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

Performance-based financing: a critical reflection Dr. Inke Mathauer Health Financing Policy, WHO SDC health network meeting Morges, 10 April 2014

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 2 |

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”, “P 4 P”, “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 3 |

I. 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 of 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" 4 |

I. 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 5 |

I. 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. 6 | By B. Meesen (2014)

I. 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) 7 | By B. Meesen 2014

I. 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 8 | By J. Kutzin 2014

II. 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 9 |

II. 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 10 |

II. 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 11 | By J. Kutzin (2014

II. 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 12 |

II. 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 13 |

III. Trends 14 |

OECD countries: Recent developments in provider payment models aim to achieve value for money Rising burden of chronic diseases and Total health expenditure as a share of GDP, 1995-2007 Selected OECD countries increasing health spending United States OECD Switzerland Germany 16 Canada Japan Traditional payment models are inadequate 14 12 % GDP Thus, experimenting with new 10 payment methods to improve the quality of care and coverage of priority 8 services 6 1995 1997 1999 2001 2003 2005 2007 Pay-for-Performance or “P 4P ” Source: OECD Health Data 2009 . 15 | By C. Cashin (2014)

III. Some examples of P4P programs Program Country Programme Year Program Focus Began Primary Care Australia PIP Practice Incentives Program 1998 Estonia PHC QBS Primary Health Care Quality Bonus System 2005 ROSP * France Payment for Public Health Objectives 2009 Germany DMP Disease Management Programs 2002 New Zealand Primary Health Organization Performance Programme 2006 PHO Performance Program Turkey FM PBC Family Medicine Performance Based Contracting Scheme 2003 U.K. QOF Quality and Outcomes Framework 2004 IHA * U.S.-California Integrated Healthcare Association Physician Incentive Program 2002 Hospitals OSS ** Social Organizations in Health 1998 Brazil--Sao Paolo Korea VIP Value Incentive Programme 2007 MHAC Maryland Hospital Acquired Conditions Program 2010 U.S.- Maryland Hospital Quality Incentive Demonstration 2004 U.S. National HQID Source: Cashin et al. (2014), P4P evaluation 16 |

III. PBF programmes in Africa Source: Fritsche et al. (2014), PBF toolkit, WB 17 | 17

III. 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 18 |

IV. Some evidence 19 |

IV. 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 Fritsche et al. (2014) 20 |

IV. 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) 21 |

IV. Evidence from OECD countries (P4H evaluation, edited by Cashin et al. 2014)  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 outcomes, 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 22 |