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

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.

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Acknowledgements

We thank Dr Lorna Guinness, Honorary Assistant Professor, Department of Global Health and Development, Imperial College, London for reviewing the manuscript and providing her input. We thank state data collection teams and data analysis team (Rajan Jaswal, Sachin Sharma and Sameer Sharma), Department of Community Medicine and School of Public Health, Postgraduate Institute of Medical Education and Research, Chandigarh, India. CHSI Study Group: Jyotsna Naik, Malkeet Singh, Himanshi Tomar, Rakesh Bahl, Amit Sachdeva, Sharminder Kaur, Sanjay Kumar, Setu Sinha, Varsha Singh, Avijit Hazra, Raghunath Misra, Divya Mehrotra, K. Narayanasamy, A. Chitra, Arun Gupta, Pankaj Bahuguna, Kusum Lata Gaur, Jai Prakash Pankaj, Dharmesh Kumar Sharma, Gajanan D. Velhal, Amit S. Bhondve, Prakash Patel, Amit C. Patel, Rajendra Joshi, Kondeti Madhavi, Pulaganti Madhusudana, Bhabagrahi Rath, Sashi Bhusan Biswal, Ankita Panigrahy.

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Correspondence to Shankar Prinja.

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Funding

The study was funded by the Department of Health Research, Ministry of Health and Family Welfare, India.

Conflicts of interest

None of the authors have any conflicts of interest to declare.

Ethical approval

The study was approved by the Institutional Ethics Committee (IEC) vide letter no. PGI/IEC/2018/00125A and Institutional Collaborative Committee (ICC) vide letter no. 79/30-Edu-13/111273 of Postgraduate Institute of Medical Education and Research, Chandigarh, India.

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Written informed consent was obtained from the participants.

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All the authors give their consent for the publication

Availability of data and material

All the cost information generated by the study is included in the paper and supplementary material. The code availability is not applicable.

Author’s contributions

Study Conception: Shankar Prinja, Balram Bhargava, Praveen Gedam. Development of data collection tools: Maninder Pal Singh, Oshima Sachin, CHSI Study Group. Data Collection: Maninder Pal Singh, Oshima Sachin, CHSI Study Group. Data Analysis: Maninder Pal Singh, Shankar Prinja. Data Interpretation: Shankar Prinja, Balram Bhargava, Praveen Gedam, Anu Nagar, Kavitha Rajsekar. Draft Manuscript: Maninder Pal Singh, Shankar Prinja. Critical contribution in revising manuscript: All Authors.

Additional information

The members of the CHSI Study Group are mentioned in "Acknowledgments" section.

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Prinja, S., Singh, M.P., Rajsekar, K. et al. Translating Research to Policy: Setting Provider Payment Rates for Strategic Purchasing under India's National Publicly Financed Health Insurance Scheme. Appl Health Econ Health Policy (2021). https://doi.org/10.1007/s40258-020-00631-3

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