PAYING FOR PERFORMANCE In PUBLIC HEALTH: Opportunities and Obstacles Glen P. Mays, Ph.D., M.P.H. Department of Health Policy and Administration UAMS College of Public Health

P4P in Health Care Use of financial incentives to improve quality, efficiency, productivity Not a new concept, but new applications are emerging post- managed care Considerable experimentation by insurers, purchasers, providers Considerable variation in methods –Target populations –Performance measures and criteria –Type and strength of incentives

Why Consider P4P in Public Health Wide variation in the performance of essential public health services Persistent disparities in population health outcomes Gaps in adoption of evidence-based public health interventions Growing demands for accountability

P4P in Health Care Inter-organizational –Insurer contracts with hospitals & physicians –Employer or government contracts with insurers Intra-organizational –Hospital compensation for employed physicians, nurses, other health professionals –Medical group compensation for individual members

Potential Effects of Incentives Improvement effects –Service quality –Cost/efficiency –Service volume, output, productivity Selection Effects –Attract better providers, staff –Attract a better patient population

Potential Advantages of Incentives Align incentives of purchaser and provider Promote accountability Reduce need to monitor inputs/effort

Potential Disadvantages of Incentives Higher payments required to attract risk-averse providers Distortion of service mix away from activities not measured, rewarded Reinforcement of disparities between high and low performing providers Creation of stressful work environments that may reduce job satisfaction, increase turn-over

Design of Performance Incentives Basing payments on health outcomes is problematic: –Exogenous & random variation in outcomes –Noisy measures –Attribution Alternatives: base pay on processes or outputs –Adherence to evidence-based practices –Service volume –Cost

Challenges in Design and Implementation Finding valid, reliable, relevant measures Data availability and quality Securing buy-in of providers Finding new dollars for sufficiently strong incentives Reducing opportunities for gaming

Unique Challenges for Public Health Limited availability of off-the-shelf measures Inflexible, categorical funding streams Public-sector purchasing, hiring, compensation rules Many areas of shared accountability –Local and state agencies –Public and private providers –Individual and population health interventions Time horizon for implementation and impact of community-based interventions

Building Blocks for Public Health P4P Existing Performance Measurement Sets –National PH Performance Standards –State measurement sets Available now Process measures Self-assessed Attribution and accountability issues ? Linkage to desired outcomes

Building Blocks for Public Health P4P Existing Population Health Measures –Vital records: mortality and birth outcomes –Notifiable disease surveillance data –Behavioral Risk Factor Surveillance System Available now Linkage to desired outcomes Attribution and accountability issues Time horizon

Building Blocks for Public Health P4P Measures of Guideline Adherence –Guide to Community Preventive Services –Guide to Clinical Preventive Services –Tobacco Control Program Guidelines Guidelines available now ? Existing data on guideline adherence Linkage to desired outcomes Attribution and accountability issues ? Time horizon

Incentive Design Issues Use of existing public health funding streams? Handling pass-through funding? Reward quality targets or quality improvement? Economic feasibility: do rewards to offset the cost of improvement? Include incentives and penalties?

Measurement Issues Types of measures: structural, processes, outcomes Risk adjusting performance measures for community need? Including population/community perceptions of service?

Getting from Here to There Small scale demonstrations and pilots Engage the practice community in design, implementation, and evaluation Use start-up strategies that reward measurement and reporting Phase in gradually to avoid large-scale shifts in resources