Reforming payment for health care in Europe to achieve better value Dr Jennifer Dixon

Director

www.nuffieldtrust.org.uk

Overall trends Bundled payment Pay for performance Value based contracting for LTC Some questions

Objectives of payment reforms

• Extract more quality

• Extract more efficiency

• Preserve equity

Providers

Command’ (Target, directive, guidance)

Financial incentives

Regulation Accountability

Payment currency Price level Competition and choice

Context

Two broad types of payment

Pay

for p

erfo

rman

ce

Bundling

High

Low

Low High

Overall trends Bundled payment Pay for performance Chronic disease management Some questions

Types of bundled payment

Block budget/salary

Capitation Per period Per patient pathway

Per case/diagnosis/procedure

Per day Fee-for-service

Periodic global lump sum – independent of number of patients

Periodic lump sum per enrolled patient for a range of services

Periodic lump sum per patient diagnosed with a particular condition

Lump sum for all services required for a defined pathway of care

Payment per case based on grouping of patients with similar diagnoses/procedures or resource needs

Payment per day of stay in a hospital or other facility

Payment for each item of service and patient contact

High Low

Source: Adapted from Department of Health 2011. England

Prospective payment per DRGs

• Gradual introduction and extension of DRG payment

• Complexity and cost

• Whether and how best to add on P4P incentives

• ? Harmonisation?

• Impact

Overall trends Bundled payment Pay for performance Value-based contracting Some questions

Some types of pay for performance

Rewarding quality

and/or

Rewarding efficiency

Achievement against absolute threshold

Achievement against relative improvement

Rewarding (positive) Penalising (negative)

Value : a proportion of core funding Value: a supplementary bonus above core funding

Issues in pay for performance

• Type of performance measure used

• Information accuracy/availability (and gaming)

• Who to reward – individuals teams institutions?

• Nationally or locally determined?

• Impact

Overall trends Bundled payment Pay for performance Value-based contracting Some questions

Objectives of payment reforms

• Extract more quality

• Extract more efficiency

• Preserve equity

Focus on chronic disease and frailty

Types of bundled payment

Block budget/salary

Capitation Per period Per patient pathway

Per case/diagnosis/procedure

Per day Fee-for-service

Periodic global lump sum – independent of number of patients

Periodic lump sum per enrolled patient for a range of services

Periodic lump sum per patient diagnosed with a particular condition

Lump sum for all services required for a defined pathway of care

Payment per case based on grouping of patients with similar diagnoses/procedures or resource needs

Payment per day of stay in a hospital or other facility

Payment for each item of service and patient contact

High Low

P4P: Eg shared savings contingent on quality

Types of bundled payment

Block budget/salary

Capitation Per period Per patient pathway

Per case/diagnosis/procedure

Per day Fee-for-service

Periodic global lump sum – independent of number of patients

Periodic lump sum per enrolled patient for a range of services

Periodic lump sum per patient diagnosed with a particular condition

Lump sum for all services required for a defined pathway of care

Payment per case based on grouping of patients with similar diagnoses/procedures or resource needs

Payment per day of stay in a hospital or other facility

Payment for each item of service and patient contact

High Low

P4P: Eg shared savings contingent on quality

DRG + Quality?

The future? Modular payment

GP practices

Community services

Social care

Hospital Payers

Capitation-based £ Risk adjusted +P4P

DRG for elective surgery +P4P

Nuffield Trust

Overall trends Bundled payment Pay for performance Value-based contracting Some questions