Summary of the Impacts of Provider Payment Incentives

The literature on the impacts of payment reforms in LMICs is sparse, inconclusive and relatively weak methodologically. It reflects global interest in payment reforms following the successes in the U.S. and other western countries in the 1980s and 90s. A general assessment of findings is as follows:

• Impacts of payment reforms in LMICs on efficiency and other outcomes are rarely studied, and when reported, tend mainly to be subjective assessments of trends (uncontrolled pre-post methods).

• In many cases, the reported impacts of provider payment reforms on efficiency tend to be weaker and less consistent than we would expect from the experience in the developed countries.

• In other cases, the reported impacts on volumes stemming from unit of payment incentives often tend to be enormous, creating a situation where payment reforms can be a source of rising expenditures, or where payment incentives can be used as supply-side policies for managing access and utilization together with or in lieu of demand side policies.

• There has been considerable interest in using capitation and fund-holding for primary care services, though there is only weak and rather scattered impact evidence, and evidence that is confounded by the use of contracting (or even privatization) with payment change.

• We can say very little or nothing about what works best under what conditions. The evaluation literatures about impacts or process are simply inadequate.

 

 

Pro Poor Implications of Provider Payment Tools

 The pro-poor consequences of provider payment incentives have not examined directly, but only indirectly through reviewing patterns of study results. In the case of capitation, Lundberg and Wang (2006) conclude that the literature supports the view that “(capitation) can increase access to services among the poor (but) must account for variations across communities (since) there is an incentive for cream-skimming and cost-cutting.” Investigating the literature on other forms of provider payment, the same authors conclude that the pro-poor applications of incentive payment “can be positive if incentives are designed and managed carefully, (and) can be used to deliver targeted or subsidized services.” Broomberg (1994) offers a more negative view of provider payment, contracting, and pro market policies; “In the context of developing countries…the conditions required for successful implementation of these reforms are absent in all but a few, richer developing countries, and that the costs of these reforms, particularly in equity terms, are likely to pose substantial problems.”

More targeted applications of payment incentives may be used to meet the needs of the poor. Following a review of the P4P literature, Eichler (2006) concludes that P4P methods can be used to reach constrained and underserved populations: “(P4P) can motivate effort, encourage compliance with recommended clinical practice and inspire innovation in service delivery that includes creative approaches to reaching under served populations” (Eichler, 2006, p.6).

P4P and other incentives payment approaches can motivate providers to expand access to hard-to-reach populations through expanding clinic hours and providing remote services. P4P can also go further than other forms of payment in motivating access for disadvantaged populations. Examples include bonuses paid based on numbers of persons assisted from target groups and other incentives for results achieved by such groups. But, by way of conclusion McNamara (2005) writes: “Despite significant operational challenges, quality-based payment has been implemented in developing as well as developed countries, albeit not frequently in either instance. What we do not know—what the literature is nearly silent on —relates to the sustainability and ultimate impact of alternative payment schemes.”