Exploring new provider-payment models to incentivize performance improvements in Hungary
- National life expectancy five years below the WHO European Regional average.
- High prevalence of chronic disease, particularly circulatory diseases and cancer.
- Service delivery concentrated in higher-level settings; coordination across care levels fragmented.
- Weakened provider motivation, partially due to harsh cost-containment policies.
- The Care Coordination Pilot was launched in 1999 to explore ways to improve the coordination and quality of health services. Under the pilot, Care Coordinator Organizations (run by health providers from general practices or polyclinics) acted as virtual fund holders for capitation-based health care budgets within their local catchment areas.
- Carefully chosen financial incentives guided performance improvements by rewarding efficiency, incentivizing preventive care and encouraging treatment in lower-level settings.
- Empowering professionals with new responsibilities helped to overcome provider dissatisfaction.
- Extensive data collection supported analysis and comparison of local organizational arrangements.
In the early 1990s, life expectancy in Hungary was 69 years: five years below the WHO European Regional average of 74 years. High prevalence of chronic disease (specifically circulatory diseases, cancer and conditions of the digestive system) contributed to premature mortality. Fragmented interactions between primary care, secondary care and social care often led to inappropriate hospital admissions for chronic patients and, without incentives to manage patients at lower care levels, overprovision of care in higher-level settings occurred. Furthermore, cost-containment policies put in place throughout the 1990s had demotivated providers, contributing to variable care quality and increased medical migration.
The national government launched the Care Coordination Pilot in 1999 to experiment with payment mechanisms for health providers to encourage more coordinated care delivery. Under the Pilot, Care Coordinator Organizations, which were run by health providers from general practices or polyclinics, were established to act as virtual fund holders for capitation-based health care budgets within their local catchment areas. However, all financial control was retained by the National Health Insurance Fund Administration (NHIFA), meaning Care Coordinator Organizations had no actual budget holding responsibilities; virtual budgets were merely a tool to guide management improvements. At the end of the year, any budget savings were transferred to Care Coordinator Organizations, helping to incentivize efficiency improvements. A careful mix of other incentives was employed to minimize disincentives or gaming that could result in under-treatment of patients. To increase control over their spending, Care Coordinator Organizations entered into contracts with health providers in their region and shared financial gains in exchange for providers’ cooperation. These contracts essentially brought external providers under the Care Coordinator Organizations’ single-management structure and established collective goals, thus encouraging teamwork across traditional care boundaries. Care Coordinator Organizations implemented and self-policed their own organizational protocols and guidelines to improve care provision within their local networks. Access to health care utilization data from NHIFA allowed Care Coordinator Organizations to locally monitor practice patterns, protocol compliance and patient pathways, and to evaluate local strategies. While changing political priorities caused the initiative to be terminated in 2008, the Care Coordination Pilot’s early indications of success warrant consideration.
The government initiated the Care Coordination Pilot and pushed through the necessary legislation to enable change and unite key actors. Health providers were assigned a leading role within the initiative and became key decision-makers for the coordination and management of care. Care Coordinator Organizations were run by general practitioners or polyclinics, which encouraged primary care-led coordination according to patients’ needs. NHIFA provided support throughout the initiative by assigning virtual budgets to Care Coordinator Organizations and sharing information.
While the initiative was terminated before a full evaluation could be completed, preliminary data and unofficial reviews reported several positive outcomes for the Care Coordination Pilot. Health services in pilot areas appeared to be better coordinated, more cost-effective and of higher quality. Furthermore, the number of patients with chronic conditions receiving appropriate care reportedly increased in pilot sites. Overall cost savings were achieved despite higher initial care costs due to improved preventive services and Care Coordinator Organizations saved, on average, 6% of their allocated budgets.
This case was prepared as part of a larger effort by the WHO Regional Office for Europe and published (2016) in the document, "Lessons from transforming health services delivery: Compendium of initiatives in the WHO European Region".
© Copyright World Health Organization (WHO), 2016
The methodology used for the development of this case is slightly different from the templates used on the IntegratedCare4People web platform, in particular in the analysis of enabling factors and barriers to change.
Please click on the link below for more information about this practice.
WHO Regional Office for Europe