, particularly for those services that are most required given an area’s epidemiological profile (for example more emphasis on malaria in the Caribbean Coast than in Managua), as well as building the capacity of those staff members whom the SILAIS has identified as needing additional skills and providing training in M&E, particularly in planning and statistics. Each SILAIS will be able to adapt the Plan to the specific technical needs of each municipality to enhance its operational capacity to ensure the highest quality of health care service delivery. The technical department within each MOH directorate will support the municipalities in the implementing their Quality Health Care Plans and in their attempts to achieve their indicator targets. Under Component 1, the MOH will retain four percent of the annual capitated payments to fund the verification process (three percent) and the monitoring and technical support from the central level (one percent). 12. Component 1 will be implemented using capitation payments, which are the marginal financial resources transferred by the MOH to the selected municipalities to enable them to increase access to quality health services and to ensure widespread coverage of health promotion, prevention, and protection initiatives. The municipalities will execute the funds and report every six months to their SILAIS on their progress towards achieving their Project indicators and implementing their Quality Health Care Plan. The SILAIS will be responsible for collecting, revising, and consolidating all of these municipal reports and sending them to the MOH. 13. The certification process will have the following stages: (a) the municipalities will prepare bi- annual reports to present to the SILAIS; (b) the SILAIS will review the reports and send them on to the Technical Council and the Citizen Council; (c) the PVC will visit the municipalities to verify the information in the reports; (d) the annual population projections for each municipality will be verified by the National Institute of Statistics; and (e) the external institution chosen by the Project as the overall verification agency will certify the municipalities’ achievement of the agreed indicators and implementation of their Quality of Health Care Plans. Component 2: Support to the implementation of National Health Strategies for the provision of quality health services under the MOSAFC (US$ 44.5 million) 14. The PTC will coordinate the implementation of the activities under this Component with the following arrangements: (a) the use of PAHO’s Immunization Revolving Fund for procuring vaccines and immunization supplies; (b) the multisector collaboration between MINED, MIFAN, MINJUVE, and the National Office of the Family (Procuraduría Nacional de la Familia); (c) the participation of the CEMED; and (d) the use of output-based disbursement for some of the training programs provided for health workers at the central and local levels. a. The Project will use the PAHO Immunization Revolving Fund, which ensures fast-track transactions, lower purchase prices, top-quality products, and reduced management risks for the direct purchase of vaccines. The procedure will begin with the Public Health Surveillance Directorate submitting a vaccine purchase order to PAHO under the agreement signed between the MOH and PAHO. PAHO will be responsible for procuring and supplying vaccines and immunization supplies, for which it will Page 52 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) be directly reimbursed by the World Bank following the satisfactory delivery of vaccines to the country. The Project team will prepare a report to be submitted to the World Bank which should certify that the vaccine was delivered to the SILAIS based on the online registry system from the National Center of Biologicals and that it was properly stored at the designated national distribution points. The DGVSP is the technical unit that will be responsible for coordinating this delivery. The transportation costs will be financed from the Government budget. b. The Project will strengthen the MOH’s multisectoral collaboration MINED, MIFAN, MINJUVE and the Procuraduría Nacional de la Familia. This collaboration is geared to reduce and prevent pregnancies among girls under 19 years of age. It seeks to introduce actions from MINED for an early identification of at-risk girls to be referred to the social protection system -MIFAN. At the same time, these institutions support the coordinated implementation of the national strategy for the prevention of adolescent pregnancy and gender-based violence nationwide. c. The CEMED, a Directorate of the MOH, will be responsible for the implementation of subcomponent 2(f)(ii) enabling the capacity of the CEMED. The Center will prepare terms of reference for the rehabilitation of the working spaces for the training and local repair of equipment; the procurement plan for equipment, and repair pieces of medical and non-medical equipment as needed; the procurement of two micro buses to provide integral maintenance of the regional health facilities; and the training plan for the personnel working at CEMED. Any procurement will be implemented in coordination with the MOH’s General Procurement Division in accordance to the World Bank Procurement Guidelines. Any training other than basic on-the-job training will be closely coordinated with the General Directorate for Training, supported by local and international academic Institutions, including graduate level, masters level, technical level, and south-south training activities. The legal agreement will be prepared for CEMED following the same conditions as are specified in the contract of the ongoing project. The functions of CEMED will include: (a) implementing subcomponent activities with due diligence and efficiency, in conformity with sound technical, economic, financial, administrative, environmental, and