SOCIALSOCIALINSURANCE INSURANCE

AND AND PERFORMANCE BASED PERFORMANCE BASED

PAYMENT:PAYMENT:Powerful Financing Strategies to Powerful Financing Strategies to

Improve Health Sector Improve Health Sector PerformancePerformance

Rena Eichler, Ph.D.Rena Eichler, Ph.D.Management Sciences for HealthManagement Sciences for Health

Health Reform and Financing ProgramHealth Reform and Financing Program

The ChallengeThe ChallengeSignificant performance improvements are needed Significant performance improvements are needed

in the majority of health systems in LAC.in the majority of health systems in LAC.

• Health ImpactHealth Impact– Improve maternal and child survivalImprove maternal and child survival– Reduce unwanted fertilityReduce unwanted fertility– Reduce the incidence of infectious diseases and Reduce the incidence of infectious diseases and

HIV/AIDSHIV/AIDS

• Financial ProtectionFinancial Protection

• Responsiveness to ClientsResponsiveness to Clients

Some reasons for this Some reasons for this poor performance?poor performance?

• Vulnerable populations have insufficient access.Vulnerable populations have insufficient access.

• Resources are poorly used.Resources are poorly used.

• Human resources are inadequate.Human resources are inadequate.

• Providers are poorly motivated.Providers are poorly motivated.

• Drug management systems function poorly.Drug management systems function poorly.

• Decision making structures are rigid and Decision making structures are rigid and unresponsive.unresponsive.

• Governments are not protecting households Governments are not protecting households from financial disaster.from financial disaster.

OutlineOutline1. 1. Social insurance:Social insurance:

General objective: Improved understanding of social health insurance and how it relates to improving health system performance.

2. Performance based payment:

General objective: Improved understanding of incentives associated with provider payment mechanisms. Learn about performance based payment in HS-2004 project in Haiti and understand how payment based on results can contribute to improving health system performance.

1. Characteristics of a 1. Characteristics of a social insurance social insurance systemsystem

• Defined covered population Defined covered population

• Defined and fully available benefits Defined and fully available benefits packagepackage

• Risk poolingRisk pooling

• Cross-subsidizationCross-subsidization

Social Insurance in your Social Insurance in your country?country?

• Does the Social Security Institution Does the Social Security Institution in your country have all the in your country have all the characteristics of social insurance?characteristics of social insurance?

• Does the public health system in Does the public health system in your country have all the your country have all the characteristics of social insurance?characteristics of social insurance?

Probably not!Probably not!

• actual covered population is not knownactual covered population is not known

• benefits package is not explicitly benefits package is not explicitly determineddetermined

• health risks of the entire population are not health risks of the entire population are not pooledpooled

• society wide cross subsidization of the poor society wide cross subsidization of the poor from the rich is not achievedfrom the rich is not achieved

• universal coverage is not achieveduniversal coverage is not achieved

Social insurance can be a Social insurance can be a powerful strategy to powerful strategy to achieve the goals of achieve the goals of health sector reforms in health sector reforms in LACLAC• AccessAccess

• EquityEquity

• SolidaritySolidarity

• EfficiencyEfficiency

• QualityQuality

• Universal coverageUniversal coverage

DefinitionsDefinitions

• ProvidersProviders: Individuals and institutions that : Individuals and institutions that provide health services.provide health services.

• Health planHealth plan: Entities that assume the : Entities that assume the financial risk of providing a package of financial risk of providing a package of benefits to a defined population.benefits to a defined population.– EPS in ColombiaEPS in Colombia– Isapres in ChileIsapres in Chile– Obra Sociales in ArgentinaObra Sociales in Argentina– Iguales in the Dominican RepublicIguales in the Dominican Republic

Social insurance fund(s)Social insurance fund(s)

• The The social insurance fundsocial insurance fund is the entity is the entity that aggregates funds from the that aggregates funds from the population, pools risk, and assumes the population, pools risk, and assumes the function of financing the social health function of financing the social health insurance system.insurance system.

