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Pay for Performance (“P 4 P”) Bangkok December 2009 Pay for Performance (“P 4 P”) Bangkok December 2009

1. What Is It? 1. What Is It?

Performance Incentives to Households and/or Providers n “Demand side” n Conditional Cash Transfer (CCT) Performance Incentives to Households and/or Providers n “Demand side” n Conditional Cash Transfer (CCT) Programs ( mostly LAC) n “Supply side” n Paying Premiums n Argentina n n Providers “Process” Indicators = Improved Outcomes n Bonus Systems Households receive income transfers n n n preventive care services Maternal and child care Money and food to motivate TB/HIV patients to complete treatment. n Service Packages (typically primary care) n Afghanistan, Haiti, Rwanda.

Performance Incentives to Households and/or Providers n “Demand side” n Conditional Cash Transfer (CCT) Performance Incentives to Households and/or Providers n “Demand side” n Conditional Cash Transfer (CCT) Programs ( mostly LAC) n “Supply side” n Paying Premiums n Argentina n n Providers “Process” Indicators = Improved Outcomes n Bonus Systems Households receive income transfers n n n preventive care services Maternal and child care Money and food to motivate TB/HIV patients to complete treatment. n Service Packages (typically primary care) n Afghanistan, Haiti, Rwanda.

Paying Providers based on performance (P 4 P) n What is it? Measure performance Paying Providers based on performance (P 4 P) n What is it? Measure performance of participating providers to set financial incentive for improving performance, leading to better outcomes Payment Incentive Performance Outcomes/Goals

Paying Providers based on performance (P 4 P) n What is it? Measure performance Paying Providers based on performance (P 4 P) n What is it? Measure performance of participating providers to set financial incentive for improving performance, leading to better outcomes Payment Incentive Performance Outcomes/Goals Outputs

Paying Providers based on performance (P 4 P) n What is it? Measure performance Paying Providers based on performance (P 4 P) n What is it? Measure performance of participating providers to set financial incentive for improving performance, leading to better outcomes Payment Incentive Performance Outcomes/Goals

Paying providers based on performance (P 4 P) n What is it? Measure performance Paying providers based on performance (P 4 P) n What is it? Measure performance of participating providers to set financial incentive for improving performance, leading to better outcomes Payment Incentive Performance Outcomes/Goals n Why P 4 P? q q Improved Outcomes In the process…. reduce costs, improve quality and efficiency/equity

2. Designs and Measures 2. Designs and Measures

Pay-for-Performance (P 4 P) for physicians and hospitals n There are different P 4 Pay-for-Performance (P 4 P) for physicians and hospitals n There are different P 4 P designs n Why? n Different information technology capabilities n Data availability n Willingness of providers to participate

Pay-for-Performance (P 4 P) for physicians and hospitals n There are different P 4 Pay-for-Performance (P 4 P) for physicians and hospitals n There are different P 4 P designs n Why? n Different information technology capabilities n Data availability n Willingness of providers to participate n P 4 P is more common for outpatient care than for hospital care n Preventive and primary care services

Types of Measures: Start Here n Basic Access n n Preventive Services n n Types of Measures: Start Here n Basic Access n n Preventive Services n n n n Example: operating hours Number of enrollees that have a prepared annual health plan Breast cancer screening (mammograms) Cervical cancer screening (pap smears) Retinal eye exams for diabetics Well-child exams Childhood immunizations Institutional Capacity n Implementation of a financial management system Source: Rena Eichler, WB, 2003

Types of Measures: Extend to More System-Based n Effective management of chronic cases n Types of Measures: Extend to More System-Based n Effective management of chronic cases n n Health education n n % of smokers who participate in smoking cessation workshops Hospital quality n n Percentage of diabetics with controlled lipid levels (LDL levels less than 130 mg/d. L) Infection rates Control excessive utilization n Percentage of prescriptions that are generic

