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04.14.10
Health Financing Summit




       Building bridges between
       financing and quality
        Dr. Madeleine Valera
        WHO-WPRO
Q
   Quality is the
enabling frame that
begins, sustains
and grows any
health financing
_initiative.
Healthcare costs will continue to
    be out of reach for many
 Americans as long as patients
     believe that "more care"
       equals "better care.”

 At least, that's the opinion of New York
     Times economics columnist David
     Leonhardt, who argues that more
    knowledgeable patients and value-
     based rewards are just two steps
    toward righting healthcare's sinking
               economic ship. 
International studies in acute care hospitals
           Date
    No. of        No. of adverse   Adverse event
                    admissions
   events
          rate (%)



           1984
    30195
 1133
                   3.8


           1992
    14179
 2353
                   16.6


           1992
    1014
         119
             11.7


           1998
    1097
         176
             9.0
How much pays for Medical Error, Injuries, Death




                                                   7
It is estimated that the following occur
 every year in US hospitals due to errors in
                  treatment:

       98,000 
      people are 
 injured with an 
       estimated 
                     $       At a cost
                                          %   Only 2 to 3%
                                             of major errors
                                                are reported
12,000 deaths
                         of $33 billion
                                      
              through 
                                          incident reporting
     arising from
                                  systems
    these errors
                                                   Whittaker PPT
The US estimates that:
             15.3%       Cost to a hospital of One hospital pressure
    appendectomies       each ADE is $2,000     ulcer in average cost
   were assessed as      per event and about
                                                        was $37,288
       unnecessary,       $3.8M per hospital
                                                  (nationally a cost of
     costing $740M                   per year
                           ($1M preventable)
       $2.2B to $3.6B)
            annually
Flum and Koepsell




The UK estimates that:

    Hospital acquired
       infection cost    Costs of ADEs           25% of
                                              radiological
      $1.6B a year
          are £0.6B
                                        procedures are not
             (15-30%           ($922M)
         necessary
         preventable)
                                                              Ovretveit J, 2009
Adverse                      16.6%
                   15% of 
                10% 
Events in                    of hospital
                         patients suffer
                                                      Errors are
                                                         Due to
                                                                          of hospital
                                                                      patients suffer
 Health                     an adverse
                                event in
                                                         Patient 
                                                     Handovers
          an adverse 
  Care
                        Australia
            (US study)
               event

   5-10% of
               5 million
               100,000
                Unsafe
     hospitalized
        HAI cases are
            cases of HAI
          Surgery:
 patients acquire
         Estimated to
          in the UK lead
     234 million cases
       HAI (up to
             Occur in
             to 5,000
           globally/year; 
                                                                                7 million
       37% in
              Europe per
                  deaths
     complications, and 
HAI
        ICUs)
    HAI
         year
     HAI
         a year
      1 million deaths

About 100,000
                1.5 million
  hospital deaths
     are harmed and                    67%
        in the US
       thousands are              of patients’
       every year
     killed in the US/            medication
      are caused
           year due to                histories
      by medical
     RX     medication 
    RX     have errors
             error
                errors
                                                                                Whittaker PPT
3 step process that will                                       NO!
ultimately lead patients to say
 no to excessive treatments
          more often: 
                                                      3               Tweaking


                     2
                                                               the system so it
                                        Arming each 
              rewards the 
                                         patient with
                            all of the facts about a      quality of care rather


1
                              given treatment. This        than the quantity of
          Providing 
          sometimes results in                        care.
      patients with
      patients opting for a less
         access to       aggressive, less risky (and                      Leonhardt
                              less costly) course of
       information 
                          action. 
    about the most
           effective 
       treatments.
KANO categories of QI
                         
             KANO Type 1
    Improvements are reducing defects
                KANO Type 2
   Improvements are reductions of cost while
   maintaining or improving the experience of
                    patients

                KANO Type 3
Improvements are innovations or new things that
  you can do that sometimes cost more money
What is Pay for Performance or “P4P”?
  Pay-for-Performance (P4P) is “Transfer of money or
   material goods conditional on taking a
   measurable health related action or achieving a
   predetermined performance target” *

  Financial risk is the assumed driver of change
                      “No results, no payment”
  *From the Center for Global Development Working Group on Performance-Based
             
