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Nursing home quality improvement has historically relied on annual surveys conducted by state agencies for its impetus. Such reviews play an important role for assuring that minimum standards are met. However, we need to search for incentives that will make it in the best interest of nursing homes to improve beyond the minimum. This article explores incentives that may play that role.
Low response rates, especially among physicians, are a common problem in mailed survey research. We conducted a randomized trial to examine the effects of cash and lottery incentives on response rates. A total of 4,850 subjects were randomized to one of three interventions accompanying a mailed survey-no incentive (n = 1,700), cash payment [three levels of Hong Kong dollars (HKD) $10, $20, and $40; N = 50 in each subgroup], or entry into a lottery (three levels of HKD$1,000, $2,000, and $4,000; N = 1,000 in each subgroup) on receipt of the completed questionnaire. The response rates were higher among those offered incentives than those without (19.8% vs. 16.8%, P =.012). Cash was the more effective incentive compared to lottery (27.3% vs. 19.4%, P =.017). Response also increased substantially between the first and second mailings (14.2% vs. 18.8%, P >.001). In addition, those with specialist qualifications were more willing to participate in mailed surveys. We found no significant differences in response outcomes among the various incentive arms. Cash reward at the $20 level was the most cost-effective intervention, in terms of cost per responder. Further systematic examination of the effects of different incentive strategies in epidemiologic studies should be encouraged.
One increasingly popular mechanism for stimulating quality improvements is pay-for-performance, or incentive, programs. This article examines the cost-effectiveness of a hospital incentive system for heart-related care, using a principal-agent model, where the insurer is the principal and hospitals are the agents. Four-year incentive system costsfor the payer were dollar 22,059,383, composed primarily of payments to the participating hospitals, with approximately 5 percent in administrative costs. Effectiveness is measured in stages, beginning with improvements in the processes of heart care. Care process improvements are converted into quality-adjusted life years (QALYs) gained, with reference to literatures on clinical effectiveness and survival. An estimated 24,418 patients received improved care, resulting in a range of QALYs from 733 to 1,701, depending on assumptions about clinical effectiveness. Cost per QALY was found to be between dollar 12,967 and dollar 30,081, a level well under consensus measures of the value of a QALY.
Primary care physicians are the focal point of any capitated system. They are the gatekeepers to specialty and subspecialty physicians and to ancillary providers. However, many experts now believe that to truly align the incentives of all providers and to bring costs to the lowest level possible, specialty and subspecialty physicians also should be paid on a capitated basis.
Managed care provider contracts with risk-based compensation arrangements are similar to derivative securities in that the value of a contract depends on the value of a more fundamental asset: the health plan's investment in the provider's member panel. As such, the financial value of the incentive to avoid investing in the health of the member panel can be modeled using financial engineering techniques.
In order to determine whether a monetary incentive would increase clinic follow-up rates in patients treated for pelvic inflammatory disease (PID) in the emergency department (ED), a randomized, prospective study was undertaken. Comparison was made between groups offered $5.00 plus transportation costs and groups offered transportation costs only. Follow-up rates were low in the experimental and control groups, and not statistically different. We conclude that a $5.00 incentive does not increase follow-up rates after ED treatment of PID.
Public reporting may serve as additional incentive. Should hospitals get paid extra for doing what they should do anyway? Some advocate rewarding hospitals for improvement.
METHODS: Primary care organizations (PCOs) in England are required to run a prescribing incentive scheme. The average payment received by general practitioners (GPs) under these schemes is not known. We conducted a longitudinal (2 year) questionnaire study of all PCOs in London and the south east of England aiming to explore the relationship between the financial incentives, the selection of prescribing indicators and success at remaining within budget. In the second year, the average reward per GP amounted to 1220 pounds (range 470 pounds-4330 pounds). Underspent PCOs made larger incentive scheme payments to their practices as did PCOs that had successfully overturned a first year overspend into a second year underspend. The size of rewards was unrelated to the selection of any particular cost- or quality-based prescribing indicator. We conclude that larger prescribing incentive scheme payments may have contributed to prescribing cost control but their effect on prescribing quality is uncertain.