social guidelines and practices satisfactory to the World Bank, in accordance with the Operational Manual, the ESMF, and the Anti-Corruption Guidelines; (b) complying with policies and procedures enabling the MOH to conduct M&E activities in line with project performance indicators defined in the Operational Manual and the achievement of project goals; (c) allowing the MOH and the World Bank to inspect subcomponent activities and any relevant records and documents; and (d) preparing progress reports every six months and submitting them to the MOH and the World Bank. d. The provision of all levels of training programs for health workers at the central and local level will include the implementation of output-based disbursement for selected training activities. The General Training Directorate, together with all other directorates, will be responsible for implementing training activities according to an annual plan. The Technical Council will be responsible for the final presentation of the report for reimbursement in the case of the output- based activities. The fiduciary office of the MOH will be responsible for preparing the customized Statements of Expenditure (SOEs) for the activity. Disbursements will take place as described in the Disbursement and Financial Information Letter, taking into account any advance use of funds by the General Training Directorate to implement the activity. Page 53 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Component 3: Contingency Financing of a Public Health Emergency or Public Health Alert (US$ 0.00 million) 15. If a public health emergency or public health alert is declared, the DGVSP would be responsible for implementing activities under this Component in coordination with the Division of External Cooperation. Component 4: Project management (US$1.5 million) 16. This Component will finance the strengthening of the MOH’s capacity for administering, implementing, supervising, and evaluating Project activities. This will include support for carrying out independent external financial certifications. III. Financial Management and Disbursement Arrangements 17. Overall, the Project will benefit substantially from the MOH´s existing financial management arrangements that were put in place for the implementation of the ongoing Strengthening Public Health Care System Project (P152136). In general, the performance of these financial management arrangements in terms of a financial recording system and financial reporting, cash flow, audit arrangements, an internal control system, and asset management are moderately satisfactory. Taking into account the additional activities envisioned under the new operation, those arrangements will need to be strengthened. A financial management assessment was conducted in October 2017; key financial management issues were discussed and agreed at appraisal in the framework of the proposed Project. These include the need: (a) for additional staff to strengthen the DGAF to enable it to properly support the implementation of the Project; (b) for specific procedures to govern the flow of funds arrangements for the capitation payments and output-based financing activities; and (c) to revise the implementation of a financial management information tool that facilitates the recording, control and reporting of project transactions for the provision of required financial reports, which are currently prepared in Excel, after one year of project execution. The Operational Manual has been updated to reflect these recommendations. The following sections describe the specific arrangements: 18. Organization and Staffing. Within the MOH, the DGAF through the External Coordination Unit of the Financial Division will continue to be responsible for all of the Project’s financial management arrangements. The DGAF will execute the Project in coordination with the SILAIS and the municipal health networks. Each SILAIS is staffed by one administrative officer, an accountant, and one or two financial analysts who can carry out routine administrative tasks. Within the External Coordination Unit of the Financial Division, there is an administrative and finance team that can perform basic financial management functions such as budgeting, accounting, treasury, disbursements, and financial reporting. It currently has a budget analyst and a financial analyst, both of whom have developed expertise with externally financed operations and are familiar with the Bank’s requirements, as they are in charge of monitoring the execution of all external funds. However, because the Project will increase the number of activities and transactions to be handled (due to overlapping of projects) it has been agreed that this team would be strengthened with an additional financial analyst financed with project funds. Page 54 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 19. Budget Planning. The budget arrangements will follow the procedures that are already established in Nicaragua. Between August and September of each year, the MOH has to prepare its tentative investment program for the upcoming year (which will include the investment program for the Project) and submit it to the Ministry of Finance for review and approval. The Project budget will need to be drawn up in accordance the budget policy set by the Ministry of Finance and should be incorporated into the national budget before it is submitted to Congress in October. Based on the approved budget, the MOH will update its project-related annual work plan and procurement plan, which will be reviewed by the Bank. The Project’s budget will be processed, recorded, and executed through Nicaragua’s new Integrated Financial Management System (Sistema Integrado de Manejo Financiero, SIGAF) and will follow its procedures. 