Setting health insurance remuneration rates of private providers in Kenya: the role of costing, challenges and implications

Abstract

Successful health financing depends on prudent design of resource collection, pooling and purchasing. One of the critical purchasing design issues is the provider payment mechanism and the remuneration rates, which need to set appropriate incentives to health providers. In order to set remuneration rates, cost information is required, but this is not known in many developing countries. This paper illuminates the role of costing and the challenges of resetting health insurance remuneration rates for private hospitals in Kenya and discusses the implications and lessons. The results and proceedings of costing studies from Kenya are reviewed, which reveals methodological and practical challenges as to revising remuneration rates. The costing results are characterized by high variability, which is, among other factors, due to suboptimal resource use at some hospitals and provider payment mechanisms that incentivise over-provision. In such a context, hospital-specific remuneration rates are advisable. In conclusion, remuneration rate setting is not just about translating costing results into a price tag, but other factors have to be considered in a low-income country context in order to balance out health sector objectives and provider interests. Inclusion of providers in developing the costing methodology proves important to increase acceptability of results.

Private healthcare provider experiences with social health insurance schemes: Findings from a qualitative study in Ghana and Kenya

“…NHIF members can access inpatient services at government facilities, as well as private for- or non-profit facilities that are accredited by NHIF [ 39 ]. The creation of the outpatient scheme has for the first time opened NHIF accreditation possibilities for facilities that do not offer inpatient services.…”

Payment Arrangements for Private Healthcare Purchasing Under Publicly Funded Systems in Low- and Middle-Income Countries: Issues and Implications

“…Mackintosh et al [11] examined the public-private healthcare provider mix by looking at three dimensions of public contract models; the rationale behind the purchasing arrangements; issues occurring as a result of purchasing arrangements; and the best means for public purchasers to buy private healthcare services under public contract systems [8,9].…”

“…In such cases, it is difficult to assess the inefficiencies associated with using higher payment rates for private providers. In fact, in many countries, the use of evidencebased or full costing approaches to determine payment rates is not clearly documented [9]. Use of higher payment rates for private healthcare providers may also cause cost pressure on healthcare supply across the system, resulting in an overall increase in healthcare expenditure in a country [15].…”

Opportunities and challenges for implementing cost accounting systems in the Kenyan health system

“…Our study identified a number of opportunities and strengths in relation to the viability of a cost accounting system in Kenya – in particular, durable political commitment to digitalization in healthcare, a broad and expanding HMIS infrastructure, as well as a recognized interest from policy makers and practitioners at all levels for relevant unit cost data. In addition, a number of control initiatives established by the MoH, such as performance management, activity-based funding for maternity services, and risk adjusted payment mechanisms for providers, have been shown in the literature to stimulate the establishment and growth of cost accounting infrastructure ( 5 , 9 , 44 ).…”