Healthcare Provider Payments
Provider payment methods imply the procedure that purchasers adopt to transfer funds to health providers to deliver agreed services. Provider payment systems can be powerful tools to promote the development of health systems and achieve health policy objectives.
Payment systems should help achieve health policy objectives by encouraging access to necessary health services for patients, high quality of care, and improved equity, while promoting the effective and efficient use of resources and, where appropriate, cost containment.
With these objectives in mind, there are three ways that you can approach for paying health care providers:
• Direct payment to the provider by the patient.
• Direct payment to the provider by the patient, but with later full or partial reimbursem*nt.
• Direct payment to the provider through intermediate provider payment arrangements, with only a limited copayment or informal charge paid by the patient.
Choosing the best provider payment method.
There is no gold standard or perfect payment method, and every method has strengths and weaknesses and can produce unintended consequences. But all payment methods can be useful at particular times and in particular contexts. At country level, authorities should identify the mix of methods that will create incentives that align with their health system priorities and goals. The country’s setting, including the health system’s capabilities and goals, the overall health finance architecture, public financial management systems, and the stage of development of health information technologies, will influence how providers are paid.
The following questions can help in selection of the right mix of provider payment mechanisms:
What incentives should be created for providers?
What is the right balance of risk between the purchaser, providers, and the population?
What is the capacity of the purchaser to design and manage complex payment systems?
How much flexibility and capacity do providers have to respond to incentives?
Recommended next reads
What contextual factors are significant, like the political environment, legal constraints, and the public financial management system?
Main Provider Payment Mechanisms
PHC Payment Methods
There are three main types of PHC (including outpatient) payment methods: line-item budget; fee-for-service (with or without a fixed-fee schedule); and per capita.
Hospital Payment Methods
There are five main types of hospital payment methods. Two methods, line-item budget and fee-for-service can be applied to inpatient services. The three other methods are per diem, case-based, and global budget.
References:
Alshreef, A. (2019). Provider payment mechanisms: Effective policy tools for achieving universal and sustainable healthcare coverage. In A. I. Tavares (Ed.), Universal Health Coverage. Intechopen. https://www.intechopen.com/chapters/68032
Kazungu, J. S., Barasa, E. W., Obadha, M., & Chuma, J. (2018). What characteristics of provider payment mechanisms influence health care providers’ behaviour? A literature review. The International Journal of Health Planning and Management, 33(4), e892–e905. https://doi.org/10.1002/hpm.2565.
Kutzin, J., Cashin, C., Jakab, M., & World Health Organization. (2010). Implementing health financing reform: lessons from countries in transition. World Health Organization. Regional Office for Europe.
Langenbrunner, J. C., Cashin, C., & dougherty, S. O. (2009). How-To manuals designing and implementing health care provider payment systems. The World Bank. https://openknowledge.worldbank.org/bitstream/handle/10986/13806/48599.pdf
World Health Organization. (2010). The world health report: health systems financing: the path to universal coverage. World Health Organization.
World Health Organization. (2017). Provider payment methods and strategic purchasing for UHC. http://apps.who.int/iris/bitstream/10665/258894/1/provider_payment_methods_fr_uhc.pdf