20. Accounting. Project transactions will be recorded in SIGAF in accordance with the Government’s accounting policies and practices. For the current ongoing operation, the transactions processed in SIGAF are also recorded in an Excel file that makes it possible to classify expenditures by Project Component and cost category and in U.S. dollars. The Excel records are then used to prepare financial reports and Statements of Expenditure. Overall, this process is adequate, but considering the additional transactions and components that will be included in the proposed Project, it may be necessary after a year of project execution and joint evaluation with the Bank for the MOH do develop its own financial information system – to complement SIGAF. 21. Processes and Procedures. The MOH has to comply with local administrative and control systems (Law 550), which will soon be modified to take into account the new SIGAF system, and also it complies with local norms regarding budget preparation and execution. The MOH has already established detailed processes, procedures, controls, and monitoring tools for the execution of the current ongoing project that are reflected in the Operational Manual, including those governing capitation payments, output- based activities, and sanitary emergencies or alerts. Those procedures need to be validated and/or complemented to reflect the lessons learned from the current Project, and to verify the adequacy of the arrangements for processing output based disbursements and capitation payments, including the key documents required in the different authorization and approval of different type of payments. 22. Therefore, all existing procedures, budgeting, accounting, payments, support documentation, accounts reconciliation, and financial reporting have been updated in the Project Operational Manual. 23. Financial Reporting. The DGAF will be responsible for preparing Interim Financial Reports (IFRs) on a semi-annual basis to be submitted to the Bank. The IFRs should cover: (a) the sources and uses of funds, reconciling items, and cash balances, with expenditures classified by project component and /cost category; and (b) a statement of investments reporting the current semester and the accumulated operations against ongoing plans, as well as footnotes explaining the important variances. The reports will be prepared both in the local currency and in U.S. dollars. The IFRs should be submitted for the World Bank’s review no later than 45 days after the end of each half-year. The format and content of the IFRs in general would be similar to the actual operation. 24. On an annual basis, the MOH’s DGAF would also prepare project financial statements including cumulative figures, for the year and as of the end of the fiscal year (December 31). Page 55 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 25. All documentation related to the SOEs will be maintained for post review and audit purposes for up to three years after the closing date of the Project, or for 18 months after the World Bank has received an acceptable final financial audit report, whichever is later. 26. External Audit. The MOH will contract with an external, independent, private audit firm, acceptable to the World Bank under defined terms of reference approved by the Bank, for the entire life of the Project no later than six months after the credit’s effectiveness. The audit firm will review and provide an opinion on the Project’s annual financial statements covering the fiscal year (which coincides with the calendar year). The auditors will present the World Bank with audited financial statements no later than six months after the end of the fiscal period. According to Bank Policy 10.00 on Investment Project Financing, the audited financial statements will be made public as required in IDA’s General Conditions. The financial audit requirements are as follows: Audit type Due date Project financial statements June 30 Special opinions – SOE June 30 Management letter June 30 27. Flow of Funds. Specific procedures for the Project’s funds flow have been specified. 28. Following the general practice in the Bank’s current portfolio, the following disbursement methods may be used to withdraw funds from the credit: (i) reimbursement; (ii) advance payments; and (iii) direct payments. Three designated accounts (DAs) will be opened in the Central Bank of Nicaragua (Banco Central de Nicaragua) under the name of the Project: (i) DA-A for capitation payments; (ii) DA-B for output-based activities; and (iii) DA-C for the rest of the categories. Funds deposited into the DAs as advances will follow the Bank’s disbursement policies and procedures, to be described in the Financing Agreement and in the Disbursement and Financial Information Letter (DFIL). Following the Bank’s current practices, advances made to the DAs should be documented through the use of SOEs and supporting documents defined in the DFIL. 29. The ceiling for advances to be made into the DA-B will be specified in the DFIL. Eligible expenditures paid out of the DAs must be documented on a quarterly basis. In the case of capitation payments, advances to the DA-A will be made based on annual forecasts, and a customized SOE will continue to be submitted that gives information on the number of beneficiaries based on the information of the population covered. Funds deposited in the DAs will be then channeled through the DAs’ operating account in local currency (Córdobas) following specific arrangements described below, which will be confirmed during appraisal and further elaborated in the Operational Manual. 30. The World Bank Financial Area needs to conduct an evaluation of the Single Treasury Account. After this evaluation is completed, the Designated Accounts for the Projects can be adjusted accordingly. 