How to Pay? Understanding and Using Incentives

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 fram...

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Main Authors: Langenbrunner, John C., Xingzhu, Liu
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2013
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2004/09/5643905/pay-understanding-using-incentives
http://hdl.handle.net/10986/13674
id okr-10986-13674
recordtype oai_dc
spelling okr-10986-136742021-04-23T14:03:09Z How to Pay? Understanding and Using Incentives Langenbrunner, John C. Xingzhu, Liu ADVERSE SELECTION ALLOCATIVE EFFICIENCY BANK PUBLICATIONS BEDS CAPITATION CHILD HEALTH CHILD HEALTH SERVICES CIVIL SERVANTS CLINICAL OUTCOMES CLINICS COST SHIFTING DISABILITY DISCHARGE DISPENSARIES DOCTORS DRAFTS ECONOMICS EMPLOYMENT ENVIRONMENTAL DEGRADATION ETHICS EXPENDITURES FAMILY PHYSICIANS FEE FOR SERVICE FINANCIAL RISK GENERAL PRACTITIONERS GLOBAL BUDGETS HEALTH CARE HEALTH CARE COSTS HEALTH CARE DELIVERY HEALTH CARE FINANCING HEALTH CARE PROVIDERS HEALTH CARE SERVICES HEALTH CARE SYSTEMS HEALTH CENTERS HEALTH EXPENDITURE HEALTH FACILITIES HEALTH INSTITUTIONS HEALTH INSURANCE HEALTH INTERVENTIONS HEALTH NEEDS HEALTH OUTCOMES HEALTH PROVIDERS HEALTH SECTOR HEALTH SERVICE PROVISION HEALTH SERVICES HEALTH SYSTEM HEALTH SYSTEMS HOSPITAL CARE HOSPITAL COSTS HOSPITAL SERVICES HOSPITALS HUMAN DEVELOPMENT HUMAN RESOURCES IMMUNIZATION IMMUNIZATION COVERAGE INCOME INPATIENT CARE INSURANCE COMPANIES INSURERS INTEGRATION LATIN AMERICAN LESSONS LEARNED LOW-INCOME COUNTRIES MALNUTRITION MANAGED CARE MANAGERS MARGINAL COSTS MEDICAL CARE MEDICAL EQUIPMENT MEDICAL PERSONNEL MORAL HAZARD NONGOVERNMENTAL ORGANIZATIONS NURSES NURSING NURSING HOME CARE NURSING HOMES NUTRITION OUTPATIENT CARE OUTPATIENT SERVICES OVERRUNS PATIENTS PAYMENT SYSTEMS PHYSICIANS PREGNANT WOMEN PRIMARY CARE PROMOTING HEALTH PUBLIC HOSPITALS PUBLIC SECTOR PUBLIC SPENDING QUALITY OF CARE RESOURCE ALLOCATION RURAL HOSPITALS SERVICE DELIVERY SOCIAL INSURANCE SOUTH AMERICAN SUPPLIERS SURGERY WORKING ENVIRONMENT 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. 2013-05-30T14:28:47Z 2013-05-30T14:28:47Z 2004-09 http://documents.worldbank.org/curated/en/2004/09/5643905/pay-understanding-using-incentives http://hdl.handle.net/10986/13674 English en_US Health, Nutrition and Population (HNP) discussion paper; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic ADVERSE SELECTION
ALLOCATIVE EFFICIENCY
BANK PUBLICATIONS
BEDS
CAPITATION
CHILD HEALTH
CHILD HEALTH SERVICES
CIVIL SERVANTS
CLINICAL OUTCOMES
CLINICS
COST SHIFTING
DISABILITY
DISCHARGE
DISPENSARIES
DOCTORS
DRAFTS
ECONOMICS
EMPLOYMENT
ENVIRONMENTAL DEGRADATION
ETHICS
EXPENDITURES
FAMILY PHYSICIANS
FEE FOR SERVICE
FINANCIAL RISK
GENERAL PRACTITIONERS
GLOBAL BUDGETS
HEALTH CARE
HEALTH CARE COSTS
HEALTH CARE DELIVERY
HEALTH CARE FINANCING
HEALTH CARE PROVIDERS
HEALTH CARE SERVICES
HEALTH CARE SYSTEMS
HEALTH CENTERS
HEALTH EXPENDITURE
HEALTH FACILITIES
HEALTH INSTITUTIONS
HEALTH INSURANCE
HEALTH INTERVENTIONS
HEALTH NEEDS
HEALTH OUTCOMES
HEALTH PROVIDERS
HEALTH SECTOR
HEALTH SERVICE PROVISION
HEALTH SERVICES
HEALTH SYSTEM
HEALTH SYSTEMS
HOSPITAL CARE
HOSPITAL COSTS
