Funding primary care providers – the how, why and what for. Richard De Abreu Lourenço CHERE, UTS

Overview  The status quo  Options for funding providers  The right system for the right effect  What patients think 2

The Status Quo 3 ABS Health Survey, % of Australians visit the GP

The Status Quo  Medicare funding Transactional based funding, focused on the occasion of service. Historical models of (acute) care. “One size fits all” in terms of physicians and patients. Has achieved high coverage, and patient acceptance. 4

Options for Funding Providers  Provider payments need to: Reimburse activities performed (effort and reward). Provide incentives to motivate desired activities (eg. immunisation of children, diabetes care)  Are some payment methods better at these than others? 5

Core Funding Elements 6  Fee-for-service: Paid for services delivered (limits scope). Payments based on the type of service, rather than the type of patient.  Salary: Employed/contracted to provide a service, but payment not necessarily linked to throughput.

Core Funding Elements 7  Capitation: Funding linked to a pool of patients, not services already provided. Patients linked to specific providers. Avoid “cream-skimming” - use of risk rating to take account of patient type and service needs.

Hybrid systems.. 8  Blended payments: Combine FFS/capitation/salary into the one system eg. Episode of care payments, capitation with FFS carve outs. Potential to get the best out of each payment system. Administratively challenging for payers, physicians, patients.

Hybrid systems.. 9  Pay-for-performance: Financial incentives to target desired activity. Can be powerful, but challenging: o Process vs outcome o Attributing observed behaviour o Choosing the right outcomes o Measuring activity and outcomes

The impact of payment systems.. 10 VolumeQualityReferral rateTimeCost FFS Incentive for high throughput Unclear Disincentive to refer to other practitioners Incentive to reduce time with patients Leads to higher costs for the system Salaries Potential to restrict throughput Unclear Promotes referrals and collaboration Promotes increased time with patients Leads to lower costs for the system CapitationPotential to restrict throughput UnclearPromotes referrals and collaboration Promotes increased time with patients Promotes cost containment

The impact of payment systems…  There are trade-offs in how the different payment systems impact on behaviour and outcomes. Balance increased throughput and service volume against system cost, collaboration and patient interaction. 11

Possible options  Offer more than one payment system within Medicare; eg. allow patients with chronic conditions or in rural/remote areas to opt into capitation systems.  Expand FFS to include new service types: e-services, remote monitoring etc.  Consider service re-distribution and coordination – up and downstream. 12

What do patients think?  Surveyed 2,500 patients.  Patients claim to be loyal: 89% usually go to the same practice. 80% usually see the same GP.  However, 28% went to more than one practice over the last 12 months. 13

What do patients think? 14 What were the reasons you went to more than one practice?

What do patients think?  71% of patients were bulk- billed, remainder had some co-payment.  One-third of patients reported not going to the GP when they needed to. 15

What do patients think? 16 For those that didn’t go to the GP: what were the reasons you didn’t go?

What do patients think?  Patient feedback patients suggests capitation might meet with resistance by limiting choice.  Co-payments and added charges have the potential to reduce utilisation due to income effects. This is problematic as they disproportionately affect lower income groups and those with chronic health issues. 17

Where to from here?  Importing solutions is attractive (but ….): Concierge doctors; PCMH; personal health budgets.  Need to take a considered approach: What is happening now – are we performing better than we think? Where do we want to be? How do we get there – new technologies and a burgeoning supply of health care providers. 18

Disclosure The research reported on this website is from REFinE, a Centre for Research Excellence under the Australian Primary Health Care Research Institute, which is supported by a grant from the Commonwealth of Australia as represented by the Department of Health and Ageing. The information and opinions contained in it do not necessarily reflect the views or policy of the Australian Primary Health Care Research Institute or the Commonwealth of Australia (or the Department of Health and Ageing). Graphics from PresenterMedia. 19