31. Retroactive financing. This Project will allow retroactive financing for up to 20 percent of the total amount of the credit (up to US$12 million) for eligible expenditures under Component 2, except for subcomponent 2(f)(i) on or after December 7, 2017, but in no case earlier than 12 months from the date of the Financing Agreement. Page 56 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 32. Capitation Payments to 66 Selected Municipalities. The Project proceeds will be disbursed on an annual basis in accordance with the target population in each municipality and upon the implementation of the Quality of Care Action Plans and the achievement of the agreed health outcome indicators. Based on the experience of the previous Project, the per capita cost of health care services nationwide has been estimated at US$5.05 per capita, and this will be multiplied by the rural population of each municipality and disbursed as follows: a. Sixty percent of the per capita cost of health care services will be transferred from the MOH to the municipalities at the beginning of the period. b. The remaining forty percent will be transferred after the fulfillment of compulsory performance indicators and the implementation of the Quality of Care Action Plans as defined in the Operational Manual. The recipient municipalities will be classified according to their development performance in three categories. Those in Group 1 need significant increases in coverage and improvements in quality, those in Group 2 need moderate increases in coverage and improvements in quality, and those in Group 3 need maintenance of status quo or modest increases in coverage and some improvements in quality. 33. Health Alert or Emergency. The Bank will make disbursements to the MOH to facilitate the use of critical resources in the event of a public health alert or emergency. Funds will be disbursed once the Government has declared an alert or emergency and once it has complied with the Bank’s requirements, including providing the Bank with a list of the goods, minor rehabilitation works, consultants’ and non- consultants’ services, and operating costs required to meet the needs created by the public health alert or emergency. The funds will be disbursed in the form of advances to the SILAIS for specific expenses defined in the MOH’s procedures. 34. The DFIL will specify the supporting documentation that will be needed to document any expenditures under this Component (thresholds for the use of SOE) as well as minimum values for direct payments and reimbursements. 35. The MOH and the World Bank are jointly evaluating additional measures to ensure that capitation payments and output-based activities will be executed according to the Project’s norms and procedures and have reviewed the procedures to be followed, the documents required, and the reports to be prepared. 36. Financial Management Action Plan. Based on Bank recommendations, an action plan to ensure that adequate financial management systems are in place is currently being developed by the DGAF. The mitigation measures included in the action plan are aimed at reducing or eliminating the financial management risks associated with the Project. Page 57 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Table A2.1: Action Plan for Financial Management Action Responsible Entity Completion Date* 1. Evaluate additional measures to ensure that capitation payments and output-based activities World Bank-MOH Completed are executed according to Project norms and procedures. 2. Project financial system that facilitates the recording, control and reporting of project One year after MOH transactions for the provision of required financial effectiveness reports available. 3. Contract external auditor based on terms of reference from a shortlist satisfactory to the Six months after MOH DGAF World Bank for the entire implementation period effectiveness of the Project. Six months after 4. Employ additional financial analyst. MOH DGAF effectiveness 5. Update the Operational Manual reflecting agreed financial management procedures, including MOH DGAF Completed detailed processes and procedures, key controls, and reporting. 6. Provide the Project’s financial management staff Before project with training in financial management and World Bank implementation starts disbursements. *Note: This represents the estimated completion dates and is not an indication of any legal conditions related to the Project. 37. World Bank Financial Management Supervision Plan. A World Bank financial management specialist will complete a review prior to the Project’s effectiveness to verify the implementation of the action plan and review all financial management arrangements for the Project. After effectiveness, the financial management specialist will review the annual audit report and the financial sections of the semiannual IFRs including a monthly reconciliation of accounts, and perform at least two complete supervision missions per year. This supervision strategy would be reviewed periodically and adjusted based on performance and risk. IV. Procurement 38. Procurement will be conducted according to the World Bank’s Procurement Regulations for Investment Project Financing Borrowers, issued in July 2016, for the supply of goods, works, non- consulting services, and consulting services. The World Bank's Standard Procurement Documents will govern the procurement of World Bank-financed Open International Competitive Procurement. For procurement involving National Open Competitive Procurement, the Borrower will use standard procurement documents acceptable to the Bank that will be included as annexes to the Operational Manual. Page 58 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 39. Procurement for the Project will be carried out by the MOH. The MOH’s Procurement Division has more than five years of experience with externally financed operations, and a procurement capacity assessment carried out in September 2017 confirmed that MOH has the necessary capacity, adequate structure, and the requisite procedures in place to carry out the procurement for the Project. The Project procurement specialists will be responsible for all procurement and contracting-related queries and processing, including the management of and compliance with fiduciary requirements. A procurement plan for the first 18 months of the Project has been developed and agreed upon by the Government and Bank. The Project will be executed in accordance with the World Bank’s Procurement Regulations for Borrowers under Investment Project Financing (July 2016 - ‘Procurement Regulations’) and the provisions stipulated in the Procurement Plan and the Operational Manual. 