PM-JAY: India needs to move away from input-based financing to results-based financing

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Published: December 13, 2018 2:32:45 AM

13,000 hospital claims were submitted in just six days of the launch of the Pradhan Mantri Jan Arogya Yojana Abhiyan (PMJAY) that entitles nearly 10 crore poor families to avail free hospital care of up to Rs 5 lakh per family every year.

health, health sector, health industryThe goal of creating 1.5 lakh HWCs is to be achieved by 2022.

Sample this statistic: 13,000 hospital claims were submitted in just six days of the launch of the Pradhan Mantri Jan Arogya Yojana Abhiyan (PMJAY) that entitles nearly 10 crore poor families to avail free hospital care of up to Rs 5 lakh per family every year. The number of beneficiaries who availed of this benefit has been increasing steadily: 23,387 claims submitted in 10 days, 1 lakh claims in 30 days, and 4.6 lakh claims in 75 days. How do we know this? Well, these are official numbers reported in the media. Arguably, the PMJAY—one of the pillars of the Ayushman Bharat—is a closely tracked programme of the Narendra Modi government. Impressive, isn’t it?

How about the progress of the other pillar that deals with the strengthening of the primary healthcare? Well, those numbers are not reported with equal zeal, even if those are so closely tracked. Actually, the primary care pillar was launched almost six months before the launch of the PMJAY. Still, not much is known about its progress in terms of utilisation. It is this response that has led to some experts believing that the primary care is playing second fiddle to the hospital care in India! And they have warned of the dire consequences of ignoring primary healthcare that is supposed to prevent avoidable hospitalisation and perform the gate-keeping role. In fact, some experts question the idea of considering the primary care intervention as one of the pillars of the Ayushman Bharat. In their view, primary care is the foundation upon which the pillar of the PMJAY needs to be build.

Inadequate primary care response

Be that as it may, the primary care pillar deals with converting 1.5 lakh sub-health centres that provide selective care into health and wellness centres (HWCs) aimed at providing comprehensive primary care including preventive and promotive care. The design of HWCs evolved after extensive discussions with experts and based on India’s own experience. The goal of creating 1.5 lakh HWCs is to be achieved by 2022. Even if this goal is achieved—and which is a big leap in itself—it will not fix the broken primary healthcare system, for the system also consists of PHCs (primary health centres) and possibly CHCs (community health centres), the first referral centres. These centres are supervised by the block and district health administration, which, in turn, are subjected to two-way supervision: one, by the general district and block administration, and the other by the department of health.

Despite over a decade of the National Rural Health Mission that sought to help states to strengthen these facilities, the utilisation of these centres has remained quite low, as highlighted by the latest National Sample Survey Office (NSSO) health survey. The reasons for this low utilisation are wide ranging: unfilled vacancies, staff absenteeism, low levels of staff effort and involvement, drugs stock-outs, malfunctioning medical equipment, and so on and so forth. These reasons are the manifestations of the larger design and resourcing issue that has to do with the system being input-focused and fragmented, having weak incentives and accountability mechanisms, poor management and supervision structures, and inadequate budgets.

Redesign the entire system

Redesigning the bottom-most layer of the primary care system through the creation of HWCs alone will not strengthen the primary care system. It will need to be accompanied by the necessary reorganisation of PHCs and CHCs and, indeed, of the district and block health administration.

More specifically, the system needs to move away from input-based financing to results-based financing. All the primary health facilities—HWCs, PHCs and CHCs—need to be paid on the basis of the results achieved. In fact, even the block and district health administration need to be paid on the basis of how well these units perform their role of supervision and management. This reorganisation should lead to the professionalisation of the primary care delivery system. The most effective way to achieve this switch-over is by creating a payer-provider split.

Transition to payer-provider split

A state-level entity, say, the state primary healthcare provider (SPHP), which is in-charge of the entire state primary healthcare system, needs to be created. This entity, in turn, would create, say, a district primary healthcare provider (DPHP) unit in each district, and this unit would be responsible for the entire primary care system in that district. Similarly, it can be done at the block level. The SPHP will negotiate payments to be made to each DPHP unit for providing well-defined services. Likewise, the DPHP unit would negotiate payments to be made to each block in its region as well as help build capacity of those blocks in service provision. The providers of primary care—HWCs, PHCs and CHCs—need to be paid attractively so that people feel encouraged to join these centres. The incentives need to be lucrative enough for the qualified private practitioners to join the public system rather than operate in competition with the public system.

Similarly, a new state entity—say, state purchaser of primary care (SPPC)—needs to be created that will perform the function of purchaser of services from the SPHP. While the SPPC could rely on the system-generated data for making payments, it would also institute a third-party verification of system data and impose penalties for any data falsification.

Introducing the payer-provider split will incentivise the system towards performance, which is badly needed to restore peoples’ trust in the government primary care system. Reforming the primary healthcare system is squarely under states’ domain.

Why have states not done it?

Indeed, the primary healthcare has not become a political priority at the state level despite its potential to generate jobs. There are two probable explanations for the same. One, the perceived cost of dislocating the primary care staff in a human resource-intensive sector is considered higher than the perceived benefits of a strengthened primary care system, in a single electoral cycle. Two, the ever-growing technology is creating uncertainty about harnessing it in a durable manner to improve access, quality and affordability of care. One could also add a third explanation to it, of limited fiscal space to provide the required budgetary resources.

For these reasons, reforming the primary care system may be seen as a political gamble. But it need not necessarily be. The associated risks can be minimised and the reform is capable of yielding rich dividends. What is needed is a venturesome state willing to go for it early on in the electoral cycle. Any takers?

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