Provider PaymentProvider Payment

Implementation IssuesImplementation Issues

Bangkok February 2008

2

Issues in ImplementationIssues in Implementation

1.1. Which One? Getting Started…Which One? Getting Started…

2.2. Acceptable Levels of RiskAcceptable Levels of Risk

3.3. How Much Time and Information?How Much Time and Information?

4.4. Enabling EnvironmentEnabling Environment

5.5. ““System-Specific” IssuesSystem-Specific” Issues– Multiple PayersMultiple Payers

– Across Levels of CareAcross Levels of Care

3

Issues in ImplementationIssues in Implementation

1.1. Which One? Getting Started…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 What to Recommend to the Minister ??the Minister ??

““The Whole Point The Whole Point of Provider of Provider Payment SystemsPayment Systems is to is to

Change BehaviorChange Behavior ”

6

What is the Problem?What is the Problem?

Define/Clarify Policy ObjectivesDefine/Clarify Policy Objectives

Efficiency? Equity?Quality? Access?- Each Method has Advantages/Disadvantages !

7

FEE-FOR-SERVICEFEE-FOR-SERVICE(Cambodia, Philippines)(Cambodia, Philippines)

ACCESS/DEMAND

QUALITY

COST-CONTAINMENT

+

-

8

EPISODE-BASEDEPISODE-BASED(Thailand)(Thailand)

ACCESSQUALITY

COST-CONTAINMENT

+

-

9

CAPITATIONCAPITATION(e.g., Thailand)(e.g., Thailand)

ACCESSQUALITY

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 ChangePolicy Objectives Change over Time

4. For the Purchaser: Stay ahead of the provider/provider responses

11

“Winners and Losers” Analysis

-8

-6

-4

-2

0

2

4

6

Year 1

hospital 1hospital 2hospital 3hospital 4hospital 5hospital 6hospital 7hospital 8hospital 9hospital 10

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 changePolicy objectives change over time

4. For the Purchaser: Stay ahead of the provider/provider responses

13

Some Countries Change…and Change…Some Countries Change…and Change…andand

Fee for Service

60:40 Mix of Capitation/FFSCapitation

Slovakia

1993 1994 1998

Why: Policy Objectives Kept ChangingWhy: 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 changePolicy objectives change over time

4. For the Purchaser: Stay ahead of the provider/provider responses (gaming)

15

Issues in ImplementationIssues in Implementation

1.1. Which One? Getting Started…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 Who Bears RiskRisk ? ?

PAYER

Fee-For Service Capitation

17

Who Bears Who Bears RiskRisk ? ?

PROVIDER

Fee-For Service Capitation

18

Who Bears Who Bears RiskRisk ? ?

PROVIDER

PAYER

Fee-For Service

(China)

Capitation

(Thailand)

19

Risk and a “Hot Topic: P4PRisk and a “Hot Topic: P4PUK: Results from 1UK: Results from 1stst Year of P4P 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 ImplementationIssues in Implementation

1.1. Which One? Where to Start…Which One? Where to Start…

2.2. Acceptable Levels of RiskAcceptable 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 Alternative Payment Systems Require Different InformationRequire 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)Easy: Per Diem (Hospitals)

Payment Policy =Payment Policy =

Last Year’s Total Budget for HospitalsLast Year’s Total Budget for HospitalsLast Year’s Number of DaysLast Year’s Number of Days

23

Harder: Case-Mix Adjusted Per Harder: Case-Mix Adjusted Per AdmissionAdmission

Case-MixCase-MixGroupingsGroupings

StatisticalTeams

Collect Financial,Capacity,

and Utilization Data

Allocate Costsby Department

Form Groupings

RefineGroupings

ClinicalTeams

RelativeWeights Assess Impacts

1

2Estimate Costs Per Category

24

With Social Health Insurance?With Social Health Insurance?Complex Activities & Takes Time…Complex Activities & Takes Time…

• Collection• Pooling• Benefits Package• Contracts• Payment Systems• MIS systems• Claims Processing• Quality Assurance• Regulations• Forecasting• …

0

2

4

6

8

10

12

14

16

Years to FullyImplement

EstoniaRomaniaKyrgz AlbaniaRussia

25

Issues in ImplementationIssues 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,Don’t Implement Alone,but with...but with...

Payment Design Quality Assurance/M&E

Provider Autonomy/Civil Service Reforms

Management/ Information

Systems

27

Quality…and Overall ImpactsQuality…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:Example of Hungary:No Savings with DRGsNo Savings with DRGs

0

5

10

15

20

25

1980 1985 1990 1995 1997

Beds per 1,000Discharges per 100ALOS

(Thailand better: Global Cap)

29

Provider Autonomy and Provider Autonomy and Organization ReformsOrganization Reforms

How Far…?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 ImplementationIssues in Implementation

1.1. Which One? Where to Start…Which One? Where to Start…

2.2. Acceptable Levels of RiskAcceptable Levels of Risk

3.3. How Much Time and Information?How Much Time and Information?

4.4. Enabling EnvironmentEnabling Environment

5. “System-Specific” Issues– Multiple Payers

– Across Levels of Care

31

Households/Employers

Ministry of Finance

ArmyMOH

COOP PrivateInsurance Mutual

MOHMilitary

Charities & Donors

SS GS ISF NSSF MOSA

Private Sector

Lebanon: Multiple PayersLebanon: Multiple Payers

32

Households/Employers

Ministry of Finance

ArmyMOH

COOP PrivateInsurance Mutual

MOHMilitary

Charities & Donors

SS GS ISF NSSF MOSA

Private Sector

Lebanon: Multiple PayersLebanon: Multiple Payers

33

What Happens When Multiple Payers?

Price

Volume

5

34

Need to Harmonize Ratesand Incentives…Across Payers

Price

Volume/Access

5

7

35

2nd Issue: Mixed Incentives: Thailand

UC CSMBS SSSSSSContribution

2001

NHSO MOF Comptroller SSOSSO

CapitationDRG FFS

CapitationDRG

Public Private Providers

48 mil. 7 mil. 7 mil.

Insurees, Insurees,

Right holderRight holderss

TAX1990

Services

>50 yrs.

36

Cost Increases: Civil Service SchemeCost Increases: Civil Service Scheme

37

Get the Mix of Incentives CorrectGet the Mix of Incentives Correct

Across levels of CareAcross levels of CareCroatia:Croatia: Failed Program to Increase Primary CareFailed Program to Increase Primary Care

0

2

4

6

8

10

12

14

16

1992 1993 1994 1995 1996 1997

Admissions Per 1,000

Thank You!Thank You!

jlangenbrunner@worldbank.org