• Social insurance fundsSocial insurance funds can either pay can either pay providers directly or they can pay providers directly or they can pay health plans.health plans.

Social Health Insurance System Social Health Insurance System Functions and Financing FlowsFunctions and Financing Flows

3) Revenue Collection

4) Social Insurance Fund(s)

5) Health Plan(s)

7)

Clien

t s/E

mp

l oyer s

6) Providers

2) National Policies and Regulations that Impact on Social Insurance Coverage

1) Enabling Environment

Social Insurance can rely Social Insurance can rely heavily on the private heavily on the private sector.sector.• Providers, Health Plans, and Social Providers, Health Plans, and Social

Insurance Funds can be public, parastatal, Insurance Funds can be public, parastatal, private nonprofit, and private for-profit.private nonprofit, and private for-profit.

• The UNIQUE role of the government is to The UNIQUE role of the government is to ensure cross-subsidization.ensure cross-subsidization.

• The government establishes the rules of The government establishes the rules of the system so that social goals are the system so that social goals are achieved. achieved.

Key questionsKey questions• Is there enough money?Is there enough money?

• Is there a priority population?Is there a priority population?

• Who should be subsidized?Who should be subsidized?

• What services should be covered?What services should be covered?

• How will revenue be collected?How will revenue be collected?

• What entities will assume financial risk?What entities will assume financial risk?

• How will providers be paid and what are the How will providers be paid and what are the associated incentives?associated incentives?

• How will quality be ensured?How will quality be ensured?

Is there enough money?Is there enough money? A straightforward arithmetic A straightforward arithmetic

exercise?exercise?

Example:Example:

Target population = 2000Target population = 2000

Average cost = 50 colonesAverage cost = 50 colones

Expected utilization = .5Expected utilization = .5

Expected cost of covering service=Expected cost of covering service=

(2000 * .5) * 50 = 50,000 colones(2000 * .5) * 50 = 50,000 colones

Because social health Because social health insurance reforms have insurance reforms have an impact on...an impact on...

•efficiencyefficiency

•qualityquality

•accessaccess

•utilizationutilization

This is not a simple arithmetic This is not a simple arithmetic exercise!exercise!

Technical assistanceTechnical assistance

Goal: Help countries move from broad health Goal: Help countries move from broad health reform goals to design details and, reform goals to design details and, ultimately, to action.ultimately, to action.

1. What obstacles and facilitating elements exist in the “enabling environment” of the health sector?

2. What are/will be the national policies and regulations that impact on social insurance coverage?

3. How are/can funds be collected to finance social insurance?

ContinuedContinued

4. What institution(s) do/will assume the function of combining and managing funds to finance social insurance?

5. What institution(s) do/will assume the 5. What institution(s) do/will assume the role of the role of the health planhealth plan (assuming the financial risk of providing a (assuming the financial risk of providing a package of benefits to a defined covered population)?package of benefits to a defined covered population)?

6. How are/will 6. How are/will providers be organized and providers be organized and compensatedcompensated??

7. Who will be covered and how much 7. Who will be covered and how much voicevoice do/will do/will consumersconsumers and and employersemployers have? have?

2. Provider payment 2. Provider payment mechanismsmechanismsDo payers use their purchasing power Do payers use their purchasing power

effectively to achieve social goals?effectively to achieve social goals?

– GovernmentsGovernments

– DonorsDonors

– EmployersEmployers

– InsurersInsurers

– HouseholdsHouseholds

People and Institutions People and Institutions are driven by many are driven by many things...things...

• To “do good”To “do good”

• To develop professionallyTo develop professionally

• To be challengedTo be challenged

• To be promotedTo be promoted

• To earn moneyTo earn money

Financial remunerationFinancial remuneration

• Financial rewards are one of many Financial rewards are one of many drivers--- but important.drivers--- but important.

• Financial rewards can be used to reinforce Financial rewards can be used to reinforce (or work against) other drivers that are (or work against) other drivers that are already present:already present:– organizational missionsorganizational missions– individual desires to do goodindividual desires to do good

• Financial rewards can be used to reinforce Financial rewards can be used to reinforce behaviors- and ultimately, outcomes- that behaviors- and ultimately, outcomes- that the “payer” views as important.the “payer” views as important.

