Provider Payment Mechanisms

Abstract

Provider payment mechanism is one of the most important issues in health care system. It has directly impact on the performance of health care system. There are 6 provider payments methods commonly used in health care system around the world. They are 1) line-item budgets, 2) global budgets, 3) capitation, 4) case-based payment, 5) fee-for-service and 6) per diem. The attributes and impact of payment mechanisms need to be addressed when the payment mechanisms are defined. If the payment method is designed carefully, health service can be improved, leading to lower costs, higher quality of care, equity and greater patient satisfaction. However, there is no single optimal provider payment mechanism. Each of them is inevitably associated with advantages and disadvantages to health care providers. Some additional specific actions are needed to control the disadvantages of individual payment mechanism.