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
Colombia: General System of Social Security in Health
  • 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.

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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.

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.

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.

India: Rajiv Aarogyasri
  • 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.

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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.

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.

Mexico: Seguro Popular
  • 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.

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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.