Title: Methods for reducing health inequalities through pricing of health services
Funder: Department of Health and Social Care

Abstract: Payment systems are important policy levers for influencing healthcare delivery. Previous research has shown that both the amount and the manner in which general practitioners (GPs) and hospitals are reimbursed can affect the volume and quality of services they provide to different patient populations. At present, the English NHS does not make strategic use of its payment system to incentivise reductions in health inequalities between disadvantaged and affluent patient groups. Payments typically reflect the expected cost of delivering care services without explicitly considering the amount of health benefits these services create or how these benefits are distributed across socio-economic groups. This approach may inadvertently increase health inequalities, for example if providers focus efforts on easier to reach populations in preference to more difficult to reach populations. Our study will bring together two distinct methodologies from within the field of health economics - contract theory and distributional cost-effectiveness analysis - to develop a payment framework that commissioners can use to set explicit price incentives for healthcare providers to reduce health inequality. The health benefits generated by healthcare activities can vary widely across socio-economic groups due to differences in disease prevalence, access to care, and treatment effectiveness. By modifying payments, commissioners can encourage providers to focus more time and effort on the care activities that generate more health benefits for more disadvantaged patient groups, thereby reducing health inequalities. Our approach acknowledges that under a given budget increased payments for some care activities must be offset by reductions elsewhere. An efficient and equitable payment system therefore needs to set financial incentives that meet the joint, and sometimes competing, objectives of maximising population health and reducing health inequalities. We will apply our pricing methodology to study GP incentive payments made under the Quality Outcome Framework (QOF). The QOF is a national pay-for-performance programme that rewards GP practices for delivering care to patients with chronic conditions according to agreed best practice standards. We will combine regression analysis of primary care records from the Clinical Practice Research Datalink with distributional cost-effectiveness analysis to estimate: how disease prevalence and care delivery for conditions incentivised under the QOF differ across socio-economic groups (as defined by the Index of Multiple Deprivation); how incentivised care affects morbidity and mortality (summarised in the form of quality-adjusted life years) as well as lifetime healthcare costs for patients; how GP practices have responded to previous changes in QOF payments. This information will then be used to calibrate our payment framework, from which we will derive estimates of both the current health equity impact of the QOF and how inequalities are predicted to change under alternative incentive arrangements. Our research findings will provide policymakers and commissioners of healthcare services with new evidence on how to change the incentives in QOF in order to address socio-economic inequalities in health. The general pricing framework will also be applicable to other healthcare settings where care activity can be measured and linked to health effects.

Lay abstract: a) aim(s) of the research This study will develop methods to help NHS commissioners decide how to pay general practitioners (GPs) so that people in more disadvantaged communities benefit more from the health service. b) background to the research The more disadvantaged a community is, the worse the health of people living there tends to be. This is known as the health gap , and it is widely seen as unfair by the public. NHS organisations have a legal duty to try to reduce the health gap. But the care that the NHS provides is often less effective for disadvantaged groups, and, as a result, the health gap is inadvertently widened. One solution to this problem would be to give more resources to health services that narrow health gaps, for example by paying GP practices to focus more on the most disadvantaged populations with the greatest healthcare needs. c) design and methods used This study brings together methods from economics and health services research to show how payments for health services could be changed to make the way healthcare is provided fairer. We will demonstrate our approach using the example of a national payment scheme, the Quality Outcome Framework (QOF). Under this scheme, GP practices receive additional payments if they provide good quality care, such as treating high blood pressure. But the rewards do not depend on who is treated. We will measure how care delivered by GP practices under the QOF differs for people living in disadvantaged and affluent areas. We will also use information from clinical trials to show how care affects patient outcomes. We will then show how commissioners can adjust GP payments under the QOF to give more money to healthcare services that provide greater health benefits for more disadvantaged communities. Finally, we will estimate how much the health gap between more and less deprived communities could be reduced through this approach. d) patient and public involvement We will involve three members of the public in our advisory group. Their experiences and knowledge of primary care in England will help to ensure that our research addresses issues that matter to patients, service users, carers and the public. They will review our methods and help us explain our findings in plain language. e) dissemination We will share our findings with the general public, policymakers and academics through presentations, reports, journal papers and lay summaries. We have well-developed patient and public networks and long-standing relationships with policymakers at the Department of Health & Social Care and NHS England and we have recruited to our advisory group several stakeholders who make pricing decisions in the English NHS. We will use these networks to reach the appropriate audiences.

Research activity codes: 8.2 HEALTH AND WELFARE ECONOMICS
Health categories: GENERIC HEALTH RELEVANCE