Payment mechanisms

Countries use a variety of payment methods to pay the providers of health services because no single payment mechanism can deliver positive incentives for better productivity, cost-effectiveness quality or other desired outcomes.

• motivate actors within the health system to be productive — in terms of number of treated cases and services provided;
• avoid incentives that would lead to risk selection;
• contribute to health system efficiency through expenditure control;
• be administratively easy;
• encourage providers to achieve optimal care outcomes.

Often payment mechanisms differ between hospital and ambulatory (outpatient) care. The most common payment mechanisms for hospitals include per diems, global budgets, and DRG-based case payment. In ambulatory care, fee-for-service, salary, and capitation payments prevail.