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Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Reforms in purchasing in Central/ Eastern Europe and ex-USSR:
pay for performance?
Joseph Kutzin
Head, WHO Barcelona Office for Health Systems Strengthening
Incentives for Health Provider Performance Network
11 May 2011, Clermont-Ferrand, France
Main sources for this presentation
And the publications produced by the Kyrgyz Health Policy Analysis Center (see www.hpac.kg for more)
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Overview
• Motivations for reform of purchasing and some key messages from our analysis of financing reform implementation
• The (mostly) Kyrgyz experience
• General lessons learned from the region, and possible lessons for low and middle income countries elsewhere in the world
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Motivations for reform of purchasing
• Inheritance of excess capacity, low productivity, and unresponsive systems
• Growing recognition of poor quality in service provision, especially primary care
• Expectation that with “new formulas” by which only good and efficient services would be purchased, the problems could be solved
Key alignment issues (coordination, not magic bullets or “schemes”)1. Revenue collection and pooling
- Explicit coordination/pooling of budget and payroll tax revenues
2. Revenue collection and purchasing
- Predictable, stable revenues to the purchaser
3. Pooling and purchasing for redistribution and efficiency gain
- Not only new provider payment methods; need both
4. Revenue collection and benefit package
5. Benefit package and purchasing
- Explicit links to avoid merely declarative entitlements
6. Financing and service delivery
- Incentives alone not enough: need changes on provider side and political will to implement
Our list of pitfalls – errors in conception as well as implementation1. Treating the benefits package as the solution to an
accounting problem rather than as a policy instrument
2. “Solving” informal payments simply by legalizing them as co-payments
3. Undertaking incomplete or “half-hearted” reforms
4. Implementing contradictory policies
5. Having unrealistic expectations in terms of effectiveness of health financing instruments to improve quality of care
6. “Starting insurance” with the formal sector and hoping that economic growth will bring eventual progress towards universal coverage, as it did historically in many west European countries
7. Ignoring public health services and public health programs in health financing reform and policy analysis
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Aligning benefits with purchasing to enable
realization of entitlements
Reducing out-of-pocket spending for defined exempt groups in Kyrgyzstan
How benefit categories, co-payment obligations, and purchasing are linked by the Kyrgyz MHIF
Self-referred
Uninsured
Insured
Partially exempt
Fully exempt
Patient pays:
co-paymentMax
High
Mid
Low
Zero
Purchaser pays:
hospital base rateNone
Little
Mid
High
Most
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Unique research on informal payment
• Data on informal payment is based on patient surveys
• There have been 5 complete survey waves between 2001 and 2006
• Interviews conducted 4-6 months after discharge
• Detailed record of payment is taken without mentioning the word ‘informal’ or ‘illegal’
• Survey data is merged with the case-based data of the MHIF to obtain administrative data on case characteristics
From declaring benefits to purchasing them: changes in OOPS by exempt patients
458
650
500 488
130
700
545500
0
100
200
300
400
500
600
700
Exempt Not exempt Exempt Not exempt
Single Payer Other regions
So
ms
Baseline Follow-up
Source: WHO surveys of discharged hospital patients
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Informal payments declined most for pregnant women and children…
For children<5, the net reduction in total patient payments was KGS 736 or 52% in real terms
For pregnancies, the net reduction in total patient payments was KGS 363 or 37% in real terms
0200
400600800
1,0001,2001,4001,600
1,8002,000
2001 2006 2001 2006 2001 2006
All patients Children<5 Pregnancies
Informal payment Co-payment
-19% -52%
-37%
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
-400
100
600
1,100
1,600
2,100
2,600
2001 2006 2001 2006 2001 2006 2001 2006
All patients Pensioners>75 Medically exempt Socially exempt
Informal payment Co-payment
For pensioners>75, the net reduction in total patient payments was KGS 397 or 28% in real terms
For medically exempt, the net reduction in total patient payments was KGS 732 or 33% in real terms
For socially exempt, the net reduction in total patient payments was KGS 181 or 13%
-19% -28%
-33%
-13%
… and show significant improvement for pensioners and other exempt categories
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Aligning purchasing with service delivery in an attempt
to improve quality and outcomes
Well conceived, but yet to deliver the results in Kyrgyzstan
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Motivation
• In analyzing its hospitalization data, MHIF determined there were a lot of cases for conditions that could be effectively managed at primary care level (“primary care-sensitive conditions”) IF treatment was appropriate and the population had access to the relevant medicines
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Aims of Kyrgyzstan’s additional drug package• Promote use of new family physician groups by
expanding their services (i.e. raise their credibility)
• Reduce unnecessary hospitalizations by supporting outpatient management of key conditions (asthma, hypertension, anemia, ulcers)
• Improve quality by link to new clinical guidelines, especially improved prescribing practices
• Reduce cost of outpatient drugs for beneficiaries
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Features of the drug package
• Funded out of FGP capitation payment
• Covers limited list of prescribed items; targets 4 causes of avoidable hospitalization for which clinical guidelines were developed
• Prescribing by generic name required
• Purchaser (MHIF) contracts with qualifying private pharmacies
• Patient pays difference between reimbursement rate and retail price
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Initial results were encouraging
• All PHC physicians have been re-trained
• Monitoring studies show that adherence to guidelines is high in PHC
• Additional Drug Benefit is widely used and HTN drugs are “top sellers”
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
But detailed survey analysis revealed problems in effective coverage• Kyrgyz Health Policy Analysis Center and WHO
study of health system effectiveness in Hypertension Control included hypertension monitoring as part of the health module
– Nationally representative sample
– 12,438 respondents 18 years or older in KIHS
– 10,170 completed HTN measurement
The Additional Drug Package is a good program but not enough
• ADP provides subsidy to insured people for the purchase of drugs for primary-care sensitive conditions incl. HTN
• Generic prescription rate is very high
• Patients switch to brand name drugs at the time of purchase
• Cannot afford brand-name drugs continuously
• Result: intermittent use of HTN medication
0%10%20%30%40%50%60%70%80%90%
100%
Prescribed Sold
Generic Brand name
% of generic versus brand name HTN medication in ADP
Source: MHIF
Why did people not take their HTN medication in the last 24 hours?
