Institutions for health care price setting and regulation: A comparative review of eight settings

Summary Background Price setting and regulation serve as instruments to control volumes of services, while providing incentives for quality, coverage, and efficiency. In recognition of its complexity, many countries have established specific entities to carry out price setting and regulation. Methods The aim of the study is to investigate institutions established for health care price setting and regulation and determine how countries have implemented pricing strategies. Eight settings were selected for case studies: Australia, England, France, Germany, Japan, Republic of Korea, Thailand, and Maryland in the United States. Each identified the agency responsible, their role and function, and resources for implementation. Results In England, Japan, Korea, and Thailand, government entities conduct price setting and regulation. In Australia, France, Germany, and Maryland, independent entities were established. Their responsibilities include costing health services, establishing prices, negotiating with stakeholders, and publishing price and quality data for consumers. Conclusions Dedicated institutions have been established to carry out costing, price setting, and negotiation, and providing consumer information. Characteristics of successful systems include formal systems of communication with stakeholders, freedom from conflicts of interest, and the mandate to provide public information. Substantial investments in price regulatory systems have been made to attain coverage, quality, and efficiency.

investments in price regulatory systems have been made to attain coverage, quality, and efficiency.

K E Y W O R D S
delivery of health care, economics, government, policy

| INTRODUCTION
Controlling the growth of health care spending while maintaining or increasing access is a major policy priority. Generally, health care spending increases at rates higher than general inflation. This is a function of both volumes of care and prices. In the United States (US), high prices alone are estimated to account for half or more of the growth in health care spending. 1 Wide price variation can be seen both across countries and within the same country across regions and facilities. 2,3 Increases in both prices and volumes can be attributed to the adoption of new technologies, increases in income, and changes in insurance design and demographics. The demand for health services is expected to increase with population ageing. 4 In this context, price setting and regulation serves as an instrument to control volumes of services and spending, maintain quality, and promote sustainability and efficiency. 5,6 In recognition of its complexity and importance, many countries have established or designated specific entities to carry out price setting and regulation. In this study, we investigate systems and institutions in eight settings, to understand their roles, function, and the level of resources invested to carry out price setting and regulatory tasks.

| METHODS
This study focused on eight settings (Australia, England, France, Germany, Japan, Republic of Korea [Korea], Thailand, and Maryland in the US). The eight settings included in the study represent middle-income and highincome settings and variations in the main source of health care coverage. These settings were also chosen to represent key features of health systems that vary considerably, including the strength of regulatory systems, professional associations, and health market concentration.
For each setting, information was collected about the technical agencies responsible for price setting and regulation, their role and function, and resources required for operations and implementation. A comparison of this information is presented, followed by an analysis relevant to countries considering investing in price regulatory systems for health services. Currency conversions were done using US$ exchange rates from the World Bank database on official exchange rates for the corresponding year. 7 Figure 1 illustrates the level of health spending for each of the eight settings in the study. The total amount of resources for health varies widely across these settings. Current health expenditure as a share of GDP ranges from 17% in the USA to less than 4% Thailand (Figure 1). The source of most spending in all settings is compulsory (ie, set aside by the government for certain health programs or initiatives).

