financing: a critical reflection Dr. Inke Mathauer Health - - PowerPoint PPT Presentation

• Dr. Inke Mathauer

Health Financing Policy, WHO

SDC health network meeting Morges, 10 April 2014

Performance-based financing: a critical reflection

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Overview

I. Labels, definition, design principles and steps

• II. Arguments in favour and against PBF
• III. Trends in OECD and low- and middle-income countries (LMIC)
• IV. Evidence and country examples
• V. Implementation / institutionalization issues
• VI. Conclusions and policy implications

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Main messages

 Moving from passive to “strategic” purchasing of health services is an important means to improve health system performance and help systems move towards UHC.  “RBF”, “P4P”, “PBF”, etc., are examples of strategic purchasing, and have the potential to be entry points to strengthen the purchasing function of health financing systems  It won’t happen by magic; requires explicit attention to the interaction of any “PBF program” with existing provider payment mechanisms  Key areas for attention are links to public sector financial management, the nature of the agency that will pay providers, information systems, and provider autonomy

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A variety of labels and definitions

"Pay for performance, performance-based contracting, performance- based financing and results-based financing  " [try to] reward the delivery of specific services, i.e. selected aspects

• f defined performance objectives in order to encourage

– higher coverage, – better quality or – improved health outcomes" (WHR 2010)  It's a mechanism by which health care facilities (and their personnel) are, at least partially, remunerated based on "performance"

I.

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Principles of PBF

 The purchaser

– decides which output he wants (objectives) – pays a price for the output

 The provider

– can decide on the input allocation and – keeps and decides about the revenue

 Typically used in combination with one of the basic types of payment

– Often to address limitations of the main provider payment

 Basic premises

– Causes of poor performance can be simplified into indicators and targets – These are amenable to behavior change through financial incentives of the providers

I.

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Monitoring under the output-based contract

 Monitoring mainly consists in observing whether the provider delivers the service (quality and quantity) agreed in the contract.  If monitoring is not done, the provider will

– declare more outputs than what he actually produced, – induce demand that is not necessary, – deliver service of lower quality.

By B. Meesen (2014)

I.

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Design steps

 Define which services to buy  Define performance for each unit and how to evaluate it (indicators)  Design and write contracts  Set fees and determine a payment formula  Design quality checklists  Creation of new organizational bodies at different levels (purchasing agency, verification agent, steering committees…)  Separation of functions (purchasing, provision, verification, governance)

By B. Meesen 2014

I.

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Let's bring RBF/P4P back into health financing policy

 Health financing consists of

– Revenue contribution/collection – Pooling – Purchasing – Benefit design and rationing

 RBF/P4P: an explicit link between purchasing and benefits

– e.g. paying providers for each attended delivery, paying providers for each child immunized, paying providers for achieving certain screening targets, etc. – A means for transforming stated priorities or policies (e.g. free MCH care) into reality through explicit resource allocation incentives

By J. Kutzin 2014

I.

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Arguments in favour of PBF: PBF improves performance and equity

 Output-based payment sets strong incentive to satisfy users  can increase productivity of health workers  fosters community involvement – community actors can be contracted to verify the reality of remunerated outputs  PBF can make "free care" functional  PBF can incorporate different prices to account for remoteness

II.

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Arguments in favour of PBF : PBF as a means to more allocative efficiency

 Implementing PBF requires the steward to identify key health priorities to be « purchased ».

– Preference for high impact interventions.

 Consumers vote with their feet: their health seeking behaviour decisions affect resources received by health facilities;  PBF may allow better involvement of the private sector

II.

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Arguments in favour of PBF : PBF as a means for HF system development

 Moving towards strategic purchasing is a key to building domestic health financing systems and national capacity

– Generation and use of information on provider performance or population health needs for resource allocation decisions

 PBF can change the nature of accountability

– May increase transparency in reporting on input use, while promoting accountability for outputs

By J. Kutzin (2014

II.

