Sustainability of Health Systems:
Is Pay for Performance the Answer?
Review of OECD experience
May 11th, 2011; Clermont Ferrand
Y-Ling Chi OECD
Michael Borowitz OECD
Raphaelle Bisiaux OECD
Cheryl Cashin , University of California,
Berkeley/OECD/Results for Development
Richard Scheffler, University of California, Berkeley
Collaboration with World Bank
1
Budget constrained environment: Where do cuts in spending
take place?
Total health expenditure as a share of GDP, 1995-2007
Selected OECD countries
United States
Switzerland
Canada
16
OECD
Germany
Japan
14
12
% GDP
In the aftermath of the crisis, some
countries face the difficult task of
choosing where to cut public
spending:
 need to ensure that health
spending achieves the best possible
value for money
 room for improvement = better
coordination of care, the use of
evidence-based
medicine
and
assessment of new technologies,
and paying providers according to
the quality of service
10
8
6
1995
1997
1999
2001
Source: OECD Health Data 2009.
2003
2005
2007
Wide Range of Tools to control health spending
Pay for
performance
Source: Borowitz and Bisiaux, 2011 (to be published)
Recent developments in payment models aim to achieving
value for money in OECD countries
• Rising burden of chronic diseases with
ageing population pose a considerable
threat to health budgets (in both lowmiddle and high income countries)
• Traditional payment models can be
inefficient
• Many OECD countries are
experimenting with new methods of
paying health care providers to
improve the quality of health care and
coverage of priority services (Pay-forPerformance or “P4P”)
• P4P often used to incentivize
preventative activities for chronic
disease and care coordination
4
Definitions of Pay for Performance
Organization
Definition
World Bank
A range of mechanisms designed to enhance the performance of the
health system through incentive-based payments.
AHRQ
Paying more for good performance based on quality metrics.
CMS
The use of payment methods and other incentives to encourage quality
improvement and patient-focused high value care.
RAND
The general strategy of promoting quality improvement by rewarding
providers (physicians, clinics or hospitals) who meet certain
performance expectations with respect to health care quality or
efficiency.
USAID
Introduce incentives (generally financial) to reward attainment of
positive health results.
Center for Global Transfer of money or material goods conditional on taking a
Development
measurable action or achieving a pre-determined performance target.
5
A standardized framework was used to describe and
assess the schemes
Measures
•Performance
domains
•Indicators
Data
Reporting and
Verification
•Information systems
Basis for
Reward
•Absolute level of
measure: target or
continuum
•Change in measure
Reward
•Bonus payment
•Publicize
measures and
ranking
•Relative ranking
Source: Adopted from Scheffler RM: Is There a Doctor in the House? Market
Signals and Tomorrow’s Supply of Doctors, Stanford University Press, 2008.
6
A diversity of schemes across OECD countries
X
X
X
X
X
X
X
X
X
X
X
X
Patient
satisfaction
Process
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Chronic
disease
X
Preventive
care
Chronic
disease
X
If so, targets
related to:
Clinical
outcome
• The US, the UK and
Australia in the late
1990s and early 2000s
have
broken
new
grounds for other OECD
countries
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United states
Preventive
care
• This table illustrates the
diversity of pay for
performance schemes on
the supply side in all
areas of care, based on a
survey carried out in
2008/2009.
If so,
If so,
targets
targets
related to:
Bonus for related to:
Summary
of OECD experience
of pay
forfor
primary
Bonus for
Bonus
Country
care
specialists
hospitals
performance
physicians
X
X
X
X
X
X
X
X
X
X
X
X
X
X
n.a.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
n.a.
X
X
X
n.a.
X
X
X
X
X
X
X
X
P4P mechanisms aim at addressing these problems and
create behavorial change through six factors (1)
1.Health-increasing substitution (+)
Incentives’ goal is for new mix
of services and inputs to
increase health
2.Health-decreasing
substitution (-)
Incentives can be perverse,
where providers substitute
away from unrewarded, yet
important, dimensions
because they are unobserved
or unmeasurable
3. Increased provider effort (+)
Provide incentives to increase
workers’ effort, where
increased effort could be for
output (LICs) or quality (HICs)
Example (item 3):
•Before P4P: a physician earns
$100,000 salary with effort e1
•After P4P: $90,000 salary plus
bonus $0 to $20,000, with
expected value of $10,000 with
effort e2, where e2 > e1
•Impacts Some workers will quit
and the remaining workers willing
to expand effort e2
P4P address these problems and create behavorial change
through six factors (2)
4. Risk premium costs (-)
Need to compensate provider for taking on risk, i.e., for being
rewarded for factors beyond its control
Risk premium costs decrease health, because less budget
available for health care services
5. Monitoring costs (-)
Monitoring costs decrease health, because less budget
available for health care services
6. Net externalities (+ or -)
Positive or negative effects on health, beyond the explicit P4P
measures
Positive – better governance and information systems
Negative – workers become less team-oriented
Optimal P4P scheme balances 6 factors
Illustration of the effect of provider P4P on health care through six factors
1. Health-Increasing Substitution
Optimal
Better
Health
6. Net Externalities
Total
2. HealthDecreasing
Substitution
Worse
Health
3.
