Effect of capitation payment method on health outcomes, healthcare utilization, and referrals in Ghana

Different provider payment systems generate different incentives for patients, providers, and purchasers. Ghana introduced the National Health Insurance Scheme (NHIS) in 2003 and has made reforms to its provider payment methods to create incentives in providers for cost containment. Starting with the fee for service method, it shifted to the Diagnostic Related Group (DRG) method in 2008 to improve cost containment. In 2012 the NHIS began piloting capitation method of payment which has been suspended since 2017 to allow for thorough review. This study uncovers the association between capitation payment system and patient health outcomes, utilization of healthcare services and referral patterns in Ghana based on data collected between November 2012 and January 2013. Using a cross-sectional data on 500 malaria patients who were enrollees of the NHIS from the two payment plans (i.e., capitation and DRG plan), ordered logit, negative binomial and logit regression results showed that patients under capitation were 11.9% less likely to report better health and had 1.583 fewer visits relative to patients under DRG. In relation to referrals, capitated providers were more likely to refer patients than under DRG plans. In the capitated region, better health outcomes were reported by patients of private health facilities. Capitation in Ghana was associated with under-provision of care, hence decreasing any efficiency gain from the reform. Implementors of capitation need to ensure a good monitoring and evaluation system for adequate provision of quantity and quality of care. Some limitations of this study include the use of cross sectional rather that panel data which follows individuals over time and therefore may be more able to provide definite information about cause-and-effect relationships. It also does not account for events before and after the introduction of any payment method. Overall, this study provides valuable information on the implementation policy for reintroducing capitation.