PAY-FOR-PERFORMANCE IN TAIWAN Academy Health Annual Research Meeting 2006 Seattle, Washington June 25-27, 2006 May Tsung-Mei Cheng International Forum Princeton University

OUTLINE OF PRESENTATION I. QUICK OVERVIEW OF TAIWANS HEALTH SYSTEM II. OVERVIEW OF TAIWANS P4P PROGRAMS III. HOW P4P PROGRAMS IN TAIWAN WORK IV. FUNDING FOR P4P PROGRAMS IV. CONCLUDING OBSERVATIONS

I. QUICK OVERVIEW OF TAIWANS HEALTH SYSTEM

OVERVIEW OF TAIWANS HEALTH CARE SYSTEM A single-payer system, National Health Insurance (NHI), established in 1995 and administered by the central governments Bureau of National Health Insurance (BNHI) under the Department of Health (DOH). Covers 99% of Taiwans population of 22.3 million; enrollment is mandatory Comprehensive benefits: in- and outpatient care, drugs, dental, vision, traditional Chinese medicine, etc. Smart Card (IC-Card) is used for accessing care in 100% of cases

OVERVIEW OF TAIWANS HEALTH CARE SYSTEM Taiwans total NHE is 6.17% GDP (2004) NHI accounts for 56.55% of that total Out of pocket payments: 32% (by way of comparison, it is 30% in Canada) NHI is financed from 3 sources: households (38%), employers (35%) and government (27%) The premium structure is very complex. Roughly speaking, households pay a premium of 4.55% of income. 100% electronic claim submission

Delivery system: private sector dominance (97% doctors in private practice; 84.8% hospitals private) Global budget: 4 sectors -- hospital, primary care, dental, traditional Chinese medicine Payment of providers is primarily FFS, some DRGs, case payment, capitation, and P4P Patients have complete freedom to choose providers; co-pay varies by level of providers No waiting lines like in the UK or in Canada Satisfaction rate among citizenry is high: 70s% OVERVIEW OF TAIWANS HEALTH CARE SYSTEM

II. OVERVIEW OF TAIWANS P4P SYSTEM

GENESIS OF P4P INTIATIVES IN TAIWAN NHI Law made no special provision re quality; emphasis was on access and coverage. Even so, Taiwans BNHI has engaged in a number of quality improvement initiatives, of which P4P is one. Several pilot programs began in late In January 2006, two additional programs were initiated.

5 PILOT P4P PROGRAMS + 2 TRIAL PROGRAMS Asthma (based on process measures) Diabetes (based on process measures) Breast cancer (based on outcome measures) Cervical cancer Tuberculosis A. The Original 5: Implementation began late 2001 B. New - January 1, 2006: Trial period 1 yr. Hypertension Depression

III. HOW P4P PROGRAMS IN TAIWAN WORK

Voluntary participation by primary care physicians, hospitals, or clinics and other care facilities. To participate in the program, providers must adopt the following quality assurance measures: –Meet formal qualification/certification requirements for participating medical personnel (physicians, nurses, dieticians), hospitals and clinics. –Follow treatment guidelines such as the widely accepted guidelines for DM care developed by the U.S. based ADA. –Establish case-based Electronic Medical Record (EMR) and medical record management systems.

Reporting: claims data, supplemented by self- reported performance data on the outcome and process parts, using a special webpage outside of regular claims filing channel. ILLUSTRATIONS: - Breast Cancer - Diabetes - Asthma

–Starting date: November 1, 2001 –Outcome-based payment, contingent upon year- end total survival and disease-free survival –Provider participation: 3 medical centers, 5 hospitals, 2 regional hospitals for a combined total of 200 professional medical personnel committed to the program –2,381 new patients covered in the program in 2004 = 44.34% of all BRAC patients in Taiwan Breast Cancer

Outcome-based bonus payments on top of regular case-based payment: –1% of regular case payment at 1st yr. survival –2% 2 nd yr. –5% 5 th yr. EXTRA PAYMENTS FOR BREAST CANCER P4P

Breast Cancer RESULTS: –The sole P4P program among the 5 that bases payment on outcomes, the BRAC P4P met 100% target goals for 5-year total survival and disease-free survival. –Patient satisfaction extremely high.

Diabetes Mellitus (DM) Starting date: November 1, th leading cause of death in Taiwan (2003) Accounting for 11.5% of NHI spending Quality of care remained poor due to the fragmented care under the FFS payment system Previous government attempts to improve the quality of care yielded mediocre results, thought to be due to lack of structural support and financial incentive to providers to deliver appropriate care.

