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:	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
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

How to Pay? Understanding and Using Incentives

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