provider payment dr wai hnin aye lecturer community medicine field training center (hlegu)
TRANSCRIPT
Provider payment
Dr Wai Hnin Aye
Lecturer
Community Medicine Field Training Center
(Hlegu)
Health Systems Goals
• Better health outcomes
• More responsive health system
• Equitable health care
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Objectives of health care financing
• Provide resources for health services
• Ensure access to health care services
• Ensure equity in health care coverage
• Provide quality care
• Provide efficient care
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Healthcare Financing comprise :
1.collecting revenue
2. Pooling of risk
3. Purchasing
4.Financial Protection
Financial Issues in Healthcare System of Developing Countries
• limited amount of financial resources in health care
• distribution of resources is inequitable
• gross inefficiency in management of resources
• poverty is a major obstacle to access health care
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Reforms in the health care systems
of developing countries focus on
“getting the incentives right”
Aim
To use provider payments to optimize
the utilization of scarce health care
resources, transform clinical practice,
and improve the quality of care
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Purchasing
• Passive purchasing
– No selectivity of providers
– No quality control and monitoring
– Use of norms to set fees and related concerns
• Strategic purchasing
– Performance-based model
– Contestable contracts
– Ongoing quality control and monitoring
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Who Purchases: Organizational Forms
Government Private Sector
Ministry of Health
Regions
Social Insurance
Public
Enterprises
(Insurance or
Budget)
Insurer
Employer
Managed Care
Organization
Individual
(Medical Savings
Account)
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4 Performance Tools of Purchasing
For Whom to Buy? ”Coverage decisions”
What to Buy, in which form, and what to
exclude “Benefits Package”
From Whom, at what price and how much,
“Contracting”
How to Pay, and what incentives to meet,
which policy objectives. “Payment method”
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provider payment method
define as the mechanism used to
transfer funds from the purchaser of
health care services to the providers
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Why Payment Method is Important? Cost Containment Measures Efficiency Influence Provision of Services Incentives or disincentives Preventive vs Curative Services Basic Health Services Influence Quality of Care Technical Quality Client Satisfaction Viability of Health Financing Scheme Disbursement of funds
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Provider payment • focuses on providers’ incentives and
behaviour also affect payers’ behaviour and consumers’ behaviour (pts’ )
• way they practice with regard to:– staff mix (technical efficiency)– choice of technology (technical
efficiency)– choice of services (allocative efficiency)
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Provider Payment & Financial Risk
• financial risk is the potential to lose money,
earn less money, or spend more time or effort
without additional payment on a reimbursement
transaction
• whenever providers or patients are bearing little
risk, the system encourages higher levels of use
of resources
– e.g : OOP – Patient carries all the risk
– Health insurance- Insurer carries the risk13Dr.WHA
Payment Methods
1.Retrospective Payment
2.Prospective Payment
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Retrospective Payment
- payment rate is selected during or after the service has been rendered
- cost-based reimbursement
- well known for being cost enhancing rather than cost reducing.
