Update: Reforming Indonesia’s Healthcare System – Key Features of the Health Law

Following the issuance of Law No. 17 of 2023 on Health (the Health Law), we have updated our June 2023 e-bulletin on “Reforming Indonesia’s Healthcare System – Key Features of the Health Bill” with this e-bulletin.  

The Covid-19 pandemic has tested healthcare systems worldwide, and Indonesia has been no exception. The pandemic exposed the limitations of Indonesia’s healthcare system, leading to healthcare becoming a national priority for the Indonesian government. 

The government felt that a major and holistic transformation of the national healthcare system was needed, and on 8 August 2023 enacted the Health Law in the form of omnibus legislation that revoked 11 key existing laws in the healthcare sector – including the 2004 Medical Practice Law, 2009 Health Law, 2009 Hospitals Law and 2014 Health Workers Law – by simplifying, consolidating and improving upon these laws. 

Introduction

Previously, the draft Omnibus Health Bill (the Health Bill) emphasised simplifying and centralising various powers in the central government, including the Ministry of Health (the MOH), with the expectation of reducing red tape and creating more flexibility to better align with the healthcare sector developments. However, those features have been somewhat diluted in the Health Law as enacted. We set out below key aspects of the Health Law that are most relevant to industry stakeholders, including medical liability, processing of medical records and health data, and employment of foreign doctors.  

1. Medical liability for hospitals and medical and healthcare practitioners 

Prior to the enactment of the Health Law, several regulations already recognised medical liability, including Law No. 44 of 2009 on Hospitals, Law No. 29 of 2004 on Medical Practice, and Law No. 36 of 2014 on Healthcare Practitioners. Under these three laws, hospitals, medical practitioners and healthcare practitioners, respectively, can be held liable for medical malpractice. However, despite this legal recognition, Indonesia’s medical liability regime is still rudimentary, with only limited actions ever having been taken against hospitals, medical practitioners, and healthcare practitioners. This is primarily due to the difficulty of proving cases, lack of awareness among patients, and inadequate enforcement mechanisms.   

Mistakes vs negligence. Under the Health Law, any patient suffering losses from a “mistake” in the provision of healthcare services can seek compensation for damages against their medical practitioners and healthcare practitioners, but not from the hospital. However, in case of “negligence” by the healthcare human resources in a hospital, it is the hospital that will be held liable for all losses. The terminology “healthcare human resources” covers medical practitioners, healthcare practitioners and supporting or auxiliary healthcare personnel.   

This contrasts with the previous regulatory regime, under which claims could be made against healthcare practitioners for losses arising from both their “mistakes” and “negligence” (we note that “healthcare practitioner” is defined differently under the Health Law).   

Under the Health Law, claims made against a medical or healthcare practitioner for a mistake must go through an alternative dispute resolution (ADR) forum before a patient can proceed to court. 

The Health Law also sets out criminal sanctions for a medical or healthcare practitioner whose negligence results in a patient suffering serious injury, for which the penalty is imprisonment for up to three years or a fine of up to Rp.250 million (US$16,000), or death, for which the penalty is imprisonment for up to five years or a fine of up to Rp.500 million (US$32,000).   

Unfortunately, the Health Law does not contain any guidance on the difference between mistakes and negligence. The ADR forum and compensation scheme are also not explicitly regulated in the Health Law. This leaves plenty of room for interpretation and judicial discretion. 

Corporate liability. Under Article 193 of the Health Law, a hospital can be held liable for any loss resulting from negligence by healthcare human resources. There is no express guidance on this corporate liability concept, and from a plain reading, the term “hospital” seems to refer to the relevant corporate entity operating the hospital.  

The Health Law goes on to state that where a corporate entity engages in specified criminal acts set out under the Health Law (such as commercialisation of organ transplants or body tissue), then criminal sanctions (eg, imprisonment and fines) may be imposed on the relevant functional officer (pengurus yang mempunyai kedudukan fungsional), order giver (pemberi perintah), controller (pemegang kendali) and/or beneficial owner (pemilik manfaat).

These provisions seek to pierce the corporate veil by extending liability to other parties in addition to the corporate entity itself. Further guidance from the regulator will be needed to understand how these concepts will be interpreted in practice. 

