International Research Project on Financing Quality in Health Care

1. International Research Project on FinancingQualityin Health Care Welcome and Introduction AnnualMeetingHannover, February 9-10, 2012 Project Leader Prof. dr hab. Tomasz Hermanowski

2. Agenda – Day 1

3. Agenda – Day 1

4. Agenda – Day 2

5. Institutional Context • Euro-DRG Project concluded that quality was not adversely affected by the introduction of DRG-based hospital payment in most European countries. • The impact of DRGon quality of care depends on the country-specific design features of the systems and institutional context Diagnosis-Related Groups in Europe, Busse R., Geissler A., Quentin W., Wiley M., eds., , European Observatory of Health Systems and Policies, Open University Press, Berkshire, 2011, p. 155

6. CQUIN experience • Few countries explicitly adjust DRG-based hospital payments on the basis of information regarding quality in hospitals. • One exception is England, where the Commissioning for Quality and Innovation (CQUIN) framework allows purchasers to link a moderate proportion of hospitals' income (that is, 1.5 per cent in 2010/2011) tothe achievement of locally negotiated quality goals. • Therefore, the we have invited prof. John Hutton to deliver a keynote presentation on UK experience with the Quality and Outcomes Framework

7. Integrated Care • Another patient-based alternative for integrating quality into DRG-based hospital payment systems is to extend the treatment episode for which payment is granted; by including outpatient visits, readmissions, and so on. • For example, Dutch DRG system covers the whole spectrum of inpatient and outpatient care provided at hospitals, relating to a specific diagnosis, from the first specialist visit to the end of the care process and including inpatient days, outpatient visits, laboratory services, medical imagining services, medications, medical materials, surgical procedures, etc • The second Keynote Speaker: Dr. Elisabeth Siegmund-Schulze from KKH-Allianz; sickness fund will tell us about German experience with Integrated care and payment systems

8. German healthcare • The first Keynote Speaker and our Host: prof. Volker Amelung will provide an overview of changing German healthcare system • On behalf of all Annual Meeing guests and attendees I would like to thank all three Keynote Speakers for accepting our invitations, in spite of the short notice and little time to prepare presentatios • Importance of the subjects and their competence makes me feel we are in the right place and in the right time to start the Annual Meeting with an overview of the burning issues, directly relevant for the InterQuality Project

9. Thank you! Tomasz.hermanowski@wum.edu.pl

10. International Research Project on FinancingQualityin Health Care Project Overview State-of-theart and beyond AnnualMeetingHannover, February 9-10, 2012 Project Leader Prof. dr hab. Tomasz Hermanowski

11. WP1 Reviews

12. WP2 Reviews

13. Scope of InterQuality Research Project • to investigate the effects of different financing models and incentives on the quality, effectiveness and equity of acess to: • Outpatient care • Hospital care • Pharmaceutical care • To establish the feasibility of collaborative practice models, involving physicians, hospitals and pharmacy-service providers in the context of implementing integrated care and innovative P4P financig models

14. WP1 – 2; Incentives, Values/Benefits The first two work packages will provide detailed theoretical background: • WP 1 will discuss into the effects of financial and non-financial incentives of reimbursement systems based on the neoclassical economics principal-agent theory • WP 2 will assess the benefits of reimbursement incentives in the light of their effects on the quality of care

15. WP1 – 2; Intermediate Reports • The objective of IQ Project is to identify and recommend to EU Member States most effective P4P models. • If the results are not yet conclusive, we should ask ourselves why and what should be our next steps: • Re-visit thoretical assumptions ( Principal-Agency Theory, Transaction Costs Analysis) • Analyse the impact of country institutional settings and availability of quality information • Narrow-down on selected therapeutic areas or case-studies: diabetes, cardio-vascular diseases, oncology?

16. Methods • New Institutional Economics (Olivier Williamson, Nobel prize 2009) • Agency (Principal-Agent) Theory • Transaction costs analysis • Use of Patient Reported Oucomes data to assess healthcare quality and efficiency: • English NHS PROMs programme, • Reimbursement for providers linked to PROMs performance, via local incentive contracts (‘CQUIN’ payments) • If the purpose of a health system is to improve health, not just to produce healthcare services - than PROMs are essential!