| RESULTS
Australia, England, and Thailand's Universal Coverage Scheme have systems of health coverage based on residence or citizenship. The other settings have employment-based contributory health coverage and vary by the number of payers. In Korea, there is a single payer system, whereas in France and Japan, multiple payers exist with automatic (compulsory) affiliation. In Germany and the US, multiple payers exist with choice of affiliation (Table 1).
England, Japan, Republic of Korea, and Thailand have designated the tasks for price setting and regulation under the responsibilities of the government ministry (Table 2). In England, the National Health Service (NHS) responsibilities for price setting are shared by NHS Improvement and NHS England, who have been working under a joint operating model since April 2019. Their responsibilities are comprehensive and include commissioning health care services, contracting for health care providers, and supporting Clinical Commissioning Groups that plan and pay for local health services. They are also responsible for calculating prices from cost data collected from all NHS health service providers. Public consultation on the price-setting methodology is formalized with internal stakeholders, as well as the external clinical community, NHS service providers, and Clinical Commissioning Groups to ensure that new proposals make clinical sense and are practical to implement. If more than 66% of commissioners or providers object, the regulated prices must be referred to the Competition and Markets Authority or a new consultation is conducted.  In the other four settings, independent agencies were established with the responsibility for developing and updating hospital prices and fee schedules. This has occurred in Australia, France, Germany, and the state of Maryland in the United States (Table 3). consultation, and the studies are published on the authority's website. It publishes both price and quality information for the public. In 2017/2018, it employed 42 staff, and its operating budget was AUS$ 17.9 million (US$ 23.4 million).
In France, the Technical Information Agency of Hospitalization (ATIH) was created in 2002 as an independent public administrative institution, which is cofunded by the government and the national health insurance funds. It collects data on hospital activity in order to establish a national schedule and undertakes financial analysis of health care facilities and of the health system. Some 135 hospitals participate voluntarily on an annual basis in data collection efforts that covers acute inpatient and outpatient care. In 2017, it employed 118 staff, and its budget was approximately EUR 29.4 million (S$ 24.9 million).
In Germany, the Federal Association of Sickness Funds, the Association of Private Health Insurance, and the German Hospital Federation established the Institute for the Payment system in Hospitals (InEK). It is not an independent entity, but a public entity supervised by the three parties that oversees the hospital payment system. Generally

| DISCUSSION
This study found variations in how systems for health care price setting and regulation were established. In four of the eight settings in this study (England, Japan, Korea, and Thailand), the responsibilities for price regulation were established under the relevant government ministries. The benefits of this approach are the linkages among payment systems for primary and inpatient care, and the close alignment between payment systems and government goals. This is an advantage in settings where the government is a credible authority to the public.
In four other settings (Australia, France, Germany, and Maryland in the USA), entities with the legal authority to set up and control hospital payment rates were established. Broadly, the mandate of these agencies is to develop a credible price schedule for hospitals. This includes grouping and ordering services based on their complexity, taking into consideration the available health resources, burden of disease, and clinical protocols and pathways.
Characteristics of successful systems include political independence, formal systems of communication with stakeholders, credibility in the eyes of the public, freedom from conflicts of interest, and political standing to resist both industry capture and political pressures. In some cases, such entities have independent sources of funding that are separate from general revenues. This has occurred in Germany and Maryland in the USA, for example.
While situations vary, independent agencies may have more freedom from conflicts of interest, and the political standing to resist industry and regulatory capture. Moreover, the establishment of national independent agencies can help to promote comparability and harmonization of clinical classifications across hospitals. In some settings, such harmonization applies across both public and private sectors, whether through the contracting of services or price benchmarking. Finally, clearly delineating the technical task of establishing the price schedule from the political process of negotiating payments to health care providers has also been recommended. 8 This is particularly true in the case of independent authorities.
An important issue is how to make use of all health resources available to attain coverage and efficiencies. Price setting for only one part of the health system (either public or private) could create incentives for providers to shift care to other settings that are not subject to price regulation. This would diminish the impact of pricing policies on coverage and desired outcomes. A comprehensive price setting system could be used to create a level playing field and eliminate the fragmentation across public and private sectors. In this sense, price schedules are a public good, whereby private health plans may use prices set by the government as benchmarks. Given finite resources for health, price regulation can be used to promote greater value for all payors, both public and private.
A balance must be found between maintaining dialogue with stakeholders, including the health industry, while also observing objectivity and independence. To address this challenge, formal consultation processes have been implemented in each setting that involve stakeholders in the discussion of the base price and the cost elements that it covers. Feedback from health care providers involved in care provisions may ensure acceptability of the regulated fees.
Each of the agencies also demonstrated a mandate to inform consumers about prices and quality. These agencies average or median of hospital prices for individual services, and some report total and out-of-pocket costs for care episodes. Publishing service prices charged by health care providers is one means to help consumers make informed choices. Price and quality information also inform active purchasers of health care and can, in some cases, control overall spending and reduce price variation for routine services.
In each setting, pricing policies have been used not only to ensure adequacy in covering the costs of delivering services but also to provide financial incentives for health care providers. This study confirms that pricing and payment systems are powerful tools to drive broader health system goals. Hence, investing in formal mechanisms enables price setting and price regulation to be used as instruments to achieve broader system goals.

FUNDING
Funding was provided by the World Health Organization Centre for Health Development grant numbers K18013 and K18014.