Payment systems and incentives to support integrated care

1. Payment systems and incentives to support integrated care Professor Chris Ham Chief Executive The King’s Fund 11 April 2013

2. The context • Populations are ageing • The burden of disease is changing • Premature deaths from major causes – cardiovascular and cancer – are declining • Prevalence of diabetes and other chronic diseases is increasing • Risk factors like overweight/obesity are a growing concern

3. The context (2) • In the UK, two thirds of hospital bed days arise from unplanned admissions • A high proportion of these admissions involve people who have acute exacerbations of one or more chronic conditions • Proactive management of these people could help to avoid admissions and help them remain independent

4. Multimorbidity is critical • Some of the biggest challenges relate to people with more than one chronic condition • Multimorbidity increases with age and deprivation but most people with more than one chronic condition are under 65 • Disease management for people with single diseases is important • But high quality care for people with multimorbidity is even more important

5. Integrated care • Ageing populations and the shifting disease burden require a much more integrated approach to care • The different elements of Wagner’s Chronic Care Model need to work together, but not necessarily in the same organisation • Collaboration between different organisations and professionals is needed to overcome fragmentation • The challenge is that integration and collaboration do not come easily

6. Evidence and experience • There are many different examples of integrated care around the world • The results of evaluations are mixed but there is enough evidence to lend support to integration • Among the wide range of examples that exist, there is no one ‘best way’ • But there are several common ingredients in the examples that have been studied

7. Typologies of integration • Organisational, clinical and service • Vertical and horizontal • Real and virtual (or contractual) • Integration of provision; integration of funding; integration of provision and funding

11. Common ingredients of integrated care (a short list) • Visionary and stable leadership • Collaborative culture of team working • Responsibility for defined populations • Clear goals focused on improving outcomes • Information sharing supported by investment in IT • Payment systems and incentives aligned with goals

13. Options for paying for care • Payment for activity/fee for service • Bundled payments • Episode payments • Year of care tariff • Programme budgets • Capitated budgets • Quality incentives

14. International experience • High performing integrated systems use capitated budgets for almost all care • Their main focus is on population based budgets not disease or condition based budgets • They also specify the quality/outcomes they expect to be delivered • Systems like Kaiser Permanente are not over-reliant on payment methods and financial incentives – other tools are also important

15. Implications for providers • Capitated budgets make heavy demands on providers • Providers need to operate on the appropriate scale and to have the right capabilities • The more comprehensive the scope of capitated budgets, the more important this becomes • Used well, payment reform can drive change and innovation among providers

17. The Alternative Quality Contract • Developed by BCBSMA in 2009 for medical groups covering 5,000+ members • A capitated budget with quality incentives based on 64 measures of performance • Quality incentives cover primary and secondary care, motivating some medical groups to work closely with hospitals • Results show better performance than in control groups, and slow down in rate of spending increases

18. The wrong kind of integrated care • Small scale • Disease based • Organisational (not clinical or service integration) • Integrated care that creates unresponsive monopolies

19. Competition and Integration • Integration co-exists with competition in some systems e.g. California • Enthoven argues that competition stimulates KP to realise benefits of integration • Competition between integrated systems has been suggested by some as most likely to deliver benefits e.g. Christensen and colleagues • Other researchers are sceptical and argue that integration can deliver benefits in the absence of competition e.g. Jonkoping CC in Sweden

20. Finally • All systems use a mix or blend of payment systems and incentives • Capitated budgets seem most appropriate to integrated care • Capitated budgets demand exceptional capabilities among providers • Don’t put all your eggs in the payment reform basket: many other ingredients matter • A burning platform and exceptional leadership are critical factors

22. c.ham@kingsfund.org.uk @profchrisham