Increased
Provider
Effort
5. Monitoring
Costs
4. Risk Premium
Costs
0%
Increasing Share
30%
Share of Provider Revenue Based on Pay for Performance
This study reviews P4P experience from an implementation
perspective
The objectives are to:
 Better understand the
elements of the design and
implementation of P4P
schemes
 Assess to what extent the
schemes meet their objectives
 Identify factors that contribute
to or limit success
 Generate lessons for low- and
middle-income countries
Schemes from a variety of contexts
Large national
Australia, New
schemes
Zealand, U.K,
Germany,
Turkey
Pilot schemes
feeding into a
national initiative
Small local scheme
part of national
policy agenda
U.S., France,
Korea
Brazil
11
The schemes have a wide range of objectives
Objective
Improve quality of care
Improve coverage of priority services
Counteract the incentives created by
the fee for service payment system
Link an increase in government
resources with increased accountability
Reduce health disparities
Improve the use of data and
information technology
Promote care coordination
Increase provider productivity
Make services more patient-centered
Improve the integration of health teams
Improve the skill mix, recruitment,
retention and morale of providers
AUS
BRZ FRN








NZ
UK US


















12
Incentive structures reflect priorities
Distribution of points in U.K. QOF
Education Coordinated
and training
care
Coverage of
3%
2%
Medicines
priority services
4% management
4%
Practice
management
2%
Patient
communication
0%
Records and
information
about patients
9%
Aged Care
Access
Procedural
3%
3% Teaching
3%
Rural loading
9%
Quality
prescribing
1%
Domestic
Violence
<1%
Patient
experience
11%
Clinical
(655 points)
65%
eHealth
33%
Diabetes,
Asthma and
Cervical
Screening
11%
Practice
Nurse
18%
Source: ANAO 2010.
After-hours
19%
Distribution of payments in Australia PIP
13
Australia “Practice Incentives Program (PIP)”
13 incentive areas
in 3 domains : quality of care, capacity, rural support
Ex: Asthma, Diabetes incentives, Quality prescribing, rural
loading, ehealth…
Basis for reward:
Flat rate for achieving minimum criteria, then per patientequivalent or per-service
Level of reward
Average payment to a practice in 2009-2010 A$57,800 (4 7% of total practice income)
Results
Diabetes: mixed results
Practice nurse incentive: management of chronic
conditions ++
Asthma: positive results
Potential pitfalls
‘P4P a la carte’ : organizational problems
Incentives set too low compared to management and
administrative costs are high
Costly long term investment (with 97% of practices
participating)
Better evaluation needed
14
Overall Conclusions on Pay for Performance
• Can be very costly (PIP in Australia: $3 million spent on the
scheme within 10 years)
• P4P : really a solution in budget-constrained environment?
Concerns on cost-effectiveness compared to other potential
measures.
• Different context between low-middle-high income countries
– Low income countries incentivize productivity (e.g. P4P success in Rwanda)
– High income countries “too much activity” ? Focuses on cost control
• Could be difficult to implement given the political economy and
culture of care // seems more successful when phased-in.
• Evaluation is seldom conducted rigorously and do not provide
countries with tangible evidence on effectiveness.
• have only modest impacts on quality and outcomes, even when
looking at the measured indicators (cf. table)
15
Incentives for health promotion: limited evidence
Cancer screening
(breast, cervical)
Asthma
Diabetes
Hypertension
Vaccination
Countries
Effect?
providing incentive
Australia
Significant increase in screening rates (BR)
Brazil
Modest increase in screening rates (NZ)
New Zealand
Targets met (UK)
U.K.
No improvement (AU; FR)
Australia
Modest increase in completion of treatment cycles (AU)
U.K.
Targets met (UK)
Australia
France
New Zealand
U.K.
France
New Zealand
U.K.
Brazil
France
New Zealand
U.K.
Modest increase in screening and preventive testing and
management (AU; FR; NZ)
Targets met (UK)
Modest improvement (NZ)
Targets met (UK)
No improvement (FR)
Significant increase (NZ—children)
No improvement (FR; NZ--adults)
Targets met (BR; UK)
16
What are the potential pitfalls of P4P?
• Incentives might not work to motivate better performance for
complex tasks.
