Compare: Provider payment mechanisms

Joint Learning Network for Universal Health Coverage

The Joint Learning Network for Universal Health Coverage systematically documents the reforms of its member countries and other countries that have expanded health coverage through demand-side financing. The case studies contained in these pages are brief, comparative and modular in nature, describing the key highlights and technical features of each program.


Compare various dimensions of country reform efforts using our interactive tool.


Program Provider Payment Mechanisms Provider payment mechanisms
Rwanda: Mutuelles de Sante
  • Fee-for-service
  • Capitation

The health insurance system in Rwanda has two main channels for financing: the demand side – the insurance programs, and the supply side – transfers from the treasury to districts and health facilities. On the demand side, services are financed through three main channels: demand-based user payments, demand-based payments from Mutuelles, and demand-based payments from RAMA and MMI.

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The health insurance system in Rwanda has two main channels for financing: the demand side – the insurance programs, and the supply side – transfers from the treasury to districts and health facilities. On the demand side, services are financed through three main channels: demand-based user payments, demand-based payments from Mutuelles, and demand-based payments from RAMA and MMI.

  • Demand Based User Payments: These amount to approximately 20% of total health expenditures in Rwanda. These stem from personal payments for treatment from individuals who have health coverage. Those insured by RAMA and MMI pay 15% upon treatment for all services and pharmaceuticals. Those covered by the Mutuelles system pay 10% for all services.
  • Demand based payments from Mutuelles: Payments are made directly to health facilities based on a fee-for-service or a capitation basis depending on the region.
  • Demand Based payments from RAMA and MMI: Payments are made to the health centers by the insurance system RAMA and MMI on a fee-for-service or a capitation basis. Many of the health centers receive capitation payments, while district and national hospitals are paid on a fee-for-service basis.

On the supply side, financing flows from the central government towards health providers through multiple block grants, which provide hospitals with greater degrees of autonomy.

A key issue on the supply-side financing is the equity of the needs based transfers against the historical criteria. The government hopes to progressively move towards increasing the importance of needs-based transfers and decreasing historical transfers.

  • Needs-based transfers are delivered in the form of a monthly block grant from the government to individual district-level health centers, in amounts that are calculated based on a formula which includes population and poverty levels as a weighing factor.
  • Performance based transfers or Pay for performance (PFP), instituted in 2006, links measurable indicators with financial incentives for district level health centers that are paid according to performance, rather than actual costs of service or operation. Hospital budgets are determined prospectively based on an annual value of beds. Each quarter, performance is reviewed by the district level peer review system with indicators that gauge facility outputs, quality, and administration. Based on the scores, each hospital receives payment that correlates to the performance review. Incentives are included for workers in rural areas and hospitals that offer HIV/AIDS services in order to maintain qualified health personnel. Results from independent studies of 16 health centers indicated that income was 22.7% higher and health outcomes improved in health centers that had PFP mechanisms. The same study found that family planning was 28% higher in provinces with PFP.
  • History based transfers delivered from the government to health centers for facilities to maintain their assets.
  • Investment grants which are provided from the government for construction and equipment to health centers
  • Fragmented Donors’ Transfers from a group of bilateral and multi-lateral organizations to specific facilities, some of which are made in kind. Rwanda receives a substantial amount of funding from donors, approximately $700 million per year. Donor funding is generally funneled either through a single framework coordinated by the central government or through NGOs and administrative districts. Of those diverted through NGOs, a large percentage are earmarked for specific purposes such as HIV/AIDS, which creates administrative challenges for the government and often skews the focus of the health system.

A key issue on the supply-side financing is the equity of the needs based transfers against the historical criteria. The government hopes to progressively move towards increasing the importance of needs-based transfers and decreasing historical transfers. In addition, the substantial amount of donor funding incurs high overhead costs and involves a lack of clarity.

Mutuelles de Sante

Provider payment mechanisms

Provider Payment Mechanisms: Fee-for-service, Capitation

The health insurance system in Rwanda has two main channels for financing: the demand side – the insurance programs, and the supply side – transfers from the treasury to districts and health facilities. On the demand side, services are financed through three main channels: demand-based user payments, demand-based payments from Mutuelles, and demand-based payments from RAMA and MMI.

  • Demand Based User Payments: These amount to approximately 20% of total health expenditures in Rwanda. These stem from personal payments for treatment from individuals who have health coverage. Those insured by RAMA and MMI pay 15% upon treatment for all services and pharmaceuticals. Those covered by the Mutuelles system pay 10% for all services.
  • Demand based payments from Mutuelles: Payments are made directly to health facilities based on a fee-for-service or a capitation basis depending on the region.
  • Demand Based payments from RAMA and MMI: Payments are made to the health centers by the insurance system RAMA and MMI on a fee-for-service or a capitation basis. Many of the health centers receive capitation payments, while district and national hospitals are paid on a fee-for-service basis.

