The main purpose of this study was to assess the effect of capitation payment on the health service utilization and related claims expenditure under Ghana’s National Health Insurance Scheme. A key objective for the introduction of capitation payment was to hold down growth in total health care expenditure by controlling outpatients’ utilization and related expenditure. Our study revealed that outpatient utilization and related claims expenditure increased in both pre and post capitation periods. However, the growth in utilization in the intervention region after the introduction of capitation payment was slower than that of pre-capitation period, suggesting that implementation of capitation payment to control utilization yielded some positive results for the NHIA. This is because in 2012 when the policy was introduced, a negative growth of 44.9% was experienced and thereafter, though there was positive growth of 3.9% in 2013 and 17% in 2014, the trend in growth was slow compared to the period before the introduction of capitation payment. It must, however, be noted that the trend in the control regions were a bit different. While the central region experienced negative growth of 2.5% in 2013, the Volta region experienced a positive growth of 62.3%; and in 2014 Central region recorded a positive growth of 30.7% while the Volta region recorded a negative growth of 0.8% in utilization. With regard to OPD claims expenditure, Ashanti region showed slowed growth of 32.7 and 24.2% in 2013 and 2014, respectively but the control regions exhibited different patterns. Central region experienced negative growth of 17.9 and 8.7% in both 2013 and 2014, respectively but the Volta region experienced negative growth of 11.6% in 2013 and a positive growth of 25.8% in 2014. This phenomenon suggest that factors other than capitation payment policy may have contributed to the trend observed in the Ashanti region. Nonetheless, our findings are consistent with findings in other studies that showed that capitation payment is associated with slower growth of health care expenditures on services that seem profitable under fee-for-service, could contain cost of services and also serve as critical source of income for providers [
24‐
26]. Our findings also corroborate those of a study on capitation payment for primary outpatient services in Zhuhai, China which found a positive effect in controlling costs of health care services [
33]. In the China study, the OPD cost increased rapidly over 2 years before the implementation of the capitation payment system but increased at a much lower rate after the implementation, just as our study found that capitation payment had some positive effect in 2012 which was the first year of implementation after which utilization and costs started to increase again but at a slower rate; except that the capitation system in Zhuhai-China was implemented alongside pay-for-performance with a robust monitoring system. This monitoring system which sought to regularly check the behaviours of providers might have contributed to the slowed growth observed in the Chinese study. Similarly in Ghana, clinical audit activities by the NHIA which exposes fraudulent claims by some health care providers and the consequential court action taken against them may have contributed to the observed slowed growth in utilization and claims expenditures. It must, however, be noted that a better effect of the capitation payment could have been achieved but for some design defects of the policy, one being the implementation of the G-DRG alongside the capitation payment at the OPD. The NHIA designed two baskets of services for outpatient care under the capitation payment policy; namely primary outpatients services and “none-primary outpatients services”. With the combination of DRG and capitation payment at the general OPD, it is plausible that potentially primary outpatient services are shifted to the “none-primary outpatients” services and claims made on the latter which cost the NHIA more than the actual cost of the real services rendered. This plausible explanation is based on a study that showed that capitation is associated with the shifting of potentially primary care services to other areas of care [
34]. Another possible reason for the increasing outpatient services utilization cost in the post intervention period may be the upward revision of the per capita rate in February 2013 from $0.35 for public facilities, $0.46 for faith-based facilities and $0.65 for private facilities per month to $0.58, $0.79 and $0.84, respectively [
4]. During the revision antenatal and post-delivery care were taken out from the basket of services under the capitation payment while payment for medication, which hitherto was part of the capitated fees, was reverted to FFS method. Thus, both ante-natal and post-delivery services were paid by G-DRG method and medicines paid by FFS method, thereby increasing the total cost of OPD services. Other plausible reason for the upward trend in claims expenditure is that providers could be discontent with the new system and try to manipulate their income upwards. This is because studies have found that although health care providers in Ashanti region were aware of the potential advantages and positive attributes of capitation, they perceived the capitation payment and the choice of the region for the pilot to be a politically motivated rather than an intervention aimed at improving efficiency in health care delivery and ensuring quality of care [
8,
35]. Consequently, although providers might know the advantages of capitation payment, the negative perceptions they held about it could pose a threat to the policy as observed by Atuoye et al. [
36]. The increase in OPD drugs cost for example suggests that providers may have increased their drug prescription to their patients in order to make more money from sale of drugs to the insured. Furthermore, the increase in IPD utilization could be an indication that more patients are referred to a higher level of care under the capitation payment system. In both cases reimbursement for the treatment is by DRG and FFS methods, a situation that suggests that providers receive double reimbursement. Besides the reasons that might have contributed to the OPD utilization and cost in the post capitation period, this study found that availability of district hospitals is a significant contributory factor. This finding is expected because of the general perception that higher level hospitals are better equipped and tend to have more qualified personnel, and therefore, become the preferred choice of majority of insured clients as noted by Andoh-Adjei et al. in a related study [
35]. Apart from provider payment method, utilization of health care may also be influenced by demographic, socio-economic and other health system factors [
37]. With regard to demographic factors, the literature shows that there is no difference in utilization in Ghana based on gender [
38]. A difference was, however, found in utilization for residents in urban areas compared to those in rural areas. For socio-economic factors, there is a difference in utilization of health care service for income groups. Studies [
38,
39] have found that in general, the poor benefit less from the NHIS, because they are less often insured but another study also found that the poor who are members of the NHIS utilise services the more [
40]. In our study, we noted that factors such as urban population and availability of district hospitals tend to contribute to increasing utilization and cost of outpatient services in the intervention region. One other finding from our study, however, was that higher poverty was correlated with lower OPD service costs, a result that differs from one found in literature [
38]. Further studies into this phenomenon will be helpful to policy makers in designing interventions to address the situation.