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 |
|---|---|---|
| Vietnam: Compulsory and Voluntary Health Insurance Schemes |
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Although there has been some innovation in provider reimbursement over the past few years, fee-for-service (FFS) remains the dominant payment mechanism. Rates are set by the fee schedule, and have remained unchanged since the schedule was created in 1995. Read full sectionAlthough there has been some innovation in provider reimbursement over the past few years, fee-for-service (FFS) remains the dominant payment mechanism. Rates are set by the fee schedule, and have remained unchanged since the schedule was created in 1995. In light of concerns that FFS payments encourage providers to treat patients more than is clinically necessary, the Vietnamese government has begun exploring alternative methods of payment. Additionally, an incentive-based structure for providers has been put in place that has tied provider payment to the financial performance of the facility. The FFS rates were created by an interministerial commission consisting of representatives from MoH, the Ministry of Finance (MoF), the Ministry of Labor, War Invalids, and Social Affairs (MOLISA) and the State Price Commission (SPC). The fees in the schedule are a mixture of per-item charges and per diem rates, with ranges for each type, and variations according to the type of hospital (higher class hospitals being able to charge more). With the exception of the addition of 1,022 new procedures in 2006, fees have been unchanged since the major initiative of 1995, not even to adjust for inflation. However, the government plans to update the fee schedule to reflect current rates. Note that drugs prices are not regulated by VSS (though they are monitored), and providers have the scope, in practice, to levy unofficial charges. The New Health Insurance Law 2008 provides for several different provider payment methods, including FFS, capitation, diagnostic-related group (DRG) or other modes of payment. Innovation in provider payment remains a top priority for reforms to improve the health insurance system. Beyond fees, Vietnam has an incentive structure for providers tied to the financial performance of their facility. Under Decree 33/1995, providers had limited ability to retain a portion (30%) of gross revenues from user fees. However, under this system, opportunities for incentive payments are highly variable based on the facility and the population they serve, and this structure had high potential for creating further imbalances in the system. This incentive structure has since been replaced by Decrees 10/2002 and 43/2006, which allow hospitals greater discretion over financial operations, management of human resources, organization of services, and choices of services offered. By providing greater autonomy to facilities over the management of their costs and revenues, the government hopes to better align the incentives of providers (hospital staff) with the overall financial performance of the health facility. Contracting between VSS and a health care provider is normally done for providers who operate as a separate legal entity. In effect, these are limited to provincial, central, and district level hospitals. Commune Health Centers (CHC) and inter-commune polyclinics can provide services to insured members but they are supervised by District Health Centers (DHC) and hence they do not possess a legal entity status to operate a bank account. VSS therefore cannot contract directly with them but must coordinate commune level health service provision under the supervision of the DHCs. With regard to quality control, the VSS plays little to no role in overseeing the quality of care. They serve primarily as the bill-payer and general orchestrator of the system. There are currently no clinical guidelines enforced by the MoH or VSS, and there is no credible quality assurance mechanism. Providers are largely free to treat patients as they choose. Compulsory and Voluntary Health Insurance SchemesProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service Although there has been some innovation in provider reimbursement over the past few years, fee-for-service (FFS) remains the dominant payment mechanism. Rates are set by the fee schedule, and have remained unchanged since the schedule was created in 1995. In light of concerns that FFS payments encourage providers to treat patients more than is clinically necessary, the Vietnamese government has begun exploring alternative methods of payment. Additionally, an incentive-based structure for providers has been put in place that has tied provider payment to the financial performance of the facility. The FFS rates were created by an interministerial commission consisting of representatives from MoH, the Ministry of Finance (MoF), the Ministry of Labor, War Invalids, and Social Affairs (MOLISA) and the State Price Commission (SPC). The fees in the schedule are a mixture of per-item charges and per diem rates, with ranges for each type, and variations according to the type of hospital (higher class hospitals being able to charge more). With the exception of the addition of 1,022 new procedures in 2006, fees have been unchanged since the major initiative of 1995, not even to adjust for inflation. However, the government plans to update the fee schedule to reflect current rates. Note that drugs prices are not regulated by VSS (though they are monitored), and providers have the scope, in practice, to levy unofficial charges. The New Health Insurance Law 2008 provides for several different provider payment methods, including FFS, capitation, diagnostic-related group (DRG) or other modes of payment. Innovation in provider payment remains a top priority for reforms to improve the health insurance system. Beyond fees, Vietnam has an incentive structure for providers tied to the financial performance of their facility. Under Decree 33/1995, providers had limited ability to retain a portion (30%) of gross revenues from user fees. However, under this system, opportunities for incentive payments are highly variable based on the facility and the population they serve, and this structure had high