40. Based on the assessment and the fact that the expected procurement activities: (a) are not complex in terms of procurement; (b) have been successfully implemented by the same team in the ongoing Strengthening Public Health Care System Project (P152136); and (c) do not imply major risks, it was determined that the procurement risk is rated as Moderate. 41. The MOH’s fiduciary unit has developed a full PPSD focused on the high value goods under Component 2. Component 1 does not involve any procurement. Based on the PPSD’s market analysis, it concluded that the Project’s procurement processes will concentrate on: (a) the acquisition of goods (medical equipment) which will use international bidding; (b) the purchase of vaccines through an institutional agreement with PAHO/World Health Organization (WHO); and (c) the purchase of low-value goods and services (under Component 2 and 4) to be purchased through national bidding to support the health care provision network. In addition, the PPSD specified that some of the goods to be purchased under the Project will depend on the technical design of the Las Minas Hospital. 42. Based on the market analysis and lessons learned from previous similar experiences, it was concluded that the best alternative for project procurement is a straightforward approach via Requests for Bids in an open competitive process, applying the current country thresholds, which were defined as completely valid and applicable for this Project. Therefore, it is expected that the processes to procure medical equipment under Component 2 will be international. The procurement arrangements for the activities expected to be carried out during the first 18 months of the Project are detailed in the relevant Procurement Plan. 43. In addition to conducting the prior review, supervision to be carried by the Bank team, the capacity assessment of the implementing agencies has recommended annual supervision missions in the field to carry out the post review of procurement actions. Page 59 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) ANNEX 3: IMPLEMENTATION SUPPORT PLAN COUNTRY: Republic of Nicaragua INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES PROJECT I. Strategy and Approach for Implementation Support 1. The strategy for implementation support has been developed based on the nature of the Project and its risk profile as well as on lessons learned from previous and ongoing projects. The strategy is designed to be flexible so that it can be revised during project implementation if any challenges become evident. The implementation support strategy focuses primarily on the risk mitigation measures defined in the SORT and on supporting the client in various efficient ways as described below. II. Implementation Support Plan and Resource Requirements 2. Operational Support. The World Bank’s implementation support to the Government of Nicaragua will include the following activities: (a) ensuring that the verification institution chosen for the Project, which in the ongoing Strengthening Public Health Care System Project (P152136) has been the PAHO- WHO agency, is a good fit; (b) continuing to ensure the timely production of the annual implementation plans and annual social agreements; (c) continuing to track the progress of project indicators, to monitor the implementation of project components, and to ensure that the Project is in conformity with the Operational Manual; (d) revisiting the sustainability measures implemented throughout the implementation period; (e) ensuring the results-based mechanism is being implemented according to the annual action plans; and (f) ensuring that the Project is in compliance with submitting financial unaudited and audited reports. A senior health economist/ a public health physician (the task team leader), and an operations analyst will perform the day-to-day supervision of all operational aspects of the Project, while also coordinating with the client and the World Bank. 3. Coordination with Other Agencies and Other World Bank-financed Projects. Throughout the Project, the World Bank will coordinate with the United Nations agencies such as PAHO or an academic institution on the certification of specific activities, with United Nations International Children’s Emergency Fund, and with United Nations Population Fund on the implementation of the Adolescent Health Strategy. The Project will also promote and enhance cross-sectoral collaboration between MINED, MINJUVE, and MIFAN, especially in the prevention of adolescent pregnancy, including domestic violence. 