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. |
| Colombia: General System of Social Security in Health |
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EPSs and EPSSs are free to establish payment levels and payment mechanisms for services that they purchase from providers. Both entities have used the fee schedules, adjusted for inflation, developed by the pre-reform public health plans as ceilings for price negotiations. As of 2008, provider associations were forcefully seeking the establishment of price floors by the MPS. Read full sectionEPSs and EPSSs are free to establish payment levels and payment mechanisms for services that they purchase from providers. Both entities have used the fee schedules, adjusted for inflation, developed by the pre-reform public health plans as ceilings for price negotiations. As of 2008, provider associations were forcefully seeking the establishment of price floors by the MPS. There are two payment mechanisms common to both EPSs and EPSSs. In general, preventive and primary care services are contracted on a capitation basis. Most specialist and hospital care, however, is paid for either on a fee-for-service basis or by a services package. The CR and SR enrollees must also pay copayments, which vary according to an individual’s income. CR copayments are charged according to salary income. Enrollees with salaries lower than 2 minimum monthly salaries (mms) have a maximum copayment of USD46.70 annually. The maximum copayment for enrollees with incomes in the range of 2-5 mms is USD 195.20 annually. Finally, enrollees with incomes greater than 5 mms have a maximum copayment of USD390.30 annually. SR copayments are set according to SISBEN category. The poorest enrollees, who are classified in category 1, pay co copayments. On the opposite end of the scale, enrollees classified in category 3 pay 10% of the service value. General System of Social Security in HealthProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Capitation EPSs and EPSSs are free to establish payment levels and payment mechanisms for services that they purchase from providers. Both entities have used the fee schedules, adjusted for inflation, developed by the pre-reform public health plans as ceilings for price negotiations. As of 2008, provider associations were forcefully seeking the establishment of price floors by the MPS. There are two payment mechanisms common to both EPSs and EPSSs. In general, preventive and primary care services are contracted on a capitation basis. Most specialist and hospital care, however, is paid for either on a fee-for-service basis or by a services package. The CR and SR enrollees must also pay copayments, which vary according to an individual’s income. CR copayments are charged according to salary income. Enrollees with salaries lower than 2 minimum monthly salaries (mms) have a maximum copayment of USD46.70 annually. The maximum copayment for enrollees with incomes in the range of 2-5 mms is USD 195.20 annually. Finally, enrollees with incomes greater than 5 mms have a maximum copayment of USD390.30 annually. SR copayments are set according to SISBEN category. The poorest enrollees, who are classified in category 1, pay co copayments. On the opposite end of the scale, enrollees classified in category 3 pay 10% of the service value. |
| Kyrgyz Republic: Mandatory Health Insurance Fund (MHIF) |
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Outpatient care is funded through capitation-based payments while hospital services are funded through case-based payments. The capitation formula for primary care is adjusted by coefficients for rural, small towns, and mountainous areas. This leads to cross-subsidization across geographical boundaries. Read full sectionOutpatient care is funded through capitation-based payments while hospital services are funded through case-based payments. The capitation formula for primary care is adjusted by coefficients for rural, small towns, and mountainous areas. This leads to cross-subsidization across geographical boundaries. The base primary care capitation rate (before adjustment coefficients) is based on two variables, the estimated number of enrollees that are expected to be enrolled in a family group practice over the coming year, and the size of the budget. The case-based payments for hospital services introduced the idea of output-based payments to the Kyrgyz health system. The system for grouping cases, generally called clinical statistical groups, was based on American diagnosis-related-groups, but was created with Kyrgyz utilization and cost data. This new system enabled an expansion of the budget management autonomy of hospital administrators, although hospital autonomy and management capacity is still an issue on the reform agenda. The republican MHIF and its territorial branches administer the national pool of funds for the SGBP and are responsible for making all case- and capitation-based payments. Per-case payment rates are defined prospectively but payments are made on a monthly basis. In order to avoid provider selection, providers receive higher payments for treating exempt patients and those with lower copayments. A key to the success of the MHIF as the single-payer for the SGBP has been the continuous development and refinement of financial and clinical information systems to operate the provider payment systems and ensure good financial reporting and