Financing and Payment Models For Primary Health Care: Six Lessons From JLN Country Implementation Experience
Financing and Payment Models For Primary Health Care: Six Lessons From JLN Country Implementation Experience
Financing and Payment Models For Primary Health Care: Six Lessons From JLN Country Implementation Experience
PAY M E N T M O D E L S
F O R P R I MARY
H E ALT H C AR E
SIX LESSONS FROM JLN
COUNTRY IMPLEMENTATION
EXPERIENCE
F I NAN C I N G AN D
PAY M E N T M O D E L S
F O R P R I MARY
H E ALT H C AR E
SIX LESSONS FROM JLN
COUNTRY IMPLEMENTATION
EXPERIENCE
AC K N OW LE DG M E N T S
This document was produced by the Joint Learning Network for Universal Health Coverage (JLN), an
innovative network of practitioners and policymakers from around the world who collaboratively solve
implementation challenges and develop practical tools to help countries work toward universal health
coverage. More information is available at www.jointlearningnetwork.org. For inquiries about this
document or other JLN activities, please contact the JLN at [email protected].
The work was funded by the The work is licensed under the Creative Commons Attribution-ShareAlike 4.0
Deutsche Gesellschaft für International License (CC BY-SA 4.0). To view a copy of this license, visit
https://creativecommons.org/licenses/by-sa/4.0/. The content may be freely
Internationale Zusammenarbeit (GIZ)
used in accordance with this license provided the material is accompanied by
through the Global Alliances for the following attribution: “Financing and Payment Models for Primary Health
Social Protection program, along with Care: Six Lessons from JLN Country Implementation Experience. Copyright
grants to the JLN Provider Payment 2017, Joint Learning Network for Universal Health Coverage, Results for
Development (R4D).” If translated or used for educational purposes, please
Mechanisms Technical Initiative from
contact the JLN at [email protected] so we may have a record of its use.
the Bill & Melinda Gates Foundation
and the Rockefeller Foundation.
CONTRIBUTORS
PAG E 2
Contents
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LESSON 1. Choose financing and payment models that advance the country’s
PHC service delivery objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LESSON 2. Define the PHC service package before selecting payment methods . . . . . . . . . . . 9
LESSON 4. Consider that most countries are moving toward some variation of
capitation payment for PHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
LESSON 5. Use simple, flexible monitoring systems that make use of existing data . . . . . . . . 17
CONCLUDING THOUGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PAG E 3
“Primary health care is not the entry point to
the health system but the center. And at the
center of the center are people.”
Dr. Isabella De Ferari
Office of the Under-Secretary for Health Services Networks
Ministry of Health, Chile
Introduction
In most countries, primary health care (PHC) providers are the first point of contact that people
have with the health care system. This part of the system is used the most and can have the
greatest impact on health, particularly among vulnerable populations. International evidence
confirms that a stronger PHC sector is associated with greater equity and access to basic health
care, higher patient satisfaction, and lower aggregate spending for the same or better outcomes.
The role of the PHC sector also determines many of the interactions among the government
purchasers, providers, and the population throughout the health system. Many countries find it
challenging to improve their PHC systems, however. (See Box 1.) Financing and payment models
for PHC can be important tools for addressing issues of access, quality, and equity in health care.
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Countries find it challenging to develop
financing and payment systems for PHC that
align with payment systems at other service
delivery levels and create both opportunity and
incentives to provide better PHC, ensure more
equitable access, and shield families from
impoverishing out-of-pocket payments. Little
evidence is available on effective payment
models for PHC that help shift the balance of
resources and service use toward PHC and
expand prevention to improve population
health. Many countries, including those in
the Joint Learning Network for Universal
Health Coverage (JLN), have tried a variety
of approaches and models for PHC financing
and payment, but few of those experiences JLN country members share their experience with PHC financing and payment
have been evaluated or their lessons well at a session in Santiago, Chile.
The JLN Provider Payment Mechanisms (PPM) Technical Initiative is hosting a collaborative learning exchange so countries
can share their experiences with different PHC financing and payment models. This effort is generating a deeper
understanding of how the design and implementation of financing and payment models for PHC can support effective,
sustainable health systems that improve population health and financial protection in low- and middle-income countries.