potential for creating further imbalances in the system. This incentive structure has since been replaced by Decrees 10/2002 and 43/2006, which allow hospitals greater discretion over financial operations, management of human resources, organization of services, and choices of services offered. By providing greater autonomy to facilities over the management of their costs and revenues, the government hopes to better align the incentives of providers (hospital staff) with the overall financial performance of the health facility. Contracting between VSS and a health care provider is normally done for providers who operate as a separate legal entity. In effect, these are limited to provincial, central, and district level hospitals. Commune Health Centers (CHC) and inter-commune polyclinics can provide services to insured members but they are supervised by District Health Centers (DHC) and hence they do not possess a legal entity status to operate a bank account. VSS therefore cannot contract directly with them but must coordinate commune level health service provision under the supervision of the DHCs. With regard to quality control, the VSS plays little to no role in overseeing the quality of care. They serve primarily as the bill-payer and general orchestrator of the system. There are currently no clinical guidelines enforced by the MoH or VSS, and there is no credible quality assurance mechanism. Providers are largely free to treat patients as they choose. |
| Chile: National Health Fund (FONASA) |
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FONASA transfers money to public health care providers through fee-for-service mechanisms for certain services and groups of services that are assigned a fixed value. The remainder of resources for health care services and facility maintenance in the public sector is transferred based on historical budgets, which tend to be antiquated and therefore undervalued. In terms of transfer mechanisms, FONASA funds are not transferred directly to the individual health care providers. Read full sectionFONASA transfers money to public health care providers through fee-for-service mechanisms for certain services and groups of services that are assigned a fixed value. The remainder of resources for health care services and facility maintenance in the public sector is transferred based on historical budgets, which tend to be antiquated and therefore undervalued. In terms of transfer mechanisms, FONASA funds are not transferred directly to the individual health care providers. Rather, funds are transferred to the regional health entity (under the purview of the MOH) for the geographical region where the provider is located. The regional health entity pools the funds for all public health care providers in the area and then is charged with determining the budget of each provider. FONASA also transfers funds prospectively to the regional health entities for primary care facilities through capitation mechanisms. These funds are based on a region’s health care needs and its disease burden. FONASA and the ISAPREs transfer funds to private providers on a retrospective fee-for-service basis. Private providers always receive funds through fee-for-service mechanisms, and they have no ceiling on income, regardless of whether the source of the funds is FONASA or an ISAPRE. National Health Fund (FONASA)Provider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Capitation FONASA transfers money to public health care providers through fee-for-service mechanisms for certain services and groups of services that are assigned a fixed value. The remainder of resources for health care services and facility maintenance in the public sector is transferred based on historical budgets, which tend to be antiquated and therefore undervalued. In terms of transfer mechanisms, FONASA funds are not transferred directly to the individual health care providers. Rather, funds are transferred to the regional health entity (under the purview of the MOH) for the geographical region where the provider is located. The regional health entity pools the funds for all public health care providers in the area and then is charged with determining the budget of each provider. FONASA also transfers funds prospectively to the regional health entities for primary care facilities through capitation mechanisms. These funds are based on a region’s health care needs and its disease burden. FONASA and the ISAPREs transfer funds to private providers on a retrospective fee-for-service basis. Private providers always receive funds through fee-for-service mechanisms, and they have no ceiling on income, regardless of whether the source of the funds is FONASA or an ISAPRE. |
| : Taiwan: National Health Insurance |
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Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI. The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Read full sectionProviders obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI. The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Initially, NHI providers were paid on a fee-for-service basis, however providers were able to make sizable profits by overprescribing medications and ordering unnecessary procedures, leading to quickly rising per person expenditures. Hospitals in Taiwan reward their staff physicians individually for bringing in revenue, known as a “professional fee,” further encouraging physician-induced over-prescription. The Bureau of National Health Insurance (BNHI) estimates that overuse and misuse of health care may constitute up to a third of BNHI’s expenditures. Facing the need for cost containment, BNHI introduced a reasonable volume standard for outpatient visits coupled with a sliding fee schedule for visits above the volume standard, which discouraged supply-induced demand and reduced the number of visits per person. BNHI also reduced the high profit margin that clinics and hospitals can obtain from dispensing drugs by reducing the reimbursement rates for drugs, using reference pricing, and encouraging the use of generic drugs. The NHI experimented with different payment systems, such as diagnosis-related groups (DRGs) for hospitals, primary care capitation for certain population