MR Microinsurance_2012_03_29.indd - International Labour ...

Th ird-party payment mechanisms in health microinsurance
be based on cost plus a reasonable margin, or to be supported by accurate data.
Another challenge with all payment methods is that healthcare providers may
attempt to “balance the bill”, or collect additional fees not reimbursed through
the payment made by the TPP mechanism.
From the perspective of the scheme, each payment method has advantages
and disadvantages, as highlighted in Table 6.3. Measures to off set disadvantages
vary depending on the method of payment chosen (ILO STEP, 2006; Langenbrunner
et al., 2009).
Table 6.3 Advantages and disadvantages of the diff erent payment methods
Method of
payment
Advantages Disadvantages
Fee-for- Fee-for- Fee-for- – Easy to understand and implement; typically
– Fuels medical infl ation by providing a fi nancial
service the method used by healthcare providers incentive to:
– Encourages provision of services, which can – over-utilize services (increase volume);
aid access to care for low-income households – raise billed charges if these are the basis for
– Generally well accepted by healthcare providers calculating payments (increase unit costs)
– HMI scheme bears entire fi nancial risk and and may
try to restrict claims by limiting covered services
or by being prone to reject claims
– Can require unpopular unpopular interventions to reduce
inappropriate claims
Per case – Simplifi es claims administration
– Incentive to diagnose and bill for more complex
– Transfers fi nancial risk for length of stay to (higher revenue) cases
providers
– Incentive to reduce length of stay and services that
– Encourages effi cient care management may be necessary
(shorter length of stay)
– Incentive to make unnecessary admissions
– Diffi cult to establish a fair cost per case for all
patients (i.e. including outliers)
Per day – Simplifi es claims administration
– Incentive to increase length of stay
– Transfers fi nancial risk for cost per day to – Incentive to reduce services that may be necessary
providers
– Encourages effi cient care management
(lower intensity of service per day)
– Incentive to make unnecessary admissions
Capitation – Simplifi es claims administration (no claims – Providers generally unreceptive due to inability to
necessary)
manage fi nancial risk of care
– Steady revenue stream (prepayment) for – Diffi cult to price accurately without large enrol- enrol-
providers (cash-fl ow advantage)
ment due to high variation in cost to care for small
– Allows the transfer of fi nancial risk to health- health- health- numbers of patients and overall lack of data
care provider
– Incentive to reduce care
– Encourages providers to provide preventive – Incentive to exclude high-risk groups (elderly,
care and encourage earlier and less costly treatpersons living with HIV/AIDS, those with pre-
ment
existing and chronic diseases in some cases)
– Encourages inappropriate referral to other provid- provid-
ers for expensive cases when some but not all
healthcare services are covered by the capitation
payment
– Can be diffi cult for insurer to obtain utilization
(encounter) data to reconcile payments with actual
experience
Most of the surveyed schemes with TPP mechanism use a single method for
payment, though 36 per cent use a mix of two or more payment methods. Th e
majority (69 per cent) have negotiated fee-for-service payment terms, while 40
per cent use a case-based payment method and 17 per cent have negotiated a prospective
payment based on capitation.
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