Simplify payment models, says King’s Fund

Payments and contracting for integrated care: the false promise of the self-improving health system says policy makers have spent 30 years attempting to devise financial incentive schemes to improve the performance of health services. With existing activity-based payment arrangements now recognised as not supporting system working, the report says the NHS is again proposing new payment schemes based around capitation budgets with incentive schemes and risk share arrangements.

In the report, King’s Fund projects director Ben Collins (pictured) asks whether the latest incentive schemes – ‘borrowed in large part’ from US accountable care models – will be any more successful than their predecessors.

The report questions the service’s ability to identify appropriate outcomes, the practice of withholding payment for badly performing providers and the transaction costs involved with sophisticated payment models.

‘In a health system where services are being brought together in integrated systems and where policies to encourage choice of provider and provider independence are largely in abeyance, the tools of arm’s length purchasing look increasingly redundant,’ said Mr Collins.

‘Rather than new complex schemes, commissioners should develop simple arrangements that allow resources to be allocated where they are most needed, make it easier to collaborate on improvement and promote a culture of collective responsibility for local health systems,’ he added.

He suggested trust-based models – such as adopted by New Zealand’s Canterbury health system or the use of aligned incentive contracts in Bolton – offer a better alternative to ‘existing toxic incentive schemes’.

These could involve a move to global budges based on bottom-up estimates of costs and agreements to work together to manage risks around population need, demand or costs.