provider paymentprovider payment which one? how do you implement

Provider PaymentProvider PaymentProvider PaymentProvider Payment

Which One?Which One?How Do You Implement?How Do You Implement?How Do You Implement?How Do You Implement?

MoscowApril 2011

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

11 Whi h O ? G tti St t dWhi h O ? G tti St t d1.1. Which One? Getting Started…Which One? Getting Started…

22 Acceptable Levels of RiskAcceptable Levels of Risk2.2. 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“System--Specific” IssuesSpecific” IssuesM lti l PM lti l P–– Multiple PayersMultiple Payers

–– Across Levels of CareAcross Levels of Care2

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

11 Whi h O ? G tti St t dWhi h O ? G tti St t d1.1. Which One? Getting Started…Which One? Getting Started…

2 Acceptable Levels of Risk2. Acceptable Levels of Risk

3. How Much Time and Information?

4. “Enablers” ???

5. “System-Specific” IssuesM lti l P– Multiple Payers

– Across Levels of Care3

What to Recommend to What to Recommend to the Minister ??the Minister ??

4

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

Change BehaviorChange Behavior ”Change BehaviorChange Behavior ”

Change...Change...In the Way Providers OperateIn the Way Providers OperateChange...Change...In the Way Providers Operate In the Way Providers Operate and Manage…to remain financially and Manage…to remain financially

viableviable while achieving policywhile achieving policyviableviable …while achieving policy while achieving policy objectivesobjectives

Change the Mix of StaffAdd/Remove EquipmentAdd/Remove EquipmentAdd/Remove ServicesCh T t t S tti (I ti t VChange Treatment Setting (Inpatient Vs.

Outpatient)

6 Improve Performance

What is the Problem?What is the Problem?

Define/Clarify Policy ObjectivesDefine/Clarify Policy Objectives

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

7

Episode-Based/DRGs Global BudgetsPay Level

CapitationPay Level

UnitFee for Service8

Unit

FEEFEE--FORFOR--SERVICESERVICEFEEFEE--FORFOR--SERVICESERVICE(US, Canada, parts of Europe)(US, Canada, parts of Europe)

+

ACCESS/DEMAND

QUALITY-

9COST-CONTAINMENT

EPISODEEPISODE BASEDBASEDEPISODEEPISODE--BASEDBASED(Europe, US, (Europe, US, KyrgzstanKyrgzstan))pp y gy g

+

ACCESS

COST-CONTAINMENT-

10

ACCESSQUALITY

CAPITATIONCAPITATIONCAPITATIONCAPITATION(e.g., Parts of US, Canada, Europe)(e.g., Parts of US, Canada, Europe)

+

ACCESSCOST-CONTAINMENT-

11

ACCESSQUALITY

Is Any Country Changing?Is Any Country Changing?y y g gy y g gMoving to New PerformanceMoving to New Performance--Based Payment Based Payment

Systems in Eastern Europe/CISSystems in Eastern Europe/CISSystems in Eastern Europe/CISSystems in Eastern Europe/CIS14

10

12

Line Item

6

8Capitation

Line Item

4

6Per DiemCase MixGlobal Budget

0

2Global Budget

12Primary Care Hospitals

Hospital Payment Reform in Europe & Central AsiaHospital Payment Reform in Europe & Central Asia

Moreno-Serra R, Wagstaff A. (2010) System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia. Journal of Health Economics V. 29 pp. 585–602

13

But…Also Unintended Consequences

• Increased PHC Referrals to Higher Levels

• FFSVol me Increases• Volume Increases

– Czech Rep, 46%, 1992-1995

• Per Diem and Per CaseI d B d D d Ad i i• Increased Bed Days and Admissions

– Hungary, Croatia, Russia

14

Thailand: Thailand: FFSFFS = Cost Escalation = Cost Escalation Under Civil Service SchemeUnder Civil Service Scheme

15

Getting StartedGetting Started

1 Start even if relatively simple1. Start…even if relatively simple

2 Always always always do an impact2. Always…always…always…do an impact analysis

providers, patientsp , p

3. Don’t Be Afraid to ChangePolicy Objectives Change over Time

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

16

“Winners and Losers” AnalysisWinners and Losers Analysis6

4

6

hospital 1h it l 2

2hospital 2hospital 3hospital 4

-2

0 hospital 4hospital 5hospital 6

-4

hospital 6hospital 7hospital 8

-8

-6 hospital 9hospital 10

17Year 1

Getting StartedGetting Started

1 Start even if relatively simple1. Start…even if relatively simple

2 Always always always do an impact2. Always…always…always…do an impact analysis

providers, patientsp , p

3. Don’t be afraid to changePolicy objectives change over time

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

18

Some Countries Change andSome Countries Change andSome Countries Change…and Some Countries Change…and Change…andChange…andgg