I did not feel like it
17%
Did not have money
10%
Other10%
Doctor told me to take it in
crisis63%
Pharmacy was far0%
Could not find0%
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Major problem of provider quality
“If my physician had emphasized the importance of taking drugs for high blood pressure, I would have taken it on a regular basis, and maybe I would have avoided getting a stroke.” (Man, 50 years old, Jalal-Abad oblast)
Akunov, Ibraimov, Akkazieva et al. 2007. “Is the Kyrgyz health system effective in preventing and treating cardio-vascular disease?” CHSD Policy Research Paper No
45. http://hpac.kg
Measuring the effectiveness of the health system in HTN control
Aware:
26.5%
Treated:
17.1%
Controlled:
13.9%
2.4% of hypertensives whose 2.4% of hypertensives whose blood pressure is controlledblood pressure is controlled
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
So even this comprehensive approach was not adequate• Provider behavior resistant to change
• Generic prescribing built into the ADP was undermined by switching to more expensive branded drugs in the pharmacy
• Repeat of study in 2010 showed improvements in population awareness of their condition and care seeking behavior (especially in rural areas and for women), but little change in provider behavior and population behavior with regard to taking their HTN medications
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Some conclusions and possible lessons for other low and middle income countries
Lessons learned - general
• New health purchasers have been critical in transforming (some) health systems– Several countries demonstrated gains in “structural”
efficiency, redistribution, and targeting of entitlements
– However, little documented success in actually improving quality through purchasing
– We’re still better at purchasing things we can count
• Accountability and governance structures did not receive sufficient attention
• Management autonomy and skills have been critical success factors
• Step-by-step implementation was important to give time for institutions to mature
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
RBF/strategic purchasing as a key step in process of building domestic health financing systems and institutions
• Need to consider the purchasing institution(s) as well as the technical mechanisms used to pay providers
• Creating a strong purchasing agency as the “change agent” in the reform process– Requires consolidating fund pools
– Technical development on payment methods, information management, provider autonomy, …
– And it takes time!
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
A contextual challenge?
• How to attract and retain people with the (scarce) skills needed to implement relatively sophisticated purchasing and M&E systems?– Kyrgyz hospital payment system was designed by
former rocket scientists(!), and availability of mid-level technicians to run it who had little choice but to take public sector job
– How to create enabling conditions for effective purchasing on behalf of the entire population of most LMIs, when it probably is not possible at civil service salaries?
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Thank you
An illustration of the problem: government health spending by input (prior to financing reforms)
Moldova 2000 Kyrgyzstan 2001
Salaries and social benefits
47% 52%
Utilities 27% 20%
Drugs and supplies
14% 9%
Food 6% 9%
Capital and repairs
6% 5%
Other 4%
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Aligning pooling and purchasing for efficiency gain
The single payer reform and downsizing in Kyrgyzstan
Fragmentation and inappropriate incentives as sources of efficiency problems
• Input-norm-based budgeting
• Fragmented and overlapping pooling and purchasing, vertically integrated with provision
• Inherited clinical practice patterns
• Rising energy prices with transition to market economy, combined with energy inefficient buildings
• Difficulty in reducing staff numbers because of social consequences of unemployment
• Inefficiencies had distributional consequences– They manifested as the need to pay/provide own
inputs, which hit the poor hardest
Source/ collection
Pooling
Purchasing
Provision
Population
Oblast, rayon and city administrations
Bishkek City Finance Dept.
