By Sarah Bales

Vietnam and the Philippines: Learning Together for Primary Care Payment Reform

Apr. 16, 2016  |     |  0 comments

Vietnam and the Philippines have both prioritized universal health coverage on their health reform agendas. An essential element of universal health care is ensuring access to comprehensive, effective primary care. Both countries have been trying to achieve the Millennium Development Goals (MDGs) and are striving to move primary care beyond the Alma Ata agenda to deal with growing challenges of population aging and chronic disease. But both countries are facing some difficulties in the transition away from the patchwork of programs and payment mechanisms towards a more coherent system that can narrow disparities in basic health outcomes and health service access, ensure financial protection and deal with the neglected, but growing, problems of non-communicable disease.

Vietnam has an extensive system of commune health stations (CHS) providing primary health care throughout the country. It has achieved nearly all the MDGs on health, including reducing maternal mortality, infant mortality, child malnutrition, maintaining high immunization rates, access to antenatal and delivery care and reducing morbidity and mortality due to HIV, TB and malaria. But the primary care system is failing to respond adequately to the growing burden of chronic diseases like hypertension and diabetes. Residents of disadvantaged areas are heavily reliant on CHSs for much of their care, yet these are the facilities with the lowest capacity to provide effective services. Weaker health outcomes and lower access to quality services persist in disadvantaged areas.1 In better off areas and among better off populations, CHSs are rarely used.2 Preventive and promotive interventions to keep people healthy have been neglected, except for immunizations.

Funding for CHSs comes from multiple sources, each mechanism involving different incentives. Staff of the CHS are paid civil servant salaries, which are generally low, although there are supplements for those working in remote areas. Budgets for overheads were set in 2002 at no less than VND 10 million per year (VND 1 million is about USD 45).3 Materials and medicines for specific health programs are generally provided in kind through national target program budgets under the control of central specialized hospitals and institutes, which also pay minor incentive payments for some program activities like fully immunizing a child under age one. Drugs for basic medical care are provided in kind by district hospitals for insured patients. Fees are collected for providing some basic services like injections or IV drips either through the district health insurance reimbursements or out-of-pocket from households. Physicians often obtain additional income from moonlighting after hours. This mishmash of incentives leads health workers to focus on each individual intervention, rather than the overall health of members of its catchment population.

Vietnam has an extensive system of commune health stations providing primary health care. But the system is failing to respond adequately to the growing burden of chronic diseases like hypertension and diabetes.

The question Vietnamese policymakers are asking is how to reform CHS payments to ensure reasonable incomes for health workers while motivating performance that effectively meets the comprehensive basic healthcare needs of the population. So far, the national target programs have been effective at targeting resources and attention to specific interventions or diseases, leading to high achievement in child immunization, reducing maternal and child mortality and malnutrition, and gradually reducing incidence of TB and malaria. But these programs are costly due to their vertical nature and duplications in administrative costs, and are losing their funding as donors gradually withdraw to focus on poorer countries and as the government cuts national target program spending from the state budget.4 While there is a mandate for CHSs to provide healthcare for the elderly and for people with chronic disease, the relevant training, medicines and incentives are inadequate.

PhilHealth, the Philippines social health insurance corporation, has been developing a number of primary care packages that would seem to fit requirements of the Vietnamese system. The Tsekap package,5 in particular, contains WHO-recommended interventions for a range of common infectious disease as well as chronic disease. It involves performance assessment linked with incentive payments. Accreditation of facility capacity to provide the full package of services in house, or through pre-existing arrangements for outsourcing laboratory and imaging services, is a prerequisite for obtaining PhilHealth reimbursement,6 and there are incentives for both PhilHealth and local governments to help facilities meet PhilHealth standards.7,8 The package also involves dispensing of drugs, which is separated from prescribing to avoid conflict of interest that might lead to stinting. The package is paid a fixed amount per family, but includes withholds paid only when the facility has implemented basic profiling of the patient population to identify people with risk factors in need of screening and disease management. Certain obligated services could be further incentivized through pay-for-performance, although that has not yet been operationalized. The design is well-engineered, involves appropriate incentives, quality assurance, and impetus not only for patients to seek care, but for the facility to seek out the patients and make sure they are getting important primary care services. Eventually immunizations, maternal and early child care packages and TB-DOTs could be incorporated into this overall package.

In an evidence-informed policymaking approach, we would first want to know whether the policy works in a given context. Unfortunately, PhilHealth has not yet applied the policy widely even though 99 percent of local government units have facilities accredited to provide this outpatient package.9 An impact evaluation is being undertaken in a limited number of localities to assess whether the incentives for obligated services work, but results are not available. Apparently one impediment to implementation is related to drug dispensing arrangements.10 Under capitation payments, facilities would have an incentive to stint on drug prescribing to ensure surplus. Because margins are allowed to be charged on top of the cost of procuring drugs, a charge reimbursement to facilities that both prescribe and dispense drugs would lead to over-prescription. Existing central drug procurement arrangements by the Department of Health can achieve lower drug prices through bulk procurement, but PhilHealth is not allowed to reimburse the Department because the Health Insurance Act only allows PhilHealth to pay for dispensing, not procurement of drugs.