    Incentives
What is P4P?
P4P incentives are provisions in health
 plan contracts that modify payment to
    a physician group based on the
  group’s performance on a measure
Pay-For-Performance Concept

                              Payers
             (Donors, Government, NGOs, Health Programs,
                        Insurers, Communities)



   Money
   Goods
                                                        Results
Other rewards


                           Recipients
            (Households, Service Providers [Facilities, Health
             Workers], Health Programs, Local Government,
                         National Government)
Why Enthusiasm for P4P?
• Slow progress in improving quality 
• Societal emphasis on market-based solutions
  – Public release of performance data 
  – Increased patient cost-sharing
Increasing enthusiasm for P4P 
• Private Health Plans
  – Rapidly increasing use of P4P incentives
• Federal and State Governments
  – Current discussions on introducing P4P into
    Medicare reimbursement
What health systems problems is P4P addressing? 
 Strengthening capacity Improving quality
 to provide services         




 • Catalyzes changes that            • Preventive care services utilized
 strengthen management.
             by more people
 • Improves information systems
 and the use of information for      • Rewards correct diagnosis and
 decisions.
                         treatment
 • Motivates health worker


                                     Increasing utilization
 Improving efficiency
                • Overcoming financial and
                                     physical barriers to access that
 • Better use of inputs to achieve   poor households face   



 health results
                     • Overcoming information and
                                     cultural barriers that inhibit
                                     utilization

                                                                Eichler et al on P4P
A “menu” of options to consider for "
             supply side payment 
•  Sub-national level:
    –  Aligned with facility or population level targets
•  Institution level: 
    –  Frequency of performance payment
    –  Amount at risk 
    –  Stepped
    –  Per service provided 
    –  Adjustment for quality score
    –  Combination
    
 

         
      
       
     
       




                                                            Eichler et al. on P4P
Supply side payment options cont’d
•  Payment tied to attainment of targets
    –  “all or nothing approach” – clear and fewer transaction costs
    –  Stepped– partial payments for partial attainment of targets; perceived as more
       fair, but imposes increased transaction costs and weakens incentives to attain
       full target
    –  Strength: Incentives linked to population based coverage, stimulates strategic
       planning to address systemic issues.
    –  Weakness: More difficult to understand that fee for service.

•  Per service provided (FFS)
    –  Fee for each service provided on a list. Fee may or may not cover the cost of
       providing the service. Note: FFS is paid by purchaser (not equivalent to “user
       fees” which are paid by patient).
    –  Strength: Increases production of services, Easy to understand… therefore
       motivating, stimulates use of preventive services that are underutilized
    –  Weakness: Can generate excessive provision of services beyond what is
       needed to ensure good health. 
    
 
 
          
        
        
          
       
          Eichler et al. on P4P
Supply side payment options cont’d
•  Establish Thresholds or “Tournaments”
    –  Impose that only those that reach x% of population coverage receive
       performance payments.
    –  Tournament- only those in the top x percentile of performance will
       receive rewards.
    –  Challenges with these approaches: may reward those that are already
       top performers and fail to motivate the weak performers to improve.

•  Adjustment for quality
    –  E.g. ‘patient responsiveness’ measured by short exit survey
    –  Quality deflator based on facility assessment score
    –  Quality index 
    –  Reward scores on clinical vignettes
    –  *** Innovations are needed to reward quality.


 
     
       
        
       
       
                   
                             
                                                                      E ichler et al. on P4P
Supply side payment options cont’d
•  Rules for how incentive payments can be used
    –  Specify portion for individual rewards vs. facility/
       system investment
    –  Specify rules for how teams distribute facility
       payments to individuals?
    –  Individual provider level: Salary plus? (or withhold
       and “bonus”) Amount at risk?