Devising new incentives was a main element of health care reform in Israel, which created a regulated market that embodies many principles of managed competition. This study examined sick fund directors' perceptions of the new incentives and their strategic responses to these incentives, enabling the testing of how managed competition works in practice. The methodology used was a multiple case study of Israel's four sick funds. Data were gathered through in-depth interviews with 160 senior officials, analysis of national health insurance legislation, and analysis of published and unpublished archival documents, newspaper articles, public statements of senior managers, and other published data on the sick funds' behavior. The study revealed discrepancies between planned and perceived incentives and highlighted the effect of the latter on strategy formulation. Analysis of sick fund strategies showed that their responses to managed competition incentives deviated from theoretical expectations, compromising some of the objectives of the reform. The study also shows that contextual features account for the specific model of managed competition that was implemented and for the specific strategies employed by the sick funds. The study concludes by highlighting the need to build a process that will enable policy makers to consider local contextual factors when planning and implementing reform, involving health care providers in designing incentives, continuously monitoring processes and outcomes in the reformed system, and allowing for flexibility in policy making.
An IDS that wishes to assume risk should understand first the factors that have caused IDSs to experience poor financial performance under risk contracts. Then, the IDS should clarify its goals for managed care contracting, assess its operational strengths and weaknesses, evaluate potential managed care payer partners, and understand the amount of risk associated with various contract options. Implementation issues that need to be addressed include aligning the financial incentives of physicians and the IDS, establishing systemwide policies and procedures for monitoring performance, and developing information systems capabilities.
Program focuses on quality of care indicators, patient safety, and community health. Facilities can potentially receive incentive of up to 4% of hospital inpatient DRG payment each year. Program is not static; as performance data is accumulated, the "bar" can be continually raised.
The prospective Payment System (PPS) represents a fundamental change in the way the United States government reimburses hospitals for medical services covered under Medicare, a federal health care insurance program for the elderly and disabled. PPS replaced the retrospective cost-based system of payment for Medicare services with a prospective payment system. Under PPS, a predetermined specific rate for each discharge dictates payment according to the diagnosis related group (DRG) in which the discharge is classified. The PPS was intended to create financial incentives that encourage hospitals to restrain the use of resources while providing high-quality inpatient care. Both objectives appear to have been met under PPS. Hospital utilization has declined, average length of stay has fallen, and the locus of care has shifted from the inpatient setting to less costly outpatient settings. The growth in inpatient hospital benefits has slowed and the impending insolvency of the Medicare trust fund has been forestalled. Studies have found no deterioration in the quality of care rendered to Medicare beneficiaries. Neither the mortality rate nor the rate of re-admission (presumably related to premature discharge) increased under PPS. Indeed, PPS appears to have enhanced the quality of inpatient care by discouraging unnecessary and potentially harmful procedures, and by encouraging the concentration of complex procedures in facilities in which the high frequency of these procedures promotes efficiency. Incentive-based reimbursement also appears to have contributed to the growth in alternative delivery systems, such as HMOs and PPOs, which contain costs by maintaining a high volume of a limited range of services. The success of the PPS/DRG system in controlling costs and promoting quality in this country suggests its application in other countries, either as a method of reimbursement or as a product line management tool.
The authors' academic medical center, Brigham and Women's Hospital, Boston, Massachusetts, developed a primary care physician (PCP) salary incentive program for employed academic physicians. This program, first implemented in 1999, was needed to meet the financial imperatives placed on the institution by managed care and the Balanced Budget Act of 1997; its goal was to create a set of incentives for PCPs that is consistent with the mission of the academic center and helps motivate and reward PCP's work. The program sought to simultaneously increase productivity while optimizing resource utilization in a mixed-payer environment. The salary incentive program uses work relative-value units (wRVUs) as the measure of productivity. In addition to productivity-derived base pay, bonus incentives are added for efficient medical management, quality of care, teaching, and seniority. The authors report that there was significant concern from several members of the physician staff before the plan was implemented; they felt that the institution's PCPs were already operating at maximum clinical capacity. However, after the first year of operation of this plan, there was an overall 20% increase in PCP productivity. Increases were observed in all PCP subgroups when stratified by professional experience, clinical time commitment, and practice location. The authors conclude that the program has succeeded in giving incentives for academic PCPs to achieve under the growing demands for revenue self-sufficiency, managed care performance, quality of care, and academic commitment.