On the supply side, financing flows from the central government towards health providers through multiple block grants, which provide hospitals with greater degrees of autonomy.

A key issue on the supply-side financing is the equity of the needs based transfers against the historical criteria. The government hopes to progressively move towards increasing the importance of needs-based transfers and decreasing historical transfers.

  • Needs-based transfers are delivered in the form of a monthly block grant from the government to individual district-level health centers, in amounts that are calculated based on a formula which includes population and poverty levels as a weighing factor.
  • Performance based transfers or Pay for performance (PFP), instituted in 2006, links measurable indicators with financial incentives for district level health centers that are paid according to performance, rather than actual costs of service or operation. Hospital budgets are determined prospectively based on an annual value of beds. Each quarter, performance is reviewed by the district level peer review system with indicators that gauge facility outputs, quality, and administration. Based on the scores, each hospital receives payment that correlates to the performance review. Incentives are included for workers in rural areas and hospitals that offer HIV/AIDS services in order to maintain qualified health personnel. Results from independent studies of 16 health centers indicated that income was 22.7% higher and health outcomes improved in health centers that had PFP mechanisms. The same study found that family planning was 28% higher in provinces with PFP.
  • History based transfers delivered from the government to health centers for facilities to maintain their assets.
  • Investment grants which are provided from the government for construction and equipment to health centers
  • Fragmented Donors’ Transfers from a group of bilateral and multi-lateral organizations to specific facilities, some of which are made in kind. Rwanda receives a substantial amount of funding from donors, approximately $700 million per year. Donor funding is generally funneled either through a single framework coordinated by the central government or through NGOs and administrative districts. Of those diverted through NGOs, a large percentage are earmarked for specific purposes such as HIV/AIDS, which creates administrative challenges for the government and often skews the focus of the health system.

A key issue on the supply-side financing is the equity of the needs based transfers against the historical criteria. The government hopes to progressively move towards increasing the importance of needs-based transfers and decreasing historical transfers. In addition, the substantial amount of donor funding incurs high overhead costs and involves a lack of clarity.
Korea, Rep.: National Health Insurance Program
  • Fee-for-service

Providers have historically been reimbursed by the regulated fee-for-service system since the beginning of the national health insurance program (NHIP). There is no difference between public and private providers from the health insurer side regarding fee schedules or reimbursement rates. The fee-for-service system has led to an increase in volume and intensity of services in the long run. However, because fee regulation is applied to all providers, both public and private, it has contributed to overall cost containment and a rapid extension of population coverage. South Korea has single pooled purchasing, and claim reviews and payments are centralized and monitored by the Ministry of Health and Welfare (MoHW).

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Providers have historically been reimbursed by the regulated fee-for-service system since the beginning of the national health insurance program (NHIP). There is no difference between public and private providers from the health insurer side regarding fee schedules or reimbursement rates. The fee-for-service system has led to an increase in volume and intensity of services in the long run. However, because fee regulation is applied to all providers, both public and private, it has contributed to overall cost containment and a rapid extension of population coverage. South Korea has single pooled purchasing, and claim reviews and payments are centralized and monitored by the Ministry of Health and Welfare (MoHW).

In 1997 the government launched a Diagnosis Related Group Pilot program for voluntary participating health facilities. The pilot program showed positive impacts on the behavior of health providers, such as the reduction in the length of stay, medical expenses, the average number of tests and a decreased use of antibiotics. However, there is strong opposition from providers, which has blocked the extension of DRG as a provider payment mechanism throughout the country.

The pharmaceutical dispensing was separated from prescribing in 2000. This bars pharmacists from selling antibiotics to customers without a prescription. As such, physicians are not allowed to dispense medicines.

National Health Insurance Program

Provider payment mechanisms

Provider Payment Mechanisms: Fee-for-service

Providers have historically been reimbursed by the regulated fee-for-service system since the beginning of the national health insurance program (NHIP). There is no difference between public and private providers from the health insurer side regarding fee schedules or reimbursement rates. The fee-for-service system has led to an increase in volume and intensity of services in the long run. However, because fee regulation is applied to all providers, both public and private, it has contributed to overall cost containment and a rapid extension of population coverage. South Korea has single pooled purchasing, and claim reviews and payments are centralized and monitored by the Ministry of Health and Welfare (MoHW).

In 1997 the government launched a Diagnosis Related Group Pilot program for voluntary participating health facilities. The pilot program showed positive impacts on the behavior of health providers, such as the reduction in the length of stay, medical expenses, the average number of tests and a decreased use of antibiotics. However, there is strong opposition from providers, which has blocked the extension of DRG as a provider payment mechanism throughout the country.

The pharmaceutical dispensing was separated from prescribing in 2000. This bars pharmacists from selling antibiotics to customers without a prescription. As such, physicians are not allowed to dispense medicines.