Contrast reimbursement Contrast reimbursement mechanisms...mechanisms...

Inputs Inputs Outputs Outputs ResultsResults

installedinstalled per service per service consumerconsumercapacitycapacitysatisfactionsatisfaction

documenteddocumented per diagnosis health per diagnosis health expendituresexpenditures impactimpact

grantsgrants per day per day institutionalinstitutionaldevelopmentdevelopment

Benefits of Performance Benefits of Performance Based PaymentBased Payment

• Financial rewards tied to performance Financial rewards tied to performance motivate achievement of results.motivate achievement of results.

• Organizations and individuals change in Organizations and individuals change in response to new incentives. response to new incentives.

• Payers also change as new roles are Payers also change as new roles are assumed.assumed.

Overview of Haiti Project:Overview of Haiti Project: HS-2004 HS-2004• 1995 - 20041995 - 2004

• USAID-funded, $90 MillionUSAID-funded, $90 Million

• Implemented by MSH, JHU/CCP & Pathfinder Implemented by MSH, JHU/CCP & Pathfinder InternationalInternational

• Purpose: To ensure that Haitian families have Purpose: To ensure that Haitian families have equitable access to primary and reproductive health equitable access to primary and reproductive health services in a manner that can be sustained over timeservices in a manner that can be sustained over time

• Components: Components: – Service Delivery (Child survival and reproductive Service Delivery (Child survival and reproductive

health)health)– Institutional Development Institutional Development

A bit of history...A bit of history...• Project beginning: Project beginning: emergency fundingemergency funding

– focus was to get resources to partner NGOs, was focus was to get resources to partner NGOs, was input based.input based.

• Project middle: Project middle: more accountabilitymore accountability– focus was on better cost reporting systems, still focus was on better cost reporting systems, still

input based with accountability.input based with accountability.

• Recently:Recently:measure performancemeasure performance– focus on monitoring performance, still input based focus on monitoring performance, still input based

with better information and “moral suasion”.with better information and “moral suasion”.

• Current phase:Current phase:reward performancereward performance– Reward performance and withhold funds for under-Reward performance and withhold funds for under-

performanceperformance

What motivated USAID What motivated USAID and HS-2004 to try and HS-2004 to try performance based performance based payment?payment?• Large variation in performance among Large variation in performance among

recipient NGOsrecipient NGOs– contraceptive prevalence rates below contraceptive prevalence rates below

7% and above 25%7% and above 25%– full immunization coverage below 7% full immunization coverage below 7%

and above 70%and above 70%

• No correlation between performance No correlation between performance and unit costsand unit costs– Unit costs per visit ranged between

$1.35 to $51.93!

The HS-2004 performance The HS-2004 performance based reimbursement based reimbursement modelmodel

• Three NGOs participated in a pilot that began June Three NGOs participated in a pilot that began June 1999 and ended March 2000. Four additional NGOs 1999 and ended March 2000. Four additional NGOs have been included in phase 2.have been included in phase 2.– Pilot NGOs: Centres Por Le Developpment et la Pilot NGOs: Centres Por Le Developpment et la

Sante (CDS); Comite Bienfaisance de Pignon Sante (CDS); Comite Bienfaisance de Pignon (CBP); Save the Children.(CBP); Save the Children.

– Total population served: 534,00Total population served: 534,00

• NGO partners agreed to performance increase NGO partners agreed to performance increase targets.targets.

• NGOs receive 95% of their “historical” budget plus NGOs receive 95% of their “historical” budget plus the opportunity to earn an additional 10% if they the opportunity to earn an additional 10% if they achieve performance targets.achieve performance targets.