Payment incentives to both consumers and providers have significant consequences for the equity and efficiency of a healthcare system, and have recently come to the fore in health policy reforms. This review first discusses the economic rationale for the apparent international convergence toward payment systems with mixed demand- and supply-side cost sharing. The recent payment reforms undertaken in Taiwan, South Korea and China are then summarised. Available evidence clearly indicates that payment incentives matter, and, in particular, that supply-side cost sharing can improve efficiency without undermining equity. Further study and monitoring of health service quality and risk selection is warranted.
This research gives a comprehensive overview of the nursing home payment methodologies used by each State Medicaid program. To present this comprehensive overview, 1988 data were collected by survey from 49 States and the District of Columbia. The literature was reviewed and integrated into the study to provide a theoretical framework to analyze the collected data. The data are organized and presented as follows: payment levels, payment methods, payment of capital-related costs, and incentives in nursing home payment. We conclude with a discussion of the impact these different methodologies have on program cost containment, quality, and recipient access.
OBJECTIVE: To review recent studies comprehensively assessing the impact of incentive-based multitier formularies on pharmaceutical costs and utilization. DATA SOURCES: PubMed (2001-December 2003) was searched using the key terms formularies, cost-sharing, and drug costs. STUDY SELECTION AND DATA EXTRACTION: Studies addressing the impact of implementing multitiered incentive-based formularies as a central component of an outpatient drug benefit were selected. DATA SYNTHESIS: One study using pharmacy claims from 25 employers with data from 402 786 members modeled the range of anticipated plan/employer savings associated with single- to 3-tier shifts and found that, going from a single- to 3-tier benefit results in decreased plan/employer pharmaceutical costs from $650 to $494 (24% decrease) per member per year and decreased pharmaceutical utilization from 12.3 to 9.4 (23.6% decrease) prescriptions per member per year. Another study demonstrated that adding an additional tier decreased pharmaceutical utilization, with a dramatic increase in member contribution offsetting the plan's expected increase in expenditures. This shift in pharmaceutical expenditures appeared to have no effect on overall medical utilization over a 3-year follow-up. Finally, a study converting members from a single- to 3-tier incentive-based formulary, associated with two- to fourfold copayment increases, resulted in a 10% discontinuation rate for angiotensin-converting enzyme inhibitors, statins, and proton-pump inhibitors among members who were primarily hourly employees. For salaried workers, the addition of a tier to their benefit appeared to have minimal impact on pharmaceutical utilization. CONCLUSIONS: Emerging data suggest a potential inverse relationship between pharmaceutical utilization and incentive-based formularies that increase member contribution to drug costs. Future research should focus on identifying price points and percentage increases at which members are likely to begin discontinuing necessary medications.
Expanded Medicaid eligibility and case-managed care have contributed to improved birth outcomes and reduced Medicaid expenditures in Alabama. In 1990, 26.5 percent of all women delayed entry to care until the fourth month of pregnancy or later. Additionally, more than 1,000 women in the state received no care at all. In many of these cases, women perceived prenatal care as unimportant or unnecessary until later in pregnancy. As a result, the Alabama Medicaid Agency developed Healthy Beginnings, an incentive and awareness program which utilizes coupons to motivate women to seek prenatal care. Pregnant women can receive the coupon book (worth about $300) simply by dialing a toll-free number. To take advantage of the free gifts and discounts, expectant mothers must visit a private physician or health clinic and have their coupons validated monthly. The project was initiated in August, 1990, and already there is clear evidence that the use of incentives represents a viable outreach strategy to motivate poor and uninsured women to seek care. In the program's first year, more than 20,000 women received the coupons, of which 78 percent were Medicaid recipients, uninsured or in a presumptive (Medicaid) eligibility period. Focus group studies, field visits and a survey were used to evaluate the effectiveness of the new program. Preliminary data analysis has revealed that the incentive program may be a significant factor in motivating women to seek early and continuous prenatal care.
Medicare's current method for setting capitation rates does not provide adequate financial incentives for HMOs to offer managed care products; more than 60 percent of the nation's HMOs still do not participate in Medicare risk contracts. Possible changes to the capitation calculation method could provide the necessary financial incentives for Medicare HMOs to proliferate and ease the strain on the Medicare trust fund. Managed care organizations need to prepare to enter the Medicare risk-contracting arena.