This paper presents six important early lessons emerging from the collaborative learning exchange that can be adapted and
applied by other countries that face similar challenges or are embarking on PHC reform efforts. This is not an exhaustive
synthesis of country experience, but rather a sample of experience that illustrates these early lessons. The paper also points
out helpful resources with guidance that countries can adapt to their own contexts.
HELPFUL RESOURCES
The UHC Primary Health Care Self-Assessment Tool helps countries quickly For Universal Health Coverage
PAG E 5
Lessons from JLN Country Experience
Since the collaborative learning exchange on PHC financing and payment began in January 2016,
policymakers and practitioners from 15 JLN member countries and three resource countries
(nonmember countries that have been willing to engage with the JLN and share valuable
experience) have shared their experience and reached consensus on a set of early lessons that
can be adapted and used by other countries to guide implementation of effective PHC financing
and payment models.
B OX 2 .
CO LL ABO R AT I V E LE AR N I N G E XC H AN G E PAR T I C I PAN T S
JLN COUNTRIES
BAHRAIN K E N YA PERU
BANGLADESH M A L AY S I A PHILIPPINES
GHANA M O L D O VA S O U T H KO R E A
RESOURCE COUNTRIES
ARGENTINA CHILE E S TO N I A
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Since 2010, the PPM Technical Initiative has worked with countries to develop and refine a framework for understanding
the role of PHC financing and payment models in the context of broader health financing and service delivery systems.
(See Figure 1.) The framework also acknowledges the influence of policy, legal, and regulatory factors such as the public
financial management system, government decentralization, and civil service laws.
F I G U R E 1.
P H C F I NAN C I N G AN D PAY M E N T M O D E L S I N CO N T E X T
This framework is being used by participants in the collaborative learning exchange to discuss and synthesize country
experience and understand how that experience can be adapted to other country contexts.
PAG E 7
LESSON
Choose financing and payment models
Countries should first determine their objectives for PHC service delivery and then identify
financing and payment models that will support that vision and create the right incentives to
ensure seamless, well-managed access across levels of care.
HELPFUL RESOURCES
https://phcperformanceinitiative.org/8-core-tenets-primary-health-
care-improvement-middle-and-high-income-countries
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LESSON
2
Define the PHC service package
before selecting payment methods
To adequately fund PHC, it is important to define the PHC benefits or service package. PHC
packages are typically defined as entitlements of basic and essential health services, but
some countries design those packages around the health service delivery structure and scope
of services. Some countries have difficulty defining PHC and the services that should be in
the package.
Countries with a defined PHC package typically define that package through a combination of stakeholder consultations
and use of some objective criteria. Some countries, such as Kenya, define their PHC package to prioritize access to free or
low-cost PHC as a pathway to UHC. As more resources become available, the PHC package may become more generous.
Malaysia’s PHC package started out as a basic package focused on maternal and child health; as the country’s resources
have grown, the scope of PHC services has become more comprehensive and includes more complex services. The following
table lists the PHC service packages in seven JLN countries.
T H E P H C S E R V I C E PAC K AG E I N S E V E N J LN CO U N T R I E S
BANGLADESH Ministry of Health • Maternal and newborn care, child health, and immunization
and Family Welfare • Adolescent health
• Family planning: preconception, postpartum, post-abortion, post-
menstrual regulation
• Child, adolescent, and maternal nutrition
• Communicable diseases, including tuberculosis, leprosy, malaria,
HIV/AIDS, and neglected tropical diseases
• Noncommunicable diseases: hypertension, diabetes, breast and cervical
cancer, mental health
• Sexual and gender-based violence
• Other common conditions: eye, ear, skin, dental, emergency, geriatric
care
• Support services: laboratory, radiology/imaging, pharmacy
• Integrated behavior change and communications
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COUNTRY PURCHASER DEFINITION OF PHC PACKAGE AND SCOPE OF SERVICES
INDONESIA Badan • Promotive and preventive services: individual health counseling, basic
Penyelenggara immunization, family planning, health screening
Jaminan Sosial • Medical examination, treatment, and medical consultation
Kesehatan
• Nonspecialty medical treatment (surgical or nonsurgical)
(social security
agency) • Medicine and medical consumables
• Blood transfusion
• First-level laboratory examinations
• First-level inpatient care
KENYA National Hospital • General consultation by a general physician, clinical officer, or nurse
Insurance Fund • Diagnosis and treatment of common ailments
• Prescribed basic and routine laboratory tests, including prenatal profiling
• Basic X-ray investigation services
• Maternal care and reproductive health services
• Treatment of sexually transmitted infections
• Minor surgical services
• Daycare procedures
• Drugs and dispensing services
• Physiotherapy
• Kenya Expanded Programme on Immunization
• Health education, wellness, and counseling
• Routine screening for conditions such as cervical and prostate cancer
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COUNTRY PURCHASER DEFINITION OF PHC PACKAGE AND SCOPE OF SERVICES
HELPFUL RESOURCES
n e f i t s Po l i cy F r a m e
h Be wo
a lt rk
He
ways to design and revise PHC benefits packages, offers resources Financing:
Mobilizing &
Pooling
Resources
Financing:
www.jointlearningnetwork.org/technical-initiatives/ Generating
Demand
www.cgdev.org/publication/whats-in-whats-out-designing-benefits-
universal-health-coverage
PAG E 1 1
LESSON
Use a combination of costing and
Information on the cost of delivering health services is one important element of sound decision-
making on establishing or expanding a PHC service package, strategically purchasing covered
services, and implementing policies that will promote efficient service delivery and cost-effective
services. But costing alone is not enough and must be combined with other information, such as
the amount of available resources and policy priorities.
