Improving fund allocation in Iran Health Insurance Organization by applying internal reference pricing: a policy brief

Abstract

Improving healthcare quality services is one of the governments’ major commitments, which often faces budget constraints. Addressing this challenge requires that health insurance companies set great store by productivity and performance. However, not only are health insurance companies plagued by productivity negligence but, also, many low- and middle-income countries often place a low priority on performance. Among many strategies which could influence optimal resource use in health insurance companies, this paper picks up on internal reference pricing (IRP). In this study, we first reviewed the literature on the advantages and disadvantages of IRP policy implementation. Then, we calculated the financial impact of each decision and held an expert panel to explore the best method of implementation and some recommendations for mitigating unwanted results. This policy implementation can potentially bring about a 1.5 million US dollar annual saving for Iran Health Insurance Organization (IHIO). In the wake of the recent budget deduction of the IHIO, a package of cost-containment methods was proposed, which, among others, included IRP. To streamline a policy, policymakers need to be fully aware of its advantages and disadvantages and keep its implementation barriers in proper perspective. All aspects of IRP have been fully elaborated in this paper to help health managers with evidence-based policymaking.