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Pay for performance

Anita Charlesworth, Chief Economist, Nuffield Trust




Supported by:
Key Issues 3: Pay for performance

Why pay for performance?
 1. Signalling
 • payment is one way to signal what is important and
   incentivise providers to focus on this?
 • Others are targets, regulatory and professional standards
   and guidelines?
 • Is payment more effective that the other options? Is
   payment more effective if it is combined with other levers?
 • What is different about payment?


Supported by:
Key Issues 3: Pay for performance
2. Quality and cost
 • Better quality is more expensive
   • Why not just increase reimbursement price to deliver desired quality?
   • If performance varies substantially between providers – quality premium or threshold
       avoids economic rents.
 • Better quality is cheaper
   • Why not just reduce the reimbursement price?
   •   If improved quality reduces activity is this a form of gain sharing to incentivise providers
       to make improvements which would have a negative impact on their income?
   • Concerned about the instability this might cause for providers and patients who may find
       it difficult to achieve quality standard.


 Supported by:
Key Issues 3: Pay for performance

Key challenges
 • Defining high quality
   • The type of indicator: What domains of quality, with what
     weight
   • Who sets the standard and on what basis – what to reward
   • Availability of robust metrics which providers can’t game
   • Value – how to achieve improvement rather than
     displacement
   • Administrative cost and complexity


Supported by:
Key topic 3: Pay for performance

• What is the role of pay for performance versus the provision
  of better information on quality for patients, physicians and
  purchasers?
• What are the strengths and weaknesses of pay for
  performance – is it different for physician reimbursement
  and hospital reimbursement?
• Which policies help to further a beneficial impact of pay for
  performance payments?
• What role, if any, should HTA bodies such as NICE have in
  pay for performance models?
• What innovations are next?

Supported by:
www.nuffieldtrust.org.uk


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24 January 2012                                © Nuffield Trust

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Anita Charlesworth: Pay for performance

  • 1. Pay for performance Anita Charlesworth, Chief Economist, Nuffield Trust Supported by:
  • 2. Key Issues 3: Pay for performance Why pay for performance? 1. Signalling • payment is one way to signal what is important and incentivise providers to focus on this? • Others are targets, regulatory and professional standards and guidelines? • Is payment more effective that the other options? Is payment more effective if it is combined with other levers? • What is different about payment? Supported by:
  • 3. Key Issues 3: Pay for performance 2. Quality and cost • Better quality is more expensive • Why not just increase reimbursement price to deliver desired quality? • If performance varies substantially between providers – quality premium or threshold avoids economic rents. • Better quality is cheaper • Why not just reduce the reimbursement price? • If improved quality reduces activity is this a form of gain sharing to incentivise providers to make improvements which would have a negative impact on their income? • Concerned about the instability this might cause for providers and patients who may find it difficult to achieve quality standard. Supported by:
  • 4. Key Issues 3: Pay for performance Key challenges • Defining high quality • The type of indicator: What domains of quality, with what weight • Who sets the standard and on what basis – what to reward • Availability of robust metrics which providers can’t game • Value – how to achieve improvement rather than displacement • Administrative cost and complexity Supported by:
  • 5. Key topic 3: Pay for performance • What is the role of pay for performance versus the provision of better information on quality for patients, physicians and purchasers? • What are the strengths and weaknesses of pay for performance – is it different for physician reimbursement and hospital reimbursement? • Which policies help to further a beneficial impact of pay for performance payments? • What role, if any, should HTA bodies such as NICE have in pay for performance models? • What innovations are next? Supported by:
  • 6. www.nuffieldtrust.org.uk Sign-up for our newsletter www.nuffieldtrust.org.uk/newsletter Follow us on Twitter (http://twitter.com/NuffieldTrust) 24 January 2012 © Nuffield Trust