 
    
      
      
       
      



                                                      Eichler et al. on P4P
Demand Side Payment Options
                        Payment for a series of
Payment for discrete health-related actions
health-related actions
 taken by a household
                                  • e.g. conditional cash transfer
• e.g. pay pregnant women who     programs that provide income
deliver at health facility
       support to families that receive a
                                  package of health and other
                                  interventions


Payment for long-term             Payment for evidence
treatment of chronic              of behavior change 
conditions
                       • e.g. drug-free, quit smoking,
• e.g. patients are compensated   lose weight
or provided food packages when    • Payment conditional on results
they present to take medicines
   of spot verification techniques
Implications for Policy (QIDS study)
•  Accreditation and PHIC payments are shown to
   be potentially powerful tools in either screening for
   or for raising quality
   –  The positive relationship found between PHIC
      accreditation and receipt of PHIC payments to
      facility and physician quality already suggest the
      expected power of such regulatory instruments
   
 

 These tools work in two ways:
 (1)  accreditation and payment regulations screen out lower
   
 

        
      quality docs; and 
 (2)  In a dynamic setting, accreditation and payments can be
      used to raise quality of care as in the use of multi-tiered
      accreditation and quality bonuses
                                                           Peabody et al. on QIDS Study
Paying for results
                 
  Financing incentives be used only
  when there is strong evidence of
  effectiveness and specific outcomes
  can be articulated

 
  Remove financial barriers to improve
  care: reinforce positive performance
  through additional payments or
  removing payment mechanisms


 
   
    
     
     
     
        
                                 McLoughlin, QSHC 2003
Common Mistakes in P4P Design
•  Failure to consult with stakeholders to gain input to design, maximize
   support, and minimize resistance
•  Failure to adequately explain rules (or rules that are too complex)
•  Too much or too little financial risk
•  Fuzzy definition of performance indicators and targets, too many
   performance indicators, and targets, and targets for improvement that are
   unreachable
•  Tying the hands of managers so that they are not able to fully respond to
   the new incentives
•  Insufficient attention to the systems and capacities needed to administer
   programs
•  Failure to monitor unintended consequences, evaluate, learn, and revise 

 
      
        
        
       
        
        

 
      
        
        
       
        
        
        

                                                                   Eichler et al on P4P
Possible pitfalls
•  Excessive attention to reaching targets, to detriment of
   other (harder to measure) types of performance

•  Undermining intrinsic motivation, turning health care
   delivery into “piecework”

•  “Gaming,” including erosion in quality of institutions’
   service statistics
Key points to ponder
•  There are significant problems with the quality of health
   care
•  This is reflected in the perceptions of stakeholders, in
   unintentional harm to patients, overuse of ineffective care
   and underuse of effective interventions
•  Poor quality generates additional costs, yet current
   financing arrangements may actually impede
   improvements
•  Financing issues are usually debated in terms of the level
   and method of funding without clarity about what needs to
   be achieved to address quality of care
•  Achieving improvements requires attention to stable
   investments
Thank you!
Slides adapted from:

•  Eichler and Levine. November 17, 2008. Pay for Performance:
   Changing Incentives to Achieve Results Presented at World Bank
   Conference on Impact Evaluation, Nov. 17, 2008.
•  Eichler, Rena and Susna De. December 2008. Paying for
   Performance in Health: A Guide to Developing the Blueprint.
   Bethesda, MD: Health Systems 20/20, Abt Associates Inc.
•  McNamara, Peggy. May 2005. Quality-based payment: six case
   examples. Intl Journal for Quality in Health Care
•  McLoughlin and Leatherman. April 2010. Qual. Saf. Health Care

