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Translating Research to Policy: Setting Provider Payment Rates for Strategic Purchasing under India's National Publicly Financed Health Insurance Scheme

Author

Listed:
  • Shankar Prinja

    (Postgraduate Institute of Medical Education and Research)

  • Maninder Pal Singh

    (Postgraduate Institute of Medical Education and Research)

  • Kavitha Rajsekar

    (Government of India)

  • Oshima Sachin

    (Government of India)

  • Praveen Gedam

    (Government of India)

  • Anu Nagar

    (Government of India)

  • Balram Bhargava

    (Government of India
    Government of India)

Abstract

Background In 2018, the Government of India launched Ayushman Bharat Pradhan Mantri-Jan Aarogya Yojana (AB PM-JAY), a large tax-funded health insurance scheme. In this paper, we present findings of the Costing of Health Services in India (CHSI) study, describe the process of use of cost evidence for price-setting under AB PM-JAY, and estimate its fiscal impact. Methods Reference costs were generated from the first phase of CHSI study, which sampled 11 tertiary public hospitals from 11 Indian states. Cost for Health Benefit Packages (HBPs) was estimated using mixed (top-down and bottom-up) micro-costing methods. The process adopted for price-setting under AB PM-JAY was observed. The cost of each HBP was compared with AB PM-JAY prices before and after the revision, and the budgetary impact of this revision in prices was estimated. Findings Following the CHSI study evidence and price consultations, 61% of AB PM-JAY HBP prices were increased while 18% saw a decline in the prices. In absolute terms, the mean increase in HBP price was ₹14,000 (₹450–₹1,65,000) and a mean decline of ₹6,356 (₹200–₹74,500) was observed. Nearly 42% of the total HBPs, in 2018, had a price that was less than 50% of the true cost, which declined to 20% in 2019. The evidence-informed revision of HBP prices is estimated to have a minimal fiscal impact (0.7%) on the AB PM-JAY claims pay-out. Interpretation Evidence-informed price-setting helped to reduce wide disparities in cost and price, as well as aligning incentives towards broader health system goals. Such strategic purchasing and price-setting requires the creation of systems of generating evidence on the cost of health services. Further research is recommended to develop a cost-function to study changes in cost with variations in time, region, prices, skill-mix and other factors.

Suggested Citation

  • Shankar Prinja & Maninder Pal Singh & Kavitha Rajsekar & Oshima Sachin & Praveen Gedam & Anu Nagar & Balram Bhargava, 2021. "Translating Research to Policy: Setting Provider Payment Rates for Strategic Purchasing under India's National Publicly Financed Health Insurance Scheme," Applied Health Economics and Health Policy, Springer, vol. 19(3), pages 353-370, May.
    • Handle: RePEc:spr:aphecp:v:19:y:2021:i:3:d:10.1007_s40258-020-00631-3
    DOI: 10.1007/s40258-020-00631-3
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    References listed on IDEAS

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    1. Shankar Prinja & Akashdeep Chauhan & Blake Angell & Indrani Gupta & Stephen Jan, 2015. "A Systematic Review of the State of Economic Evaluation for Health Care in India," Applied Health Economics and Health Policy, Springer, vol. 13(6), pages 595-613, December.
    2. Pankaj Bahuguna & Lorna Guinness & Sameer Sharma & Akashdeep Singh Chauhan & Laura Downey & Shankar Prinja, 2020. "Estimating the Unit Costs of Healthcare Service Delivery in India: Addressing Information Gaps for Price Setting and Health Technology Assessment," Applied Health Economics and Health Policy, Springer, vol. 18(5), pages 699-711, October.
    3. Moens, Freddy, 1990. "Design, implementation, and evaluation of a community financing scheme for hospital care in developing countries: A pre-paid health plan in the Bwamanda health zone, Zaire," Social Science & Medicine, Elsevier, vol. 30(12), pages 1319-1327, January.
    4. Kutzin, Joseph, 2001. "A descriptive framework for country-level analysis of health care financing arrangements," Health Policy, Elsevier, vol. 56(3), pages 171-204, June.
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    1. Maninder Pal Singh & Shankar Prinja & Kavitha Rajsekar & Praveen Gedam & Vipul Aggarwal & Oshima Sachin & Jyotsna Naik & Ajai Agarwal & Sanjay Kumar & Setu Sinha & Varsha Singh & Prakash Patel & Amit , 2022. "Cost of Surgical Care at Public Sector District Hospitals in India: Implications for Universal Health Coverage and Publicly Financed Health Insurance Schemes," PharmacoEconomics - Open, Springer, vol. 6(5), pages 745-756, September.
    2. Shankar Prinja & Yashika Chugh & Kavitha Rajsekar & V. R. Muraleedharan, 2021. "National Methodological Guidelines to Conduct Budget Impact Analysis for Health Technology Assessment in India," Applied Health Economics and Health Policy, Springer, vol. 19(6), pages 811-823, November.

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