fiduciary risk mitigation. Mandatory Health Insurance Fund (MHIF)Provider payment mechanisms Provider Payment Mechanisms: Capitation, Diagnosis-Related Groups Outpatient care is funded through capitation-based payments while hospital services are funded through case-based payments. The capitation formula for primary care is adjusted by coefficients for rural, small towns, and mountainous areas. This leads to cross-subsidization across geographical boundaries. The base primary care capitation rate (before adjustment coefficients) is based on two variables, the estimated number of enrollees that are expected to be enrolled in a family group practice over the coming year, and the size of the budget. The case-based payments for hospital services introduced the idea of output-based payments to the Kyrgyz health system. The system for grouping cases, generally called clinical statistical groups, was based on American diagnosis-related-groups, but was created with Kyrgyz utilization and cost data. This new system enabled an expansion of the budget management autonomy of hospital administrators, although hospital autonomy and management capacity is still an issue on the reform agenda. The republican MHIF and its territorial branches administer the national pool of funds for the SGBP and are responsible for making all case- and capitation-based payments. Per-case payment rates are defined prospectively but payments are made on a monthly basis. In order to avoid provider selection, providers receive higher payments for treating exempt patients and those with lower copayments. A key to the success of the MHIF as the single-payer for the SGBP has been the continuous development and refinement of financial and clinical information systems to operate the provider payment systems and ensure good financial reporting and fiduciary risk mitigation. |
| Kenya: National Hospital Insurance Fund |
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The National Hospital Insurance Fund (NHIF) and private insurers have negotiated fixed reimbursement rates for in-patient care. The reimbursement amount varies slightly with the level of provider, the diagnosis, and the type of care required. “Contract A” and “Contract B” providers are typically reimbursed through case based or fee-for-service provider payments. “Contract C” providers are reimbursed through a per diem rebate system. Claims are submitted by hospitals directly to the National Hospital Insurance Fund (NHIF), and then hospitals are paid for procedures and users are reimbursed. Most claims are reimbursed within 14 days of the claim received. This process is computerized and is designed to be transparent to the providers. Read full sectionThe National Hospital Insurance Fund (NHIF) and private insurers have negotiated fixed reimbursement rates for in-patient care. The reimbursement amount varies slightly with the level of provider, the diagnosis, and the type of care required. “Contract A” and “Contract B” providers are typically reimbursed through case based or fee-for-service provider payments. “Contract C” providers are reimbursed through a per diem rebate system. Claims are submitted by hospitals directly to the National Hospital Insurance Fund (NHIF), and then hospitals are paid for procedures and users are reimbursed. Most claims are reimbursed within 14 days of the claim received. This process is computerized and is designed to be transparent to the providers. Moving forward, the NHIF intends to increasingly employ case-based payments for inpatient services. As the NHIF adds outpatient care to the benefits package with implementation of the recently gazette changes, capitation to comprehensive-care facilities will be the intended payment mechanisms. The fee-for-service system has been identified as one of the key drivers of escalating health care costs, as it creates incentives to encourage over-servicing and supplier-induced demand. The majority of services covered by the NHIF are delivered through private facilities, indicating a preference by the bulk of salaried workers (who make up the majority of those covered by NHIF) toward private providers rather than public institutions. Of overall health expenditures in Kenya, Secondary and Tertiary care providers traditionally absorb approximately 70% of health expenditures, though health centers and primary care units provide the bulk of services. Health personnel expenditures are high—accounting for about 50% of the budget—compared to expenditures on drugs, pharmaceuticals, and operations and maintenance. Expenditures for curative care constitute more than 48% of the total MOH budget. Health care facilities also receive payments from the Ministry of Health (MOH), which releases funds to the district and national level hospitals. Allocations to the district health centers and dispensaries are in the form of line-item budgets, whereas national level hospitals receive global budgets. Salaries to staff are paid directly by the MOH. Drugs are also procured centrally, by the Kenya Medical Suppliers Agency (KEMSA) and then delivered to district and local level facilities. At the local level, the process of disbursement of funds is slow, which causes uncertainty for the providers, impedes their planning process, and encourages district level managers to await funding before they procure services, and creates an incentive to under-service clients. National Hospital Insurance FundProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Diagnosis-Related Groups, Other The National Hospital Insurance Fund (NHIF) and private insurers have negotiated fixed reimbursement rates for in-patient care. The reimbursement amount varies slightly with the level of provider, the diagnosis, and the type of care required. “Contract A” and “Contract B” providers are typically reimbursed through case based or fee-for-service provider payments. “Contract C” providers are reimbursed through a per diem rebate system. Claims are submitted by hospitals directly to the National Hospital Insurance Fund (NHIF), and then hospitals are paid for procedures and users are reimbursed. Most claims are reimbursed within 14 days of the claim received. This process is computerized and is designed to be transparent to the providers. Moving forward, the NHIF intends to increasingly employ case-based payments for inpatient services. As the NHIF adds outpatient care to the benefits package with implementation of the recently gazette changes, capitation to comprehensive-care facilities will be the intended payment mechanisms. The fee-for-service system has been identified as one of the key drivers of escalating health care costs, as it creates incentives to encourage over-servicing and supplier-induced demand. The majority of services covered by the NHIF are delivered through private facilities, indicating a preference by the bulk of salaried workers (who make up the majority of those covered by NHIF) toward private providers rather than public institutions. Of overall health expenditures in Kenya, Secondary and Tertiary care providers traditionally absorb approximately 70% of health expenditures, though health centers and primary care units provide the bulk of services. Health personnel expenditures are high—accounting for about 50% of the budget—compared to expenditures on drugs, pharmaceuticals, and operations and maintenance. Expenditures for curative care constitute more than 48% of the total MOH budget. Health care facilities also receive payments from the Ministry of Health (MOH), which releases funds to the district and national level hospitals. Allocations to the district health centers and dispensaries are in the form of line-item budgets, whereas national level hospitals receive global budgets. Salaries to staff are paid directly by the MOH. Drugs are also procured centrally, by the Kenya Medical Suppliers Agency (KEMSA) and then delivered to district and local level facilities. At the local level, the process of disbursement of funds is slow, which causes uncertainty for the providers, impedes their planning process, and encourages district level managers to await funding before they procure services, and creates an incentive to under-service clients. |
| Mexico: Seguro Popular |
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The interventions included in the CAUSES are paid for by capitation. Meanwhile, the interventions carried out under the FPGC are paid for on a per-case basis. The payment mechanism for contracts with private providers is vague. The reform stated that health services should be provided by state health secretariats in accordance with the state of residence of the insured family or by other public health institutions that have contracted with the state health secretariats. After the passage of the law, however, the executive branch issued a by-law that introduced the option of contracting with the private sector. The problem with this by-law is that it does not specify the form that payments to private sector will take. Thus, such payments take place on an ad-hoc, non-systematic basis. Read full sectionThe interventions included in the CAUSES are paid for by capitation. Meanwhile, the interventions carried out under the FPGC are paid for on a per-case basis. The payment mechanism for contracts with private providers is vague. The reform stated that health services should be provided by state health secretariats in accordance with the state of residence of the insured family or by other public health institutions that have contracted with the state health secretariats. After the passage of the law, however, the executive branch issued a by-law that introduced the option of contracting with the private sector. The problem with this by-law is that it does not specify the form that payments to private sector will take. Thus, such payments take place on an ad-hoc, non-systematic basis. Seguro PopularProvider payment mechanisms Provider Payment Mechanisms: Fee-for-service, Capitation, Diagnosis-Related Groups The interventions included in the CAUSES are paid for by capitation. Meanwhile, the interventions carried out under the FPGC are paid for on a per-case basis. The payment mechanism for contracts with private providers is vague. The reform stated that health services should be provided by state health secretariats in accordance with the state of residence of the insured family or by other public health institutions that have contracted with the state health secretariats. After the passage of the law, however, the executive branch issued a by-law that introduced the option of contracting with the private sector. The problem with this by-law is that it does not specify the form that payments to private sector will take. Thus, such payments take place on an ad-hoc, non-systematic basis. |
| 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. |