A costing exercise typically involves estimating the unit cost of each service in the package and projecting utilization to
arrive at the total annual cost of making the services in the package accessible. The Philippines periodically validates the
cost estimates for its PHC packages, and Chile frequently updates expenditure requirements for PHC packages using new
costing studies. In 2017, Bangladesh finalized costing of its updated PHC package (called Essential Health Service Package).
In practice, countries often use approaches other than costing exercises to allocate resources to PHC, as shown in Figure 3.
F I G U R E 3.
A P P R OAC H E S TO ALLO C AT I N G F U N D S F O R P H C
Philippines
Available revenue • Mismatch between revenue and need
Vietnam
Negotiation with
Mongolia • Competing priorities
Ministry of Finance
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HELPFUL RESOURCES
www.jointlearningnetwork.org/resources/costing-of-health-services-
for-provider-payment-a-practical-manual
PAG E 1 3
LESSON
4
Consider that most countries are moving toward
some variation of capitation payment for PHC
While there is no ideal payment method and each model has its strengths and weaknesses,
many countries are moving toward some variation of capitation payment for PHC. Capitation is
structured around financing all necessary health care for a defined population rather than tying
payment to specific diagnostic and curative services when those services are delivered. Among all
of the payment methods it is the most consistent with the philosophy of PHC. In general, countries
are moving toward capitation because the alternatives—fee-for-service and line-item budgets—
have demonstrated shortcomings in supporting a PHC-centered health system.
Other reasons cited by JLN countries for favoring capitation for PHC include:
Capitation is based on covering all care within the service package for each enrollee. Capitation can improve equity and
create incentives for providers to improve efficiency by reducing unnecessary services, shifting services toward PHC and
prevention, and attracting additional enrollees. Some positive results of capitation have been observed in JLN countries
and other countries, including lower hospitalization rates in Chile and increased preventive care in Peru. Other experience
indicates that capitation has in some cases contributed to better cost management for public purchasers, some guaranteed
income for providers, and flexible and responsive services for patients.
Some adjustments to capitation are typically needed, however, depending on factors such as health needs, geography, and
poverty. Other measures may also be necessary to counterbalance potential negative consequences of capitation, such as
underprovision of services or inappropriate referrals. Most JLN countries that use capitated payment for PHC implement
additional measures such as monitoring, performance-based incentives, and supplementary fee-for-service payments to
boost utilization of priority services. The resulting payment model, including country-specific complementary measures,
works best when services are delivered within networks by family health teams, and when information systems at every level
are integrated.
Capitated payment models are designed to align with the country’s definition of PHC. Most JLN countries start with a simple
capitation model that is transparent, with simple payment calculations, and easy to administer, particularly in places where
data automation is limited. Most of them eventually adjust capitated payments based on demographic variables such as
age and sex, and some adjust for geographic differences, poverty, and other factors. An important consideration is whether
to include PHC medicines in the capitation payment system. The most effective way to pay for medicines depends on the
context; the learning collaborative will take up this challenging issue in the next phase.