4. Technical Support. The World Bank will bring value-added to the Project implementation in the form of technical support in the following areas: (a) providing technical guidance on the final review of the national NCD strategy and on the preparation of the strategy’s implementation plan; (b) discussing and systematizing procedures for improving the quality of care; (c) identifying high-level academic institutions and centers for training staff at all levels of service delivery; (d) implementing South-South exchanges on particular topics to enable the health sector to benefit from international experiences; and (e) opening a dialogue with the Ministry of Finance regarding sources of stable annual funding to improve the maintenance and repair of high-tech medical equipment and the HWM. In addition, the World Bank will continue to support public discussions about what adjustments might be necessary for the health system to respond to the changing epidemiological profile of the population. Page 60 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) 5. Monitoring and Evaluation. As the MOH will be implementing the Project directly with no coordination unit, the World Bank will provide the MOH with technical support to analyze the information needed to trigger the transfers to municipalities. It will also verify results on the ground with the support of PAHO and work with the MOH to monitor the project indicators. 6. Fiduciary Aspects. In the area of financial management, the World Bank will review the Project’s financial management system, including, but not limited to, accounting, reporting, internal controls, and compliance with financial covenants. A financial management specialist based in the World Bank’s country office will help the MOH to review interim unaudited financial reports, annual project audits, and external audits (as relevant). The specialist will carry out on-site financial management supervision once a year. In the area of procurement, a World Bank procurement specialist will provide the following implementation support: (a) training MOH staff and providing them with detailed guidance on the World Bank’s Procurement Guidelines as needed; (b) reviewing procurement documents and providing of timely feedback to the Project procurement team; (c) providing guidance to the MOH on the implementation of the Procurement Framework; and (d) undertaking post-procurement reviews. will provide this support. 7. Environmental and Social Aspects. The World Bank will help the MOH to effectively implement the Environmental Plan, with a particular emphasis on the adequate management of medical and non- medical waste. Also, the Project will support the Government of Nicaragua in implementing the IPP, which will guide the integration of traditional ancestral medicine into modern health systems. World Bank social and environmental specialists will be available to provide timely assistance to the MOH, the SILAIS, and the municipalities and will carry out field visits on a regular basis. 8. Information and Communication. A communications strategy will support the implementation of the Project in its different areas of intervention. The strategy will cover the implementation of various consultative and accountability processes, including a grievance redress mechanism. Page 61 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Table A3.1: Detailed Implementation Support Required Time Focus Skills Needed Estimated # of Staff Weeks Project management Task Team Leadership, Senior 12 First twelve Health Economist, and Public months Health Specialist Operational support Operations Analyst/ Economist 5 Strengthening procurement Procurement Specialist 6 capacity Strengthening financial Financial Management Specialist 4 management capacity Medical and non-medical Equipment Specialist 9 equipment Hospital and Management Hospital Administrators 2 specialist Monitoring and evaluation M&E Specialist 2 Knowledge management and Knowledge and Communication 4 communication Specialist Social and environmental Social Specialist 2 specialists Environmental Specialist 3 Project management Task Team Leadership, Senior 8 12-48 Health Economist and Public months Health Specialist Operational support Operations Analyst/ Economist 3/5 Procurement implementation Procurement Specialist 15 support Financial management Financial Management Specialist 12 implementation support Environmental sustainability and Environmental Specialist 9 safeguards supervision Social development and Social Development Specialist 6 community engagement/gender Hospital and Management Hospital Administration 3 specialist Knowledge management and Knowledge and Communication 12 communication Specialist Medical and non-medical Equipment Specialist 9 equipment Monitoring and evaluation M&E Specialist 6 Page 62 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) ANNEX 4: ECONOMIC AND FINANCIAL ANALYSIS COUNTRY: Republic of Nicaragua INTEGRATED PUBLIC PROVISION OF HEALTH CARE SERVICES PROJECT 1. This annex presents the Project’s cost-benefit analysis based on the Project’s projected costs and measurable economic benefits. Because of its eventual impact on morbidity, mortality, disease prevention, and maternal and infant mortality, the proposed Project will generate economic and social benefits both nationally and locally. This analysis considers the costs and benefits generated by Components 1 and 2, but does not discuss any costs or possible benefits yielded by Components 3 and 4. 2. Under Component 1, the proposed Project will use per capita payments to cover the cost of providing quality preventive and promotion health care services to vulnerable populations for the implementation of the MOSAFC. The Component will fund two groups of activities. The first group of activities (extramural) will promote family and community health through regular home visits to families based on risk criteria, as well as work with communities and their community leaders in local participatory planning, community-led health initiatives and social assessment/audit, training for health volunteers and midwives, counselors on standardized basic knowledge for delivering community-based safe and quality care to people. The second group of activities (intramural) will involve implementing national quality health care plans, including monitoring and certification. The MOH has estimated that the average annual per person cost of providing a package of services across all geographic and demographic regions of the country will be US$20.01. The prevention and promotion health care services to be funded by the Project will contribute US$5.05 of that total, with the difference being funded by the Government. 