• Fee-for-service • Payment per itemized bill • Payment per diem
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• fee-for-service (a typical form )
• but prices for each service set in
advance, providers are not limited by
predetermined agreement on the
types and number of services
rendered
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Prospective Payment
payment rate for a package of health
care services is negotiated and agreed
upon before the treatment takes place
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• increase the incentive for efficiency
• health provider faces higher financial
risk
These are-
• Capitation payment
• Global budget
• Case-mix payment 18Dr.WHA
Methods of Payments
Physician Hospitals
1. Payment per procedure: Fee for Service2. Payment per episode ofillness3. Payment per patient:Capitation4. Payment per time: Salary
1. Payment per procedure: Fee for Service 2. Payment per day: Per Diem3. Payment per episode ofhospitalization: DRG4. Payment per patient:Capitation5. Payment per institution:Global Budget
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Current trends in Provider Payment System
• Strategic Purchasing
• Performance based system
(payment linked to quality and out come)
• Shift financial risks to providers
• Bundling to avoid fragmentation
• Reduce Admin cost
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Payment Models for PHC in Malaysia
Health Centre / PHC Clinic
Doctors / Providers
Line Item Budget
Global Budget
Patient Visit
Fee-for- Service
Case-Payment
Capitation
Fee-For-Service
Salary
Salary plus Bonus
Capitation
Capitation plus
Bonus
Case payment 21Dr.WHA
Global Budget
• is a payment fixed in advance to cover
the aggregate expenditures of that
hospital over a given period to provide
a set of services that have been broadly
agreed upon (at the hospital level)
• based on either inputs or outputs, or a
combination of the two
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• determine on the basis of historical costs (in Canada and Denmark)
• incorporated measures of output, such as bed-days or cases, into global budgets for hospitals (France and Germany)
• Ireland introduced a case-mix adjustment to global budgets for acute hospital services in 1993
• nearly all EU countries use case-mix adjustment
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Payment per Procedure: Fee-for-Service
• traditional method of reimbursing physicians,
hospitals and other providers for their services
• provider is paid for each procedure or service
rendered
• each provided service associated with a
corresponding fee to be paid to the provider
• fees increase when more services are provided
or as more expensive services are substituted
for less expensive ones
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- may be either input-based or output-based
• input-based if services are not bundled, and
fee schedules are not set in advance
• providers are permitted to bill payers for all
costs incurred to provide each service(US)
• called “retrospective cost-based” payment
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• output-based if fees are set in advance
( Canada, Japan, and Germany)
• services are bundled to some degree
• provider is paid the fixed fee for the
pre-defined service regardless of the
costs incurred to deliver the service
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- economic incentive to perform more
services
- overconsumption of care
- not encourage physicians to consider the
cost of the treatments they provide to their
patients
- their remuneration is not tied to patient
health outcomes
- in US, rapid rise in health care costs due to it27Dr.WHA
• overwhelming reliance on FFS lead to source
of inefficiency in the health system
• physician expenditure is 2nd to hospital
expenditure
• to reduce health expenditures ,use alternative
payment mechanisms capitation, fund holding
(a more complete form of capitation), mixed
payments, pay-for-performance and profit
sharing28Dr.WHA
Payment per Episode of Illness
- payment by episode of illness or case
- physicians have the economic incentive to
reduce the volume of services provided per
illness episode or case
– transfers portion of the risk to the provider
– eg : Appendicitis episode
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Payment per Patient: Capitation
• insurer pays physicians a pre-
determined fixed amount and paid in
advance for each covered person
regardless of the type and number of
services used
• physician is responsible for delivering or
arranging the delivery of services of a
contracted persons 30Dr.WHA
- shifts the financial risk from the insurer to
the physician
(If he incurs costs > per capita budget, he is
liable for these costs)
(if the provider achieves efficiency gains and
incurs costs < per capita budget, the
provider can retain and reinvest this surplus)
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• output-based
• unit of output is coverage of all pre-
defined services for an individual for a
fixed period of time (one month or one
year)
• is not linked to the inputs the provider
uses or the volume of services provided
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- physicians have incentives to limit the
use of services and the use of
expensive resources and services
– rewards go to physicians who limit
referrals, stay within formularies, lessen
laboratory use and reduce average
hospitalization33Dr.WHA
Payment per Time: Salary
• fixed annual payment unrelated to workload
(one lump sum per month or yearly)
• as theory ,salary d/on performance
• in practice d/on yrs of service
• no risk carried by the physician
• Incentive undermine to work hard
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low income country, low salary leads
to
less work hard
need more hours of work
find additional ways of generating
income (informal ways)
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Per Diem • incentive no: of hospital days, bed
