Publication: Pricing Health Services for Purchasers : A Review of Methods and Experiences
Loading...
Date
2004-09
ISSN
Published
2004-09
Author(s)
Editor(s)
Abstract
This paper reviews methodologies and international experience related to costing and pricing health services. Several factors affect the determination of the prices purchasers pay for health services. These include: the method of provider payment; the availability of information on costs, volumes, outcomes, and patient and provider characteristics; methods used to calculate providers' costs; and characteristics of purchasers and providers-including the regulatory environment, provider autonomy, negotiating power, and the degree of competition. The paper focuses on methods for setting levels of payment under different provider payment mechanisms. Line item and global budgets remain the most common reimbursement methods in developing countries. However, many of these countries are implementing mixed payment systems that have greater information demands. The principal payment types used in high-income countries-capitation, payments per case or diagnosis, and fee-for-service-are reviewed here, and implications for low- and middle-income countries discussed. To minimize incentives for under- or over-utilization, prices that purchasers pay for health care services should be related to the unit costs of services. However, establishing the true unit cost of health services is complicated, and detailed data needed to correctly allocate indirect costs to the units of services are not generally available in developing countries. The organizational characteristics of health care providers and their relationships with purchasers strongly influence the way prices for health services are determined. Pertinent characteristics include provider autonomy, provider negotiating power, and the degree of competition. The principal constraint on the development of provider payments systems in developing countries is the limited availability of information on costs, volumes, and patient characteristics. However, international experiences reveal a variety of options for setting prices for health care purchasers in developing countries that are reforming their payment systems.
Link to Data Set
Citation
“Waters, Hugh; Hussey, Peter. 2004. Pricing Health Services for Purchasers : A Review of Methods and Experiences. Health, Nutrition and Population (HNP)
discussion paper;. © World Bank. http://hdl.handle.net/10986/13764 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Vietnam : Learning from Smart Reforms on the Road to Universal Health Coverage(World Bank Group, Washington, DC, 2014-08)Universal Health Coverage is a powerful framework for a nation aiming to protect their population against health risks. However, countries face multiple challenges in implementing, achieving and sustaining UHC strategies. Sharing and learning from diverse country experiences may enable to foster global and country progress toward that goal. The study seeks to contribute to the global effort of sharing potentially useful lessons to address policy concerns on the design and implementation of UHC strategies in LMICs. Vietnam is one of the LMICs that have taken relatively quick and effective actions to expand health coverage and improve financial protection in the last two decades. The country study, first, takes stock of UHC progress in Vietnam, examining both the breadth and the depth of health coverage and assessing financial protection and equity outputs (chapter one). Chapter two includes an in-depth analysis of some of the major success strategies and policy actions that the country took to expand health coverage and financial protection for all, including for the poor. Chapter three focuses on some of the UHC-related challenges that the country faces in pursuing expansion and sustaining UHC. Vietnam s experience suggests that, moving toward greater UHC outputs, the system must be constantly adjusted, and that UHC strategies must be adaptive, those used in the past to cover the formal sector and the poor may turn out inadequate to reach the uninsured in the informal sector.Publication How to Pay? Understanding and Using Incentives(World Bank, Washington, DC, 2004-09)Many countries have experimented with alternative ways of paying providers of health care services. This paper illustrates different methods, suggests some of the theoretic advantages and limitations of each, and provides a general theoretical framework for evaluating alternatives. Over the last two decades, new and more sophisticated payment systems have evolved, with a broadening of units of payment and setting of payments prospectively. The authors discuss the international experience of a number of payment systems, both traditional and more recently developed, including line-item budgeting, salary, fee-for-service, per diem, case-mix adjusted per episode, global budgets and capitation. The authors argue that no one set of incentives will address the multiple objectives of purchasers, providers, and patients. As a result, purchasers and policymakers must understand and address policy objectives explicitly. With more sophisticated systems, part or all of the financial risk is transferred from the purchaser back to the provider and patient. Most observers caution against full risk but encourage some supply-side cost sharing only, with purchaser and provider sharing in risk arrangements to address moral hazard issues. Imposing high copayments or user fees is an alternative, but in developing countries that quickly erodes financial protection. More sophisticated payment systems may also lead to higher transaction costs and necessitate a greater capacity to use information and management systems. Finally, the best planned and implemented payment incentives and systems may fail due to a variety of other and related factors in health care delivery. Unless these issues are addressed, impacts of change in resource allocation and purchasing will be diluted or neutralized. Technicians and policymakers will need to address these potential "chokepoints" in any process of implementation and refinement.Publication Tajikistan - Feasibility Study for Results-Based Financing (RBF) In the Health Sector(World Bank, 2010-03-31)The purpose of this study is to examine the feasibility of introducing Results-Based Financing (RBF) in Tajikistan's health sector. Several countries have experience with RBF in low-income settings, and lessons learned can be interesting for Tajikistan. Technically, RBF is a retrospective provider payment that