Challenges of Provider Payment Mechanisms in Indonesia

Indonesia is using mix provider payment mechanisms. Many insurance carriers and Government is still looking of what the most suitable payment mechanism. Jamkesmas (national insurance for poor people) is using capitation and DRG. While PT. ASKES using capitation and fee for service. And most of the other health insurance carriers such as private insurance and Jamkesda are still using fee for service. Within many kind of payment mechanism by insurance carrier to public health provider, Government is still giving line item budget and subsidy through various kinds of mechanisms. There are a lot of challenges in implementing all of them.


Since 2007 Jamkesmas programme -Health insurance for the poor- is using capitation in primary health care (Puskesmas) and DRG in Hospital level. Capitation system seem does not work well as a risk sharing payment system. Puskesmas cannot get any incentive by doing efficiency. Why? Financing system regulation in local government stated that all revenue should not be retained in health facilities. It need goes to local treasury and will be allocated to Puskesmas by line item budget which depend on parliament policy.

While DRG system in hospital is called INA-CBG (Indonesia Case Based Group). It has been improved every year. One of the problem need to be fixed was special base rate for private hospitals due to no subsidy from central/ local government. These make private hospitals are reluctant to serve Jamkesmas patients even it was obligated by Central government. It makes some of hospital only provide small amount of third class beds which can be used for Jamkesmas. Furthermore, using DRG means all medical staffs need to know well about ICD X which impact to DRG price. Coders are very helpful to solve this problem. Due to knowledge of coders, not many DRG codes use among 1077 codes. I hope, someday we can start to make our own simple DRG. It is not inventing the wheel, but it is a tailor made which differ for every country.


It has been a long time ago; PT. ASKES –insurance for civil servants- already use capitation payment mechanism for Puskesmas and fee for service at the hospital level. By contracting private practice as a primary health care, capitation mechanism seems work very well. It gives major changes of General Practitioners (GP) behavior. GP try to be very efficient without reducing quality due to competition if there are many private practice in one of region. On the other hand, there is no transparency by PT. ASKES in capitation calculation and they give a same amount of capitation for all GP. The doctors become very frustrated if he/she open the clinic 24 hours – more easy to be accessed- and there are a lot of elderly people and babes as a member –over utilize-. To overcome these problems, PT ASKES should develop capitation rate and do a proper costing for a better capitation adjustment.

However, ASKES payment mechanism in hospitals is using fee for service with cost sharing. Since cost of services cannot be controlled easily, sometimes it is only contributed a small share of financial protection. It also made a financial barrier to people who already retired from civil servants or military.

Other Insurance Scheme

While most of other health insurance schemes such as private insurance, Jamkesda –local insurance scheme-, Jampersal -birith insurance- are using fee for service either in Puskesmas and Hospital. One of the managers in Jamkesda Yogyakarta said, “We are not ready yet to use capitation. According to our estimation, it is very costly”. In my opinion it happens due to lack of preparation and reliable data/ information – unit cost, utilization rate, number of member, etc.-

Special Case: Traditional Healer

Instead of going to health facility, most of rural and poor people in Indonesia go to traditional healer first. Payment mechanisms for traditional healer in Indonesia are quite unique. Most of traditional healers claim that they can cure all diseases, from coughs, cancer without surgery, until HIV/ AIDS. There is no standard tariff, and it can be more expensive than in modern health facilities. Some of the ads on the radio said that they will refund if the patient does not recover within a few days. Although I’m sure only a few patients will ask for it back, because of embarrassment or they realize that this is just an alternative treatment. On the other side, doctors will be sued if the patient is not satisfied or get complications.

To sum up, Indonesia health financing system reform is needed to support health provider payment mechanism to achieve universal coverage shortly.


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