Provider Payment Implementation Issues Provider Payment Implementation Issues Bangkok February 2008

2 Issues in Implementation 1.W hich One? Getting Started… 2.A cceptable Levels of Risk 3.H ow Much Time and Information? 4.E nabling Environment 5.“ System-Specific” Issues –M–M–M–Multiple Payers –A–A–A–Across Levels of Care

3 Issues in Implementation 1.Which One? Getting Started… 2.Acceptable Levels of Risk 3.How Much Time and Information? 4.“Enablers” ??? 5.“System-Specific” Issues –Multiple Payers –Across Levels of Care

4 What to Recommend to the Minister ??

“The Whole Point of Provider Payment Systems is to Change Behavior ”

6 What is the Problem? Define/Clarify Policy Objectives Efficiency? Equity? Quality? Access? - Each Method has Advantages/Disadvantages !

7 FEE-FOR-SERVICE (Cambodia, Philippines) ACCESS/ DEMAND QUALITY COST-CONTAINMENT + -

8 EPISODE-BASED(Thailand) ACCESS QUALITY COST-CONTAINMENT + -

9 CAPITATION (e.g., Thailand) ACCESS QUALITY COST-CONTAINMENT + -

10 Getting Started 1.Start…even if relatively simple 2.Always…always…always…do an impact analysis providers, patients 3.Don’t Be Afraid to Change Policy Objectives Change over Time 4.For the Purchaser: Stay ahead of the provider/provider responses

11 “Winners and Losers” Analysis

12 Getting Started 1.Start…even if relatively simple 2.Always…always…always…do an impact analysis providers, patients 3.Don’t be afraid to change Policy objectives change over time 4.For the Purchaser: Stay ahead of the provider/provider responses

13 Some Countries Change…and Change…and Fee for Service 60:40 Mix of Capitation/FFS Capitation Slovakia Why: Policy Objectives Kept Changing

14 Getting Started 1.Start…even if relatively simple 2.Always…always…always…do an impact analysis providers, patients 3.Don’t be afraid to change Policy objectives change over time 4.For the Purchaser: Stay ahead of the provider/provider responses (gaming)

15 Issues in Implementation 1.Which One? Getting Started… 2.Acceptable Levels of Risk 3.How Much Time and Information? 4.Enabling Environment 5.“System-Specific” Issues –Multiple Payers –Across Levels of Care

16 Who Bears Risk ? PAYER Fee-For Service Capitation

17 Who Bears Risk ? PROVIDER Fee-For Service Capitation

18 Who Bears Risk ? PROVIDER PAYER Fee-For Service (China) Capitation (Thailand)

19 Risk and a “Hot Topic: P4P UK: Results from 1 st Year of P4P Providers: incremental revenue from successful performance without large financial risks Cost to payer (NHS) was considerably more than expected Alternatively, make it “budget neutral” but shift risk to provider –Hospitals performing in top decile receive a 2% increment in payments, –Hospitals in second decile receive a 1% increment –Hospitals classified in lowest two deciles are liable for a 1 to 2% financial penalty… Schneider, 2007

20 Issues in Implementation 1.Which One? Where to Start… 2.Acceptable Levels of Risk 3.How Much Time and Information? 4.Enabling Environment 5.“System-Specific” Issues –Multiple Payers –Across Levels of Care

21 Alternative Payment Systems Require Different Information Payment System Salary Fixed budgets Fee for each service Per diem payment in hospitals Capitation Episode based, eg DRGs Pay for Performance Information Needs Staff characteristics Budgets and case mix Classification of services Budgets and number of days Population characteristics Diagnoses, treatments, costs, demographics Services/performance characteristics Adapted from Schneider, 2007

22 Easy: Per Diem (Hospitals) Payment Policy = Last Year’s Total Budget for Hospitals Last Year’s Number of Days

23 Harder: Case-Mix Adjusted Per Admission Case-MixGroupings Statistical Teams Collect Financial, Capacity, and Utilization Data Allocate Costs by Department Allocate Costs by Department Form Groupings Refine Groupings Clinical Teams Relative Weights Assess Impacts 1 2 Estimate Costs Per Category

24 With Social Health Insurance? Complex Activities & Takes Time… Collection Pooling Benefits Package Contracts Payment Systems MIS systems Claims Processing Quality Assurance Regulations Forecasting …

25 Issues in Implementation 1.Which One? Where to Start… 2.Acceptable Levels of Risk 3.How Much Time and Information? 4.Enabling Environment 5.“System-Specific” Issues –Multiple Payers –Across Levels of Care

Don’t Implement Alone, but with... Payment Design Quality Assurance/M&E Provider Autonomy/Civil Service Reforms Management/ Information Systems

27 Quality…and Overall Impacts Provider Level: Identify Pressure Points for Bad Care –Examples of Hospital DRGs (last session) Too Many Easy Admissions ALOS too short Discharge Placement Appropriate? Broader System Level: Evaluation /Monitoring –Costs/Quality/Access Pilot? Facilities, Practice Settings, geographic areas Or Nationwide?

28 Example of Hungary: No Savings with DRGs ( Thailand better: Global Cap )

29 Provider Autonomy and Organization Reforms How Far…? Primary Care Eastern Europe/Egypt/Iran/Lebanon: freestanding practices and independent contractors Hospitals Eastern Europe/CIS: Czech Rep, Estonia, Latvia, Lithuania, Kazakhstan, Hungary, Armenia Latin America: Argentina, Brazil, Chile, Colombia, El Salvador, Nicaragua, Peru, Uruguay and Venezuela Dimensions: “At Risk” arrangements, Civil Service Reforms, Contracting, Purchase Equipment? Compete for Patients, …

30 Issues in Implementation 1.Which One? Where to Start… 2.Acceptable Levels of Risk 3.How Much Time and Information? 4.Enabling Environment 5.“System-Specific” Issues –Multiple Payers –Across Levels of Care

31 Households/Employers Ministry of Finance Army MOH COOP Private Insurance Mutual MOH Military Charities & Donors SS GS ISF NSSF MOSA Private Sector Lebanon: Multiple Payers

32 Households/Employers Ministry of Finance Army MOH COOP Private Insurance Mutual MOH Military Charities & Donors SS GS ISF NSSF MOSA Private Sector Lebanon: Multiple Payers

33 What Happens When Multiple Payers? Price Volume 5

34 Need to Harmonize Rates and Incentives…Across Payers Price Volume/Access 5 7

35 2 nd Issue: Mixed Incentives: Thailand UCCSMBSSSS Contribution 2001 NHSO MOF ComptrollerSSO Capitation DRG FFS Capitation DRG Public Private Providers 48 mil.7 mil. Insurees, Right holders TAX 1990 Services >50 yrs.

36 Cost Increases: Civil Service Scheme

37 Get the Mix of Incentives Correct Across levels of Care Croatia: Failed Program to Increase Primary Care

Thank You!