Health Economics Series: Provider Payment in the UHC era

The country is considering several options for provider payment reform that will help achieve universal health care. Population-based interventions will be primarily offered by the government. As such, provider payment mechanism for these interventions will include salary and capitation. Philhealth considers primary health care capitation to promote integrated care through the service delivery network; thus, ensuring efficiency resulting to better health outcomes and financial protection. Moreover, funds in provincial and city-wide service networks for both population- and individual-based interventions will be pooled into a special health fund intended for health services. Sources for this fund include grants and subsidies from the national government, income from Philhealth payments, and other financial grants or donations.

For individual-based interventions, several payers are likely to use various payment mechanisms. The country’s social health insurance (SHI) will continue to use case rate payment system and capitation while transitioning to diagnosis related groups (DRG) for contracted networks and apex hospitals. Private companies, such as HMOs and PHIs, will likely continue to offer case rate payment and/or fee for service payment for their customers.

HPS 252 Provider Payment

The diagram sends us a message that various provider payment mechanisms will continue to exist in the country’s health care system. Emphasis is placed, however, on the current movement towards using performance-driven, prospective payments based on DRGs. At the end of it all, “mixing” of provider payment mechanisms can be complementary or compensatory. It is promising how incentives will come into play when these mechanisms align themselves during the implementation of the UHC law.