Building bridges between financing and quality Dr. Madeleine Valera WHO-WPRO

04.14.10 Health Financing Summit

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

admissions No. of adverse events

Adverse event rate (%)

1984 30195 1133 3.8

1992 14179 2353 16.6

1992 1014 119 11.7

1998 1097 176 9.0

7

How much pays for Medical Error, Injuries, Death

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

treatment:

Whittaker PPT

98,000 people are

injured with an estimated

12,000 deaths arising from these errors

At a cost of $33 billion

Only 2 to 3% of major errors

are reported through

incident reporting systems

$ %

The US estimates that:

15.3% appendectomies

were assessed as unnecessary,

costing $740M annually

Cost to a hospital of each ADE is $2,000 per event and about

$3.8M per hospital per year

($1M preventable)

One hospital pressure ulcer in average cost

was $37,288 (nationally a cost of $2.2B to $3.6B)

The UK estimates that:

Hospital acquired infection cost

$1.6B a year (15-30%

preventable)

Costs of ADEs are £0.6B

($922M)

25% of radiological

procedures are not necessary

Flum and Koepsell

Ovretveit J, 2009

Whittaker PPT

10% of hospital

patients suffer an adverse

event

16.6% of hospital

patients suffer an adverse

event in Australia

15% of Errors are

Due to Patient

Handovers (US study)

Adverse Events in Health Care

About 100,000 hospital deaths

in the US every year

are caused by medical

error

5-10% of hospitalized

patients acquire HAI (up to

37% in ICUs)

5 million HAI cases are Estimated to

Occur in Europe per

year HAI

100,000 cases of HAI

in the UK lead

to 5,000 deaths a year

Unsafe Surgery:

234 million cases globally/year;

7 million complications, and

1 million deaths HAI HAI 1.5 million

are harmed and thousands are

killed in the US/ year due to medication

errors RX

67% of patients’ medication

histories have errors RX

3 step process that will ultimately lead patients to say

no to excessive treatments more often:

Leonhardt

Providing patients with

access to information

about the most effective

treatments.

Arming each patient with

all of the facts about a given treatment. This sometimes results in

patients opting for a less aggressive, less risky (and

less costly) course of action.

Tweaking the system so it

rewards the quality of care rather than the quantity of

care.

NO!

12

3

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)

Recipients (Households, Service Providers [Facilities, Health Workers], Health Programs, Local Government,

National Government)

Money Goods

Other rewards Results

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?

Eichler et al on P4P

Strengthening capacity to provide services

•  Catalyzes changes that strengthen management. •  Improves information systems and the use of information for decisions. •  Motivates health worker

Improving quality •  Preventive care services utilized by more people

•  Rewards correct diagnosis and treatment

Improving efficiency •  Better use of inputs to achieve health results

Increasing utilization •  Overcoming financial and physical barriers to access that poor households face

•  Overcoming information and cultural barriers that inhibit utilization

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 discrete health-related actions •  e.g. pay pregnant women who deliver at health facility

Payment for a series of health-related actions taken by a household •  e.g. conditional cash transfer programs that provide income support to families that receive a package of health and other interventions

Payment for long-term treatment of chronic conditions •  e.g. patients are compensated or provided food packages when they present to take medicines

Payment for evidence of behavior change •  e.g. drug-free, quit smoking, lose weight •  Payment conditional on results 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

•  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

Key points to ponder

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