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KCE Reporst 57 Musculoskeletal & Neurological Rehabilitation 241
11.2.1.2 Lump sum
A disadvantage is that a FFS provides incentives for supplier induced demand (SID),
especially combined with excess supply, and may lead to overconsumption and higher
than expected costs for the sponsor, i.e. there is a substantial risk of exceeding the a
priori defined budget.
In order to avoid this, specific measures are possible such as fixing the total number of
activities or an a posteriori price calculation according to the number of activities so
that centres exceeding their a priori target level of supplied care (or budget) get
financially punished.
The main advantage of a lump sum payment system per protocol is that it creates
incentives for cost containment. From the point of view of the sponsor it facilitates
controlling total payments and for the supplier total budget for a particular treatment is
clearly known. Moreover a lump sum system allows to allocate budgets for essential
activities in complex rehabilitation that are difficult to register (e.g. coordinating
activities and interdisciplinary discussions).
However, it does not give financial incentives to provide high quality services. On the
contrary, suppliers may be induced to provide a suboptimal level of care and may try to
select good risks in order to avoid financial losses. Therefore implementation of such a
mechanism should go hand in hand with accountability, quality control and a reliable
PCS.
11.2.1.3 Mixed payment mechanism
A mixed payment system combines a FFS with a fixed component (lump sum). The
advantage of a mixed system is that it combines the characteristics of both FFS and lump
sum. It contains the advantages (and disadvantages) of both into a blended system that
dampens the undesired incentives of each of the extreme mechanisms. It can be
constructed as a linear combination of the lump sum (i.e. fixed payment) that would be
received to treat a particular patient according to the protocol and the FFS payment
scheme for that patient. Suppose a particular treatment can be financed using a FFS or
a fixed payment :
F : fee = cost per session (in FFS)
n : number of sessions (in FFS)
Total payment FFS : nF
Total fixed payment for treatment : FP
Payment mixed system : MS = αFP + (1 −α) nF with 0 ≤α ≤1
The parameter can be considered as the weight (fraction) of the fixed payment in
total payment : if = 0 the formula collapses into a FFS payment and if = 1 it equals
the fixed payment; FP is a fixed, lump sum part of the payment and (1- )nF is the
variable part, depending on the number of sessions. Varying allows to stress either
the FFS component or the fixed component and their respective advantages and
incentives.
A hypothetical example of total and marginal payments of a FFS, lump sum to finance a
particular protocol and two mixed systems ( = 0.25 and = 0.80) are depicted in
Figure 11.1 and Figure 11.2. It is clear that in the mixed system institutions with relative
high numbers of high cost patients are less penalised than in a lump sum mechanism.
On the other hand, incentives for overconsumption are smaller compared to a FFS
system.
It is clear that a high share of fixed payment is more indicated in case of relatively high
fixed costs, whereas a high share of FFS payment is better indicated in case of a
relatively high proportion of variable costs – in order to reduce the financial risk for the
provider. However if the provider can relatively easily influence the number of
activities, this ‘advantage’ of reduction in financial risk for the provider, must be weighed
against the ‘disadvantage’ of potential excess utilisation of the service. This disadvantage
would not show up in case of fixed funding, but the latter may have the disadvantage