Using disease management team care model, chronic care services are delivered by certified DM physicians, nurses, and dietitians 4 x/yr. Required services include and tests for HbA1C, urine micro-albumin, eye exam, BP and LDL check, foot care, and patient counseling % DM patients enrolled in DM-P4P program: % % Diabetes Mellitus (DM)

Provider participation: /2005 Hospitals/Clinics Cases 32,267 80, , ,148 Diabetes Mellitus (DM)

Complex process-based bonus scheme: –1845 points for initial visit for new patient – 875 points for each repeat visit (up to 3x/yr.) –2245 points for annual evaluation visit – 200 points for drug refill prescription – Eye exam separate payment Other medical services and drugs for DM patients enrolled in the program are paid under the traditional FFS payment scheme. EXTRA PAYMENTS FOR DIABETES P4P NOTE: 1 POINT = NT$ 1 = US$ 0.03

RESULTS: A.Process indicators: Showed improvements across the board in 2004 over previous studies B.Outcomes indicators: Pre-trial* Post-trial** % Change HbA1c % Systolic BP % Diastolic BP % LDL % * Pre-trial column: Numbers refer to % of DM patients in the experimental group whose biological and metabolic conditions were not well-controlled before entering trial ** Post-trial column: Numbers refer to % of patients whose biologic and metabolic conditions remain not well-controlled after trial began. Diabetes Mellitus (DM)

Asthma Starting date: November 1, 2001; beginning in January 2004 payments increased also for care for co-morbidities of asthma patients Provider participation: /2005 Hospitals/clinics ,252 Cases 7,229 31, , ,831

1 st Year: –NT$ 500 management fee for new patients –NT$ 200 for 2 nd visit –NT$ 200 for 3 rd visit –NT$ 900 for year-end (4 th ) visit 2 nd Year: –4 NT$ 200, 200, 200, and 900 for ea. visit EXTRA PAYMENTS FOR ASTHMA P4P NOTE: NT$ 100 = US$ 3.05

RESULTS After 2 yrs. of follow up: –No apparent difference in frequency of outpatient visits –Cost for outpatient care: 16.27% – for TOTAL care: 9.17% –Frequency of emergency visits: 39.94% –Cost for emergency care: 30.90% –Frequency of hospitalization: 46.31% –Cost of inpatient care: 44% –Length of stay: 51.74% Asthma

IV. FUNDING FOR P4P PROGRAMS

Beginning in 2006, funds for bonus payments are made available through a special, ear-marked budget line item titled Other Budgets within the NHIs overall global budget. Therefore, the P4P system is not budget-neutral. Instead, performance payments are made in addition to the regular FFS payments for services rendered.

Total funding for P4P committed in 2006, by source of funding: GB for primary care NT$ 356 ml. Hospital GB NT$ 725 ml. Other sources NT$ 69 ml. TOTAL $ COMMITTED: NT$ 1,166 ml. HOW MUCH IS COMMITTED TO PERFORMANCE PAYMENTS? At this time, total P4P spending under Taiwans NHI is between.3% and.4% of total NHI spending, but it is slated to grow in the future.

IV. CONCLUDING OBSERVATIONS

It would appear that, based on the results of the P4P programs currently being adopted in Taiwan, financial incentives do play an important role in the delivery of better quality care and better outcomes. This is a conclusion the authors of a national DM study also reached.

Of course, the results shown here may also be driven by other factors, e.g.: –guideline-based disease management helped guide/change provider behavior. –Coordinated efforts from other DOH agencies to promote better process and outcome, e.g., the Bureau of Health Promotion in the DOH actively works with the BNHI to improve DM care. To my knowledge, a full-fledged statistical analysis of Taiwans P4P programs controlling for possibly confounding factors has not yet been undertaken.

Finally, whatever one may think of single-payer health insurance systems, Taiwans single payer system is an ideal platform for P4P programs, because that system embodies an information infrastructure that yields comprehensive and up-to-date information on the care actually delivered to patients. It allows Taiwan to base its P4P system more heavily on claims data, rather than on the less reliable, self- reported performance data now so widely used for P4P throughout the world. Of course, to the extent that claims for payment may be fraudulent or miscoded, such data are no more reliable than self-reported performance data.

All P4P systems, around the world, should operate on Ronald Reagans famous maxim: TRUST, BUT VERIFY.