3. Under Component 2, the Project will support the implementation of national health strategies for providing quality health services using the MOSAFC, which will be key to the success of the Project. Under Component 2, the Project will finance: (a) the national chronic disease strategy; (b) national efforts to prevent infectious diseases, including support to: (i) the National Entomological Surveillance Program, the National Immunization Program, and the National Medical Waste and Water Quality Management Programs; (ii) the National Program for the Inclusion of Holistic Medicine and Traditional Therapeutic Medicines; (iii) the adolescent sexual reproductive health strategy; (iv) the expansion of health care coverage in the Caribbean Coast; (v) cross-strategy investments for the implementation of the national health strategies, including support training programs for health workers, the repair and maintenance of medical equipment, and the consolidation of the MOH’s health information systems. Development Impact 4. Investment. Out of the US$60 million, US$58.5 million will constitute the Project’s direct investment in health goods and services in the country, distributed as follows:  US$14.0 million will be distributed under Component 1 to fund per capita transfers to cover primary health care for 1,307,522 beneficiaries over a four-year period. This will expand services, increase access, and improve the quality of care available to the rural population in the 66 selected municipalities. It is estimated that the increase in services will generate an average savings of US$5 per capita in the direct and indirect expenses that households incur when they Page 63 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) need to use health care services. The estimate is based on the time when there was a fee for service in place and, therefore is a very conservative estimate as it does not take account of the expected reductions in mortality and morbidity among this population due to the Project.  US$44.5 million under Component 2 to support national programs that are directly related to the provision of health care to the population. 5. According to the cost-benefit analysis, the following benefits will result from the Project’s investment: (a) Savings in household health costs because of the increased coverage of available health services. The Project assumes US$5.0 saving per year per beneficiary over a five-year period. These savings are conservative because they do not account for any repeat visits to health facilities or for the different types of care that patients receive in each visit. It only accounts for the nominal fee that the patient would have had to pay in the past to seek care at a primary health care facility. In 2007, the Government abolished the fee for services at all of the health care facilities in the public health care network. As a result, access to health care is now free of charge for preventive and curative services ranging from prenatal care to hospitalization. The savings will only be accounted for the lifetime of the Project. (b) Savings achieved because of the early detection of risk factors and the delayed onset of chronic diseases and complications. The Project assumes a per person reduction of 0.5 day in the average number of hospitalization days among the over-50 population, which is considered to be the age group at risk (2.72 percent of the total population). This conservative estimate represents a saving of around US$11.47 per hospitalized person. (c) Savings achieved by supporting the implementation of the National Immunization Program. It is estimated that vaccines prevent almost 6 million deaths worldwide every year.26 In countries such the U.S., there has been a 99 percent decrease in the incidence of the nine diseases for which vaccines have been recommended for decades, accompanied by a similar decline in mortality and disease sequelae.27/28 The Project is expected to result in at least a 20 percent reduction in Nicaragua’s under-5 mortality rate, considering that other vaccines purchased directly by the Government will lead to a further 60 percent reduction. With regard to the monetary benefits, this analysis estimates that the Project’s five years of investment in the beneficiary children will result in lifetime future income and contributions to the labor force based on Nicaragua’s current per capita income level. (d) Savings achieved by supporting the integration of traditional medicine with Western medicine. Ethnic minorities and populations with ancestral beliefs about natural medical practices will be attracted to culturally appropriate health care services that combine traditional medicine with 26 http://www.who.int/bulletin/volumes/86/2/07-040089/en/ 27 Anon. Impact of vaccines universally recommended for children. 1900–1998. Mortal Morb Wkly Rep 1999; 48: 243-8 28 Achievement of the MDG 4 (a two-thirds reduction in the 1990 rate of under-5 child mortality by 2015) will be greatly advanced by (and is unlikely to be achieved without) expanded and timely global access to key life-saving immunizations such as measles, Hib, rotavirus, and pneumococcal vaccines. Page 64 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Western medicine. Although they may initially go to the facility to access traditional services, once they are there, they are likely to also be prepared to explore Western medicines. Thus, providing culturally appropriate services will help to reduce morbidity and mortality and out-of-pocket health expenditures for these groups. The savings that will result are estimated to be US$5 per person, taking into account only the ethnic minority population. (e) Savings achieved by investing in the prevention of pregnancy among adolescents (girls and