17. Methods Market regulators inability to observe agents private information is perhaps most evident in the case of physicians or pharmacists, expected to act as patient’s agents in some health care systems, like Germany or UK. This may explain why US Government prefers to use as agents, managing Medicare drug benefit, Prescription Drug Plans, whose business model is far more transparent and easier to observe. Adoption of a Cost-Saving Innovation: Germany, UK and Simvastatin, in: England and Germany in Europe – What Lessons Can We Learn from Each Other? McGuire,T., Bauhoff S. Klusen, N., Verheyen, F. and Wagner, C. (eds.). Beiträge zum Gesundheitsmanagement 32: p.11-26

18. WP1 Objectives • To perform a comprehensive literature review to explore what is known about the impact of payment incentives on quality of clinical care and related concepts including: patient experience with care, ethnic and racial disparities, and costs of care to society and individuals. • To develop criteria for desirable payment models for ambulatory care, inpatient hospital care and integrated acute care. • Using the criteria, develop generic and country-specific payment models for ambulatory care, inpatient hospital care and integrated care. These models would serve as templates for subsequent work products

19. WP1 Tasks Task 1.1. Literature and methodology review, definitions development Task 1.2. Input from collaborative partners (13 Person-Months FTE) analysis of perceived strengthsand weaknesses of current and proposed models. Partners will provide UI with results of review of literature perceived as relevant to country specific health care system issues Task 1.3. Comparative analysis of incentives and payment models.Summary of perceived strengths and weaknesses of about a dozen payment models will be developed, fed back to the partners and revised. Areas of consensus and disagreement will be identified, country-specific considerations that make particular payment approaches desirable or problematic will be identified by UI Task 1.4. Criteria Development. Based upon task 1.2 & 1.3 consensus process to develop specific criteria (or attributes) would be used for evaluating current and proposed payment models. UI will develop consensus criteria, others would review and comment

20. WP1 Deliverables Internal deliverables: D1.1.1 An extensive literature review on financial and non-financial incentives that affect provider behavior D 1.1.2 A catalogue of criteria related to quality, cost, efficiency, administrative feasibility and other important considerations as a basis for evaluating specific payment models that are or could be implemented Should be sent to European Commission at month 18 as: D 1.1 Project Methodology Guidelines; Part 1: Guidelines for further project activities on comparative evaluation of quality, economic and equity issues in healthcare systems: 1. catalogue of definitions related to quality, equity, costs, and administrative feasibility for evaluating specific payment models, set on the base of extensive literature review on financial and non-financial incentives

21. Collaborative Work • The first objective of the Hannover meeting should be to start the review and appraisal process of alternative payment incentives to drive quality improvement and foster better use of health care resources • Specific literature in languages other than English may be requested . WP1 may perform disquisitive studies, not just comparative studies of payment models. • Tasks 1.2. , 1.3., 1.4. should be completed by Partners by May 31, 2012

22. Collaborative Work • The effect of DRGs on hospital quality is not straightforward (Davis & Rhodes, 1988; Farrar et al., 2009). • On the one hand, because DRGs provide a concise and meaningful measure of hospital activity and thus facilitate monitoring and comparisons of hospital quality, they could contribute to better quality of care. In addition, cost-reduction incentives of DRG-based hospital payment systems could lead to increased efforts to improve quality, if quality contributes to reduced costs. For example, improved coordination between hospitals, out­patient providers and long-term care facilities would reduce costs but could also contribute to better quality of care.

23. Collaborative Work • However, on the other hand, and this has been a reason for continuous concern (Rogers et al., 1990), hospitals may be tempted to reduce costs by reducing quality, if DRG-based payments do not depend on quality. For example, because DRGs do not specify which services must be provided when treating a specific patient, hospitals can 'skimp' quality by avoiding certain diagnostic tests, disregarding hygiene standards, or by lowering staffing ratios per bed

24. Innovation’s effect on cost and quality Effect of innovation on cost + A Quality-increasing and Cost-increasing innovation D Quality-decreasing and cost-increasing innovation - + Effect of innovation on quality 0 C Quality-decreasing and Cost-saving innvation B Quality-increasing and Cost-saving innovation -

25. Institutional Context • Euro-DRG Project concluded that quality was not adversely affected by the introduction of DRG-based hospital payment in most European countries. • The impact of DRGon quality of care depends on the country-specific design features of the systems and institutional context • The effect of DRG-based hospital payments on quality of care might be different in Europe from that in the United States because : • DRG-based hospital payment systems in most countries did not replace fee-tor-service systems (as was the case in the United States) but rather global budgets, which were already partly adjusted for activity measured in cases or bed days • much stronger public sector presence in the provision of health care in Europe than in the United States.

