Selection and Payment of Health Care Providers Flagship Course on Health System Strengthening in Africa Kigali, June 24 th, 2010 Driss Zine-Eddine El-Idriss, HSO Hub/World Bank [Special thanks to HS20-20] 1

2 Objectives Understand and apprehend: goals of schemes in selecting and paying providers; how to lay the groundwork for selecting and engaging health care providers; key factors in the design of rational payment systems; key aspects to strengthening service delivery to assure good quality and efficient health care provision.

Some preliminary questions Questions for Health Insurers as purchasers: For whom should I buy health services? [Population coverage; Targeted groups] What should/could I buy? [Benefits package] From whom should I buy? [Selection of Health Providers] How should I buy? [Contracting & Providers Payment Mechanisms] 3

Purchasing Passive purchasing – No selectivity of providers – No quality control and monitoring – Use of norms to set fees and related concerns Strategic purchasing – Performance-based model – Contestable contracts – Ongoing quality control and monitoring... 4

Incentives: the heart of the system Providers Beneficiaries Purchaser (insurer) Incentives 5

6 Aligning Goals with Selection and Payment of Providers Payment systems create incentives for providers and patients/beneficiaries Align health insurance policy goals with choices of providers and payment methods Policy goals may include: Access, quality, cost containment, equity, preventive vs curative care, simplicity, prevention of fraudulent behavior etc.

7 Understand the Offer/Supply Understand the supply of health care providers – Provider type, number and location relative to target population and benefits package Health insurance schemes require adequate provider networks – HI schemes can promote but usually cannot create the desired mix and numbers of providers Map providers to service areas

8 Understand the Offer/Supply Compare mapping to goals, benefits, target populations – Make adjustments as necessary Either in goals, benefits, target populations or in pre- requisites to implementing scheme to create adequate network Bonus: mapping helps in your negotiations with insurance companies etc., to ensure they contract with adequate provider network

9 Choice of Providers Choice of providers is often important to beneficiaries – Must be balanced with health insurance goals and realities Types of choices: – Public vs. private – Choice among similar specialties – Generalists vs. specialists (gatekeepers?) – Physicians Vs. other health care workers – Types of hospitals (clinics, secondary, tertiary, ER) – In network vs. out-of-network (often not option in developing countries)

10 Choice of Providers Impacts (tradeoffs) of decisions on provider choice – Beneficiary satisfaction – Cost and efficiency – Provider income – Quality/appropriateness of care

Quality of Care 11 Provider contracting and payments are not primary determinants of quality but can have a significant impact – Cross element point: Health insurance is not a panacea for what ails a health care system – But can help to address some system issues such as access, quality, equity…

Payment & contracting can affect quality Ways that selection, contracting and payment can affect quality: Require accreditation and/or Quality Assurance Align physician and hospital incentives with appropriate care o Balance of PHC and specialist professionals in network o Beneficiary complaint resolution process o Financial incentive for appropriate number, type and location of care o Compliance with clinical guidelines o Example; Clinical care pathways (CCP) for hospital payments o Require participation in quality assurance program o Termination from network and other penalties 12

Provider Payment Modalities Typology: – Fee-for-service – Capitation – Line item budgets – Per-diem – Case-based payments – Global budget – Performance-based payments (P4P) 13 Many variations on each (and this list is not exhaustive) Can get extremely complex Politics and influence will always play a part

14 Provider Payment Modalities Fee-for-service Payment is made for each service provided Many variations on FFS payment methodology Capitation Fix amount per member (or sometime group) per month/year for specified basket of services Most common for PHC

15 Provider Payment Modalities Line-item budget (hospitals and clinics) – Based on inputs (number of beds, physicians, health workers, buildings etc.), rather than outputs (e.g., services provided) – Common in former socialist countries and public facilities – Can be adjusted to take some measures of output into account Per-diem (hospitals) – Fix payment for each day patient is in hospital (per bed-day) – Can be case-mix adjusted and have limits by diagnosis

16 Provider Payment Modalities Case-based payment (hospitals) – Fixed payment for a case based on diagnosis (or variation) – Many types have been developed (e.g. diagnostic- related groups), – Adjustments for outliers, hospital case-mix – Complex to implement – Data requirements, coding, training, groupers, upcoding

17 Provider Payment Modalities Global Budget Fixed maximum expenditure for basket of services Can be based on factors such as: Health care needs; objective target (e.g., % GDP) etc. – Budgets usually set by governments (e.g. Canada single payer, German point system) – Enforcement is an issue Performance-based payments (P4P or value-based purchasing) Links payments to pre-determined result or output Can link to positive results or decreasing negative results (e.g., medical errors) Questions from providers on appropriateness of quality measures

PPM Features ModalitiesMethodsFlexibility in resource use Financial Risk Line Item BudgetRetrospective & Prospective --Payer: Moderate Provider: Mod. Global BudgetProspective+Pay: Moderate Prov.: High CapitationProspective+Pay: Moderate Prov.: High Per caseProspective+Pay: Moderate Prov.: Moderate Per DiemProspective+Pay: Fairly High Prov.: Moderate Fee-For-ServiceRetrospective+Pay: High Prov.: Moderate Adapted from: PHR (1998) 18

19 Operational & Institutional Constraints Provider selection systems can range from simple to very complex More complex strategies have tried to align various policy goals and incentives Need to carefully consider Data and information available to support various payment methods Regulations and requirements (e.g., use of ICD-10 codes) Information technology available: groupers, HMIS; Automation available at hospitals, clinics group practices Human resource capacity Training requirements

Requirements Source: PHR 20

21 Provider Contracts Provider contracts must: Conform to legal and regulatory requirements of the jurisdiction Cover essential elements clearly: Covered services Payment rate and terms Dispute resolution Performance incentives; Indemnification and liabilities Administrative procedures (forms, billings) Both parties’ rights

Payment modalities & Providers’ behavior Modalities Providers behavior Prevent health problems Deliver services Respond to legitimate expectations (pop.) Contain cost Line Item Budget+/---+/-+++ Global Budget++--+/-+++ Capitation (with competition) Diagnostic related payment +/-++ Fee-For-Service+/ Effect: +++ very positive; ++ some positive; +/- little or variable; -- some negative; --- very negative Source: WHO 22

23 Optional Exercise How do insurers determine the adequacy of the providers’ network in your country? What kinds of PPM are used in your country? What are incentives in each PPM? Is it easy to move from one PPM to another? Is it relevant to combine multiple PPM?

Thank you 24