2. Processing medical records and health data 

Key concepts. The Health Law recognises various concepts, including “medical records”, “patient confidential personal health”, “data and information” and “personal health data and information”. Some of these concepts are already covered by existing regulations, and navigating these overlapping requirements could become a complex exercise for both healthcare service providers and patients. For instance, the term “medical records” is regulated by Minister of Health Regulation No. 24 of 2022 on Medical Records, issued in August 2022, while “health data and information” is regulated by Law No. 27 of 2022 on Personal Data Protection (the PDP Law).  

Legal bases for onshore processing of health data and information. With respect to the recognised legal bases for processing personal health data and information, the Health Law not only recognises the relevant patient’s consent as a legal basis for onshore processing activities but also recognises other legal bases as set out in the PDP Law. This aligns with the PDP Law, which is a welcome development.  

Offshore transfers and disclosure of health data and information. A major difference between the PDP Law and the Health Law relates to offshore transfers and disclosures. The Health Law requires (among other things) prior approval from the President of the Republic of Indonesia for (i) offshore transfers of public and private “health data and information”, with such transfers only to be made for specific and limited purposes, and (ii) offshore transfers of specimens. In contrast, the Health Bill only required the prior approval of the MOH. This Health Law requirement is stricter than under the PDP Law, as the latter permits offshore transfers of personal data (including “health data and information”) if (a) the recipient country offers equivalent protection to, or higher protection than, the PDP Law, (b) there is adequate protection under binding arrangements between the transferor and transferee, or (c) the relevant personal data subject’s consent has been obtained.  

Processing of health data and information must be onshore. The Health Law requires the processing of health data and information  to be conducted primarily in Indonesia. Offshore processing is only permitted if: (i) such processing complies with other relevant regulations (eg, regulations applying to electronic systems, electronic transactions and information, and personal data protection), and (ii) the President’s prior approval has been obtained.  

With respect to the processing of health data and information, there are more stringent rules under the Health Law, adding another layer of complexity in relation to personal data protection rules in the healthcare sector.

3. Employing foreign doctors  

Minister of Health Regulation No. 6 of 2023 on the Utilisation of Foreign Healthcare Practitioners (MOH Regulation 6) regulates the types of activities that can be undertaken by foreign doctors and the applicable regulatory requirements that must be met before undertaking such activities. For example, foreign doctors can practice medicine in healthcare facilities if they satisfy certain criteria, such as being able to speak Indonesian and holding a specialist qualification, a Competency Certificate (Sertifikat Kompetensi), a Temporary Registration Certificate (Surat Tanda Registrasi Sementara or STR), and a Licence to Practise (Surat Izin Praktik or SIP). In practice, these criteria are difficult to fulfil, meaning that foreign doctors seldom practise in Indonesia.

Registration and licence issuing authority. The Health Law grants the Indonesian Medical Council (KKI) (on behalf of the MOH) the authority to issue the Registration Certificate (STR), and the relevant regional government has the authority to issue the Licence to Practise (SIP) allowing foreign doctors to practise in Indonesian healthcare facilities. So there is little change from MOH Regulation 6 in terms of the issuing authority. (Under the Health Bill, the authority to issue both the Temporary Registration Certificate and Licence to Practise was granted to the MOH, but that change is absent from the Health Law.)

Registration Certificate (STR). STRs for foreign doctors will now be valid for two years (and extendable for another two) based on the Health Law. This is an increase of two years in the total validity period, compared with one year plus a one-year extension previously. 

Licence to Practise (SIP). The Health Law slightly reduces the power of the medical association. Under the previous regime, a recommendation from the medical association was one of the prerequisites to obtain an SIP. That requirement no longer applies in the Health Law. 

Overall, we do not see significant changes in the overall regulatory framework applying to foreign doctors in Indonesia. However, the implementing regulation should address these procedures in more detail. 

4. Health Social Security 

The Health Bill anticipated amendments to Law No. 24 of 2011 on Social Security Organising Board (known by its Indonesian abbreviation as BPJS) (the BPJS Law) by increasing (i) the accountability of BPJS vis-à-vis other ministries, (ii) the responsibilities of employers for BPJS registration, and (iii) the BPJS health benefits. However, the Health Law no longer includes any such amendments to the BPJS Law.

Conclusion 

Healthcare is clearly a national priority for the government, as it continues to reform Indonesia’s healthcare system. While the changes introduced by the Health Law have been quite limited, we hope that the accompanying implementing regulations will be more ambitious in tackling the issues faced by Indonesia’s healthcare system.