– Incentives more effective at increasing “output,” e.g.
screening
• Substitution—providers may shift toward activities with
incentives and away from others that have more benefit for
health
• Reduced intrinsic motivation— shift away from the “heart” in
medicine
• “Cream-skimming”--incentive to avoid difficult patients
• May miss the real barriers to improvement--not always related
to incentives
• Provider incentives ignore the role of patients
17
17
Overall Conclusions on Pay for Performance
However,
• Fully assess the impact of introduction of schemes is difficult
• For Germany, evidence shows that P4P may be useful for management
of chronic diseases especially incentivizing preventative interventions
as well as following evidence-based clinical guidelines
• Better monitoring, tracking and evaluation of health provider is
positive in itself.
• P4P schemes can have positive effects on equity, but this typically
requires explicit measures
Improved use of data/IT is critical – Solow Paradox
Sometimes the spillover effect of better data, use of information, and
feedback loop to providers can bring more important result in the
long term.
Also, should think about countries embarking in a long journey
towards developing new payment models, combining monitoring
and evaluation methods
18
Brazil “Programa de Incentivo para a Melhoria do Desempenho na Saude da Familia
(PIMESF)”
6 indicators
addressing specific health gaps in the municipality:
Cervical screening in women between 25 and 59 years old
7 prenatal appointments per pregnant woman
Vaccination coverage
Basis for reward:
“All-or-nothing” payment if all 6 targets are met
Level of reward
flat rate 20% of salaries of team members
Results
• Important positive spillovers, especially on data
reporting, transparency, culture of performance among
health staff
• Very positive: family teams meet on a regular basis to
share progress reports and discuss the targets ->
dissemination of good practices
• Not measured: health outcomes.
Potential pitfalls
• Data are collected from team members routine reporting
• External evaluation lacks appropriate design : impact on
health outcomes not clear
• Targets may be set up too low and payments are
complicated to understand
19
France “Contracts to Improve Individual Practice (CAPI)”
16 indicators
in 3 domains—prevention, chronic disease management, costeffective prescribing
Vaccination rate against flu among 65+ patients
Share of diabetic patients who had an eye exam in past year
Prescription of generics for antibiotics out of total prescription of
antibiotics (number of boxes)
Basis for reward:
Calculation of an achievement rate for each indicator
Level of reward
on average earned EUR 3 000 per physician per year, which accounts
for 3% of average total earnings for a primary care physician
Results
• Process indicators: very positive results: An extra 12 000 diabetic
patients have benefited from HcA1c doses 3 or 4 times during the year
(+4.2 percentage points)
• Cost-containment system: financed through savings from
prescription
• It is worth noting that preventive care achieved smaller
improvements compared to other performance domains.
Potential pitfalls
• CAPIs’ expansion will not be possible without a modification of
collective agreements – deal with a complex environment
• prescription problems: very small improvement given the initial level
• Design of the evaluation : paying for services that would have been
provided anyway?
20
U.K. “Quality and Outcomes Framework (QOF)”
129 indicators
in 4 domains—clinical care, organizational, patient experience, additional
services
Basis for reward:
Targets with maximum point values--a flat-rate paid per point
achieved // Practices accumulate quality points according to
performance up to a maximum of 1,000 points.
Level of reward
The average payment to a GP practice was £74,300 in 2004-05 (30% of
average total earnings) and £126,000 in 2005-06.
Results
• Modest improvements in outcomes for asthma and diabetes
• Recent study of 470,000 British patients with hypertension found no
impact on rates of heart attacks, kidney failure, stroke or death –
Improve health outcomes?
• BUT: good investment in IT: Rates of recording increased for all risk
factors (including those not in QOF)
• Providers use electronic medical records and record patient-level
data directly during the consultation – £30 million for Primary Care
Trusts to upgrade clinical data systems
Potential pitfalls
• A costly scheme
•Since the QOF started, GP practices consistently have achieved >95%
of possible points (range: 88-97%) – paying for what they are asked
for anyway?
• The effect of QOF on patient experience is minimal and research
shows continuity of care has decreased.
• Trend of improvement prior to introduction of QOF
21
Germany : Disease Management Program
5 areas of care
diabetes -type 1 and 2-, breast cancer, asthma, chronic obstructive
pulmonary disease and coronary heart disease
Basis for reward:
Creates a cascade of incentives: prior to 2009 :
from MoH  insurance funds  Doctors and patients
Paying for coordination between different health providers for a
unique patient.
Level of reward
Level of reward depends of region/insurance fund
Results
• Large take-up of DMP : 3.5 million enrollees in Diabetes program
• important impact of DMP in increasing quality of care, in turn
affecting quality of life and life span of people with chronic conditions
(Miksch et al., 2010).
• positive behavioral change of medical staff toward greater
coordination of care, compliance with clinical guidelines developed
with the Ministry of Health and monitoring and evaluation.
Potential pitfalls
• Recent reform: what future for DMPs?
• Very complex organization with insurance funds developing 11 000
individual programs - efficient organization?
• proper evaluation of the program is rendered difficult by fragmented
organization of DMPs
22