Republican budget
Rayons Oblast
RFD
rayon hospitals,
polyclinics, SUBs, FAPs
OHDOFD
Oblast hospitals and
polyclinics
Each oblast
city health
depart-ment
CHD
City hospitals and polyclinics
City
MOH
MOH
Republican health facilities
Bishkek (and nearby)
Coverage Coverage
RFD OHDOFD
Social Fund
MHIF
Covered persons
contracted FGPs
& hospitals
cont
ract
ed F
GPs
& h
ospi
tals
Source/ collection
Pooling
Purchasing
Provision
Population
Bishkek City Finance Dept.
Republican budget
Rayons Oblast
CRH, FAPs, SVAs, SUBs,
FGPs, polyclinics
Oblast hospitals and
polyclinics
CHD
CHD
City hospitals, polyclinics,
FGPs
Bishkek
MOH
MOH
Republican health facilities
Bishkek (and urban Chui)
CoverageCoverage
Each of Six Oblasts
Oblast, rayon and city administrations
CRHRFD
OHDOFD
CRHRFD
OHDOFD
1997 compulsory insurance fund adds new player but doesn’t address underlying structure
Republican MHIF (national
pool)
Population of each Single Payer region
Cov
erag
e
contracts
Source/ collection
Pooling
Purchasing
Provision
Population
Social Fund
Oblast, rayon and city administrations
Republican budget
FGPs, oblast and rayon hospitals, private pharmacies, etc.
Coverage
Oblast level TDMHIF
Mandatory Health Insurance Fund
2001 “Single Payer Reform” eliminates fragmentation within oblasts
Summary of Single Payer features
• Sources: local budgets, Republican budget, payroll taxes, formal co-payments
• Pooling: Single pool for each territory (oblast), and complementary national pool for “insured”
• Purchasing: purchaser-provider split; capitation payment for PHC, case-based payment for inpatient care
• Benefits: universal entitlement funded from local budgets, complementary contribution-based entitlement for insured funded from payroll tax and Republican budget
Planned for years, but downsizing only began after the incentives changed
Source: Socium Consult (2002)
Share of hospital expenditures spent on patients increased
20.4 20.1
30.532.7
0
5
10
15
20
25
30
35
2004 2005 2006 2007
Direct medical expenditures (medicines, medical supplies, and food) as a share of total public expenditures at the hospital level in the SGBP
Source: Mandatory Health Insurance Fund, Kyrgyzstan
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Aligning pooling and purchasing for redistribution
Centralization of pooling and change to output-based payment for redistribution
in Moldova and Kyrgyzstan
Insured population
Cov
erag
e
contracts
Source/ collection
Pooling
Purchasing
Provision
Population
Central budget revenues
Payroll taxes
Health care providers
National Health Insurance Company
Moldova also eliminated fragmentation with single national pool of funds
2/3 1/3
Centralized pooling combined with shift from input to output-oriented payment reduced geographic inequity in spending
Source: Shishkin et al. (2008). Evaluation of Moldova’s 2004 Health Financing Reform. Copenhagen: WHO/EURO Health Financing Policy Paper 2008/3.
Centralization of pool and continued output-based payment in Kyrgyzstan led to similar results in 2006
Source: Financial Management Reports on execution of the State Guaranteed Benefit Package and 2007 MOH Performance Indicator Report
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
Bishkek city Chui Issyk-Kul Osh Jalal-Abad Batken Naryn Talas
Ind
ex
of
pe
r c
ap
ita
MH
IF s
pe
nd
ing
re
lati
ve
to
Bis
hk
ek
2005 2006
Lessons learned – primary health care
• Capitation payment is a good start to equalize resource allocation when moving away from historical budgets – Provider autonomy and improved management skills
are key
– Age, sex and other need adjusters in capitation formula are important
• Not sufficiently powerful incentive to encourage expansion of PHC task profile – Limited patient switching weakens competitive drive
– Inherent incentive is to prescribe and refer weak early detection and chronic disease management
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Lessons learned - hospital care
• The trend towards case-based payment was driven by efficiency considerations and need for purchasers to have activity information
• Case based payments indeed drive efficiency improvement at the hospital level mostly through volume increase
• Purchasing reform alone did not trigger reduction of physical infrastructure
• To achieve better balance between different levels of care, additional instruments needed
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Data
Month of hospitalization
Number of interviews As share of hospitalization* in month of survey
2001 February 2,913 7.4%
2001 July 3,731 9.9%
2003 April 4,440 9.5%
2004 April 4,534 8.0%
2006 October 5,337 9.4%
* Among hospitals contracted by the MHIF
Pay for performance: lessons from
central/eastern Europe and ex-USSR11 May 2011
Total volume of informal payment decreased
+18%
-54%
-63%
+37%
-22%
-
200
400
600
800
1,000
1,200
2001 2003 2004 2006
milli
on s
oms
Personnel Drugs Medical supplies Other supplies Food
In real terms @ 2001 prices