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Selection and Payment of Health Care Providers

Flagship Course on Health System Strengthening in Africa

Kigali, June 24th, 2010

Driss Zine-Eddine El-Idriss, HSO Hub/World Bank

[Special thanks to HS20-20]

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ObjectivesUnderstand 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.

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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]

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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 ...

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Incentives: the heart of the system

Providers Beneficiaries

Purchaser (insurer)

Incentives

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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.

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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

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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

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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)

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Choice of Providers• Impacts (tradeoffs) of decisions on provider

choice– Beneficiary satisfaction– Cost and efficiency– Provider income– Quality/appropriateness of care

Quality of Care

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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…

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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

careo Balance of PHC and specialist professionals in networko Beneficiary complaint resolution processo Financial incentive for appropriate number, type and

location of careo Compliance with clinical guidelines

o Example; Clinical care pathways (CCP) for hospital payments o Require participation in quality assurance programo Termination from network and other penalties

Provider Payment Modalities• Typology:– Fee-for-service– Capitation– Line item budgets– Per-diem– Case-based payments– Global budget– Performance-based payments (P4P)

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Many variations on each (and this list is not exhaustive)• Can get extremely complex• Politics and influence will always play a part

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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

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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

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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

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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

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PPM FeaturesModalities Methods Flexibility in

resource useFinancial Risk

Line Item Budget Retrospective & Prospective

-- Payer: ModerateProvider: Mod.

Global Budget Prospective + Pay: ModerateProv.: High

Capitation Prospective + Pay: ModerateProv.: High

Per case Prospective + Pay: ModerateProv.: Moderate

Per Diem Prospective + Pay: Fairly HighProv.: Moderate

Fee-For-Service Retrospective + Pay: HighProv.: Moderate

Adapted from: PHR (1998)

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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

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Requirements

Source: PHR

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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

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Payment modalities & Providers’ behavior

ModalitiesProviders 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

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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?

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Thank you