UK: Examples of Measures for Chronic Care Asthma % of patients with asthma who UK: Examples of Measures for Chronic Care Asthma % of patients with asthma who have had an asthma review in previous 15 months Cancer % of patients with cancer reviewed within 6 months of confirmed diagnosis Chronic obstructive pulmonary disease (COPD) % of patients with COPD with diagnosis confirmed by spirometry and reversibility testing Coronary heart disease (CHD) % of patients with CHD whose last blood pressure measurement was 150/90 mm Hg or less Diabetes % of patients with diabetes whose last blood pressure measurement was 145/85 mm Hg or less Hypertension % of patients with hypertension with last blood pressure measurement was 150/90 mm Hg or less Hypothyroidism % of patients with hypothyroidism with thyroid function tests recorded in the previous 15 months Mental health % of patients with severe long-term mental health problems reviewed in the preceding 15 months Source. Pay for Performance Program, UK. www. nejm. org :

3. Global Experience 3. Global Experience

Primary Care Doctors’ Reports of Any Financial Incentives Targeted on Processes/Quality of Care, 2006 Primary Care Doctors’ Reports of Any Financial Incentives Targeted on Processes/Quality of Care, 2006 Percent reporting any financial incentive* * Receive of have potential to receive payment for: clinical care targets, high patient ratings, managing chronic disease/complex needs, preventive care, or QI activities Data: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians

United States n Started in private sector (80% of HMOs use) n Medicare n United States n Started in private sector (80% of HMOs use) n Medicare n Bonuses to Hospitals n Top 20% for processes related to specified treatments n n Joint replacement, CABG, heart attack, heart failure, pneumonia Medicaid n 115 P 4 P programs in States (50 million lives) n Flat bonus or premium, withholds, publication of provider scores

United States (Maryland) n Incentives for reducing actual number of complications after hospital admissions United States (Maryland) n Incentives for reducing actual number of complications after hospital admissions linked to poor quality of care, such as Urinary tract Infection n Septicemia (infection in blood) n Collapsed lung n n 52 categories

Since 2004, the NHS of the UK introduced P 4 P for Family Practitioners Since 2004, the NHS of the UK introduced P 4 P for Family Practitioners n NHS committed $3. 2 billion in additional funding over 3 years for P 4 P program n 146 indicators for P 4 P n n n Immunizations, well-child care 10 chronic diseases organization of care patient counseling and experience Postgraduate education allowance

P 4 P: Impact on Quality of Community Services in England Mean Scores for P 4 P: Impact on Quality of Community Services in England Mean Scores for Clinical Quality at the Practice Level for Aspects of Care for Coronary Heart Disease, Asthma, and Type 2 Diabetes That Were Linked with Incentives and Aspects of Care That Were Not Linked with Incentives, 1998– 2007. Quality scores range from 0% (no quality indicator was met for any patient) to 100% (all quality indicators were met for all patients). Source: S. Campbell et al. , “Effects of Pay for Performance on the Quality of Primary Care in England, ” N Engl J Med 2009; 361: 368 -378.

Overall Results Mixed (US and UK) n Some Improvement in quality but often modest Overall Results Mixed (US and UK) n Some Improvement in quality but often modest (<5%) in terms of outcomes n Not clear who benefits (US HMO Pacifi. Care n Top quintile of provider performance n Lowest quintile (not often) n Administrative costs higher (UK: check the box). Family practitioners (FP) employed more nurses and administrative staff and increased use of electronic medical records n Questions Remain: e. g. , does it take away from non-bonus areas of care?