Some countries combine payment methods to create a blended payment system, or mixed model, to maximize the beneficial
incentives and minimize the unintended consequences of each payment method. For example, a capitated payment system
for PHC can incorporate a small amount of fee-for-service payment for priority preventive services, such as prenatal care
and immunization, to counteract the potential perverse incentive in capitation to underprovide services. (See Box 3.) Any
payment method can also be combined with specific performance-based rewards or penalties (known as results-based
financing or pay-for-performance).
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B OX 3 .
E S TO N I A : A B LE N D E D P H C PAY M E N T M O D E L W I T H
P E R F O R MAN C E I N C E N T I V E S
In Estonia, the Estonian Health Insurance Fund (EHIF), which is responsible for financing health care,
has used a blended payment model for PHC for many years. The EHIF has carefully crafted a blend of
payment methods to provide incentives for family doctors to take more responsibility for diagnostic
services and treatment, as well as to compensate them for the financial risks associated with caring for
older patients and working in remote areas. Family physicians under contract with the EHIF are paid
through a combination of a fixed monthly allowance (for a second nurse and to cover infrastructure
and utilities costs), an age-adjusted capitated payment per enrollee per month, some fee-for-service
payments, additional payments based on the distance to the nearest hospital, and performance-related
payment through the Quality Bonus System (QBS).
The proportion of family physicians participating in the QBS and earning a quality bonus has increased
steadily since the QBS was introduced in 2006. Participation became mandatory for all family physicians
in 2016. The QBS uses a points-based system in which the practitioner earns a fixed number of points
for meeting the expected threshold of each indicator (or earns 0 points for not meeting that threshold).
The thresholds are revised annually based on previous-year coverage to ensure a stepwise increase. It
takes about one year to develop a new indicator.
▶▶Type 2 diabetes
▶▶Hypothyreosis
▶▶Myocardial infarction
▶▶Pregnancy follow-up
▶▶Gynecological examination
▶▶Minor surgery
PAG E 1 5
When the design and implementation
arrangements are appropriate, even simple
capitation models can improve equity,
efficiency, and provider responsiveness.
In Mongolia, the urban PHC sector was
restructured in 2000 into family group
practices, now called family health centers.
PHC is financed through a needs-based
per capita allocation from the Ministry of
Finance to the local level, which in turn makes
capitated payments to family health centers.
Equity in resource allocation and the ability
of providers to respond to the health needs of
their populations are considered to be much
better than under the line-item budget and
fee-for-service payment systems, which are JLN country members view Chile’s integrated information system for PHC,
used to pay for most services outside of PHC which allows patients and providers to have paperless interactions.
in Mongolia.
Capitation can lead to unintended consequences, however. Paying providers in advance can lead to underprovision of
necessary services or overreferral. Also, if providers lack the capacity to deliver the package of services, referrals will be
higher and excess financial risk may be shifted to the purchaser or to patients who bypass their PHC provider. There is also
the practical challenge of defining PHC providers, linking them to individual enrollees for a fixed period of time, and making
and accounting for prepayments.
HELPFUL RESOURCES
www.jointlearningnetwork.org/resources/assessing-health-provider-
payment-systems-a-practical-guide-for-countries-w
for PHC. Each case study describes the context, objectives, design,
Financing and payment models for PHC can be important tools for
addressing issues of access, quality, and equity in health care. Financing
and payment models for PHC should allow adequate resources to flow to the I N - D E P T H CO U N T RY
primary care level and make priority interventions accessible to the entire CASE STUDIES
population. These models should also create incentives across the health
The series includes case studies
system to manage population health, use resources efficiently, and avoid
on these three countries:
unnecessary services and expenditures at the secondary and tertiary levels.
innovation and how well the payment innovation has met its
Countries find it challenging to develop financing and payment systems
for PHC that align with payment systems at other service delivery levels
and create both opportunity and incentives to provide better primary
care, ensure more equitable access, and shield families from impoverishing out-of-pocket payments. Little evidence is
available on effective payment models for PHC that help shift the balance of resources and services toward primary care and
prevention to improve population health. Many countries, including those in the Joint Learning Network for Universal Health
Coverage1 (JLN), have tried a wide variety of approaches and models for PHC financing and payment, but few of those
objectives.
experiences have been evaluated or their lessons well documented for an international audience.
