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3.3 Basis for Payment

The basis for payment for services should match (where possible) the:

  • Nature and scope of the services; and
  • The pattern of costs incurred by the provider.

The agency must agree a regime for determining payment. There are a number of possibilities:

  • Fee for service – a set amount paid each time a client uses a service.
  • Block payments - a predetermined payment for delivery of the service.
  • Cost and volume – combines aspects of fee for service and block payments.
  • Paying the cost of a particular input (e.g. a staff salary).
  • Hybrid payments – a combination of some of the above payments. Typically relevant for complex services or a group of services.
  • Special payments – made for activities outside the normal scope of the service (e.g. contributing to policy development, providing significant amounts of information above that required for monitoring).

There are a number of ways in which the payment can be structured (see section 4.3 below), including:

  • In arrears.
  • On delivery.
  • By time period.
  • In advance (at the beginning of the contract or before service delivery).
  • At the end of the contract.

No payment should be made until the contract is signed. This is equally important for a conditional grant.

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