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Richard Murray: Payment reform in the NHS
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Richard Murray: Payment reform in the NHS


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  • 1. Payment reform in the NHSRichard MurrayChief Economist, Department of Health
  • 2. IssuesPayment reform in the NHS • Reflections on the NHS • Payments and `Payment by Results’ • PbR and reform • Other payment systems 2
  • 3. Health and social care payment systems Current methods include: Future methods will add:Payment reform in the NHS • Payment by Results: • Payment by Results: -National tariff per unit of -Year of Care activity; -Expansions to scale and -Best Practice Tariffs, scope marginal tariffs, Never • New incentive elements: the Events Quality Premium, the Health • GP and Dental national Premium and pay-for- contracts performance pilots in drug and alcohol recovery • Local discretion • Related reforms on personal • Needs-weighted allocations budgets 3
  • 4. PbR: impact on cost, quality and activity Over 2003/04 to 2007/08, evaluations show positivePayment reform in the NHS impacts on cost and quality Cost Reduced costs, as proxied by length of stay and the day case rate Quality At least, no reduction in quality on the measures available: -hospital mortality; -30 day mortality following CABG -28-day unplanned re-admission following emergency admission for hip fracture Activity Increases in both elective and non-elective admissions HERU, Payment by Results: consequences for key outcome measures across HRGs, providers and patients. 4
  • 5. PbR, integration and competition Initial objectives On competition, PbRPayment reform in the NHS • Facilitating patient choice by remains: ensuring money followed the patient. • an alternative to price • Supported the best use of capacity competition; by ensuring those that could expand received additional payment to do • a supporting so. measure for comparing quality and • Avoiding price competition and choice allowing commissioners to focus on quality. PbR had no initial • `Rational’ payment system for newly remit on integration autonomous providers 5
  • 6. PbR: current priorities Key priorities for the reform of PbRPayment reform in the NHS Objectives 2011/12 examples Quality and Outcomes Best Practice Tariffs, cQUIN Efficiency and value for money Setting tariffs below average, high efficiency requirements Integration and patient responsiveness Measures on reablement, year of care Expanding the scope of tariff Measures on renal dialysis, adult and neonatal critical care, community services 6
  • 7. Innovations: improving quality PbR is moving into directly incentivising quality of carePayment reform in the NHS Innovation Motivation No payment for `never events’ Covers mainly serious, preventable accidents CQUIN – 1.5% of contract value An incentive for quality, with two linked to quality indicators nationally mandated areas but otherwise locally driven Best practice tariffs Providing incentives for quality and/or efficiency including: -A simple pathway (cataracts) - Payments related to achievement of quality markers (Stroke, hip fracture) - Incentives for day cases (Cholecystectomy) 7
  • 8. Innovations: integration and bundling Integration and bundling:Payment reform in the NHS within providers: e.g. tariffs for pathways within acute providers such as cataracts or for packages of care now under development e.g. podiatry across healthcare: national currency for year of care for cystic fibrosis between health & no reimbursement for emergency social care: readmissions within 30 days of elective discharge; reablement tariffs 8
  • 9. Payment systems other than PbR PbR is far from being the only payment or organisationPayment reform in the NHS tool to target integration and quality: •integration and choice driven directly by users through personal budgets; • payment by results – where `results’ are outcomes - for providers of alcohol and drug rehabilitation programmes; • the Health Premium for Local Authorities to reward progress on health inequalities and public health; • NHS funding for social care, where benefits accrue to both • Value-Based Pricing for pharmaceuticals; and • integration through institutional change and other reform, e.g. the creation of CCGs and the shift of Community Providers away from commissioners. 9
  • 10. SummaryPayment reform in the NHS • Major extension to the scale and scope of PbR, though at relatively early days in terms of formal evaluation; • Part of a wider thrust to reform incentives, payments and allocations towards outcomes, patient-centred care and value-for-money. 10