26. Institutional Context • Few countries explicitly adjust DRG-based hospital payments on the basis of information regarding quality in hospitals. • One exception is England, where the Commissioning for Quality and Innovation (CQUIN) framework allows purchasers to link a moderate proportion of hospitals' income (that is, 1.5 per cent in 2010/2011) tothe achievement of locally negotiated quality goals. • In the Netherlands, insurers can negotiate with hospitals regarding price, volume and quality of care for about 30 per cent of Dutch DRGs. However, insurers and hospitals negotiate predominantly on price and volume, while quality plays only a minor role in the negotiation process

27. Institutional Context • Instead of adjusting DRG-based hospital payment for quality, most countries reward quality improvements through specificbudgets that are independent from DRG-based hospital payments • The problem is that in many European countries information on quality in hospitals is still insufficient

28. Institutional Context • However, data quality (at least in terms of diagnoses and procedures) have improved considerably following the introduction of DRGs in many countries • If these data are found to provide valid and reliable indicators for the quality of care, it is likely that there will be increased efforts to use such data also for payment purposes, called pay­for-performance (P4P) • Implementation of P4P in Europe depends on E-healh progress Diagnosis-Related Groups in Europe, Busse R., Geissler A., Quentin W., Wiley M., eds., , European Observatory of Health Systems and Policies, Open University Press, Berkshire, 2011, p. 155

29. Collaborative Work • Penalizing or rewarding hospitals based on their diagnosis coding could heighten the risks of 'gaming' or coding manipulation (Iezzoni, 2009). • Another patient-based alternative for integrating quality into DRG-based hospital payment systems is to extend the treatment episode for which payment is granted; by including outpatient visits, readmissions, and so on. • Dutch DRG system covers the whole spectrum of inpatient and outpatient care provided at hospitals, relating to a specific diagnosis from the first specialist visit to the end of the care process (treatment completed) and including inpatient days, outpatient visits, laboratory services, medical imagin services, medications, medical materials, (surgical) procedures, etc

30. Collaborative Work • Consequently, as long as a patient is treated for the same condition, the hospital does not receive an extra payment. However, the Dutch system does not provide incentives to reduce postoperative infections or readmission rates, since these are coded as new DBCs. • It is possible to have a system which combines different approaches, for example quality adjustments at the patient level with a globalpayment adjustment for quality at the hospital level. • The essentialprerequisite for quality-based payment adjustments to the hospital payment system is the availability of information on the quality of care.

31. Collaborative Work • Several countries have increased their efforts to collect quality information:BOS-Federal Office for Quality Assurance or AQUA-Institute for Applied Quality Improvment in Germany (Busse et al., 2009), COMPAQH in France) but routinely available information cm patient outcomes is still scarce. • Theimportance of having better information regarding the quality of care is evidenced by the existence of specific financial incentives to hospitals for reporting quality information. • Medicare encourages hospitals to participate in public reporting of quality information. Those hospitals that do not report on 10 measures of quality (defined by the Hospital Quality Alliance) receive a 0.4 per cent reduction in their DRG prices.

32. Collaborative Work • In Germany hospitals are financially penalized if they report quality information for less than 80 per cent of treated cases (Busse et al., 2009) • The pertinence of using the act of reporting quality data as a proxy for quality of care delivery is questionable, but - when data are available - hospitals can also be offered positive incentives for their effort or extra payments can be made for stimulating innovative approaches to improving quality and patient safety

33. Collaborative Input Structure • Overview of health care institutions and the role of payment methods in the country • Development and updates of payment methods • Country cost-accounting system • Availability of quality information • Methods to integrate medical technology innovations assessment • Summary of oulook in terms of future development and reforms

34. Collaborative Work • Two key words • Division of labor • Teamwork

35. Remaining Collaborative Work One of the objectives of this Conference should be to investigate the feasibillity of focusing Project’s research on a particular therapeutic area (diabetes?oncology?) Participants are kindly asked to contribute proposals and ideas for a hypothetical case study totest the attributes of desirable payment models

36. Collaborative Work

37. WP2 Objectives WP 2 will solve methodological challenges raised by analysis of patient-level datain international comparative research. All Consortium partners will contribute with input on data availability and particular challenges in their countries.Main objectives are to develop consensus and guidelines on: • common terminology and conceptual framework for costs and outcomes measurement • methods of measuring costs • methods of evaluating economic efficiency, based on NICE guidelines for health technology evaluation and IQWIG efficiency frontier, including guidelines for measuring patient-relevant outcomes • methods of measuring quality and equity of healthcare • methods of statistical analysis across countries, differentiating between country and policy effects