SlovakiaFee for Service

60:40 Mix of Capitation/FFSCapitation

1993 1994 1998

Why: Policy Objectives Kept ChangingWhy: Policy Objectives Kept Changing19

Why: Policy Objectives Kept ChangingWhy: Policy Objectives Kept Changing

Some Countries Change andSome Countries Change andSome Countries Change…and Some Countries Change…and Change…andChange…andgg

SlovakiaFee for Service

60:40 Mix of Capitation/FFSCapitation

1993 1994 1998

Important: Evolved to Mixed ModelImportant: Evolved to Mixed Model20

Important: Evolved to Mixed ModelImportant: Evolved to Mixed Model

Hospitals:Hospitals:Hospitals: Hospitals: Mixed Models in Mixed Models in Western Western EuropeEuropepp

Line Item DRGs/Per Case Global BudgetMixed Case Mix

and Global Budgetg

Denmark X X

England X

Finland X

Ireland X

Norway X

Sweden X

Italy X

Portugal X

Spain X

Austria X

Belgium X

France X

Germany X

21

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

11 Whi h O ? G tti St t dWhi h O ? G tti St t d1.1. Which One? Getting Started…Which One? Getting Started…

2 Acceptable Levels of Risk2. Acceptable Levels of Risk

3. How Much Time and Information?

4. Enabling Environment

5. “System-Specific” IssuesM lti l P– Multiple Payers

– Across Levels of Care22

Who BearsWho Bears RiskRisk ??Who Bears Who Bears RiskRisk ??

PAYERPAYER

Fee For Service Capitation23

Fee-For Service Capitation

Who BearsWho Bears RiskRisk ??Who Bears Who Bears RiskRisk ??

PROVIDERPROVIDER

Fee For Service Capitation24

Fee-For Service Capitation

Who BearsWho Bears RiskRisk ??Who Bears Who Bears RiskRisk ??

PROVIDERPROVIDER

PAYERPAYER

Fee For Service Capitation25

Fee-For Service Capitation

Risk and a “Hot Risk and a “Hot Topic”: Topic”: P4PP4PUK: Results from 1UK: Results from 1stst Year of P4PYear of P4P

• Providers: incremental revenue from successful performance without large financial risks

• Cost to payer (NHS) was considerably more than t dexpected

• Alternatively make it “budget neutral” but shift risk toAlternatively, make it budget neutral but shift risk to provider– Hospitals performing in top decile receive a 2% increment in

paymentspayments, – Hospitals in second decile receive a 1% increment– Hospitals classified in lowest two deciles are liable for a 1 to 2%

financial penalty26

financial penalty…

Schneider, 2007

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

11 Whi h O ? Wh t St tWhi h O ? Wh t St t1.1. Which One? Where to Start…Which One? Where to Start…

22 Acceptable Levels of RiskAcceptable Levels of Risk2.2. Acceptable Levels of RiskAcceptable Levels of Risk

3. How Much Time and Information?

4. Enabling Environment

5. “System-Specific” IssuesM lti l P– Multiple Payers

– Across Levels of Care27

Alternative Payment Systems Alternative Payment Systems Require Different InformationRequire Different Information

fPayment System

• Salary

Information Needs• Staff characteristics

• Fixed budgets

• Fee for each service

• Budgets and case mix

• Classification of servicesFee for each service

• Per diem payment in hospitals

• Budgets and number of dayshospitals

• Capitation

days

• Population characteristics

Di t t t• Episode based, eg DRGs • Diagnoses, treatments, costs, demographics

28• Pay for Performance • Services/performance characteristics

Adapted from Schneider, 2007

Data Requirements for Hospital Data Requirements for Hospital CaseCase--Based GroupingBased Grouping

Type of Case Grouping

Data Requirements Data Sources

No case grouping Average cost per hospital case (Kazakhstan)

Historical hospital budgets; statistical datadata

Department case grouping

Department average cost per bed-day; department

Hospital budgets and cost- accounting

lengths of stay analysisDiagnosis-based case grouping

Department average cost per bed day; individual

Hospital budgets and cost accountingcase grouping per bed-day; individual

diagnosis; length of stay; other case characteristics

cost- accounting analysis; patient-level data; ICD code for

i di i29

primary diagnosis; length of stay; surgery, etc.