groups, and even performance-based payments. DRGs were phased in for the 50 most common diseases and treatments, which effectively reduced the average length-of-stay in hospitals. The ultimate cost control measure, however, has been the imposition of global budgets for hospital outpatient and inpatient services in 2002. This remains highly controversial because global budgeting incorporates an aggregate fixed sum budget imposed on all hospitals in Taiwan collectively, creating a zero-sum game in which the players cannot effectively police one another. Reimbursement contracts are negotiated with health care providers on a fee-for-service basis with a uniform pay schedule. A deflation mechanism engages once a service quota is reached, resulting in declining reimbursement rates. Under the global budget payment system, the NHI Medical Expenditure Negotiation Committee convenes and negotiates overall caps on total medical payments based on a set of equations and indicators prior to the beginning of a fiscal year. Along with the implementation of global budgets, the NHI took several measures to control the demand for selected types of health care, such as increasing copayments for high users of drugs and outpatient services. The global budget payment system with these measures has been successful in containing the annual growth in the health insurance system's expenditures with spending growth leveling out at below 5% a year since it was fully implemented in July 2002. National Health InsuranceProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Diagnosis-Related Groups, Global budgets Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI. The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Initially, NHI providers were paid on a fee-for-service basis, however providers were able to make sizable profits by overprescribing medications and ordering unnecessary procedures, leading to quickly rising per person expenditures. Hospitals in Taiwan reward their staff physicians individually for bringing in revenue, known as a “professional fee,” further encouraging physician-induced over-prescription. The Bureau of National Health Insurance (BNHI) estimates that overuse and misuse of health care may constitute up to a third of BNHI’s expenditures. Facing the need for cost containment, BNHI introduced a reasonable volume standard for outpatient visits coupled with a sliding fee schedule for visits above the volume standard, which discouraged supply-induced demand and reduced the number of visits per person. BNHI also reduced the high profit margin that clinics and hospitals can obtain from dispensing drugs by reducing the reimbursement rates for drugs, using reference pricing, and encouraging the use of generic drugs. The NHI experimented with different payment systems, such as diagnosis-related groups (DRGs) for hospitals, primary care capitation for certain population groups, and even performance-based payments. DRGs were phased in for the 50 most common diseases and treatments, which effectively reduced the average length-of-stay in hospitals. The ultimate cost control measure, however, has been the imposition of global budgets for hospital outpatient and inpatient services in 2002. This remains highly controversial because global budgeting incorporates an aggregate fixed sum budget imposed on all hospitals in Taiwan collectively, creating a zero-sum game in which the players cannot effectively police one another. Reimbursement contracts are negotiated with health care providers on a fee-for-service basis with a uniform pay schedule. A deflation mechanism engages once a service quota is reached, resulting in declining reimbursement rates. Under the global budget payment system, the NHI Medical Expenditure Negotiation Committee convenes and negotiates overall caps on total medical payments based on a set of equations and indicators prior to the beginning of a fiscal year. Along with the implementation of global budgets, the NHI took several measures to control the demand for selected types of health care, such as increasing copayments for high users of drugs and outpatient services. The global budget payment system with these measures has been successful in containing the annual growth in the health insurance system's expenditures with spending growth leveling out at below 5% a year since it was fully implemented in July 2002. |
| India: Rajiv Aarogyasri |
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Providers are paid on a by-intervention basis, where a specified rate is set by Aarogyasri Trust in consultation with medical experts. For each approved procedure, the payment covers the entire cost of treatment, from the date of admission to discharge, as well as a maximum of 10 days after the discharge and any complications while in the hospital. The package rate includes consultation, medicine, diagnostics, implants, food, cost of transportation, hospital charges, and post-operative hospital stay. Read full sectionProviders are paid on a by-intervention basis, where a specified rate is set by Aarogyasri Trust in consultation with medical experts. For each approved procedure, the payment covers the entire cost of treatment, from the date of admission to discharge, as well as a maximum of 10 days after the discharge and any complications while in the hospital. The package rate includes consultation, medicine, diagnostics, implants, food, cost of transportation, hospital charges, and post-operative hospital stay. A comprehensive list of benefits and associated payment pricing can be found on the Aarogyasri web site. Seeking care is truly cashless for the patient. On the back-end, the provider must submit a pre-authorization to the insurance company (Aarogyasri I procedures) or to Aarogyasri Healthcare Trust (for Aarogyasri II procedures). The insurance company/Trust appoints medical officers who work on pre-authorizations. After pre-authorization and treatment, the insurance company or Trust (depending on which Procedure the beneficiary was enrolled in) will settle claims from hospitals within seven days of receipt of claim, discharge summary, and a satisfaction letter from the patient. To prevent fraudulent claims, the claim settlement history of each hospital is scrutinized