Feature / Incomes for outcomes

What will a shift to a payment system based on patient outcomes mean to the health service, asks Steve Brown

In May, Monitor and NHS England set the scene for their review of the payment system for NHS services. Within the vision in How can the NHS payment system do more for patients? two things were clear: the two bodies think that while payment is not the only lever to effect change, it does influence behaviour; and the payment system should ‘reimburse providers for delivering specified outcomes for patients rather than particular treatments or inputs’.

Few would argue with this in principle. But putting it into practice will be no easy task. The HFMA has described the proposed change to outcomes-based payment as a ‘sea-change for the whole health economy’.

‘The principle of paying for outcomes, or at least recognising outcomes in the payment system, makes sense,’ it says in a statement. However, there are significant difficulties in establishing appropriate outcome measures and in understanding at what point a sensible assessment of outcome can be made and then linking this to timely payment.’

There have been attempts to link payment to outcomes, but these have often used other measures as a proxy for specific patient outcomes. So, for instance, payment might be linked to overarching quality measures, such as reducing overall levels of pressure sores. Or payment could be linked to the presence of best practice processes within the overall treatment of an individual patient.

But the development of patient-reported outcome measures (PROMs), consultant-rated outcome measures (CROMs) and patient-reported experience measures (PREMs) could provide opportunities to make clearer links between outcomes and patients’ experience of treatment and the payment they receive.

The obvious starting point for NHS England and Monitor is with existing mechanisms.

Direct links

At the most basic level, direct links between payments and the treatment of specific patients and their outcomes exist in the approach to never events. While the focus is to encourage transparency and learning from such episodes, the zero-tolerance approach is underlined by a no payment (cost recovery) policy.

But a simple ‘payment or no payment’ mechanism is a fairly blunt tool in incentivising good outcomes. Best practice tariffs attempt to provide a subtler approach. These have so far used the presence of evidence-based, best practice process steps as a proxy for good outcomes. Martin Campbell, head of pricing at NHS England, argues that this can work well. ‘Where you know there is a link between following a particular process and getting better outcomes, that is pretty close to paying for outcomes,’ he says.

So, for example, the cholecystectomy best practice tariff encourages the procedure to be undertaken using keyhole surgery in a day-case setting where appropriate. And the stroke tariff rewards treatment in a stroke unit, timely brain imaging and assessment for thrombolysis. On the whole, clinicians like the evidence-basis behind best practice tariffs. Get the right steps in the process and you should get a good outcome.  But the reality is that the best practice rate is paid if the criteria are met, regardless of the actual outcome.

Next year will see one further step in what Monitor and NHS England have described as ‘the first currency based on patient outcomes’. The new hip and knee replacement best practice tariff will link the receipt of the additional ‘best practice’ payment to PROMs for hip and knee patients.

It will be introduced in a relatively gentle way. To receive the payment in year one, providers will have to demonstrate they don’t have an ‘average health gain significantly below the national average’, while also meeting data submission standards in terms of PROMS participation rates and submissions to the national joint registry.

 ‘We want to get people used to the approach, identify the outliers and improve the quality of data the tariff is based on,’ says Mr Campbell. It has been a couple of years in the making, as concerns have been addressed – such as taking account of patient complexity. But, with two other PROMs already being collected for groin hernia and varicose veins, it clearly offers a template for possible further best practice tariffs.

Getting the tariff to the launch pad has required some key issues to be grasped. When do you measure the outcome and how do you link this in a timely way to the payment? How do you factor in patients who don’t want to rate their outcome, whether good or bad? ‘We can’t do this at the individual patient level yet,’ says Mr Campbell. ‘The eligibility for the best practice payment will be at the contract level and based on the most recent PROMs data.’

In practice, this means a six-month lag. So patients treated in the first quarter of 2014/15 will attract the full best practice payment as long as PROMs reported six months ago indicated the required level of health gain.

Mr Campbell says a more direct link between individual patient outcome and payment could be introduced within a few years.

The mental health sector is arguably ahead of the acute sector in linking payment to outcomes, or at least getting the infrastructure in place to make it possible. Unlike the acute sector, mental health has a ready-made CROM – based on the Health of the Nation Outcome Score – which is already used in assessing service users and assigning them to one of 21 clusters in the new currency. Reassessing users at review times or at discharge provides the opportunity to measure improvement.

There is also ongoing work on PROMs – in particular the Warwick Edinburgh mental well-being scale (WEMWBS). In terms of PREMs, the government’s response in November to the Francis report confirmed that the friends and family test, already used in acute trusts, will be extended to mental health by the end of December 2014. The use of the Care Quality Commission’s community mental health survey is also being investigated. With the cluster currency still being introduced across the sector, the aim is to build in links to quality and outcome more or less from the outset.

Other links

There are other ways that payment is currently adjusted relating to outcome. For example, a readmissions rule built into payment by results links payment to outcomes in a general way. Readmissions judged to be avoidable are not paid for. However, ‘avoidability’ is assessed by comparing the overall number of readmissions to a locally agreed threshold, rather than on a case-by-case basis.

The commissioning for quality and innovation (CQUIN) initiative provides the other main mechanism to link payment to outcomes – or at least to specific quality goals. The scheme has been running since 2009 and has linked an increasing proportion of overall contract value (2.5% in 2013/14) to the achievement of national and local targets.