Easy: Per Diem (Hospitals)Easy: Per Diem (Hospitals)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 Total Budget for HospitalsLast Year s Total Budget for HospitalsLast Year’s Number of DaysLast Year’s Number of Days

30

CaseCase--Mix Adjusted Per AdmissionMix Adjusted Per Admission1

Collect Financial1

StatisticalTeams

Collect Financial,Capacity,

andUtilization Data

Allocate Costsby Department

Utilization Data

RelativeEstimate Costs

CaseCase--MixMixGroupingsGroupings

RelativeWeights Assess ImpactsEstimate Costs

Per Category

GroupingsGroupings

2Form

GroupingsRefine

GroupingsClinicalTeams

31

Groupings GroupingsTeams

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

1 Whi h O ? Wh t St t1. Which One? Where to Start…

2 Acceptable Levels of Risk2. Acceptable Levels of Risk

3. How Much Time and Information?

4. Enabling Environment

5. “System-Specific” IssuesM lti l P– Multiple Payers

– Across Levels of Care32

Don’t Implement Alone,Don’t Implement Alone,b i hb i hbut with...but with...

Payment DesignPayment DesignQuality

Assurance/M&E

Management/Management/ Information

Provider Autonomy/Civil

Systems

Service Reforms

MIS: MIS: 3 Elements Required3 Elements Required

34

PAYERPAYER SIDE FUNCTIONALITYSIDE FUNCTIONALITYPAYERPAYER--SIDE FUNCTIONALITYSIDE FUNCTIONALITY

E ll t i t ti d li ibilit Enrollment, registration and eligibility Premium collection

Contracting and contract management Contracting and contract management Claims adjudication

Utilization management Utilization management Quality assurance

35

PROVIDERPROVIDER SIDE FUNCTIONALITYSIDE FUNCTIONALITYPROVIDERPROVIDER--SIDE FUNCTIONALITYSIDE FUNCTIONALITY

Unit level information of provider systems (for inpatient stays Unit-level information of provider systems (for inpatient stays and for outpatient visits)

Patient registration and rostering Eligibility checking Eligibility checking Appointment scheduling

Claims/encounter creation Claims/encounter creation Claims/encounter creation and submission

P t i Payment processing Contract monitoring and negotiating

Business-unit management Inventory management

36

Quality…and Overall ImpactsQuality…and Overall Impacts

P id L l Id tif P P i t• Provider Level: Identify Pressure Points for Bad Care

Examples of Hospital Per Case Payment– Examples of Hospital Per Case Payment• Too Many Easy Admissions• ALOS too short• Discharge Placement Appropriate?

• Broader System Level: Evaluation /Monitoring/Monitoring– Costs/Quality/Access

• Pilot? Facilities, Practice Settings, geographic areas

37

Pilot? Facilities, Practice Settings, geographic areas• Or Nationwide?

Example of Hungary:Example of Hungary:No Savings with No Savings with Case PaymentCase Payment

25

20

10

15Beds per 1,000Discharges per 100

5

10 ALOS

01980 1985 1990 1995 1997

38

1980 1985 1990 1995 1997

(Thailand better: Global Cap)

Issues in ImplementationIssues in ImplementationIssues in ImplementationIssues in Implementation

11 Whi h O ? Wh t St tWhi h O ? Wh t St t1.1. Which One? Where to Start…Which One? Where to Start…

22 Acceptable Levels of RiskAcceptable Levels of Risk2.2. 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” IssuesM lti l P– Multiple Payers

– Across Levels of Care39

2nd Issue: Mixed Incentives: Thailand

2001TAX

1990>50 yrs.UC CSMBS SSSSSS

Contribution

48 mil. 7 mil. 7 mil.

NHSO MOF Comptroller SSOSSO

CapitationDRG FFS Capitation

DRG

IIPublic

Private Providers

Insurees, Insurees,

Right Right h ldh ld

Services

40holdersholders

What Happens When Multiple Payers?

Price

5

41Volume

Need to Harmonize RatesNeed to Harmonize Ratesand Incentives…Across Payersy

Price

7

5

42Volume/Access

How Set Level of Payment?y

• Methods to set pricesMethods to set prices– Historic prices– Average cost– Average cost– Negotiation

Analysis of (ideal) production– Analysis of (ideal) production

The less generous the payment level the• The less generous the payment level, the more hospitals tend to feel it is necessaryand legitimate to act to maximize revenueand legitimate to act to maximize revenue

43• But the more generous it is, the higher the cost

Get the Mix of Incentives CorrectGet the Mix of Incentives CorrectAcross levels of CareAcross levels of Care

Croatia:Croatia: Failed Program to Increase Primary CareFailed Program to Increase Primary Care16

12

14

8

10

6

8 Admissions Per 1,000

2

4

440

1992 1993 1994 1995 1996 1997

45

Thank You!Thank You!

jlangenbrunner@worldbank orgjlangenbrunner@worldbank.org