Changes to payment systems and reimbursement in healthcare

Changes to payment systems and reimbursement in healthcare

Health systems around Europe are considering changes to how they pay for healthcare to reflect modern challenges of ageing populations, changing demands on health and care alongside stretched budgets. 

Matthew Bell  joined a team of experts in the UK healthcare system today to discuss the future of how NHS care is remunerated.  Next month he will join experts in France to discuss similar issues.  

During his presentation, Matthew focused on one of the most pressing issues for the NHS:  ensuring variations in care around the country do not result from uncontrollable differences in the cost of delivering care.  One of the pillars that ensures payments reflect local cost conditions – the market forces factor – was significantly reformed for 2019/20 following work by Frontier with NHS Improvement and NHS England.  It is now on a five year transition to a more cost-reflective, economically sound measurement of how costs vary around the country.

However, ensuring equitable care across the country independent of local costs will require more changes.  Matthew pointed out that the shift to more integrated and population-based delivery models for health and care posed new challenges for ensuring local cost differences are remunerated.  The current approach – based on provider-level remuneration and local labour markets – may no longer reflect the costs incurred by the new healthcare organisations.  Furthermore, long transitions to the new system may result in costs being misaligned for a long period. 

Frontier Economics regularly advises on healthcare policy and ensuring payment systems are consistent with desired policy outcomes around Europe.

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