A review for the Department of Health by Nottingham University, published earlier this year, suggested the scheme’s impact had been ‘disappointing’. Although the framework had helped commissioners and providers identify and prioritise local needs for quality improvement, aspects of the current implementation were seen as ‘potentially impeding’ the ability to generate the desired improvements in care.

Criticisms included lack of clinician engagement in scheme development, lack of standardisation of indicators across different schemes and a focus on structure and process rather than outcome. This assessment has informed an NHS England review of incentives and sanctions – recommendations were presented to NHS England’s board last month.

The scheme remains in place for 2014/15 with some of the issues raised in the Nottingham report addressed. For example, prequalification criteria relating to high-impact innovations will be removed and a non-mandatory list of indicators for use in local CQUIN schemes will be made available.

CQUIN?link

CQUIN is also the way in which funding is currently linked to patient experience. It links 0.125% of acute contract value to meeting the national roll-out plan for the friends and family test, increasing patient participation and improving (or maintaining good) performance in a staff version of the test.

CQUIN adjusts income at the contract level and while it cannot offer the same direct links with individual patient outcomes, it arguably benefits from being simpler to operate. Developing best practice tariffs for large numbers of the more than 2,000 healthcare resource groups in the latest HRG4+ currency could quickly grow to be a data monster.

Mr Campbell acknowledges the issue and says NHS England is keen to avoid imposing an additional data-chasing burden on the NHS. However, he suggests that automatic links between commissioning data sets, PROMs data and specific sources such as the national joint registry would open up potential.

Ruth McDonald, professor of governance and public management at Warwick Business School, has specialised in incentives for healthcare quality in recent years. She led reviews of both best practice tariffs and CQUIN while at Nottingham University Business School. Reflecting the outcome of both reviews, she says she is clear that best practice tariffs hold the best current option for linking payment to quality of service (as a proxy for outcome), particularly while commissioners are still establishing themselves.

‘No-one is arguing with the principle of paying for outcomes, but putting it into practice is not straightforward,’ she says. ‘We found the best success was where clinicians bought into the pathways as with best practice tariffs. Best practice tariffs also provide a lever for clinicians to use [to argue for resources for quality improvements].’

She adds that the tariffs ‘definitely offer a better model than CQUIN’ but that the associated data burden will dictate the speed of expansion. ‘You need to take people with you and build the data collection systems,’ she says.

Advancing Quality

One approach that perhaps navigates a path between the best practice tariff and CQUIN routes is the Advancing Quality initiative in the North West. Launched in 2008, the scheme involving 24 trusts initially focused on five high-frequency clinical areas: heart failure; heart bypass; heart attack; hip and knee surgery; and pneumonia. The scheme works by assigning a number of key clinical interventions that should happen when treating patients in these areas – referred to as clinical process measures.  If there are four measures and five patients, then there are 20 opportunities that should be met. If all five patients receive all four measures, then 20/20 is achieved – a score of 100%. Trusts receive a percentage score for each clinical area.

The programme also factors in patient views of outcomes and their overall experience using PROMs and PREMs.

While the scheme started off with a direct link between performance in each area and funding, with tariff bonus payments given to top-performing and improving trusts, the scheme has now been moved within the CQUIN framework. The North West takes a health economy-wide approach to how improvement is measured. However, the level of improvement sought in different localities (and the amount of money attached to achievement) is now down to local negotiation, albeit subject to a prescribed minimum level of performance.

The scheme has been expanded to cover stroke, dementia and psychosis and there are plans to develop measures for long-term conditions delivered in the community. While the measures again use best practice process steps as a proxy for good outcome, the scheme has had some success in driving up quality.

There has been year-on-year improvement across four of the five initial clinical areas (pneumonia showed a small reduction in year 4, though this was due to raising the bar). And an independent evaluation of the first 18 months of the scheme found there had been a ‘significant’ fall in mortality rates since the initiative’s introduction – avoidable mortality rates fell by 6% (890 deaths) across three of the initial areas covered in the first 18 months of operation. Further research suggests an eight-fold pay-off in health gain for every £1 spent.

Under the CQUIN model, Advancing Quality payments may now only be about £20,000 per condition for a medium-sized acute trust. Even so, the financial side is seen as important. ‘The money helps,’ says Advancing Quality programme director Lesley Kitchen. ‘It makes it relevant to finance directors and executives and it helps with the profile of the scheme. But the clinicians are driven by good-quality data and performance against their peers.’

‘With the current financial pressures, you need incentives to keep providers on board to sustain continued delivery,’ says Cath Hill, director of the  Advancing Quality Alliance, which runs the programme.

Both suggest that Advancing Quality aligns well with the outcomes framework, especially around reducing mortality, and supports the current push on commissioning for better outcomes. They highlight a similar scheme (Enhancing Quality) in the South East as evidence that the scheme can be replicated.

There are other possible models out there – for example, US schemes that link payment to a basket of quality and outcome-related indicators and a more detailed algorithm for calculating provider-specific levels of avoidable readmissions. But early signs (in the tariff for 2014/15) suggest the approach will be to build on existing mechanisms. Changes are likely to be incremental and linked to the ability to evidence outcomes without creating an excessive data collection burden.