Improving Service Delivery: A Question of Incentives
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Box 6.2 (Continued)
For outpatient care, governments and insurers in most OECD countries pay primary care providers using a combination of either capitation or salary payments with FFS for preventive care and specialist services. This is also increasingly the pattern in Central and Eastern Europe and the Commonwealth of Independent States, where many countries have seen a shift to private primary care, combined with the introduction of capitation payment and FFS for priority preventive services (in some countries) (Velasco-Garrido, Borowitz et al. 2005). There is little systematic evidence on how different forms of provider payment impact quality, costs, and efficiency in the provision of outpatient care. However, a review of several studies of primary care physicians in OECD countries found that, relative to capitation and salary, FFS was associated with higher volume of care, at least in part reflecting the provision of unnecessary care (Gosden et al. 2003). In some countries, such as Thailand, capitation, complemented with separate payments for high-cost cases, has been used to pay for inpatient care (Mills et al. 2000).
reimbursement.57 In the simplest application, a fixed payment per inpatient day is set, treating all cases the same. The attraction of payment per case or inpatient day is that the method transfers some financial risk to the provider, thus creating incentives for efficiency and cost-consciousness. A growing body of international evidence indicates that moving from costreimbursement to case-based payment indeed can contribute to cost control (see box 6.2). However, case-based payment reforms have not been problem-free—they introduce incentives to increase volume, skimp on quality, and potentially to “game” the payment system. Therefore, adequate systems and procedures to control volume, quality, and other potential problems must accompany introduction of the payment reforms. Many health systems also adopt a mixed payment approach to balance the competing incentives of each method. For example, in response to the increased volume of inpatient care after introduction of case-based payment, some countries have shifted to a mix of global budgets—in which providers are paid a fixed amount to cover aggregate expenditures and given flexibility in how the budget is spent—and case-based payment. In outpatient care, the most commonly used alternatives to fee-forservice are for physicians to be salaried or for providers to be paid by the number of patients that they are expected to serve (capitation). Payment by salary has the merit of not creating adverse incentives to reduce quality,