Cheryl Cashin, R4D/JLN

Peter Smith,

Imperial College

EVOLUTION OF HEALTH

PURCHASING, PROVIDER

PAYMENT SYSTEMS AND

RBF

Interagency Working Group on Results-Based Financing

Meeting – Geneva, Switzerland

November 12, 2012

OUTLINE OF THE PRESENTATION

Summary of results and main conclusions from the

OECD/European Observatory study on supply-side

Pay-for-Performance Programs in 11 OECD Countries

(Peter Smith)

Implications for the role of RBF in health purchasing

and provider payment—initial thoughts on a

conceptual framework (Cheryl Cashin)

Peter

Smith

OECD/EUROPEAN OBSERVATORY

STUDY ON P4P IN OECD COUNTRIES

SUMMARY OF RESULTS AND MAIN

CONCLUSIONS

A DEFINITION OF P4P (FORTHCOMING)

“the deliberate adaptation of provider payment mechanisms

explicitly to promote the pursuit of health system quality

objectives”.

The key elements of any P4P programme should usually be:

a statement of the quality objectives it seeks to promote;

definition of quality metrics that will influence reimbursement;

formulation of the associated rules for reimbursement that make

some element conditional on measured levels of attainment;

rules for providers regarding provision of information and other

standards;

governance arrangements that ensure that the system is working as

intended.

Source: Borowitz, Cashin, Chi, Smith,

and Thompson (forthcoming) for

Observatory and OECD

WHAT SHOULD BE REWARDED?

Structure

Provision of service

Accreditation

Information provision

Process

Adherence to guidelines

Outcomes

Biomedical status

Avoidable admissions

Health status

ANY PAYMENT MECHANISM

GENERATES IMPLICIT INCENTIVES

Objective

Global budget According to

costs

According to

activity

Increase Activity -- (+?) ++ + Expenditure

control ++ -- - (+?)

Improve Quality - + - Improve equity

of access -- + -

Improve

efficiency - -- ++

ANY PERFORMANCE REPORTING

GENERATES INCENTIVES FOR QUALITY

Reputational incentive

Commercial incentive

Direct financial incentive

Note the key role of comparative performance

information

Increasing recognition that indirect reputational and

commercial incentives are inadequate

P4P programs and measures in OECD countries. Source: Borowitz, Cashin, Chi, Smith, and Thompson (forthcoming) for Observatory and OECD

Country Bonus for primary care physicians

If so, targets related to

Bonus for specialists

If so, targets related to

Bonus for hospitals

If so, targets related to

Financial Incentives

Pre

ven

tive

care

Ch

ron

ic

dis

ease

s

Pre

ven

tive

care

Ch

ron

ic

dis

ease

s

Clin

ical

ou

tco

mes

Pro

cess

es

Pat

ien

t sa

tisf

acti

on

Australia X X X X

Austria

Belgium X X X X X

Canada

Czech Republic X X X

Denmark X

Estonia X X X X

Finland

France X X X X

Germany X X X

Greece

Hungary X

Iceland

Ireland

Italy X X X

Japan X X X X X X X X

Korea X X X X

Luxembourg

Mexico

Netherlands

New Zealand X X X X

Norway

Poland X X X X X X

Portugal

Slovak Republic X X X X X

Spain X X X X

Sweden

Switzerland

Turkey X X X X X X

United Kingdom X X X X X X X X X X X

United States X X X X X X X X X X X

Primary care (and disease management) :

Australia: Per formance Improvement Program

United Kingdom: Quality and Outcomes Framework (QOF)

New Zealand: Primary Health Organization (PHO) Per formance Program

Brazi l : Program for Per formance Improvement (PIMESF) in Pir ipir i

France: Contracts to Improve Individual Practice (CAPI)

Germany: Disease management

Hospital care

United States: Hospital Quality Incentive Demonstration (HQID) in the Medicare System

United States: Cal ifornia Hospitals Init iat ive

Korea: Value Incentive Program

CASE STUDIES

UK QUALITY AND OUTCOMES FRAMEWORK

(QOF): SUMMARY OF FINDINGS TO DATE

Quality was improving rapidly before the QOF was introduced

The QOF may have led to a further small, but possibly transient,

increase in quality

In general, the targets seem to have been set at too low a level

The rewards associated with the QOF appear to have been excessive

Only modest evidence that ‘unmeasured’ quality is suffering relative to

measured quality

Evidence of some modest ‘gaming’ to achieve improved scores

Side-benefits of QOF include:

computerization;

better information flow;

more informed patients;

better focus for GPs;

more informed debate on what GPs should do.

