Pay for performance in the Russian Federation health sector

1. Pay for performance in the Russian Federation health sector Igor Sheiman Academy Health Annual Research Meeting June 26-28, 2005, Boston

2. Basic information -Mandatory health insurance as a starting point of the reform in 1993 -Each of 90 regions builds its own MHI system under federal regulation -Administered by 400 private insurers -Contracts with state-owned providers -Performance-related methods of payment: FFS for outpatient care “finished case” for inpatient care

3. Context of payment reform • Great underfunding (less than 3% GDP) limits the use of incentives. Hard to: • withhold incentives pool • make incentives substantial 2. Financial barriers are growing. Increased out-of-pocket payments distort incentives structure in MHI

4. Context of payment reform 3. Inherited and emerging structural distortions: • Dominance of hospital sector (3,5 bed-days per capita) • Dominance of specialists in outpatient care sector (3 to one 1 catchment area physician). • Dominance of state-owned big urban policlinics with no separation of PHC and specialist care • Western-type GP practically does not exist • Referral system destroyed

5. Context of payment reform Presidential project of health reform in late 2003: -specify explicitly guarantees of the Government -change MHI scheme to ensure additional revenue and better allocation of resources -change legal forms of providers

6. Provider payment reform priorities • Optimize structure of service delivery -ensure PHC priority - downsize the excessive capacity of secondary care 2. Enhance process and outcomes indicators of service delivery Peter Drucker: to do right things and to do right.Both, but priority - how to do right things.

7. Provider payment reform priorities • Come closer to the universal system of provider payment methods for all regions • Allow options for regions based on: - clearly substantiated specific needs and priorities • the level of technical capacity of regions.

8. Two major methodological principles • Systematic approach to building incentives for each health sector: methods of payment for PHC, outpatient and inpatient specialist care, day care centers should complement each other to avoid conflicting motivation 2. Prospective methods dominate over retrospective • purchaser plans and negotiates volumes of inpatient care • purchaser shares risks with providers • cost and volume rather than cost per case contracts

9. Basic system of payment methods(currently used in some regions and proposed nationwide) 1. PHC alternatives: a) capitation plus performance-based incentives, b) fundholding options plus performance-based incentives 2. Outpatient specialists – FFS point system with global budget 3. Each policlinic negotiates the limit of inpatient care for referrals. 4. Inpatient care is paid for planned volumes with allowed deviations (risk corridors) 5. Day care in policlinics is paid for actual cases, provided that the limit of inpatient care is not exceeded

10. Basic system of payment methods Risk –fund (Territorial bonus fund) for: • performance-based payment to PHC providers • day care actual cases • excessive inpatient care (above allowed deviations) – only variable cost

11. PHC performance-based indicators • Input in restructuring • Current activity (process) indicators • Outcome indicators

12. Input in restructuringindicators • volumes and cost of inpatient care • number of ambulance calls Assessed across: -policlinics - catchment areas within policlinics (individual physicians) Assessed quarterly

13. Current activity indicators No distinction between clinical and organizational activity Not very detailed (not more than 10) Selected by regions themselves Assessed quarterly Mostly used: • immunization rate • coverage by “schools” of diabetes or asthma • women seen in the first trimester of pregnancy

14. Outcome indicators Kemerovo region example for urban policlinics: • New permanent disability rate ( No per 1000 working -age population) • Rehabilitation of invalids (incl. partial): % to number of invalids • Infant mortality rate • Monitoring risk population (% of those at risk) • Newly revealed TB, cancer and other cases “at obvious progress stage” Assessed annually

15. “Instrument: “model of performance evaluation” • “Normative” (target value) • Weight of indicator • Vector of deviation from the target (plus-minus) • Weight of the unit of deviation “Coefficient of reaching the target” (CRT): actual and target values compared with the account of weights of indicator and its unit of deviation

16. Reimbursement pattern Bonus fund is allocated proportionally to the size of catchment area and CRT when it is higher than 0,8 Why units system is not used?

17. Fundholding options PHC group may have the budget for: • total outpatient care • portion of inpatient care • portion of ambulance calls cost • outpatient drugs • combination

18. Pre-conditions for polyclinic-fundholder scheme: • Big policlinics or group practices • Insurers can administer financial flows between providers • Insurers can re-distribute funds from one sector to another • Insurers shares risks with policlinics • Good recording system of patients flows

19. Results of basic PPS implementation in regions 1. Major results for PCH: • higher responsibility for health gains • increased income of PCH physicians • increased attractiveness of their job due to higher involvement in planning and control 2. Regions with basic PPS have higher structural and outcome indicators than average in Russia

22. Kemerovo region: • totally different trends of inpatient care utilization with and without policlinic-fundholder scheme • totally different trends of outcome indicators with and without performance indicators for PCH settings

23. Kaluga region case • World bank performance based incentive fund for GPs • When finished all structural and outcome indicators went down

24. Lessons learnt 1. Too detailed indicators system: big administrative costs with dubious outcomes. Why? • some important areas are impossible to reflect. e.g. the role of GPs in organization and coordination of care at other stages • general responsibility for health gains gives way to fragmented tasks • inevitable duplication of process and outcome indicators (hard to manage the use) • at the end of the day physicians tend to think about points rather than pain • Gaming by physicians

25. Message of the veteran of the Communist planning system Only a few people invent indicators while millions of people think very creatively how to game with them

26. Lessons learnt 2. More integrated incentives are preferable: • Fundholding scheme provides more integrated and therefore stronger incentives for better performance than a system of indicators • Potential adverse incentives under FH should be neutralized by careful selection of process and outcome indicators E.g. indicator of deaths at home with high weight

27. Lessons learnt 3. Combination of national, regional and local responsibilities: • National regulation on the scope of indicators (options) and their use • Regions select their own indicators and their weights reflecting local priorities • Local areas (rayons) use region-wide system but can negotiate indicators ex ante and ex post .

28. The case of over-centralization Maloyroslavets rayon Kaluga region: hospital wing has burnt down but the indicator of decreasing its workload has survived

29. Lessons learnt 4. Annual performance indicators should be coupled with quarterly indicators • Instrument of reflecting current needs and management • Physicians should feel the pressure of indicators (at least, not to forget what they are paid for)

30. Lessons learnt 5. Physicians at the local level should be involved in: • selecting indicators system • planning the values • assessment 6. Bonus fund should be big enough Option of its forming by estimating expected savings from the shift to more cost-effective medical interventions and structural changes in service delivery

31. Conclusion Pay for performance should be: focused on priorities clear sustainable Pay for performance should not : make physician an accountant