Example of CBP schemeExample of CBP scheme

• Historical budget=10,000,000 hgHistorical budget=10,000,000 hg

• fixed portion of performance based fixed portion of performance based payment= 9,500,000 hgpayment= 9,500,000 hg

• maximum potential award fee= maximum potential award fee= 1,000,000 hg1,000,000 hg

Measures of PerformanceMeasures of Performance

• 10% increase in full 10% increase in full immunization immunization coverage = 20% of incentive paymentcoverage = 20% of incentive payment

• 20% increase in number of pregnant 20% increase in number of pregnant women receiving at least 3 women receiving at least 3 prenatal prenatal carecare visits = 10% of incentive payment visits = 10% of incentive payment

• 15% increase in the number of mothers 15% increase in the number of mothers with full knowledge of with full knowledge of oral rehydration oral rehydration therapytherapy = 10% of incentive payment = 10% of incentive payment

Measures of performanceMeasures of performance• All Institutions and half of outreach points with All Institutions and half of outreach points with

at least 3 at least 3 modern FP methodsmodern FP methods = 20% of = 20% of incentive payment.incentive payment.

• 25% reduction in the 25% reduction in the discontinuation of discontinuation of family planningfamily planning = 20% of incentive payment. = 20% of incentive payment.

• 50% reduction in 50% reduction in waiting timewaiting time for child for child attention = 10% of incentive payment.attention = 10% of incentive payment.

• Defined Community Health Committee with Defined Community Health Committee with appropriate appropriate coordination with MSPcoordination with MSP = 10% = 10% of incentive payment.of incentive payment.

What are the incentives?What are the incentives?

• Improve health outcomes. Improve health outcomes.

• Become more efficient. Become more efficient.

• Become more innovative. Become more innovative.

• Focus on ways to strengthen and Focus on ways to strengthen and motivate staff. motivate staff.

Immunization Coverage

NGO 1 NGO 2 NGO 3Baseline 40 49 35Target 44 54 38Result 79 69 73

Results from Performance Based Reimbursement Pilot in Haiti

NGO1

NGO2

NGO3

Indicator Base9/99

Target Results4/00

Base9/99

Target Results4/00

Base9/99

Target Results4/00

Immunizationcoverage

40 44 79 49 54 69 35 38 73

3+ prenatal 32 38 36 49 59 44 18 21 16FPdiscontinuation

32 24 43 43 32 30 26 20 12

Correctutilizationof ORT

71 80 81 53 59 26 61 67 74

Institutionswith 4+modern FP

6 9 9 2 5 5 0 5 5

Table 3:Attained Bonuses

Bonus attained*NGO 1 90%NGO 2 70%NGO 3 80%

* If actual performance was within one confidenceinterval, the NGO was awarded the bonus for that indicator.

How do the NGOs How do the NGOs perceive the scheme?perceive the scheme?

• The 3 NGOs are enthusiastic about the The 3 NGOs are enthusiastic about the scheme.scheme.

• They have been stimulated to:They have been stimulated to:– introduce schemes to motivate staffintroduce schemes to motivate staff– examine utilization of resourcesexamine utilization of resources– find ways to increase efficiencyfind ways to increase efficiency– examine options to cut costs and increase examine options to cut costs and increase

revenuesrevenues– and and improve qualityimprove quality

Applications to other Applications to other settings?settings?

• Government conditions for contracts with Government conditions for contracts with health plans as part of a social insurance health plans as part of a social insurance system.system.

• Governments contracting NGOs and private Governments contracting NGOs and private providers.providers.

• Performance contracts in the public sector.Performance contracts in the public sector.

• Donor contracts with governments. Donor contracts with governments.

• Donor contracts with providers.Donor contracts with providers.

For more information...For more information...

Rena Eichler Rena Eichler Health Reform and Financing ProgramHealth Reform and Financing ProgramManagement Sciences for HealthManagement Sciences for Health1515 Wilson Boulevard, Suite 7101515 Wilson Boulevard, Suite 710Arlington, VA 22209-2402Arlington, VA 22209-2402USAUSA

Phone: (703) 248-1620Phone: (703) 248-1620Fax: (703) 524-7898Fax: (703) 524-7898E-mail: reichler@msh.orgE-mail: reichler@msh.org