occupancy, and bed capacity • shifting outpatient and community-
based rehabilitation services to the hospital
• incentive to intensity of service provided during each bed-day
• high occupancy rates are achieved by increasing hospital admissions and ALOS
• incentive to ALOS > admissions( b/of ---incentive to inputs/day--- hospital days early in a hospital stay is
more expensive than later in stay) 36Dr.WHA
• average per diem rate is easy and quick to calculate
• =
• adjusted with characteristics of patients, clinical specialty and variations in case-mix across hospitals
total historical annual hospital costs
total number of bed-days
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• appropriate intermediate step for
transition to a case-based system
• administratively simple to implement
• used to begin collecting the data that
are necessary to design a case-based
system
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Case-Based
• incentives to no: of cases
• to minimize the inputs used on each
case (because providers have more
control over resource use per case than
the total no: of treated cases)
• to control costs and reduce capacity in
the hospital sector
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provider treats a patient with a broken arm
-- for fee for service the provider is paid for
each treatment ($40 for consultation, $25
per x-ray, and $35 for cast)
-- in the case-based model the provider is
paid a flat fee for the illness ($100 to fix a
broken arm)
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Case-Mix (DRG)
classification of patient treatment episodes
designed to create classes which are
relatively homogenous in respect of the
resources used and which contain patients
with similar clinical characteristics
(George Palmer, Beth Reid,2000)
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Line Item Budget
• allocation of a fixed amount to a health
care provider to cover specific line items,
or input costs for a certain period of time
(e.g., personnel, utilities, medicines and
supplies)
• offer strong administrative controls,
often valued by government-run systems
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• technical and allocative efficiency of health interventions by manipulating the government budget lines over time to increase delivery of cost-effective health interventions and decrease delivery of less cost-effective interventions
• governments can track and understand the right combination to achieve these outputs
• in reality, lack of good monitoring information
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• according to heterogeneity among health care providers, diversity of institutions, practices, and preferences ,health care systems in developing countries divides into 3 patterns
• in Nepal, Tanzania, many of the smallest and poorest nations in sub-Saharan Africa
• large public hospitals are in the capitals and a few in largest cities
• smaller public hospitals, clinics, and health posts are scattered in rural areas
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• physicians and nurses are salaried • supplement their incomes by selling goods
and services under the table• pt with varying severity crowd emergency
rooms• little medical information is passed from
one facility to another• shortages of supplies • in rural ,use traditional healers, drug
sellers, and semi- trained health providers (they work isolated from the public facilities)
• pay out-of-pocket or thin insurance market
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• 2nd pattern is as Pakistan and Kenya
(poor countries with larger and more
concentrated populations)
• resembles the first with one exception:
• semi-trained private providers
dominate the supply of health care in
most rural and marginal urban areas
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• private providers utilize a mix of Western
and indigenous medical concepts
• make money purchasing and reselling
drugs from local chemists
• engage in agricultural or other activities
part time
• limited contact with the formal, public
health care system
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• pt are usually uninsured
• out-of-pocket
• about three-quarters of HE in India
come directly from households
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• 3rd pattern is middle- income countries
(Chile, Mexico, Thailand, South Africa)
• risk-pooling (finance with formal sector
payroll taxes)
• government- managed social security
organization collects taxes
• pays physicians and hospitals(either
public or contracted private providers) 58Dr.WHA
• general revenue financed hospitals
and clinics for informal sector workers
• growing or already substantial private
insurance markets for the relatively
well-off
• many countries’ systems are hybrids,
with different patterns
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payment methods may be used in
combination to enhance or mitigate
the incentives that are created by
each method individually
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Reference• Daniel Maceira, M.S:1998 . “ Provider Payment Mechanisms in Health
care :Incentives, Outcomes, and Organizational Impact in Developing Countries “,major applied research 2, working paper 2 from www.phrproject.com (Accessed 2nd October 2011)
• JOHN C. LANGENBRUNNER, CHERYL CASHIN, AND SHEILA O’DOUGHERTY ,2009 ,“Designing and Implementing Health Care Provider Payment Systems How-To Manuals “ from www.rbfhealth.org (Accessed 2nd October 2011)
• Pierre-Thomas Léger ,2011, “Physician Payment Mechanisms: Overview and options for Canada” Canadian health service research foundation from www.chsrf (Accessed 2nd October 2011)
• Varun Gauri “Are Incentives Everything? Payment Mechanisms for Health Care Providers in Developing Countries” Development Research Group ,The World Bank
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