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Arguments against PBF Distortions and fragmentation

 Is there an agreed understanding of what is performance? – often seen as a way to increase insufficient salaries, rather than as a way to increase performance  PBF can create disincentives for under-providing other services – Distortions – health workers focus on the more lucrative services and/or patients  Reliability of performance indicator / reporting questioned  May easily lead to fragmentation

II.

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Arguments against PBF PBF doesn't solve the root problems

 Very high administrative costs

– Need for surveillance/verification/monitoring absorbs a lot of human resources

 High design and set up costs  PBF funding may not be sustainable  PBF cannot address gaps in health worker numbers and skills and infrastructure  Often, worst performers cannot improve their infrastructure

II.

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• III. Trends

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OECD countries: Recent developments in provider payment models aim to achieve value for money

Rising burden of chronic diseases and increasing health spending Traditional payment models are inadequate Thus, experimenting with new payment methods to improve the quality of care and coverage of priority services Pay-for-Performance or “P4P”

Total health expenditure as a share of GDP, 1995-2007

Selected OECD countries Source: OECD Health Data 2009.

6 8 10 12 14 16

1995 1997 1999 2001 2003 2005 2007 % GDP United States OECD Switzerland Germany Canada Japan

By C. Cashin (2014)

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Some examples of P4P programs

Program Focus Country Programme Year Program Began Primary Care Australia PIP Practice Incentives Program 1998 Estonia PHC QBS Primary Health Care Quality Bonus System 2005 France ROSP* Payment for Public Health Objectives 2009 Germany DMP Disease Management Programs 2002 New Zealand PHO Performance Program Primary Health Organization Performance Programme 2006 Turkey FM PBC Family Medicine Performance Based Contracting Scheme 2003 U.K. QOF Quality and Outcomes Framework 2004 U.S.-California IHA* Integrated Healthcare Association Physician Incentive Program 2002

Hospitals Brazil--Sao Paolo OSS** Social Organizations in Health 1998 Korea VIP Value Incentive Programme 2007 U.S.- Maryland MHAC Maryland Hospital Acquired Conditions Program 2010 U.S. National HQID Hospital Quality Incentive Demonstration 2004

Source: Cashin et al. (2014), P4P evaluation

III.

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PBF programmes in Africa

Source: Fritsche et al. (2014), PBF toolkit, WB

III.

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PBF in low-and middle-income countries

 Earlier: performance based contracting in Haiti and Cambodia  Beyond Africa: Afghanistan, the Kyrgyz Republic, Lao People’s Democratic Republic, Tajikistan, Vietnam.  PBF programs in LMIC and OECD countries largely differ in coverage for essential health services, quality of services, health worker coping strategies, size of output budget, institutional arrangements-  Often run as a pilot project with donor funding  Heavy focus on maternity and specific child care services

III.

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• IV. Some evidence

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Country example: PBF in Burundi

 Increased opening hours  Reduced informal payments  Rebalanced health workers' dissatisfaction  Design of inter-provincial equity bonuses – Such that less well-equipped facilities will also benefit – Criteria: poverty incidence, population, number of health facilities  Challenges: – Reimbursing providers in a timely manner – Containing costs

IV.

Fritsche et al. (2014)

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Country example: PBF in Sierra Leone

 In 2011, nationwide scale up of PBF  High political support and MOH leadership  However, results rather disappointing  Reasons: – small PBF budget – separation of functions rather weak – no third-party counter-verification mechanism – no civil society involvement at any level of governance – no technical assistance for the technical support functions

Fritsche et al. (2014)

IV.

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 Very few programs are evaluated  Overall the P4P programs

– are typically costly (even when payments are low) – show only modest impacts on quality measures, no impact on

• utcomes, mixed results for efficiency and equity

 BUT, most programs contribute to:

– Greater focus on health system objectives – Better generation and use of information – More accountability

i.e. more effective health sector governance and strategic health purchasing

Evidence from OECD countries (P4H evaluation, edited by Cashin et al. 2014)

IV.

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Evidence from LMIC

 Improved performance, increased numbers in – antenatal visits – the proportion of women delivering in a health facility – child immunization coverage  Inconclusive evidence for outpatient care  Error rates in quantity verification usually decline after approximately two years of verification  Promising results need to be regarded with caution – limited evidence and less than robust evaluation studies – Many confounding factors

IV.

