Efficiency and Integration in Estonia's Health Care Payment System

PAYING FOR HEALTH CARE IN ESTONIA: TOWARD GREATER INTEGRATION AND IMPROVED EFFICIENCY World Bank Group October 2017

25 years conservatism with innovation 1

Core system characteristic - sophistication Risk-adjusted (age and gender) Floor for some rural physicians Capitation P Diagnostic fund Therapeutic fund Procedure fund FFS H Points-based scoring system Three domains 19 indicators Tiered bonus QBS C Basic allowance Distance allowance Overtime allowance Allowances 2

Change in reform priorities Objectives Specific objectives Reform initiatives Strengthening primary care Improve: Scope Quality Access Coordination role Group practices E-health E2CM Shifting specialist services to primary care Reduce unnecessary care Payment system? 3

Avoidable specialist visits by tracer Number of specialist visits Share of avoidable specialist visits Disease sub-group Diabetes 42,064 19.9% Hypertension 63,917 67.5% 4

Reform initiatives Objectives Specific objectives Reform initiatives Strengthening primary care Improve: Scope Quality Access Coordination role Group practices E-health E2CM Shifting specialist services to primary care Reduce unnecessary care delivery Payment system? 5

Outline Scope and methodology Key messages Key entry points and reform options Methods Primary health care Hospital care Functions Endnotes and next steps 6

Scope of analysis: Payment methods Capitation Key questions: Create incentives to: Align behavior with sector objectives Mitigate unintended consequences FFS Angles: Design and blending within care settings Blending across care settings QBS Allowances Additional instruments: Caps Co-pays DRG Per diem 7

Scope of analysis: Payment system functions Key questions Increase accuracy and consistency of information Align price signals with system objectives Improve accountability for achieving results Classifying Counting Costing Monitoring Pricing 8

Methodology Assess alignment with current sector objectives and international good practices Consider potential gains and risks of emerging innovations Take stock of how current system operates Propose options for improvements 9

Key messages 1. System is well developed and advanced compared to other EU countries 2. Room to adjust and complement with more than a dozen entry points, each with various options 3. At this stage, no reason to consider emerging innovations 10

Key entry points and reform options Primary care Hospital care Specific objectives Payment methods Payment functions 11

Key entry points and reform options Primary care Specific objectives PHC-led coordination of care geographical access to PHC scope of PHC services quality of PHC Payment methods Simplify incentives to practice in rural areas Introduce dynamic FFS list approach Enhance QBS arrangements Introduce incentives to join group practices + adjust payment methods Introduce payment for enhanced care management Enhance QBS Indicators 12

Introduce dynamic FFS approach Objectives: Use FFS more strategically to expand scope of services while reducing inefficiencies Issues: Scope of services covered by FFS funds has been rapidly expanding Diagnostic fund capped at 39-42% of capitation Therapeutic fund capped at 3% for solo practices, 10% for group practices Procedure fund no cap Expansions have focused on adding services without eliminating those that have been widely adopted Expansions have resulted in overlaps with other payment methods (e.g. capitation, QBS) 13

Introduce dynamic FFS approach (contd) Objectives: Use FFS more strategically to expand scope of services while reducing inefficiencies Option(s): Towards a dynamic approach and reduced overlaps: Review FFS lists every 3 years to pull in routine work under adjusted capitation payment Introduce new interventions with a sunset clause Select new interventions to strategically expand problem solving capacity Monitor delivery of services pulled under capitation through routine audits As needed, risk-adjust capitation to prevent skimping and cream-skimming 14

Enhance QBS arrangements Objectives: Improve compliance with good practices and gradually shift attention to health outcomes Issues: Complex, point-based scoring system lacking clarity of strong performance incentive Inconsistencies with dated or absence of national clinical guidelines Process without any outcome indicators Bonus amount (1.8% of avg. revenue) low compared to other OECD countries (5-15%) Tiered bonus system diluting strength of stimulus Add-on bonus not as strong as withhold or claw-back mechanisms 15

Enhance QBS arrangements (contd) Objectives: Improve compliance with good practices and gradually shift attention to health outcomes Option(s): Transition from point-based to indicator-based scoring system Ensure national clinical guidelines are available for all indicators and that these are updated in line with international good practice Gradually introduce outcome indicators Raise bonus amount Drop tiered bonus in favor of all-or-nothing rule with high threshold (e.g. 18 out of 19 indicators) Adopt withhold or claw-back mechanism 16