Another shortcoming with the Tsekap package is that it is still only limited to indigents and senior citizens, with no clear roadmap for ensuring coverage to all Filipinos. The rapid increase in PhilHealth coverage for indigents, thanks to revenues from sin taxes, is expected to improve access to services compared to the existing discretionary politically driven medical assistance funds. Yet we still do not know enough about whether this arrangement is the best one to ensure the necessary interventions targeted to the poorest and most disadvantaged groups, whose low health outcomes and access to services have prevented the Philippines from achieving several health-related MDGs.

Another shortcoming with the Tsekap package is that it is still only limited to indigents and senior citizens, with no clear roadmap for ensuring coverage to all Filipinos.

Could PhilHealth’s Tsekap package applied in the Vietnam context contribute to resolving the current problems with Vietnam’s primary care system? Some of the political issues hindering implementation in the Philippines are less of a problem in Vietnam. Health insurance policy in Vietnam does not restrict eligibility for benefits based on type of insured member, instead it charges a percentage co-payment to those able to pay and zero co-payment for the poor, children under age six and other vulnerable or meritorious groups. Mechanisms are in place for procuring and distributing drugs to CHSs through district hospitals using insurance funds, and drugs are sold at cost, so there are no major conflicts of interest as in the Philippines. Capacity of facilities to provide services currently organized according to national target programs is available in most localities, or could be strengthened through targeted investments in training and minimal investments in peak expiratory flow meter testing, blood glucose meter devices and blood pressure cuffs.

Nevertheless, there are some institutional barriers to implementing the PhilHealth primary care benefit package in the Vietnamese context. First, the Vietnamese health insurance law prohibits reimbursements to facilities for screening and counselling services, which are essential to a comprehensive primary care package that covers non-communicable disease.11 Second, health insurance coverage in Vietnam reaches only 75.3 percent of the population,12 compared to an estimated 92 percent in the Philippines.13 While the poor, children under age six and elderly are covered through government subsidies to health insurance premiums, this still means that a quarter of the population, mainly self-employed or non-working individuals, would not be able to access the package through health insurance. Third, insurance regulations currently will not allow reimbursement of outsourcing of laboratory testing, yet laboratory investments in CHSs would not be cost-effective because of low volumes and low expertise.  Fourth, electronic information systems necessary to bring costs of performance monitoring down to reasonable levels are not yet in place in most communes.

Implementation of an outpatient care package through PhilHealth or Vietnam Social Security is technically feasible in both contexts, but is it politically supported? The benefits of effective primary care in both countries have been acknowledged at high levels of the government. Yet the unspoken implications of implementing this vision involve substantial shifts in resources from high-cost hospital care and specialist control over target programs towards lower cost primary care paid through social health insurance, and shifts from brand-name drugs towards lower cost generics. Resistance from the losers is likely and needs to be addressed to move forward on this important agenda.


1. General Statistics Office and Vietnam. (2014). Vietnam Multiple Indicator Cluster Survey 2014. Final Report. Hanoi, Vietnam.

2. General Statistics Office. (2012).  Results of the Vietnam Household Living Standards Survey 2012. Hanoi: Statistical Publishing House.

3. Joint Circular No. 119/2002/TTLT-BTC-BYT of the Ministry of Finance and Ministry of Health guiding contents of revenues, expenditures and recurrent expenditures of Commune health stations.

4. Ministry of Health and Health Partnership Group. (2015, March). Joint Annual Health Review 2014. Strengthening prevention and control of non-communicable disease. Hanoi: Medical Publishing House.

5. PhilHealth Circular 002-2015 governing policies on the expanded coverage of the primary care benefit package: Tamang Serbisyo sa Kalusugan ng Pamilya (Tsekap).

6. PhilHealth Circular 002-2015.

7. Performance Agreement between the Governance Commission for GOCCs and Philippine Health Insurance Corporation pursuant to the Performance Evaluation System for the GOCC Sector (GCG MC No. 2013-02). November 28, 2013.

8. Three indicators on the LGU scorecard used as part of the Results-Based M&E towards Equity and Effectiveness program are related to RHU accreditation, including accreditation of the outpatient benefit, maternity care package and TB-DOTS package.

9. PhilHealth 2015 Stats and Charts (2015, December 31). Retrieved from

10. Philippine Institute for Development Studies. (February 2016). Batangan Dennis B. Assessment of the COMPACK Program. Policy Note No. 2016-04.

11. Article 21, item 1b in the 2008 Health Insurance Law (No. 25/2008/QH12) indicated that screening for early diagnosis of some diseases was part of the insurance benefit package, but in the 2014 Revised Health Insurance Law (No. 46/2014/QH13) this item was removed.

12. Ministry of Health and Health Partnership Group. (2015). Joint Annual Health Review 2015. Hanoi: Medical Publishing House.

13. PhilHealth 2015 Stats and Charts (2015, December 31). Retrieved from

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