An unintended consequence of provider payment reform: The case of capitation grants in the National Health Insurance reform of Indonesia.

One of the most important components of the ambitious 2014 National Health Insurance reform in Indonesia is the implementation of prospective payment system known as capitation grants, paid monthly to the primary health providers based on the enrolment rate. This has ushered in additional financial resources for the health managers in resource allocations, especially in the hiring of manpower. Drawing data from the Indonesia Family Life Survey (1993-2015), this paper uses difference-in-differences method to evaluate the effects of the payment method reform on the allocation of human resources for health among the primary health providers. To our surprise, there was no statistically significant change in the total number of full-time staff among the capitated facilities after the reform. However, capitation grants caused an increase in the number of full-time equivalent and part-time equivalent contract staff, but a significant decline in the number of full-time permanent staff among the urban capitated facilities. It is likely that more contract health workers were hired at the expense of full-time permanent staff among the capitated facilities in the urban regions. This unintended consequence shed light on the need to develop nuanced and contextual understanding of payment reforms in developing countries.

Does One Size Fit All With the Effects of Payment Reform? Dialysis Facility Payer Mix and Anemia Management Under the Expanded Medicare Prospective Payment System.

BACKGROUND: The effects of Medicare payment reforms aiming to improve the efficiency and quality of care by establishing greater financial accountability for providers may vary based on the extent and types of other coverage for their patient populations. Providers who are more resource constrained due to a less favorable payer mix face greater financial risks under such reforms. The impact of the expanded Medicare dialysis prospective payment system (PPS) on quality of care in independent dialysis facilities may vary based on the extent of higher payments from private insurers available for managing increased risks. OBJECTIVES: To evaluate whether anemia outcomes for dialysis patients in independent facilities differ under the Medicare PPS based on facility payer mix. DESIGN: We examined changes in anemia outcomes for 122,641 Medicare dialysis patients in 921 independent facilities during 2009-2014 among facilities with differing levels of employer insurance (EI). We performed similar analyses of facilities affiliated with large dialysis organizations, whose practices were not expected to change based on facility-specific payer mix. RESULTS: Among independent facilities, similar modeled trends in low hemoglobin for all 3 facility EI groups in 2009-2010 were followed by increased low hemoglobin during 2012-2014 for facilities with lower EI (P<0.01). Post-PPS standardized blood transfusion ratios were 9% higher for lower EI versus higher EI independent facilities (P<0.01). Among large dialysis organizations facilities, there was no divergence in low hemoglobin by payer mix under the PPS. CONCLUSIONS: There is evidence of poorer quality of care for anemia under the PPS in independent facilities with lower versus higher EI. Provider responses to payment reform may vary based on attributes such as payer mix that could have implications for health disparities.

Primary Care Pharmacist Services Align With Payment Reform and Provider "Joy of Practice".

The implementation and expansion of primary care (PC) pharmacist medication optimization and management services has been hindered mainly by the lack of a payment mechanism for PC providers to engage pharmacist services. If pharmacists expect to be included in new PC team-based payment models, we need to actively engage in ongoing PC practice transformation discussions with PC organizational leaders. In this commentary, examples of integrated PC pharmacist services and payment models are provided to (1) reinforce the feasibility of pharmacist integration into expanded PC teams and (2) share with PC leaders, payers, and policy makers.

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

Managing imperfect competition by pay for performance and reference pricing.

I study a managed health service market where differentiated providers compete for consumers by choosing multiple service qualities, and where copayments that consumers pay and payments that providers receive for services are set by a payer. The optimal regulation scheme is two-sided. On the demand side, it justifies and clarifies value-based reference pricing. On the supply side, it prescribes pay for performance when consumers misperceive service benefits or providers have intrinsic quality incentives. The optimal bonuses are expressed in terms of demand elasticities, service technology, and provider characteristics. However, pay for performance may not outperform prospective payment when consumers are rational and providers are profit maximizing, or when one of the service qualities is not contractible.

Competition in the Dutch hospital sector: an analysis of health care volume and cost.

This paper evaluates the impact of market competition on health care volume and cost. At the start of 2005, the financing system of Dutch hospitals started to be gradually changed from a closed-end budgeting system to a non-regulated price competitive prospective reimbursement system. The gradual implementation of price competition is a 'natural experiment' that provides a unique opportunity to analyze the effects of market competition on hospital behavior. We have access to a unique database, which contains hospital discharge data of diagnosis treatment combinations (DBCs) of individual patients, including detailed care activities. Difference-in-difference estimates show that the implementation of market-based competition leads to relatively lower total costs, production volume and number of activities overall. Difference-in-difference estimates on treatment level show that the average costs for outpatient DBCs decreased due to a decrease in the number of activities per DBC. The introduction of market competition led to an increase of average costs of inpatient DBCs. Since both volume and number of activities have not changed significantly, we conclude that the cost increase is likely the result of more expensive activities. A possible explanation for our finding is that hospitals look for possible efficiency improvements in predominantly outpatient care products that are relatively straightforward, using easily analyzable technologies. The effects of competition on average cost and the relative shares of inpatient and outpatient treatments on specialty level are significant but contrary for cardiology and orthopedics, suggesting that specialties react differently to competitive incentives.