Healthcare Provider Payment Reform in Vietnam: Current Policy Directions and Potential Solutions

IN A NUTSHELL
Author's Note 

Taking a cue from the Government and Ministry of Health current policy direction, this article turns the spotlight on potential solutions to reform healthcare provider payment in Vietnam and transform health insurance system from expenditure reimbursement toward strategic purchasing for efficiency, quality, equity and financial protection.

To this aim, key solutions should include five priority actions. First, Vietnam should implement a phased mixed-payment roadmap, with capitation for primary and outpatient care, DRGs (diagnosis-related groups) for inpatient care and limited fee-for-service for exceptional or highly specialized services. Second, the health insurance system should improve claims data, clinical coding, cost accounting and digital infrastructure to support accurate payment calculation and monitoring. Third, provider payment reform should be linked with quality indicators, referral rules, clinical guidelines and audit mechanisms. Fourth, capitation and DRG payment should be piloted and evaluated before national scale-up, with careful monitoring of provider behaviour and patient outcomes. Fifth, coordination should be strengthened among the Ministry of Health, Vietnam Social Security, provincial health authorities and service providers.

 By Tham Chi Dung, MD., PhD.

Deputy Director

Research Institute for Health Sciences (RIHS), Hanoi city, Vietnam
Email: rihsvietnam@gmail.com

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Website: Viện Nghiên cứu Khoa học Sức khỏe

Healthcare Provider Payment Reform in Vietnam

Current Policy Directions and Potential Solutions

 

 To learn more:

https://www.researchgate.net/publication/310951457_Adopting_Thai_Diagnosis_Related_Group_for_Vietnam_Universal_Health_Coverage_A_Case_of_Ba_Vi_District_Hospital

 

Provider payment reform is a central policy instrument for improving efficiency, equity and quality in Vietnam’s health system. Payment mechanisms create incentives for provider behaviour, influence service volume and quality, and directly affect the sustainability of the health insurance fund. In Vietnam, the continued reliance on fee-for-service and service-price payment has raised concerns about cost escalation, unnecessary service provision and limited incentives for efficiency. Although Vietnam has recognized multiple provider payment methods, including service-price payment, capitation and case-based payment, health insurance reimbursement remains largely dominated by payment according to service prices.1,2

The current policy direction of the Government and the Ministry of Health is therefore to move gradually from passive reimbursement toward more strategic purchasing. The amended Health Insurance Law No. 51/2024/QH15, issued on 27 November 2024 and effective from 1 July 2025, provides an updated legal framework for strengthening health insurance management, expanding benefit entitlements and improving the organization of insured health services.3 This creates an important policy window for provider payment reform, not only as a technical reimbursement adjustment, but also as a governance reform to align health insurance financing with universal health coverage, financial protection and health system efficiency. International and Vietnam-specific evidence also supports the transition toward strategic purchasing, in which purchasers actively decide what services to buy, from which providers, at what price and under what accountability arrangements.2

A mixed provider payment model is the most appropriate direction for Vietnam. Fee-for-service should be retained only for selected services where itemized reimbursement remains necessary, while capitation should be strengthened for primary care, outpatient care and registered population-based services. Capitation can encourage prevention, continuity of care and better cost control at commune, district and primary care levels. However, it must be carefully designed with appropriate risk adjustment, clearly defined benefit scope, quality safeguards and referral monitoring to avoid under-provision of services or inappropriate transfer of financial risk to lower-level providers. Vietnam issued Circular No. 04/2021/TT-BYT on capitation-based payment for health insurance-covered medical examination and treatment costs, but implementation was subsequently suspended, showing that capitation reform requires stronger technical preparation, stakeholder consensus and implementation readiness.4,5

For inpatient hospital care, diagnosis-related groups (DRGs) should become the main prospective payment direction. DRGs classify hospital cases into groups with similar clinical characteristics and expected resource use, allowing reimbursement by case rather than by each individual service item. This method can improve transparency, support cost comparison across hospitals, reduce unnecessary service use and create incentives for efficiency. The World Bank’s action plan for Vietnam identifies the shift from fee-for-service to DRG payment as a key reform pathway for inpatient payment, while emphasizing the need for reliable coding, costing, information systems, monitoring and safeguards against unintended consequences such as premature discharge, upcoding or case selection.2 Vietnam Social Security has also reported that DRG implementation in Vietnam has been supported through technical preparation, including claims database development, DRG grouping software and adaptation of international experience, particularly from Thailand.5

Key solutions should therefore include five priority actions. First, Vietnam should implement a phased mixed-payment roadmap, with capitation for primary and outpatient care, DRGs for inpatient care and limited fee-for-service for exceptional or highly specialized services. Second, the health insurance system should improve claims data, clinical coding, cost accounting and digital infrastructure to support accurate payment calculation and monitoring. Third, provider payment reform should be linked with quality indicators, referral rules, clinical guidelines and audit mechanisms. Fourth, capitation and DRG payment should be piloted and evaluated before national scale-up, with careful monitoring of provider behaviour and patient outcomes. Fifth, coordination should be strengthened among the Ministry of Health, Vietnam Social Security, provincial health authorities and service providers. Provider payment reform should ultimately serve as a practical mechanism to transform Vietnam’s health insurance system from expenditure reimbursement toward strategic purchasing for efficiency, quality, equity and financial protection.

 

References

  1. Viet Nam Social Security. Experience sharing on DRG-based health insurance payment reform. Hanoi: Viet Nam Social Security; 2023. Available from: https://vss.gov.vn/english/news/Pages/vietnam-social-security.aspx?CateID=0&ItemID=10966
  2. World Bank. Vietnam: action plan — shifting to DRG payments for health care. Washington (DC): World Bank; 2021. Available from: https://documents1.worldbank.org/curated/en/270771622798995993/pdf/Vietnam-Action-Plan-Shifting-to-DRG-Payments-for-Health-Care.pdf
  3. National Assembly of Viet Nam. Law No. 51/2024/QH15 amending and supplementing a number of articles of the Law on Health Insurance. Hanoi: National Assembly; 2024. Available from: https://thuvienphapluat.vn/van-ban/EN/Bao-hiem/Law-51-2024-QH15-on-amendments-to-some-articles-of-The-law-on-health-insurance/639881/tieng-anh.aspx
  4. Ministry of Health. Circular No. 04/2021/TT-BYT providing guidance on capitation payment of health insurance-covered medical examination and treatment costs. Hanoi: Ministry of Health; 2021. Available from: https://vbpl.vn/TW/Pages/ivbpq-luocdo.aspx?ItemID=148465
  5. Viet Nam Social Security. What you need to know about DRG and the new system for medical insurance payments. Hanoi: Viet Nam Social Security; 2023. Available from: https://vss.gov.vn/english/thebenefits/Pages/old-age.aspx?CateID=159&ItemID=11028