1. Pay for performance in chronic
disease management: the UK
QoF in wider context
Nicholas Mays
Professor of Health Policy
Department of Health Services Research & Policy
London School of Hygiene & Tropical Medicine
Nicholas.Mays@lshtm.ac.uk
Thirtieth annual meeting, Spanish Health Economics
Association, Valencia, 23-25 June 2010

2. Definition of ‘pay-for-
performance’
‘…financial incentives that reward providers for the
achievement of a range of payer objectives, including
delivery efficiencies, submission of data and
measures to payer, and improving quality and
patient safety.’
McNamara P. (2006) Foreword: payment matters? The next
chapter. Med Care Res Rev 63 (Suppl 1): 5S
Seen by Petersen et al (2006) as counter-weight to information
asymmetry between patients and their doctors

3. Accountability of providers to
payers
Clinician
Patient
Profession
Provider
organization
Government
Purchaser
organization
Citizens

4. North West region ‘Advancing
Quality’ hospital P4P scheme
• Based on US ‘Premier’ model
• 2% premium for top 10%
• 1% for next 10%
• Plans for similar scale of penalties for lowest
20%
• Cardiac, hips, knees (not chronic care)
• Mostly process measures but includes
inpatient mortality & PROMS from Oct 09
NHS North West (2008) A North West system approach to advancing quality.
Manchester: NHS NW SHA
http://www.dh.gov.uk/

5. Paying NHS acute hospitals for
quality: CQUIN, 2008
• “The framework is intended to
ensure contracts with
providers include clear and
agreed plans for achieving
higher levels of quality by
allowing PCTs to link a specific
modest proportion of
providers’ contract income to
the achievement of locally
agreed goals. All providers
should be able to earn this
money, but will not have an
automatic right to be given it.”

6. The CQUIN scheme
• By April 2010 providers of NHS acute hospital care
have 2% of income determined by outcomes
achieved alongside case-mix funding
• Purchasers to make 0.5% of budgets available for
incentive payments
• Payments linked to locally agreed quality indicators
• PROMS required for elective knee, hip, varicose vein
& groin hernia surgery from all NHS hospitals from
April 2009 ahead of CQUIN
• CQUIN being evaluated

7. Issues raised by CQUIN
• Quality of measures
• Risk adjustment
• Narrowness of scheme (1.5% of hospital
episodes)
• Positive vs possible negative effects on
unincentivised areas
• Speed of implementation
– Test first by paying for good outcome data, but
over a wider range of services?

8. Pay-for-performance in chronic care
in continental Europe
• Relatively little developed compared with the QoF
• System characteristics traditionally presented
barriers to CDM (e.g. lack of patient enrolment,
under-developed primary care, payment methods)
• Bonuses or additional payment for physicians
enrolling patients in CDM programs, documentation
& setting care protocols
• Little or no payment for hitting process or outcome
targets so far
• Some interest in incentivising patients by lower co-
payments if enrolled or participate in CDM

9. Dimensions along which chronic care
P4P programmes may vary
• Nature of incentive – reward vs. penalty
• Target entity – hospital/provider organisation, clinical
group/team, individual clinician; provider or consumer
• Balance – financial, non-financial, general vs. selective
• Proportion of remuneration - extrinsic vs. Intrinsic motivation
• Behaviour subject to the incentive
• Magnitude of incentive
• Certainty of application of incentive – ex ante vs. ex post
• Frequency and duration – short vs. long term
• Basis of comparison – relative vs. absolute performance,
improvement vs. level of attainment
• Activity incentivised – structure, process or outcome

10. Some P4P design issues in chronic
care
• At whom to aim incentives
– Organizations (CQUIN), teams (QOF), individual professionals
• Scope of scheme
– Comprehensive (QOF) or piecemeal (CQUIN)
• Power and size of incentives
– Low (CQUIN) vs high (QOF) powered; use of thresholds (QOF/CQUIN))
• Difficulty of reaching thresholds/targets
– Too easy in QOF?
• Certainty of reward
– Competition for limited funds or guaranteed reward schedule?
• Risk adjustment for disadvantaged populations
– Exception reporting (QOF)
• Avoidance of gaming and other adverse outcomes
– Information systems
– Audit
– Reforms to schemes

