Effects of performance-based capitation payment on the use of public primary health care services in Indonesia

The Indonesian national health insurance agency BPJS Kesehatan, the largest single-payer system in the world, is among the first to combine capitation-based payments with performance-based financing. The Kapitasi Berbasis Komitmen (KBK) scheme for puskesmas (community health centres) was implemented in province capitals be-tween August 2015 and May 2016. Its main goal was to incentivize the substitution of secondary by primary care use. We evaluate its effect on its three incentivized outcomes: the fraction of insured visiting the puskesmas, the fraction of chronically ill with a puskesmas visit and the hospital referral rate for insured with a non-specialistic condition. We use BPJS Kesehatan claims data from 2015 to 2016 from a stratified one percent sample of its members. Comparable control districts were identified using coarsened exact matching. We adopt a Difference -in-Differences (DID) study design and estimate a two-way fixed effects regression model to compare 27 inter-vention districts to 300 comparable non-capital control districts. We find that KBK payment increased the monthly percentage of enrolees contacting a puskesmas with 0.578 percentage points. This is a sizeable increase of 48 percent compared to the baseline rate of just 1.2% but it still leaves most puskesmas far below the ``suf-ficient'' KBK threshold of 15%. For chronically ill patients, a small increase of 1.15 percentage points was estimated, but it leaves the rate even further below the program's ``sufficient'' threshold of 50%. We find no statistically significant effect on referral rates to hospitals for conditions not requiring specialist care. While we find positive effects of KBK on two out of three outcomes, all estimated effect sizes leave the actual rates far below the program targets. Our findings suggest that the KBK performance-based capitation reform has not been very successful in substituting secondary care use by greater primary care use.