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HFS Valera

  • 1. 04.14.10 Health Financing Summit Building bridges between financing and quality Dr. Madeleine Valera WHO-WPRO
  • 2. Q Quality is the enabling frame that begins, sustains and grows any health financing _initiative.
  • 3. Healthcare costs will continue to be out of reach for many Americans as long as patients believe that "more care" equals "better care.” At least, that's the opinion of New York Times economics columnist David Leonhardt, who argues that more knowledgeable patients and value- based rewards are just two steps toward righting healthcare's sinking economic ship. 
  • 4. International studies in acute care hospitals Date No. of No. of adverse Adverse event admissions events rate (%) 1984 30195 1133 3.8 1992 14179 2353 16.6 1992 1014 119 11.7 1998 1097 176 9.0
  • 5. How much pays for Medical Error, Injuries, Death 7
  • 6. It is estimated that the following occur every year in US hospitals due to errors in treatment: 98,000 people are injured with an estimated $ At a cost % Only 2 to 3% of major errors are reported 12,000 deaths of $33 billion through incident reporting arising from systems these errors Whittaker PPT
  • 7. The US estimates that: 15.3% Cost to a hospital of One hospital pressure appendectomies each ADE is $2,000 ulcer in average cost were assessed as per event and about was $37,288 unnecessary, $3.8M per hospital (nationally a cost of costing $740M per year ($1M preventable) $2.2B to $3.6B) annually Flum and Koepsell The UK estimates that: Hospital acquired infection cost Costs of ADEs 25% of radiological $1.6B a year are £0.6B procedures are not (15-30% ($922M) necessary preventable) Ovretveit J, 2009
  • 8. Adverse 16.6% 15% of 10% Events in of hospital patients suffer Errors are Due to of hospital patients suffer Health an adverse event in Patient Handovers an adverse Care Australia (US study) event 5-10% of 5 million 100,000 Unsafe hospitalized HAI cases are cases of HAI Surgery: patients acquire Estimated to in the UK lead 234 million cases HAI (up to Occur in to 5,000 globally/year; 7 million 37% in Europe per deaths complications, and HAI ICUs) HAI year HAI a year 1 million deaths About 100,000 1.5 million hospital deaths are harmed and 67% in the US thousands are of patients’ every year killed in the US/ medication are caused year due to histories by medical RX medication RX have errors error errors Whittaker PPT
  • 9. 3 step process that will NO! ultimately lead patients to say no to excessive treatments more often: 3 Tweaking 2 the system so it Arming each rewards the patient with all of the facts about a quality of care rather 1 given treatment. This than the quantity of Providing sometimes results in care. patients with patients opting for a less access to aggressive, less risky (and Leonhardt less costly) course of information action. about the most effective treatments.
  • 10. KANO categories of QI KANO Type 1 Improvements are reducing defects KANO Type 2 Improvements are reductions of cost while maintaining or improving the experience of patients KANO Type 3 Improvements are innovations or new things that you can do that sometimes cost more money
  • 11. What is Pay for Performance or “P4P”? Pay-for-Performance (P4P) is “Transfer of money or material goods conditional on taking a measurable health related action or achieving a predetermined performance target” * Financial risk is the assumed driver of change “No results, no payment” *From the Center for Global Development Working Group on Performance-Based Incentives
  • 12. What is P4P? P4P incentives are provisions in health plan contracts that modify payment to a physician group based on the group’s performance on a measure
  • 13. Pay-For-Performance Concept Payers (Donors, Government, NGOs, Health Programs, Insurers, Communities) Money Goods Results Other rewards Recipients (Households, Service Providers [Facilities, Health Workers], Health Programs, Local Government, National Government)
  • 14. Why Enthusiasm for P4P? • Slow progress in improving quality • Societal emphasis on market-based solutions – Public release of performance data – Increased patient cost-sharing
  • 15. Increasing enthusiasm for P4P • Private Health Plans – Rapidly increasing use of P4P incentives • Federal and State Governments – Current discussions on introducing P4P into Medicare reimbursement
  • 16. What health systems problems is P4P addressing? Strengthening capacity Improving quality to provide services • Catalyzes changes that • Preventive care services utilized strengthen management. by more people • Improves information systems and the use of information for • Rewards correct diagnosis and decisions. treatment • Motivates health worker Increasing utilization Improving efficiency • Overcoming financial and physical barriers to access that • Better use of inputs to achieve poor households face health results • Overcoming information and cultural barriers that inhibit utilization Eichler et al on P4P
  • 17. A “menu” of options to consider for " supply side payment •  Sub-national level: –  Aligned with facility or population level targets •  Institution level: –  Frequency of performance payment –  Amount at risk –  Stepped –  Per service provided –  Adjustment for quality score –  Combination Eichler et al. on P4P