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Error rates in quantity verification decline after approximately two years of verification

• Argentina: errors with beneficiary

enrollment declined from 20% to 1%. Also cross-learning (see graph)

• Afghanistan: errors in facility level

reporting declined from 17% to 5% between 2010 and 2012;

• Rwanda: size of error for over-

reporting declined from >100% to ~7%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2004 2005 2006 2007 2008 2009 2010 2011 2012

% Records Rejected

Phase 1 Provinces Phase 2 Provinces

Argentina Beneficiary enrollment records rejected Phase 1 & 2

IV.

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Key implementation/ institutionalization issues/questions

 Strategic purchasing (incl RBF) is information-intensive

– How to streamline, avoiding separate forms, separate reporting,

• etc. for the performance elements?

– Integration requires not only thinking about the P4P elements but the entire information system that serves purchasing

 Verification process

– Think through the balance between cost and effectiveness – Can the country sustain what appear to be very heavy processes in some “projects”?

V.

By J. Kutzin 2014

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Key implementation/ institutionalization issues/questions (cont.)

 Alignment with public sector financial management (PFM) needed  As sources shift from donor to budget (or donor on- budget), PFM accommodation becomes critical

– PFM system needs to be sufficiently flexible to enable budget revenues to be spend on either specific services or for services provided to specific populations – What to do if PFM is based on line-item budgets or only allows to pay for buildings and inputs? – Can private providers be paid with public money?

V.

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Key implementation/ institutionalization issues/questions (cont.)

 Need to match/target health budget funds to priority services (e.g. MCH) and/or populations (e.g. poor), so that defined priorities can be realized (purchased) in practice

– Can it be done within the core PFM system (e.g. MOH)? – If not, do you need an agency outside that system, channel funds to it, and have it pay in these new ways (e.g. MHIF)?

 Who can be the purchaser? How many? => Purchasing agency needs

• some authority/autonomy to match its priorities with

budget/payment mechanisms,

• to be accountable for good financial systems & processes

V.

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Key implementation/ institutionalization issues/questions (cont.)

 How to integrate with HMIS data?  Institutional and organizational requirements need to be in place: – Is there sufficient infrastructure and capacity (data, verification teams) to implement P4P effectively?  Will existing problems (administrative burden, transparency, gaming) be exacerbated or improved?  What will happen to poor performers and the populations served?  How to finance health facilities according to their needs and constraints NOT ONLY according to their performance?

V.

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At the end: Some critical questions

 Do the diagnostics--what are the real barriers to performance improvement? Can they be resolved in other ways?  Cost-effectiveness: are the improved levels of performance worth the additional payments to achieve them?  Are there more cost-effective ways to achieve the same

• utcomes?

VI.

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Summary message

 More evidence on broader impacts is needed  PBF is much more than a provider payment mechanism. It offers an

• pportunity for wider health system reforms

 Yet, it is not a magic bullet.  Some performance aspects cannot be contracted (not verifiable)  There are risks and perverse effects that need to be managed  Classical support and other payment mechanisms remain crucial (also health workers’ intrinsic desire to do a good job)

VI.

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Policy implications

 As with health insurance schemes, think from scheme to system with PBF  PBF/RBF should not be run like a "scheme" or "project", but as a step in the process of moving systems towards more strategic purchasing  Requires thinking about how to incorporate this approach within overall health financing system

VI.

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Thank you very much Questions? Comments!

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Acknowledgement

This presentation draws on presentation material from:  Joe Kutzin (WHO Geneva)  Cheryl Cashin (R4D)  Bruno Meesen (University of Antwerp)  Thorsten Behrendt provided research assistance on country examples

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References

World Health Organization (2010). World Health Report. Health systems financing: The path towards universal health coverage, Geneva: WHO. Cashin C. et al. (eds) (2014): Paying For Performance in Healthcare: Implications for health system performance and accountability, OECD. Fritsche G. et al. (2014). PBF Toolkit. Washington D.C.: World Bank