Download This Paper
Preprints with The Lancet is a collaboration between The Lancet Group of journals and SSRN to facilitate the open sharing of preprints for early engagement, community comment, and collaboration. Preprints available here are not Lancet publications or necessarily under review with a Lancet journal. These preprints are early-stage research papers that have not been peer-reviewed. The usual SSRN checks and a Lancet-specific check for appropriateness and transparency have been applied. The findings should not be used for clinical or public health decision-making or presented without highlighting these facts. For more information, please see the FAQs.
Using Cost Evidence for Price Setting: Experience from a Large National Public Insurance Scheme of India
28 Pages Posted: 29 Jul 2020
More...Abstract
Background: In 2018, the Government of India launched Ayushman Bharat – Pradhan Mantri Jan Aarogya Yojana (AB - PMJAY), a large tax-funded health insurance scheme. Provider payment rates for the AB-PMJAY health benefit packages (HBPs) were determined through consultative process and review of existing publicly financed health insurance (PFHI) schemes. In this paper, we present findings of the Costing of Health Services in India (CHSI) study and the process of price revision in 2019.
Methods: Reference costs were generated from first phase of CHSI study which sampled 11 tertiary public hospitals from 11 Indian states. Economic costs were estimated using mixed (top-down & bottom-up) micro-costing methods. Based on stakeholder consultations, the cost of HBPs were analysed with different combinations of fixed and variable costs. The HBP cost was compared with AB-PMJAY prices of 2018 and 2019 and the budgetary impact was estimated.
Finding: Only 13% of the HBPs in 2018, were close to (± 10%) to the actual cost of providing care. More than one-third (42%) of the HBPs had price less than 50% of the cost. After revision of prices in 2019, the latter decreased to 20%. The evidence-informed revision of HBP prices is estimated to increase claims amount by 200 million (0·7%).
Interpretation: Strategic purchasing and price-setting of HBPs require creation of systems of evidence generation on the cost of providing services. Further, research is recommended to develop a cost-function for unit cost estimation with changes in time, region, prices, skill-mix and other factors. Funding Department of Health Research.
Funding Statement: The study is funded by Department of Health Research (DHR), Ministry of Health & Family Welfare, Government of India.
Declaration of Interests: The authors declare no conflict of interest.
Ethics Approval Statement: The present 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 & Research, Chandigarh, India.
Keywords: cost; costing; price setting; reimbursement prices; health benefit package; health insurance; universal health coverage; priority setting; strategic purchasing; provider payment rates
Suggested Citation: Suggested Citation