can be designed to reimburse providers for contractually defined services and specific compliance targets, including for efficiency and quality targets. In Tajikistan RBF will be linked to ongoing provider payment reforms. Therefore, the chapter also provides a brief overview on provider payment mechanisms and experience with provider payment reforms and treatment patterns from middle- and higher-income countries. The objective of this feasibility study is to propose a sustainable RBF pilot program for two oblasts (Khatlon and Sughd), to cost-effectively improve maternal and child health (MCH) outcomes. The study aims to inform the health sector strategy and help the Government and partners to effectively design and use RBF mechanisms at three potential levels. First, the fiscal transfer from the central government to oblasts (regions) and rayons (districts) could be adjusted to include a bonus payment based on specific results achieved. Second, the provider payment method from oblast health fund pools to hospitals and outpatient facilities could reward providers based on results indicators. Third, a performance payment could be added to salaries paid to staff working in health facilities. It is expected that such a three-pronged approach could reinforce the financial incentive set through RBF to staff working in the administration and provision of care. If the staff responds to these incentives, then this could lead to better management in oblast and rayons, improved availability of financial resources and medical material in health facilities, and better treatment of patients. Combined, these behavioral changes will ultimately lead to better health results, including improved quality of care and in the longer-run improved health status.Publication Designing and Implementing Health Care Provider Payment Systems : How-To Manuals(Washington, DC: World Bank, 2009)This volume grows out of an initiative in the World Bank on resource allocation and purchasing ('RAP'), which started in 2000, and continues to publish articles and books related to strategic purchasing. The initiative emerged from such questions in developing economies as: why do individuals need help in purchasing health services from providers? Is the 'middleman' really necessary? Can people not just buy health services in the same way they would go to the local market to buy bread, milk, or fruit, especially since, throughout most of history that is what most people did? When sick, they contacted local healers directly. Public policy historically was limited largely to protecting the sick against charlatans and was enforced through ethical codes such as the Hippocratic Oath. There was no expensive technology, and most serious conditions led to death. Loss of employment and burial costs were the most expensive parts of illness. With industrialization and the scientific revolution, all this changed. As understanding about the causes, prevention, and treatment of illness expanded, interventions become more complex and expensive. Health care was no longer the exclusive domain of traditional healers. Partly because of the complexities involved, the World Bank's new health, nutrition, and population strategy has noted that 'countries increasingly not only want to know what to do (with health systems) but also how to do it, particularly how to design and manage the transition from current to reformed systems.' This volume is a step in that direction, to help countries design, manage, and implement reforms related to strategic purchasing with an emphasis on changing their provider payment systems.Publication Massachusetts Health Reform : Approaching Universal Coverage(World Bank, Washington DC, 2013-01)The commonwealth of Massachusetts, one of the 50 states in the United States of America, has achieved near universal health coverage of its 6.6 million residents after a landmark reform made health insurance mandatory for all residents in 2006. The reform was only the latest step in a sequence of national and state programs that successively enrolled more people in private and public health insurance programs over a period of four decades. Massachusetts passed chapter 58 of the acts of 2006, the Massachusetts health care reform law, on April 12, 2006, and over a five-year period, more than 400,000 previously uninsured residents were provided with comprehensive health benefits. As of 2012, 98.2 percent of the population is covered, including 99.8 percent of children. Massachusetts has the highest rate of health insurance coverage of any state in the country. The program has widespread popular support, and it served as a model for the design of President Obama's affordable care act, which established a plan for mandatory coverage on a national basis for the first time in the United States. This report will briefly describe the reform and its context, but will focus for purposes of simplicity on the operational details of the mass health program of health insurance for the poor. A discussion of the administration and management of Mass Health can offer a glimpse into the inner workings of all other insurance plans in the commonwealth. Mass health, private insurance, and Commonwealth Care share similar tools, controls, and strategies.
Users also downloaded
Showing related downloaded files
Publication World Development Indicators 2014(Washington, DC, 2014-05-09)World Development Indicators 2014 provides a compilation of relevant, high-quality, and internationally comparable statistics about global development and the fight against poverty. It is intended to help users of all kinds—policymakers, students, analysts, professors, program managers, and citizens—find and use data related to all aspects of development, including those that help monitor and understand progress toward the two goals. Six themes are used to organize indicators—world view, people, environment, economy, states and markets, and global links. As in past editions, World view reviews global progress toward the Millennium Development Goals (MDGs) and provides key indicators related to poverty. A complementary online data analysis tool is available this year to allow readers to further investigate global, regional, and country progress on the MDGs: http://data.worldbank.org/mdgs. Each of the remaining sections includes an introduction; six stories highlighting specific global, regional or country trends; and a table of the most relevant and popular indicators for that theme, together with a discussion of indicator compilation methodology.Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.