The JLN/GIZ Case Studies on Payment Innovation for Primary Health Care aim to help fill this gap by sharing the experiences
of three countries—Argentina, Chile, and Indonesia—so peer countries can extract lessons about implementing innovative
payment models for PHC. Each case study describes the context, objectives, and governance structure of the PHC payment
innovation, the design of the payment model, and how effectively the payment innovations have achieved their objectives.
The Argentina case highlights the effective use of financing and payment for PHC to achieve national health objectives in a
highly decentralized context. Chile offers an example of how a country can incrementally introduce major payment reforms
during a political transition and then refine the model over time. Indonesia highlights the experience of scaling up a PHC
payment innovation in the context of integrating multiple public health insurance schemes.
The following table summarizes each country’s payment innovation and how well it has met the country’s stated health
objectives.
www.jointlearningnetwork.org/resources/jln-giz-case-studies-on- 1
The JLN is an innovative, country-driven network of practitioners and policymakers from around the globe who co-develop global knowledge products
that help bridge the gap between theory and practice to extend coverage to more than 3 billion people.
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payment-innovation-for-primary-health-care
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LESSON
5
Use simple, flexible monitoring systems that
make use of existing data
Monitoring systems provide essential and timely information on whether PHC financing and
payment models are meeting their objectives. This information can help identify the need for more
analysis about specific providers or services, and it can reveal where modifications are needed to
the payment system design or implementation. It can also support dialogue among purchasers,
providers, and other stakeholders about improving service delivery and can be useful for making
the case for additional resources.
JLN countries find that provider payment monitoring systems work best when they are simple and flexible. It is best to
select a few simple indicators at the outset and ensure that only useful data and the right amount of data are collected.
The institutional roles and responsibilities across the monitoring system should also be clear. Monitoring should be presented
not as a mechanism of control but as a way to help improve health system performance and health outcomes. Data should
also be fed back to providers to help them improve their management and ensure overall quality of services.
Primary health care data are often collected through different data systems (such as a district-level health management
information system and a separate health insurance claims system) and can therefore be fragmented and difficult to
analyze and use. To avoid data fragmentation, some countries, such as the Philippines, establish joint committees that are
responsible for data oversight and governance. Information technology plays a critical role in data collection and analysis,
but country experience shows that effective monitoring systems need human involvement and humanizing of the analysis
and results. Indicators can only show what is happening, not why or how. Dialogue among the purchaser, providers, and
other stakeholders is needed to interpret the findings from monitoring systems and decide on the actions needed for
continued improvement.
HELPFUL RESOURCES
www.jointlearningnetwork.org/resources/data-analytics-for-
monitoring-provider-payment-toolkit
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LESSON
6
Support continuous improvement of
PHC financing and payment systems
Improving financing and payment for PHC is an ongoing process—one that JLN resource countries
such as Chile and Estonia have been engaged in for more than 20 years. (See Figure 4.) Getting
the right mix of financing and payment instruments for the country’s context and objectives
requires a mix of approaches, which will evolve as the context and objectives change. Countries
have found it helpful to establish stakeholder platforms for discussing and analyzing the results
of PHC financing and payment models in an ongoing way, supported by evidence from routine
monitoring systems and periodic evaluations.
F I G U R E 4.
E VO LU T I O N O F E S TO N I A’ S P H C C A P I TAT I O N PAY M E N T S YS T E M
(2003–201 7)
2003 -
Second nurse
fee
5.2% 2017
- Activity fund 0.7%
Therapeutic
- 1.3%
fund
- Quality bonus 2.7%
Out-of-office
- 0.4%
hours pay
PAG E 1 8
Concluding Thoughts
Most JLN countries are engaged in implementing provider payment systems that can strengthen
PHC and ensure its central role in the health system. The JLN collaborative learning exchange is
helping to capture practical experience and lessons in real time as the countries take on the day-
to-day challenges of implementation. Many challenges remain (as shown in Figure 5), and JLN
countries will continue to jointly seek and share solutions.
Key topics for the learning exchange participants going forward include:
• Ensuring that payment models serve the chosen service delivery model
• Defragmenting and harmonizing payment systems
• Addressing payment for medicines for PHC
• Building implementation capacity and arrangements that make provider payment systems work better
• Engaging stakeholders and managing their expectations and interests
• Implementing processes for building new PHC provider payment systems and continually refining them
F I G U R E 5.
R E MA I N I N G I M P LE M E N TAT I O N C H ALLE N G E S I D E N T I F I E D B Y J LN CO U N T R I E S
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