Quality-Based Payment - Taiwan’s Experience

1. Quality-Based Payment- Taiwan’s Experience Hong-Jen Chang, MD, MPH, MS CEO and President Bureau of National Health Insurance Taiwan, June 6, 2004

3. Background • The NHI program since 1995 has successfully improved Taiwanese’s access to care and provided them a greater financial risk protection (Lu and Hsiao, 2003; Cheng, 2003). • Serious concern over provider withholding care due to recent rigorous cost containment strategies has placed quality assurance on top of the government agenda. • Among a number of methods, quality-based payment seems to be one most appealing policy tool to change provider behaviors in improving quality. Cheng, T.M. “Taiwan’s new National Health Insurance program: genesis and experience so far,” Health Affairs 22, no. 3 (2003): 61-76. Lu, J.R. and Hsiao, W.C., “Does universal health insurance make health care unaffordable? Lessons from Taiwan,” Health Affairs 22, no. 3 (2003): 77-88.

4. Motivation • The existing literature indicates that financial incentives have significant influences on provider behaviors. • Ideally, linking provider reimbursement directly to quality can serve as a powerful policy tool to improve quality of care. • Selection of diseases, quality measures, data availability, risk adjustment make quality-based payment difficult to implement. • Very few quality-based payment programs and systematic evaluations are available worldwide. Hanchak, N.A., Schlackman N., and Harmon-Weiss S., “U.S. Healthcare’s quality-based compensation model,” Health Care Financing Review 17, no.3 (1996): 143-159. Dudley, R.A., Miller, R.H., Korenbrot, T.Y., Luft, H.S., “The impact of financial incentives on quality of health care,” The Milbank Quarterly 76, no.4 (1998): 649-686.

6. NHI in Taiwan(1) • Mandatory enrollment • Single-payer system • Public Administration • Payroll-related premium rate • Contribution shared by the employer, the employee and the government

7. NHI in Taiwan(2) • Universal coverage • Benefits: ambulatory and inpatient care, prescription drug, preventive services, lab tests, diagnostic imaging, Chinese medicine, and dental care. • Complete freedom of choice among provider and therapies. • A mix of public and private providers. Private practicing doctors do not have hospital admitting privileges. • FFS under global budgets. Cheng, T.M. “Taiwan’s new National Health Insurance program: genesis and experience so far,” Health Affairs 22, no. 3 (2003): 61-76. Lu, J.R. and Hsiao, W.C., “Does universal health insurance make health care unaffordable? Lessons from Taiwan,” Health Affairs 22, no. 3 (2003): 77-88.

9. Overview of Taiwan NHI Payment System • Fee for Services:major unit of payment • Costs claimed based on NHI Fee Schedules and Drug Price List • Case Payment :50 disease categories • Capitation:ventilator-dependent patients • Quality-based Payment System:DM, Asthma,TB..etc Global budgets:dental care, traditional Chinese medicine, primary care , hospital care

10. NHI Payment Reform • Macro management: • Global budget • Micro management • Case payment based on DRGs/APGs • FFS (price): • Relative Value Fee Schedule (RBRVS) • Pharmaceutical Price List • Performance/Quality-based payment system • Disease/outcome Management • Family physician • “Center of Excellence” project for hospitals

12. Quality-Based Payment in Taiwan • 5 major diseases- cervical cancer, breast cancer, diabetes, tuberculosis, and asthma. • Started on October 01, 2001 • Provides extra financial rewards to providers in addition to the NHI fee schedule. • Finance of these extra rewards is not from global budgets. • Future: to include more outcomes measures, and expand to more diseases.

15. Quality: Key Features • Structure: Hospital and physician qualification requirement • Process: • Cervical cancer: rewards based on monthly volume & growth rate of pap smear screening provided. • 4 other diseases: rewards based on compliance with the NHI guidelines. • Outcome • TB & breast cancer: rewards based on full recovery and survival rates

16. Incentives: Key Features • FFS + Extra Bonus • Incentive schemes • FFS: Cervical cancer • Capitation by patient: Breast cancer, TB, asthma and diabetes • Incentives for Whom • Hospital/clinic only: Cervical cancer, breast cancer, diabetes • Physician only: Asthma • Hospital/clinic & physician: TB

17. Preliminary Results: Asthma Before: from April 01, 2001 to June 30, 2001. After: from April 01, 2002 to June 30, 2002.

18. Preliminary Results: TB • 9 month cure rate for TB participants: 40.69% • 9 month cure rate for all TB cases in Taiwan: 30.1% (From the Center of Disease Control in Taiwan).

20. Summary • Single payer system, limited authority of selective contracting, and controversies over public reporting of provider performance → Pay for Quality. • Theoretical dilemmas in program development • Disease & treatment uncertainties make linking payments to outcome less justifiable and favorable (e.g. Asthma). • Difficulty of measuring and risk adjusting clinically significant outcomes leads to the program to rely on surrogate process indicators (e.g. Diabetes). • Complete freedom of provider choice and lack of family doctor system do not allow provider to have a fixed patient population, so for preventive services such as cervical cancer screening, the program compromises to use volume/growth rate.

21. Summary • Practical challenges • Typical problem of interest group politics. In order to resolve opposition to this program and encourage participation from providers, the original experiment design was compromised (phase in and controlled experimental design was not allowed). • Inadequate financial resources to provide strong incentives to encourage provider participation and induce behavioral changes. • Detailed planning and scientific design are extremely important for successful development of payment reform and evaluation. McNamara P. Quality-based purchasing: What do we know about impact in developing countries, what do we need to know? Manuscript. Waters H., Morlock LL., Hatt L. How healthcare purchasers can influence quality- A conceptual framework and comparative analysis of contextual factors. Manuscript.

22. Future Policy Direction • Expand program scope to more diseases (Hypertension, hepatitis B&C, and schizophrenia) • Include more outcome measures. • Increase financial incentives • Simplify administrative process • Encourage provider participation • Integrate with 2nd generation of health care reform project

23. Future Research Direction • Take study design and validity issues of program evaluation into consideration when designing the forthcoming program expansion • Collect baseline information • Select appropriate control groups (different phase-in periods for different geographic areas). • Select meaningful outcome measures • Collaborate with both domestic and international experts in program planning and evaluation.

25. Thank you!