Financing of first-line care in England Matt Sutton Professor of Health Economics University of Manchester, UK [email protected] VVAA Utrecht.

Financing of first-line care in England

Matt SuttonProfessor of Health EconomicsUniversity of Manchester, UK

[email protected]

VVAA Utrecht28 March2012

Outline

• Reforms of payment systems for primary care

• Reforms of payment systems for secondary care

• Reforms of budget-holding for secondary care

Financing and structure of the NHS in England

• The National Health Service is financed from general taxation

– patients incur (almost) no charges for NHS medical care

• Patients register with general practices, who:

– are independent contractors organised in partnerships

– receive weighted capitation to provide primary care ‘in-hours’

– act as ‘gatekeepers’ for hospital care

• Hospital Trusts are paid by activity by local health authorities for:

– referrals seen and treated

– patients attending Accident and Emergency Departments

Current financing and organisation issues

• General practices have little incentive to service patient demands

• Hospital Trusts have strong incentives to service patient demands

• Existing local health authorities (Primary Care Trusts) have:

– no control over revenue

– little control over contractual terms with providers

– little control over expenditure

PAYMENT SYSTEMS FOR PRIMARY CARE

Pay-for-performance for UK primary care providers

• UK government decided to increase health funding substantially in 2000

• New contract for primary medical care developed during a 18-month negotiation between government and union, with clinical academic experts

• GP vote in June 2003; 70% turnout; 79% voted in favour

• Major reliance on self-reporting with external audit

• This emphasis on clinical quality complemented a range of ongoing quality improvement initiatives

• Intended to link ~20% of income to performance incentives

New contract for primary care providers

• Previous GP contract developed piece-by-piece over decades

– a mixture of capitation, allowances/salary, partial cost reimbursement, fee-for-service and target payments

• New contract since 2004 is with practices not individual GPs

• Payments comprise:

– A Global Sum for Essential Services (weighted capitation)

– Seniority Allowances (based on length of service)

– Additional Services payments (opt-outs)

– Enhanced Services payments (opt-ins)

– Quality and Outcomes Framework (P4P)

QOF domains - 2011/12

• Clinical domain

– Process indicators for ~20 health conditions

• Organisational domain

– Records and information

– Information for patients

– Education and training

– Practice management

– Medicines management

– Quality and productivity

• Patient experience domain

– Length of consultations

• Additional services domain

– Cervical screening, child health, maternity, contraception

Hypertension indicators

Controlled blood pressure for hypertensive patients

Pointsearned

40 70 100

57

Achievement %

60%

38

(60-40)/(70-40) x 57 = 38

Between the thresholds, revenue increases linearly with the proportion treated

QOF achievement in England

Year 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10

Points available 1,050 1,050 1,000 1,000 1,000 1,000

Average points achieved 91% 96% 96% 97% 95% 94%

Proportion of practices at maximum points

3% 10% 5% 8% 2% 1%

Proportion of practices achieving <90% of points

- - 12% 7% 8% 15%

GP pay levels

£0

£50,000

£100,000

£150,000

£200,000

£250,000

£300,000

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Gross Earnings Expenses Income Before Tax

• QOF bill is £1bn per year

~ £16 per capita

~1% of NHS budget

• Average practice gets £130k

• NHS spent 9.4% more than expected in first 3 years

• QOF increased GP pay by 38% in 2 years

Source: Doran et al (BMJ, 2011)

Raising the thresholds for immunisation against flu

Year 2004/5-2005/6 2006/7-2009/10

Condition PointsLower

thresholdUpper

thresholdLower

thresholdUpper

threshold

CHD 7 25% 85% 40% 90%

COPD 6 25% 85% 40% 85%

Diabetes 3 25% 85% 40% 85%

Stroke 2 25% 85% 40% 85%

• The 5% increase in the upper payment threshold led to:• 0.41% increase in the proportion of patients immunised • 0.26% increase in the proportion of patients declared ineligible

Source: Kontopantelis et al (HSR, 2011)