HOSPITAL SERVICES
HOSPITALS
HUMAN DEVELOPMENT
HUMAN RESOURCES
IMMUNIZATION
IMMUNIZATION COVERAGE
INCOME
INPATIENT CARE
INSURANCE COMPANIES
INSURERS
INTEGRATION
LATIN AMERICAN
LESSONS LEARNED
LOW-INCOME COUNTRIES
MALNUTRITION
MANAGED CARE
MANAGERS
MARGINAL COSTS
MEDICAL CARE
MEDICAL EQUIPMENT
MEDICAL PERSONNEL
MORAL HAZARD
NONGOVERNMENTAL ORGANIZATIONS
NURSES
NURSING
NURSING HOME CARE
NURSING HOMES
NUTRITION
OUTPATIENT CARE
OUTPATIENT SERVICES
OVERRUNS
PATIENTS
PAYMENT SYSTEMS
PHYSICIANS
PREGNANT WOMEN
PRIMARY CARE
PROMOTING HEALTH
PUBLIC HOSPITALS
PUBLIC SECTOR
PUBLIC SPENDING
QUALITY OF CARE
RESOURCE ALLOCATION
RURAL HOSPITALS
SERVICE DELIVERY
SOCIAL INSURANCE
SOUTH AMERICAN
SUPPLIERS
SURGERY
WORKING ENVIRONMENT
spellingShingle ADVERSE SELECTION
ALLOCATIVE EFFICIENCY
BANK PUBLICATIONS
BEDS
CAPITATION
CHILD HEALTH
CHILD HEALTH SERVICES
CIVIL SERVANTS
CLINICAL OUTCOMES
CLINICS
COST SHIFTING
DISABILITY
DISCHARGE
DISPENSARIES
DOCTORS
DRAFTS
ECONOMICS
EMPLOYMENT
ENVIRONMENTAL DEGRADATION
ETHICS
EXPENDITURES
FAMILY PHYSICIANS
FEE FOR SERVICE
FINANCIAL RISK
GENERAL PRACTITIONERS
GLOBAL BUDGETS
HEALTH CARE
HEALTH CARE COSTS
HEALTH CARE DELIVERY
HEALTH CARE FINANCING
HEALTH CARE PROVIDERS
HEALTH CARE SERVICES
HEALTH CARE SYSTEMS
HEALTH CENTERS
HEALTH EXPENDITURE
HEALTH FACILITIES
HEALTH INSTITUTIONS
HEALTH INSURANCE
HEALTH INTERVENTIONS
HEALTH NEEDS
HEALTH OUTCOMES
HEALTH PROVIDERS
HEALTH SECTOR
HEALTH SERVICE PROVISION
HEALTH SERVICES
HEALTH SYSTEM
HEALTH SYSTEMS
HOSPITAL CARE
HOSPITAL COSTS
HOSPITAL SERVICES
HOSPITALS
HUMAN DEVELOPMENT
HUMAN RESOURCES
IMMUNIZATION
IMMUNIZATION COVERAGE
INCOME
INPATIENT CARE
INSURANCE COMPANIES
INSURERS
INTEGRATION
LATIN AMERICAN
LESSONS LEARNED
LOW-INCOME COUNTRIES
MALNUTRITION
MANAGED CARE
MANAGERS
MARGINAL COSTS
MEDICAL CARE
MEDICAL EQUIPMENT
MEDICAL PERSONNEL
MORAL HAZARD
NONGOVERNMENTAL ORGANIZATIONS
NURSES
NURSING
NURSING HOME CARE
NURSING HOMES
NUTRITION
OUTPATIENT CARE
OUTPATIENT SERVICES
OVERRUNS
PATIENTS
PAYMENT SYSTEMS
PHYSICIANS
PREGNANT WOMEN
PRIMARY CARE
PROMOTING HEALTH
PUBLIC HOSPITALS
PUBLIC SECTOR
PUBLIC SPENDING
QUALITY OF CARE
RESOURCE ALLOCATION
RURAL HOSPITALS
SERVICE DELIVERY
SOCIAL INSURANCE
SOUTH AMERICAN
SUPPLIERS
SURGERY
WORKING ENVIRONMENT
Langenbrunner, John C.
Xingzhu, Liu
How to Pay? Understanding and Using Incentives
relation Health, Nutrition and Population (HNP) discussion paper;
description 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.
format Publications & Research :: Working Paper
author Langenbrunner, John C.
Xingzhu, Liu
author_facet Langenbrunner, John C.
Xingzhu, Liu
author_sort Langenbrunner, John C.
title How to Pay? Understanding and Using Incentives
title_short How to Pay? Understanding and Using Incentives
title_full How to Pay? Understanding and Using Incentives
title_fullStr How to Pay? Understanding and Using Incentives
title_full_unstemmed How to Pay? Understanding and Using Incentives
title_sort how to pay? understanding and using incentives
publisher World Bank, Washington, DC
publishDate 2013
url http://documents.worldbank.org/curated/en/2004/09/5643905/pay-understanding-using-incentives
http://hdl.handle.net/10986/13674
_version_ 1764424181735227392