Scope of scheme

Comprehensive (QOF)

Piecemeal

Who can enter the scheme?

Voluntary or compulsory? Choice of performance

measures

Structure, process, outcome

Power and size of incentives

Rewards for incremental improvements in quality

Difficulty of targets

Absolute attainment or improvement

External benchmark or relative to other providers

Risk adjustment for disadvantaged populations and other contextual factors

Exception reporting

Avoidance of gaming and other adverse outcomes

Information systems

Audit and penalties

Governance and accountability

Reporting requirements

Monitoring and evaluation

P4P DESIGN ISSUES

Immense variety of P4P schemes, with subtle design

variations and differences in setting

Rarely set up with evaluation in mind

Generally small measured effects

However, benefits in terms of:

Clarifying objectives

Information systems

Accountability

Dialogue between purchasers and providers

Broader public debate

Key issue is to move towards better purchasing, in

which quality plays a more prominent role

SUMMARY OF KEY FINDINGS

Cheryl

Cashin

IMPLICATIONS FOR THE ROLE OF

RBF IN HEALTH PURCHASING AND

PROVIDER PAYMENT

TOWARD A CONCEPTUAL

FRAMEWORK

Indicator/target-based incentive programs have not led to

“breakthrough” improvements in performance and quality

in higher resource settings

where strategic purchasing approaches are already in place.

So, RBF is not an endpoint.

RBF programs can, however, help build the elements of more

strategic health purchasing:

Stronger governance

More focus on specific objectives—clarified output

Better information generation and use

Improved accountability mechanisms

What do the results of the study tell us about

the role of RBF in health purchasing?

Better defined contracts

Stronger purchasing function

Passive

Output and prices defined

by provider

Active

Output and prices defined by purchaser

Strategic

Output fully specified: which services and how and by

whom they will be provided

Prices: financial incentives aligned with service delivery

objectives

Cooperative relationship between purchaser and

providers.

Weak

Money goes into the system and

services are delivered but

little connection between the two

EVOLUTION OF STRATEGIC PURCHASING

ARRANGEMENTS

Pay for output and reporting

[e.g. # of services delivered]

Essentially fee-for-service that may include some quality dimension.

Useful in low-productivity settings (with input-based budgets) or when systems are mostly absent (e.g. post-conflict)

Also useful to provide incentives for providers to report additional performance data.

Pay for performance

[e.g. capitation + bonus payments for quality]

Indicator-based incentive overlays onto underlying provider payment system.

Can help better focus on priorities but limited in its ability to counteract the much stronger incentives of the underlying payment system

Pay for integrated (better defined) output

[e.g. disease management program]

Bundling of services (provided according to guidelines) into an episode of care or longitudinal services related to chronic disease management.

May include P4P element

Pay for fully integrated output and outcomes

[e.g. accountable care organizations]

Evidence-based guidelines, integrated care management, patient-level data and appropriate outcome measures.

Evolution of health

purchasing and pay

for performance

Pay for output and reporting

[e.g. # of services delivered]

Essentially fee-for-service that may include some quality dimension.

Useful in low-productivity settings (with input-based budgets) or when systems are mostly absent (e.g. post-conflict)

Also useful to provide incentives for providers to report additional performance data.

Pay for performance

[e.g. capitation + bonus payments for quality]

Indicator-based incentive overlays onto underlying provider payment system.

Can help better focus on priorities but limited in its ability to counteract the much stronger incentives of the underlying payment system

Pay for integrated (better defined) output

[e.g. disease management program]

Bundling of services (provided according to guidelines) into an episode of care or longitudinal services related to chronic disease management.

May include P4P element

Pay for fully integrated output and outcomes

[e.g. accountable care organizations]

Evidence-based guidelines, integrated care management, patient-level data and appropriate outcome measures.

Evolution of health

purchasing and pay

for performance

Whether and what kind of RBF program

will be useful depends on where the

country is on this continuum.

NEED TO DO THE DIAGNOSTICS

PHASE I:

Purchasing function

not yet developed

[e.g. Zimbabwe]

PHASE II:

Purchasing function in place

but incomplete

[e.g. most OECD countries

studied; Ghana]

PHASE III:

Purchasing function becoming

more complete

[e.g. U.k., Germany;

Netherlands; U.S.]