  • 18. Supply side payment options cont’d •  Payment tied to attainment of targets –  “all or nothing approach” – clear and fewer transaction costs –  Stepped– partial payments for partial attainment of targets; perceived as more fair, but imposes increased transaction costs and weakens incentives to attain full target –  Strength: Incentives linked to population based coverage, stimulates strategic planning to address systemic issues. –  Weakness: More difficult to understand that fee for service. •  Per service provided (FFS) –  Fee for each service provided on a list. Fee may or may not cover the cost of providing the service. Note: FFS is paid by purchaser (not equivalent to “user fees” which are paid by patient). –  Strength: Increases production of services, Easy to understand… therefore motivating, stimulates use of preventive services that are underutilized –  Weakness: Can generate excessive provision of services beyond what is needed to ensure good health. Eichler et al. on P4P
  • 19. Supply side payment options cont’d •  Establish Thresholds or “Tournaments” –  Impose that only those that reach x% of population coverage receive performance payments. –  Tournament- only those in the top x percentile of performance will receive rewards. –  Challenges with these approaches: may reward those that are already top performers and fail to motivate the weak performers to improve. •  Adjustment for quality –  E.g. ‘patient responsiveness’ measured by short exit survey –  Quality deflator based on facility assessment score –  Quality index –  Reward scores on clinical vignettes –  *** Innovations are needed to reward quality. E ichler et al. on P4P
  • 20. Supply side payment options cont’d •  Rules for how incentive payments can be used –  Specify portion for individual rewards vs. facility/ system investment –  Specify rules for how teams distribute facility payments to individuals? –  Individual provider level: Salary plus? (or withhold and “bonus”) Amount at risk? Eichler et al. on P4P
  • 21. Demand Side Payment Options Payment for a series of Payment for discrete health-related actions health-related actions taken by a household • e.g. conditional cash transfer • e.g. pay pregnant women who programs that provide income deliver at health facility support to families that receive a package of health and other interventions Payment for long-term Payment for evidence treatment of chronic of behavior change conditions • e.g. drug-free, quit smoking, • e.g. patients are compensated lose weight or provided food packages when • Payment conditional on results they present to take medicines of spot verification techniques
  • 22. Implications for Policy (QIDS study) •  Accreditation and PHIC payments are shown to be potentially powerful tools in either screening for or for raising quality –  The positive relationship found between PHIC accreditation and receipt of PHIC payments to facility and physician quality already suggest the expected power of such regulatory instruments These tools work in two ways: (1)  accreditation and payment regulations screen out lower quality docs; and (2)  In a dynamic setting, accreditation and payments can be used to raise quality of care as in the use of multi-tiered accreditation and quality bonuses Peabody et al. on QIDS Study
  • 23. Paying for results Financing incentives be used only when there is strong evidence of effectiveness and specific outcomes can be articulated Remove financial barriers to improve care: reinforce positive performance through additional payments or removing payment mechanisms McLoughlin, QSHC 2003
  • 24. Common Mistakes in P4P Design •  Failure to consult with stakeholders to gain input to design, maximize support, and minimize resistance •  Failure to adequately explain rules (or rules that are too complex) •  Too much or too little financial risk •  Fuzzy definition of performance indicators and targets, too many performance indicators, and targets, and targets for improvement that are unreachable •  Tying the hands of managers so that they are not able to fully respond to the new incentives •  Insufficient attention to the systems and capacities needed to administer programs •  Failure to monitor unintended consequences, evaluate, learn, and revise Eichler et al on P4P
  • 25. Possible pitfalls •  Excessive attention to reaching targets, to detriment of other (harder to measure) types of performance •  Undermining intrinsic motivation, turning health care delivery into “piecework” •  “Gaming,” including erosion in quality of institutions’ service statistics
  • 26. Key points to ponder •  There are significant problems with the quality of health care •  This is reflected in the perceptions of stakeholders, in unintentional harm to patients, overuse of ineffective care and underuse of effective interventions •  Poor quality generates additional costs, yet current financing arrangements may actually impede improvements •  Financing issues are usually debated in terms of the level and method of funding without clarity about what needs to be achieved to address quality of care •  Achieving improvements requires attention to stable investments
  • 28. Slides adapted from: •  Eichler and Levine. November 17, 2008. Pay for Performance: Changing Incentives to Achieve Results Presented at World Bank Conference on Impact Evaluation, Nov. 17, 2008. •  Eichler, Rena and Susna De. December 2008. Paying for Performance in Health: A Guide to Developing the Blueprint. Bethesda, MD: Health Systems 20/20, Abt Associates Inc. •  McNamara, Peggy. May 2005. Quality-based payment: six case examples. Intl Journal for Quality in Health Care •  McLoughlin and Leatherman. April 2010. Qual. Saf. Health Care