Provider contracting for package rates


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Package rates between providers and payers have proven benefits, not just for providers and payers but also for customers. Whether private medical insurance, social health insurance scheme, or microinsurance, accuracy of package rates requires appropriate reflection of the services and consumables that are utilised in delivering care for a particular procedure. Our evidence-based clinical protocols provide a framework for provider and payers to define and cost packages for contracting.

We have helped our clients in India and other countries to develop or revise package rates based on diagnosis-related groups (DRGs) or other treatment categories. We have successfully used both claim data analysis and a cost build-up approach to determine DRG-based package rates (by adding the indirect and overhead costs of providers to direct costs to determine the rate for a treatment).

Other assignments

Revision of tariffs for DRGs in a national insurance scheme in an African country

Milliman’s consultants were assigned the task of reviewing and updating tariffs for over 500 medical and surgical conditions covered in a national insurance scheme in Ghana. The review required developing pricing and financial data collection tools, to gather data through an extensive field survey, and detailed analysis with the goal of developing package rates for 10 different provider categories across various regions.

Costing study Meghalaya

The state government of Meghalaya, India, was looking to expand its universal healthcare schemes and needed to set appropriate package rates for providers. Milliman’s consultants were tasked to develop these rates to accurately reflect provider expenses and promote acceptance of them. We used a top-down cost-allocation approach to evaluate the true expense of the procedures and helped the government offer more realistic rates that attract high-quality private hospitals and other providers.

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