Effect on emergency hospital admissions

2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

Incentivised ACSC Non-ACSCNon-Incentivised ACSC

Pro

po

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na

te c

ha

ng

e in

me

an

em

erg

en

cy a

dm

issi

on

s

Source: Harrison et al, in progress

Summary of the evidence on the QOF

• High expenditure commitment

– In general, the targets seem to have been set at too low a level

– The payments on offer appear to have been excessive

• Quality was already improving

• Impact results are sensitive to the choice of counterfactual

– Performance increased most on incentivised indicators

– Explicitly targeted patients also experienced positive spillovers

– Mixed evidence on effects on quality for untargeted patients

– Emerging evidence of impact on use of hospital care

• Evidence of ‘gaming’ by some practices to achieve improved scores

• Performance shows some sensitivity to design properties of the incentives, including payment levels and upper thresholds

PAYMENT SYSTEMS FOR SECONDARY CARE

Changes in hospital financing

Activity-Based Financing

Non-payment policies

2004/5 2010/11

Marginal emergency tariff

Commissioning for Quality and Innovation

Best Practice Tariffs

Marginal and non-payment policies

2010/11

• Marginal payment (30%) for emergency admissions above level of the previous year

2011/12

• Non-payment for emergency readmission (<30 days) after elective admission

– With exclusion of children, cancer care, traffic accidents etc.

• Non-payment for emergency re-admission (<30 days) after emergency admission above a locally-agreed threshold rate

2012/13

• Local reviews of emergency re-admissions – what proportion could have been avoided and by whom?

BUDGET-HOLDING FOR SECONDARY CARE

Previous experience with budget-holding by GPs

• Throughout the 1990s, practices could opt to become ‘Fundholders’

• Fundholders held ‘soft’ budgets for prescribing and referrals, negotiated contracts with hospitals and re-invested savings

• Estimated to have reduced elective referrals by 4-5%

• Abolished in 1999 because represented a ‘two-tier’ service

• From 2005, local health authorities were instructed to involve practices more through Practice-Based Commissioning

• Progress and organisation was highly variable across the country

New Clinical Commissioning Groups

• Groups of local general practices (approx. 250 Groups)

• ‘Membership’ organisations

• Will hold ‘hard’ budgets for prescribing, community and non-specialist hospital care

• Covers elective and emergency hospital care

• Can re-invest ‘savings’ and receive a ‘Quality Premium’ bonus

• Budgets will be set using a weighted capitation formula

• Total budget of approximately £80bn

Current organisation

Primary Care Trusts

General practices Hospital Trusts

Contract Contract

Referrals

Payment claims

Patients

A&E attendancesAppointments

Department of Health

Allocation

Planned re-organisation

Clinical Commissioning Groups

General practices Hospital Trusts

Contract

Contract

Referrals

Payment claims

Patients

A&E attendancesAppointments

Department of Health

NHS Commissioning Board

Allocation

Types of ‘incentives’ that purchasers might face

• Intrinsic motivation

• Reputational risks, through public reporting

– Career concerns

– Competition for members

• Earned autonomy

• Financial incentives

CONCLUDING REMARKS

Potential uses of financial mechanisms

• Financial incentives could be used to

– Stimulate more activity in primary care

– Reduce activity in secondary care

• Local budget-holding may

– Shift activity into the community, hopefully at same or better quality

– Reduce elective care, hopefully unnecessary care

– Prevent emergency care, hopefully inappropriate care

Some lessons from the QOF experience

• Involve health care professionals in the content of an incentive scheme

• Establish a quantitative ‘baseline’ against which impact can be measured

• Recognise the uncertainty over the economic aspects of incentives

• Avoid incentives to ‘game’, double-payments and redundant payments

• Leave enough time to evaluate the scheme carefully

– Measured domains

– Unmeasured domains

– Costs and outcomes

• Agree with providers that any innovative funding scheme will be continuously monitored, reviewed and amended

Financing of first-line care in England

Matt SuttonProfessor of Health EconomicsUniversity of Manchester, UK

[email protected]

VVAA Utrecht28 March2012