1. TESTING PERFORMANCE-BASED REMUNERATION FOR PRIMARY CARE PROVIDERS IN ARMENIA Tatyana Makarova Mark McEuen Abt Associates Inc. GHC Conference, May 30 - June 2, 2005

2. CURRENT PHC PAYMENT SYSTEM 1.PHC Benefits Package source of funding: general taxes 2.Contract based budget funds allocations 3.Payment model: prospective 4.Basic payment method: capitation 5.Differentiated per capita rates: children and adults 6.Fees for selected services 7.Fees for selected diseases treatment

3. CURRENT PHC REMUNERATION SYSTEM Ministry of Health regulated salary rates Rate estimates defined on per capita basis for physicians and nurses Total base salary per provider assumes assigned population rather than actually enrolled Salaries are fixed and do not differ across providers in regard to service volume and quality, even in cases when they provide paid services

4. GOALS OF INCENTIVE REMUNERATION SYSTEM Introduce differentiated remuneration system to: Bring incentives and reward for improved quality and increased utilization of PHC services Reward additional work as participation in reform related activities and assignments Increase PHC personnels earnings and motivation

5. IMPLEMENTATION APPROACH Define PHC financing and remuneration indicators (volume and quality type) for rewarding performance Introduce performance based PHC financing in combination with capitation payments Collect performance data from new PHC information system and generate required reports Provide feedback on performance to individual providers in comparison with minimal, average and maximum indicators values achieved by the PHC staff Introduce a simple electronic tool for remuneration estimates to be easily used by facility accountants Quality indicators for remuneration were offered only to 3 pilots out of 13 as they already had functional CQI programs

6. PERFORMANCE INDICATORS Year 2004 –for PHC financing – enrolment performance only –for remuneration – 28 volume and quality indicators were offered for facility choice with the possibility to change them from month to month. Different pilots chose from 2 to 11 indicators. Year 2005: –seven PHC incentive financing indicators directly linked with 13 PHC remuneration indicators –all 13 remuneration indicators are to be used universally by pilots

7. COMPARISON OF 2004 AND 2005 INCENTIVE REMUNERATION SYSTEMS 1.4 months in 2004 vs. whole year in 2005 2.28 indicators in 2004 vs. 13 indicators in 2005 3.Elective indicators in 2004 vs. fixed list in 2005 4.Relation of incentive remuneration indicators to facility financing indicators

8. INCENTIVE REMUNERATION SYSTEM Base fund Variable fund Remuneration Fund

9. PHC FACILITIES PERFORMANCE INDICATORS 1.Indicator of population open enrollment 2.Indicator of all types of visits to PHC physicians (separately for children and adults) 3.Indicator of early detection of hypertension 4.Indicator of early detection of diseases in 0-1 year old children 5.Indicator of immunization 6.Indicator of participation of PHC physicians in Peer Chart Review process

10. REMUNERATION BASE FUND Source – state budget per capita financing Fixed salary Based on the optimal number of served population

11. REMUNERATION VARIABLE FUND Source – state budget incentive financing - established performance pool at the purchaser organization - State Health Agency Variable remuneration Based on reform related additional work and performance results

12. ASSESSMENT OF PHC PERSONNELS PERFORMANCE PHC personnels performance indicators Automated calculation of incentive remuneration PHC facilities performance indicators

17. CORRELATION BETWEEN BASE FUND AND INCENTIVE REMUNERATION IN 2004

19. PILOT PHYSICIANS TOTAL SALARY VS. AVERAGE ARMENIA WAGE IN 2004

20. PILOT NURSES TOTAL SALARY VS. AVERAGE ARMENIA WAGE IN 2004

21. CONCLUSIONS 1.Performance based PHC remuneration system has proved to be working 2.Sufficient time (not less than a year) is needed to assess measurable impact and draw sound conclusions on performance improvement 3.Continuous monitoring and improvement of the methodology of the system is required 4.Positive impact of incentives payment system is increased when combined with regular feedback to providers on their individual performance