38. WP2 Tasks • Task 2.1. Literature and methodology review, definition development • Task 2.2. Input from collaborative partners (15 Person-Months). Review of literature perceived as relevant to country specific health care system issues • Task 2.3. Comparative analysis of value/benefits measurement. Perceived strengths and weaknesses of methodology for cost and outcome of care measurement will be developed, fed back to the members and revised. Areas of both consensus and disagreement will be identified • Task 2.4. Methodology of statistical analysis across countries & Data Base

39. WP2 Deliverables Internal deliverables: D2.1.1. Guidelines for further project activities on comparative analysis of healthcare quality evaluation, economic evaluation of health technology and equity in healthcare systems D 2.1.2. Guidelines for further project activities on statistical analysis across countries, differentiation between country and policy effects in different data sets, taking into consideration data availability and respecting confidentiality requirements: adaptation of multilevel analysis Should be sent to European Commission at month 12 as: D2.1Project Methodology Guidelines; Part 2 & 3: Guidelines for further project activities on comparative evaluation of quality, economic and equity issues in healthcare systems: 2. catalogue of definitions related to quality, equity, costs, and economic evaluation as well as comparative value/benefit analysis; 3. methodology of statistical analysis across countries.

40. Collaborative Work • The second objective of this Conference is to initiate Partners review of literature, regarding value/benefits measurement, perceived as relevant to country specific health care system issues and to start comparative analysis of value/benefits measurement. • Tasks 2.2. and 2.3., should be completed by Partners by November 30, 2011.

42. Remaining Collaborative Work One of the objectives of this Conference should be to investigate the feasibillity of focusing Project’s research on a particular therapeutic area (diabetes?oncology?) Participants are kindly asked to contribute proposals and ideas for a hypothetical case study totest the attributes of desirable payment models

43. Integrated Care of Diabetic Foot UlcerCase Study • Due to rising prevalence and the high rate of complications diabetes becomes an increasing burden for health care systems all over the world • Lower extremity ulcers are increasing a problem among patients with diabetes. Especially late complications of diabetes are shown to increase the total costs for diabetes care from 50% to more than 700%

44. Integrated Care of Diabetic Foot UlcerCase Study • Intervention directed towards preventing the development or deterioration of foot ulcers in diabetic patients may reduce the frequency of lower extremity amputations by approximately 50% to 85%. • There is also evidence that intensified and early treatment of ulcers is able to reduce the amputation rate by up to 80%

45. Integrated Care of Diabetic Foot UlcerCase Study • Treatment cost of diabetic foot may be extremely high, due to prolong healing and intensive care • However, costs to society of amputations are even higher, due to the prolonged hospitalization, rehabilitation, home care and social services for the people with a disability due to amputation.

46. Integrated Care of DiabeticFootUlcerCaseStudy • There is a need to established cost-effectiveness of intensified and early treatment of foot ulcers in diabetic population. It’s crucial to estimate not only direct but also indirect costs of diabetic foot ulcer • In order to do that economic model could be build, based on utilities values for diabetic patients with foot ulcers or/and lower extremity amputations due to foot ulcers

47. Thank you! Tomasz.hermanowski@wum.edu.pl

48. International Research Project on FinancingQualityin Health Care Wrap-up and closingremarks AnnualMeetingHannover, February 9-10, 2012 Project Leader Prof. dr hab. Tomasz Hermanowski

49. WP1 Deliverables Internal deliverables: D1.1.1 An extensive literature review on financial and non-financial incentives that affect provider behavior D 1.1.2 A catalogue of criteria related to quality, cost, efficiency, administrative feasibility and other important considerations as a basis for evaluating specific payment models that are or could be implemented Should be sent to European Commission at month 18 as: D 1.1 Project Methodology Guidelines; Part 1: Guidelines for further project activities on comparative evaluation of quality, economic and equity issues in healthcare systems: 1. catalogue of definitions related to quality, equity, costs, and administrative feasibility for evaluating specific payment models, set on the base of extensive literature review on financial and non-financial incentives

50. WP2 Deliverables Internal deliverables: D2.1.1. Guidelines for further project activities on comparative analysis of healthcare quality evaluation, economic evaluation of health technology and equity in healthcare systems D 2.1.2. Guidelines for further project activities on statistical analysis across countries, differentiation between country and policy effects in different data sets, taking into consideration data availability and respecting confidentiality requirements: adaptation of multilevel analysis Should be sent to European Commission at month 12 as: D2.1Project Methodology Guidelines; Part 2 & 3: Guidelines for further project activities on comparative evaluation of quality, economic and equity issues in healthcare systems: 2. catalogue of definitions related to quality, equity, costs, and economic evaluation as well as comparative value/benefit analysis; 3. methodology of statistical analysis across countries.