ZIMBABWE

The “Diagnostics”—what are the

main performance problems? Economic and political crises between

2000-2008

35% ↓ in GDP; collapse of basic social

services; ↓ coverage of priority MCH

services; ↓ in health outcomes

Under-utilization and low productivity

RBF program

Performance-based contracts between

NGO (purchaser) and public facilities to

deliver package of priority services

Fee-for-service payments replace user

fees

External verifier for quantity and quality

indicators reported by providers

Example of

“Phase I ”

Ind icators and

incent ive

payments

ZAMBIA

RBF

PROGRAM

Indicator Unit Price Number of

units

RBF Payment

Children fully

immunized

$5.00 40 $200.00

Vitamin A distribution $0.20 100 $20.00

Pregnant women

received TT2+

$1.00 20 $20,00

Institutional deliveries $20.00 30 $600.00

FP visit modern

methods

$0.60 100 $60.00

ARV prophylaxis to

HIV+ women

$5.00 10 $50.00

ANC visits all four

completed

$8.00 40 $320.00

Postnatal care visit $8.00 40 $320.00

Consultations OPD $0.10 500 $50.00

Subtotal (I) RBF

payment

$1,640.00

Score on quality

checklist

60%

Subtotal (II) RBF

payment

$984.00

Hardship bonus 10%

Total RBF payment to

facility

$1,082.40

ZIMBABWE

How is RBF building a strategic purchasing function? District Health Executives (DHEs)

supervise outputs and services linked to the package of services

Provincial Health Executives (PHEs) supervise outputs and quality of care at District Hospitals and provide in-service support and mentoring.

Training and capacity-building

What next?—How will Zimbabwe move to Phase II?

The Government sees the need to develop a health financing strategy, which may include social health insurance and innovative instruments like demand side RBF.

Where will the purchasing function “live”?

Example of

“Phase I ”

Example of

“Phase I I ”

GHANA

The “Diagnostics”—what are the main

performance problems?

Strategic purchasing function has been

established in the National Health Insurance

Authority (NHIA)

New output-oriented provider payment systems

(mainly fee-for-service)

Cost escalation (claims/beneficiary)

not bringing the most value for money

Threats to the sustainability of the NHIA

Capitation pilot—but concerns about effect of

incentives on quality and utilization

Quality concerns remain—although salaries have

increased significantly in recent years

How could RBF strengthen the

strategic purchasing function?

Different approaches to RBF are

under discussion

Where RBF could be helpful:

Clarify the output in the contract—which

services and how should they be delivered

Fine-tune incentives of underlying payment

systems

Strengthen the generation and use of

information

Example of

“Phase I I ”

GHANA

Payment across

levels of care .

PHASE III :

THE NEXT

STEP IN

STRATEGIC

PURCHASING

Primary Care

Outpatient Specialty Care

Inpatient Care Financial

Incentives

for High-

Quality

Integrated

Care in a

Disease

Area

Clinical guidelines

Referral guidelines

Patient-level data

Performance measures

Feedback loop

Financial incentives

Greater

accountability

for results

requires more

integrated

service

delivery

Toward

Strategic

Purchasing

Germany—Disease management programs

place primary care physicians as care

coordinators for patients with chronic

conditions, using financial incentives to

reward better care quality

Netherlands— new “care groups” receive

bundled payments to manage chronic

conditions

U.S.—new “Value -Based Purchasing”

initiatives accompanied by Accountable Care

Organizations and Medical Home models

New Zealand—group practices formed into

Primary Health Organizations to better

address population health needs;

accompanied by P4P for chronic disease

management

RBF programs can be helpful to star t the development of a strategic

purchasing function where none exists

RBF programs can strengthen an existing strategic purchasing

function

E.g. complement traditional payment systems with incentives targeted directly

at specific objectives, such as higher quality processes of care that follow

evidence-based guidelines

But, RBF programs are not an endpoint

The programs should explicitly strengthen strategic health

purchasing to allow continued evolution Do the diagnostics

Build on existing health purchasing and provider payment systems —or have a

plan for where the health purchasing function eventually will “live”

Ensure that governance, information, and accountability mechanisms are

strengthened

KEY ISSUES GOING FORWARD

THANK YOU