Aligning incentives: value-based purchasing of primary care

Aligning incentives: value-based purchasing of primary care


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Embedded in National Health Insurance reforms is the notion of moving to a system of strategic purchasing of care, including the idea of purchasing primary care on a capitated basis. Capitated payment methods have gained  popularity in fee-for-service (FFS) contexts as a means to encourage providers to adopt a more population health management approach to providing care, whereby the healthcare needs (both curative and preventative) of an entire population catchment are addressed.

The research considers, based on local and international experience, the technical dimensions of reimbursement design, and the ways in which these can align with policy objectives. Key issues include risk adjustment, the extent of risk sharing, and financial mechanisms to incentivise re-organisation of the system. Risk adjustment is necessary to ensure equity across the system and to avoid the ‘cream-skimming’ of younger and healthier patients. The degree of risk sharing influences the extent to which it is possible to align provider, patient and funder incentives and to embed a drive for quality improvement into the system.

The research also investigates the technical approaches to set capitation rates and considers the risk of rates that are either too low or too high.

It is clear from the research, that design of capitation reimbursement requires a blend of rigour and pragmatism and will almost certainly require a number of iterations before the system settles.

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