and reviewed by the Trust at regular intervals. In addition, the insurance company recruits specialized doctors, known as vigilance officers, for regular inspection of hospitals. These specialists also attend to complaints from beneficiaries directly or through Arogya Mithras for any deficiency in services reported. The specialists also to ensure proper care and counseling for the patient at network hospitals by coordinating with Aarogya Mithras and hospital authorities. Rajiv AarogyasriProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Diagnosis-Related Groups Providers are paid on a by-intervention basis, where a specified rate is set by Aarogyasri Trust in consultation with medical experts. For each approved procedure, the payment covers the entire cost of treatment, from the date of admission to discharge, as well as a maximum of 10 days after the discharge and any complications while in the hospital. The package rate includes consultation, medicine, diagnostics, implants, food, cost of transportation, hospital charges, and post-operative hospital stay. A comprehensive list of benefits and associated payment pricing can be found on the Aarogyasri web site. Seeking care is truly cashless for the patient. On the back-end, the provider must submit a pre-authorization to the insurance company (Aarogyasri I procedures) or to Aarogyasri Healthcare Trust (for Aarogyasri II procedures). The insurance company/Trust appoints medical officers who work on pre-authorizations. After pre-authorization and treatment, the insurance company or Trust (depending on which Procedure the beneficiary was enrolled in) will settle claims from hospitals within seven days of receipt of claim, discharge summary, and a satisfaction letter from the patient. To prevent fraudulent claims, the claim settlement history of each hospital is scrutinized and reviewed by the Trust at regular intervals. In addition, the insurance company recruits specialized doctors, known as vigilance officers, for regular inspection of hospitals. These specialists also attend to complaints from beneficiaries directly or through Arogya Mithras for any deficiency in services reported. The specialists also to ensure proper care and counseling for the patient at network hospitals by coordinating with Aarogya Mithras and hospital authorities. |
| India: RSBY |
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Providers are paid on a fee-for-service basis, with packages defined for each of the covered procedures and interventions. Claims submission and processing is cashless, allowing hospitals and insurers to submit claims and payments online. Read full sectionProviders are paid on a fee-for-service basis, with packages defined for each of the covered procedures and interventions. Claims submission and processing is cashless, allowing hospitals and insurers to submit claims and payments online. The process for reporting and paying claims is designed to be simple and cashless from the perspective of the provider and beneficiary. In general, the process looks as follows:
At present there are no quality standards being utilized by RSBY, but the national team is working with states and insurers to develop an incentive based quality management system for providers (e.g., a system where hospitals are graded according specific quality parameters and hospitals with better quality are paid at a higher rate by insurers). RSBYProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Diagnosis-Related Groups Providers are paid on a fee-for-service basis, with packages defined for each of the covered procedures and interventions. Claims submission and processing is cashless, allowing hospitals and insurers to submit claims and payments online. The process for reporting and paying claims is designed to be simple and cashless from the perspective of the provider and beneficiary. In general, the process looks as follows:
At present there are no quality standards being utilized by RSBY, but the national team is working with states and insurers to develop an incentive based quality management system for providers (e.g., a system where hospitals are graded according specific quality parameters and hospitals with better quality are paid at a higher rate by insurers). |
| Thailand: Universal Coverage Scheme |
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UCS uses capitation as the main provider payment mechanism. Initially, providers were given the option of receiving reimbursements based on either total capitation or capitation for outpatient services and DRG for inpatient services at the provincial level. However, due to the disincentive of paying providers for high-cost care and delays in case referrals, UCS began using a single payment system in 2003. Read full sectionUCS uses capitation as the main provider payment mechanism. Initially, providers were given the option of receiving reimbursements based on either total capitation or capitation for outpatient services and DRG for inpatient services at the provincial level. However, due to the disincentive of paying providers for high-cost care and delays in case referrals, UCS began using a single payment system in 2003. The current payment mechanism for UCS is a mixed system of risk-adjusted capitation for primary care, a DRG-based capped global budget, and fixed rate fees for some services. It should be noted that health promotion and prevention services for all Thai citizens are paid by the UCS. Universal Coverage SchemeProvider payment mechanisms Provider Payment Mechanisms: Capitation UCS uses capitation as the main provider payment mechanism. Initially, providers were given the option of receiving reimbursements based on either total capitation or capitation for outpatient services and DRG for inpatient services at the provincial level. However, due to the disincentive of paying providers for high-cost care and delays in case referrals, UCS began using a single payment system in 2003. The current payment mechanism for UCS is a mixed system of risk-adjusted capitation for primary care, a DRG-based capped global budget, and fixed rate fees for some services. It should be noted that health promotion and prevention services for all Thai citizens are paid by the UCS. |