Results from 1 st Year of P 4 P in the UK n Financial Results from 1 st Year of P 4 P in the UK n Financial incentives affect physicians’ behavior n But no way to establish how much of behavior change is due to P 4 P n Providers attained a median of 96. 7% of available points compared to 75% predicted n Targets were too easy to achieve n P 4 P program increased gross income of average family practitioner by $40, 200 per year n As a result, cost to payer was considerably more than expected n Smaller FP practices have merged due to administrative pressures

Brazil üGlobal budgets allocated in monthly installments üA 10% retention bonus fund for compliance Brazil üGlobal budgets allocated in monthly installments üA 10% retention bonus fund for compliance with performance indicators including üGood quality (e. g. , hygiene and sterilization practices) üPatient satisfaction (no overcharging and perceptions of quality) üNo fraud (ghost patients) üHire and fire staffing policies; üStaff mix flexibility/Salary adjustments/bonuses and staff/ promotions flexibility Outcomes ØImprovement in quality Øgeneral and surgical mortality Ølower infection rates ØHigher efficiency Ø improved bed turnover rates, occupancy rates, length of stay Ø physician hours Ø expenditure per admission

Haiti n Providers paid fixed fee plus bonus for achieving performance targets n Measures: Haiti n Providers paid fixed fee plus bonus for achieving performance targets n Measures: n n n increase in % of children < 1 who are fully immunized increase in % of pregnant women who receive at least 3 prenatal care visits for each indicator, a baseline measure determined at the beginning of a contract period and a target for improvement is established. n n Subcontracts clearly established targets, describe how performance will be measured, and determine the award fee associated with attainment of each target. Results n n 2. 7 million people Increased immunizations by 24%

4. Design Issues 4. Design Issues

An Initial List Target physicians or facilities? n Primary or specialists? n Carrots or An Initial List Target physicians or facilities? n Primary or specialists? n Carrots or sticks? n Performance thresh-holds be n Absolute changes? n Relative scoring rank? n n New Funding? Where will funding come from?

Different Methods to Pay Based on Performance n Withholds n Withhold about 5% of Different Methods to Pay Based on Performance n Withholds n Withhold about 5% of reimbursement. Return all or proportion n Bonus n Provide mean rewards ranging from 5 -20% of total reimbursement n Reward top-rated providers only n Quality grants n Provide funds to provider for specific quality improvement project (e. g. access to rural residents) n Threshold n Link at least 10% of compensation to change behavior

What is Financial Risk for providers under P 4 P? n Providers can gain What is Financial Risk for providers under P 4 P? n Providers can gain incremental revenue from successful performance without large financial risks under P 4 P programs n But if P 4 P is budget neutral n Hospitals performing in top decile receive a 2% increment in payments, n Hospitals in second decile receive a 1% increment n Hospitals classified in lowest two deciles are liable for a 1 to 2% financial penalty

Key Messages n KISS Principle important Key Messages n KISS Principle important

Key Messages n KISS Principle important n Design: n Clear performance indicators and targets Key Messages n KISS Principle important n Design: n Clear performance indicators and targets need to be established n Do indicators link with outcomes? n Clear methods: the way payment will be tied to results n If not, signals for behavior change will not be clear

Key Messages n KISS Principle important n Design: n Clear performance indicators and targets Key Messages n KISS Principle important n Design: n Clear performance indicators and targets need to be established n Do indicators link with outcomes? n Clear methods: the way payment will be tied to results n If not, signals for behavior change will not be clear n Administrative: n Capacity to design, negotiate, monitor and manage contracts or performance agreements

Key Messages n KISS Principle important n Design: n Clear performance indicators and targets Key Messages n KISS Principle important n Design: n Clear performance indicators and targets need to be established n Do indicators link with outcomes? n Clear methods: the way payment will be tied to results n If not, signals for behavior change will not be clear n Administrative: n Capacity to design, negotiate, monitor and manage contracts or performance agreements n Stakeholders n Engagement is critical to success to assure that the design of the approach will motivate the desired results n Sufficient buy-in among recipients to generate cooperation and partnership rather than resistance.

Thank you Email: jlangenbrunner@worldbank. org Website: www. worldbank. org Health Systems Development Thank you Email: [email protected] org Website: www. worldbank. org Health Systems Development