boys). The health sector plays an important role in preventing first and second pregnancy among adolescents as well as in reducing mortality among adolescent mothers. Based on Nicaragua’s current maternal mortality ratio (38 deaths per 100,0000 live births) and the estimated contribution of adolescent deaths to that total, providing adequate health care to adolescents could contribute to a reduction of up to 20 percent in the maternal mortality rate. In addition, this would yield many other benefits to society, including from an increase in the labor force participation rate caused by women delaying parenthood and staying in school. The estimated increase in the female labor force participation rate (to 39.7 percent)29 is based on the minimum national salary and the likely number of years that an adolescent woman will participate in the labor force in her lifetime 6. Other important investments that yield savings were not accounted for in this cost-benefit analysis including: (i) the prevention of contamination from hospital waste among health professionals and general services personnel at the health facilities and the prevention of medical waste contamination in the communities in which health facilities are located; (ii) the reduction in illness due to the provision of better quality water to the municipalities as a result of the MOH’s efforts to measure the quality of water and provide reports to the community; and (iii) the improved care and maintenance of medical and non-medical equipment that will ensure that they function optimally and last beyond their expected useful life. 7. Project Investment and Recurrent Costs. For the purposes of this economic evaluation, a net investment of US$52.2 million was assumed for the Project as a whole and a discount rate of 10 percent. Recurrent costs, which will be covered by the MOH and will include medical supplies and the cost of the health personnel working at the health facilities, were estimated to be 20 percent of the total investment. Taking Year 1 as 2018, the results of the analysis indicate that the Project has a NPV of US$4,320,320 and an IRR of 13.6 percent. The analysis shows that the Project would be worthwhile even under conservative assumptions. Table A4.1: Assumptions and Parameters used in the Analysis Discount rate 10 percent for the basic analysis, 5 percent and 12 percent in the sensitivity analysis. Periods of time considered In the cohort of children receiving vaccines, their benefits will start accruing approximately from their 19th birthday, around 15 years after they are vaccinated, which is when the first cohort of Project beneficiaries will be starting to work. 29 https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=NI Page 65 of 66 The World Bank NI - Integrated Public Provision of Health Care Services (P164452) Beneficiary Population The Project’s main target population is 1.3 million people in 66 municipalities. The beneficiaries will include children younger than 5 years of age (731,923), adolescents (girls and boys - 698,565), adults over 50 years of age (882,348), and the indigenous population (443,847). Financial measures The overall economic benefits of the interventions were estimated using two standard measures of investment project analysis: (i) the NPV and (ii) the estimated IRR of the considered interventions. Wage savings These were estimated based on the minimum salary (US$1,628) and life projections for years worked in a lifetime. Labor force The labor force participation rate of women in Nicaragua was estimated to be 39.4 percent. 8. Sensitivity Analysis: In addition, two particular variations were tested: (a) Discount rate: A variation of 2 percentage points in the discount rate (from 10 to 12 percent) would reduce the NPV to US$1,612,985 and keep the same IRR. Lowering the discount rate by 5 points (from 10 to 5 percent) would increase the NPV to US$17,800,021 with a IRR of 27.7 percent. (b) Extension of coverage: An increase of US$1 in the per capita (from US$5 to US$6 per person) would increase the NPV to US$6,174,034 with an IRR of 22.3 percent. In the same parameter, health care coverage with a combination of traditional and Western medicine of 20 percent of the actual investment would represent an increase of the NPV to US$13,065,740 with a IRR of 27.7 percent. This shows how sensitive the response could be to the increment on individual health care savings and use of health care services. The World Bank’s Added Value 9. The World Bank will contribute to Nicaragua’s long-term development by providing additional support to monitor the quality of care and the extension of coverage to the Caribbean Coast. While the Project will primarily operate in 66 municipalities (42 percent of all municipalities in the country), it will have spillover effects on the rest of the country. The Project introduces a systematic integration of risk factors identification to care provided at the primary level, which is an important step in strengthening the country’s response to the growing burden of NCDs. The underlying goal of this Project is to establish a sustainable mechanism for the measurement and monitoring of the quality of care, while strengthening the infrastructure, processes, and cultural sensitivity of the country’s public health care provision. 10. The provision of health care services to the population free of charge since 2007 has increased service use and reduced out-of-pocket expenditures for Nicaraguan households. The support provided through this Project will result in further savings for households with the improvement of the health care provision in the Caribbean Coast, the support for the strategy for continued education for health professionals at the central and local level, and the expected delay in the onset of diseases and in the complications of chronic diseases among the working adult population. Page 66 of 66