Key entry points and reform options Hospital care Specific objectives efficiency of acute inpatient care episodes + day care unnecessary acute inpatient care admissions unnecessary outpatient specialist visits Payment methods Refine Move to a 100% DRG reimbursement rate reimbursement rates based on service volumes volume caps for outpatient specialist and acute inpatient care Align DRG tariffs with clinical guidelines copays and introduce fees for no shows 17

Refine reimbursement rates based on service volumes Objectives: Reduce incentives for provision of unnecessary acute inpatient and outpatient specialist care Issues: Reimbursement rates (DRG, FFS, per diem) - acute inpatient care: Up to volume cap: For services delivered Full tariff For services not delivered --- Beyond volume cap For services delivered 30% of tariff Reimbursement rates (FFS) - outpatient specialist care Up to volume cap: For services delivered Full tariff For services not delivered --- Up to 5%: For services delivered 70% of tariff Beyond 5% of volume cap: For services delivered 30% of tariff 18

Refine reimbursement rates based on service volumes (contd) Objectives: Reduce incentives for provision of unnecessary acute inpatient and outpatient specialist care Options: Options Reimbursement rates (DRG, FFS, per diem) - acute inpatient care: Up to volume cap: For services delivered Full tariff Full tariff For services not delivered --- Reduced tariff (e.g. to cover fixed costs, OECD 20-50%) Beyond volume cap For services delivered 30% of tariff Reduced tariff or cap (e.g., cap up to 15%) Reimbursement rates (FFS) - outpatient specialist care Up to volume cap: For services delivered Full tariff Full tariff For services not delivered --- Reduced tariff (e.g. to cover fixed costs, OECD 20-50%) Up to 5% of volume cap: For services delivered 70% of tariff 70% of tariff Beyond 5% of volume cap: For services delivered 30% of tariff Reduced tariff or cap 19

Key entry points and reform options Specific objectives unnecessary outpatient specialist visits unnecessary acute inpatient care admissions efficiency of acute inpatient care episodes + day care PHC-led coordination of care geographical access to PHC quality of PHC scope of PHC services Payment functions accuracy + consistency, align price signals w/objectives accountability Strengthen pricing signals and improve impact modeling Move to patient-level costing approach Expand SNOMED-CT as classifying system Improve quality assurance of counting practices Enhance monitoring ( accountability) 20

Improve pricing negotiation and impact modeling Objectives: Strengthen price signals in line with reform objectives Issues: Prices are commonly set at cost level Price negotiations are part of costing process optimal mix, quantities and prices of inputs and activities Annual indexation of overheads only Modeling limited to impact of price changes on EHIF expenditures 21

Improve pricing negotiation and impact modeling (contd) Objectives: Strengthen price signals in line with reform objectives Options: Establish an annual negotiation cycle for strategic price adjustments that promotes clear understanding and ownership of pricing decisions by all stakeholders Introduce annual indexation of all costs Carry out impact modeling of price changes on provider revenues and behaviors (in addition to EHIF expenditures) to determine adequate price levels and phase-in schedules 22

Classifying: Expand use of SNOMED-CT Objectives: Increase the accuracy and consistency of information on health care products Issues: Output classification systems (WHO s ICD-10 for diagnoses, national health service list and NOMESCO classification for procedures) fail to capture granular information critical for risk adjustment and quality monitoring Input systems such as SNOMED-CT are increasingly used for EMR without mapping to output systems 23

Classifying: Expand use of SNOMED-CT (contd) Objectives: Increase the accuracy and consistency of information on health care products Options: Expand use of SNOMED-CT in EMR systems Introduce mapping to ICD-10 to streamline billing processes Capture information from EMR for risk adjustment, and quality monitoring and QBS Significant other benefits from mainstreaming (e.g. development of clinical decision support systems) 24

Endnotes and next steps Sophisticated system Monitor intended and unintended consequences Carry out further analytical work prior to moving towards implementation Keep an eye on emerging innovations AND 25

Dont throw me out with the bathwater! 26