11. Nature of the empirical evidence on
P4P incentives at group, team &
individual level
• Large number of design dimensions explains why the
empirical evidence is heterogeneous, incomplete
and hard to generalise & draw conclusions from
• Few, high quality studies, mostly from US and of
single, narrowly focused schemes versus ‘usual’ care
rather than comparisons of different approaches
• Almost no cost-effectiveness analysis
• Trend towards more use of outcome incentives

12. Empirical evidence on P4P incentives
at group, team & individual level
• Little evidence on relative effectiveness of
penalties versus rewards, both seem to work
• Evidence on effectiveness at different levels in
system is ambiguous
– though possibly greater impact at lower levels
• Some evidence of perverse effects suggesting
P4P may reduce provider altruism
– e.g. gaming, better reporting rather than better care,
tunnel vision, cream skimming
– need for balance of financial & non-financial incentives

13. Empirical evidence on P4P incentives
at group, team & individual level
• Current schemes tend to reward absolute
performance so little evidence on effect of relative
performance incentives
• Dose-response relationship not established
– 2-9% of remuneration at risk seems to induce modest
change, more may increase risk of adverse behaviour
• Little evidence available on impact of uncertainty,
increased frequency or increased duration of
payment
– hint that frequent feed back and continuous payments
improve performance

14. Overviews of empirical evidence on
P4P incentives
• Thus reviews disagree
• Petersen et al (2006) show some positive effects
on quality of CDM
• most comprehensive review
• Frolich et al (2007) emphasise lack of evidence
• Christianson et al (2008) conclude that evidence is
too limited to draw conclusions
• point out that many evaluations show small or
negligible impacts and omit reporting unintended
consequences on unincentivized aspects

15. Empirical evidence on P4P incentives
at group & individual level
• Thus considerable debate about, for example:
• balance of financial & non-financial incentives
• which targets/measures should be used
• at which level in the system
• effectiveness of schemes
• how they work
• which are the most influential elements
• in which circumstances
• best size, certainty, frequency and duration of
incentives for what degree of change

16. Implications of evidence
• P4P financial incentives probably worth pursuing but
need very careful design because of potential for
perverse incentives & cost
• Size of incentive matters, but little evidence as to
what this should be
– e.g. QoF may be over-powered & less cost-effective as a
result
• Objectives of schemes need to be defined carefully
(e.g. raising the ‘tail’ or the mean, or narrowing the
range)

17. Implications of evidence
• Protocols and activities incentivised need to
be based on plausible evidence that they will
improve care and outcomes cost-effectively
• Selection of performance measures is crucial
– majority should be structure & process measures
rather than patient outcomes because outcomes
often affected by factors outside direct control of
providers (e.g. smoking cessation)

18. Implications of evidence
• Require changes at organization level, especially
more systematic care and better record keeping, e.g.
– Better call/recall systems
– Risk profiling of (enrolled) patients to be able ideally to
risk-adjust payment and outcome-related performance
measures
– More emphasis on protocol-driven care
– Templates for recording actions in electronic patient
record
• Providers need to be able to respond to incentives
– thus important to consider interaction with general/pre-
existing payment mechanisms (e.g. capitation)

19. Implications of the evidence
• A cliché, but much more research is needed!

20. References
Busse, Mays N. Paying for chronic disease care. In: Nolte E, McKee M, eds. Caring for
people with chronic conditions: a health system perspective. Maidenhead: Open
University Press, 2008, 195-221
Conrad DA. Incentives fro health-care performance improvement. In: Smith PC,
Mossialos E, Papaanicolas I, Leatherman S, eds. Performance measurement for
health system improvement: experiences, challenges and prospects. Cambridge:
CUP, 2009, 582-612
Christianson J, Leatherman S, Sutherland K. Financial incentives, healthcare providers
and quality improvements, London: Health Foundation, 2008
Frolich A, Talavera J, Broadhead P, Dudley R. A behavioral model of clinician
responses to incentives to improve quality. Health Policy 2007; 80: 179-93
McNamara P. Foreword: payment matters? The next chapter. Med Care Res Rev
2006; 63 (Suppl 1): 5S
Petersen L, Woodard L, Urech T, Daw C, Sookanan S. Does pay-for-performance
improve quality of health care? Ann Intern Med 2006; 145: 265-72