Final Contract Report
This report was prepared for the Agency for Healthcare Policy and Research
(AHRQ) under Contract No. 290-06-0023-2.
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Prepared by R. Adams Dudley, Chien-Wen Tseng, Kevin Bozic, William A. Smith,
and Harold S. Luft (a)
Contents
Foreword
Abstract
Acknowledgment
Author Affiliations
Checklist: 21 Questions for Purchasers to Consider
Introduction to Consumer Financial
Incentives
Incentives to Select a High Value Health Plan, Provider Network, or Provider
Incentives to Select a High Value Treatment Option
Implementing Consumer Financial Incentive Programs
Acceptance of Consumer Incentive Programs by Consumers and Providers
Special Populations
Evaluating a Consumer Financial Incentive Program
References
Tables
Table 1. Types of Consumer Financial Incentives
Table 2. Frequently Used Criteria for Selecting Performance Measures
Table 3. Essential Elements to Enable
Patients' Self-Management of
Chronic Diseases
Table 4. Applying Social Marketing Strategies to Developing and Marketing
a Consumer Incentive Program
Table 5. Characteristics that Increase the Likelihood that a Consumer Will
Respond to Financial Incentives
Foreword: Exploring the Role
of Consumer Financial Incentives
AHRQ commissioned a multidisciplinary group of experts to develop Consumer
Financial Incentives: A Guide for Purchasers. It is a tool for employers,
health plans, and State Medicaid agencies considering or poised to design
and implement a consumer financial incentive strategy. The Guide was created
in partnership with a panel of purchasers and consumer representatives.
The panel was asked to identify questions that need to be addressed when
considering or designing a consumer financial incentive strategy; these
questions were used to form an outline for the Guide. Responses summarize
empirical evidence, when it exists, and incorporate real life case examples
to illustrate a breadth of implementation options.
Interest in consumer financial incentives seems to be increasing, particularly
as a strategy to influence the selection of high-value providers. One means
of encouraging consumers to consider value when selecting a provider is
through the development of tiered networks, which sort providers on some
combination of quality and price measures and reward consumers' selection
of those of high value (for example, by offering a lower copayment). Although
tiering represents a small segment of the market, the use of tiering strategies
by employers is growing.(b)
A recent in-depth scan supported by the Robert Woods Johnson Foundation
examined the extent of efforts to engage consumers in health care quality
issues (along with six other indicators of market readiness for quality
improvement) across 14 U.S. communities. Eleven of the 14 communities were
rated as “limited” on consumer engagement, which was the lowest
rating. Minneapolis/St. Paul scored the highest, due to its experience in
providing comparative plan and clinic-level performance to the public through
Web sites and provider directories and its 10-year-old tiered physician
network product, which provides quality and cost ratings to
consumers.(c)
This Guide is intended as a tool for exploring if and how consumer financial
incentives might be tapped to improve community or market readiness for
quality improvement. Incentives can be applied to a range of consumer decisions
that purchasers may seek to influence in the pursuit of a high-value agenda:
- Selecting a high-value provider.
- Selecting a high-value health plan.
- Deciding among treatment options.
- Reducing health risks by seeking preventive care.
- Reducing health risks by decreasing or eliminating high-risk behavior.
The guide is the latest in a series of coordinated efforts by AHRQ to contribute
to ongoing local and national dialogue related to how purchasers—a
critical stakeholder group—can work to improve quality of care. A listing
of AHRQ resources specific to consumer financial incentives is available
at
http://www.ahrq.gov/qual/value/conincent.htm;
a listing of AHRQ's pay for performance resources is available at
http://www.ahrq.gov/qual/pay4per.htm.
In particular, we recommend Pay for Performance: A Decision Guide for
Purchasers,(d)
which launched AHRQ's series of user-driven decision guides.
Just as consumer incentive strategies are in their infancy, so too is the
related research agenda. Purchaser, consumer and researcher participants
in a November 2006 colloquium convened by the Agency for Healthcare Research
and Quality and the Commonwealth Fund (e) were
charged with developing a research agenda on incentives; they identified
a set of priority research questions, including:
- What is the impact of tiered networks on provider quality and cost?
- How can consumer financial incentives be used—alone or in tandem
with provider incentives—to improve quality of care?
- How does consumer response vary by the size of financial incentive?
- Are financial incentives worthwhile, given the cost of paying for the
incentives themselves and then marketing them?
As government purchasers, employers, health plans, and other buyers of
health services consider or reconsider their quality agendas, they are encouraged
to explore and debate sponsorship of consumer financial incentives within
the context of an overarching local or national quality framework alongside
pay for performance and more traditional quality improvement strategies. We
hope this Guide informs purchaser deliberations, and we welcome feedback.
Carolyn Clancy, Director, AHRQ
Peggy McNamara, Senior Fellow, AHRQ. E-mail: Peggy.McNamara@ahrq.hhs.gov
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Abstract
Leading employer groups, employer coalitions, State Medicaid agencies,
and health plans are exploring the potential power of consumer financial
incentives in influencing quality goals and are looking for the evidence
base and illustrative examples to guide their decisionmaking processes. The Guide is
an evidence summary organized around a series of 21 questions that
span incentive design and implementation decisions as identified by user-stakeholders. That
is, the users, in this case purchasers and consumers, wrote the outline
for the publication and reviewed a formative draft. The Guide reviews
the application of incentives to five types of consumer decisions:
- Selecting
a high value provider.
- Selecting a high value health plan.
- Deciding
among treatment options.
- Reducing health risks by seeking preventive
care.
- Reducing health risks by decreasing or eliminating high risk
behavior.
The publication of the Guide is timely for several reasons. First,
employers are interested in consumer engagement strategies, including financial
incentives, especially in light of the growing consumer-driven health plan
movement. Second, and more recently, the President's Executive
Order (August 2006) highlighted provider and consumer incentives as tools
for transparency and a higher quality, more efficient health care system. And
finally, State Medicaid programs, in response to grant incentives embedded
in the 2005 Deficit Reduction Act (i.e., Medicaid Transformation Grants
and Health Opportunity Accounts) are increasingly exploring the potential
of consumer financial incentives.
Return to Contents
Acknowledgment
The authors gratefully acknowledge the valuable comments made by 14 public
and private purchasers, consumers, and academic professionals who generously
contributed their time and expertise in reviewing a formative draft of this
Guide.
Return to Contents
Author Affiliations
This report was prepared by R. Adams Dudley, MD, MBA (University of California,
San Francisco); Chien-Wen Tseng, MD, MPH (University of Hawaii, Pacific
Health Research Institute); Kevin Bozic, MD, MBA (University of California,
San Francisco); William A. Smith, EdD (Academy for Educational Development);
and Harold S. Luft, PhD (University of California, San Francisco).
The views expressed in this report are those of the authors. No official
endorsement by the Agency for Healthcare Research and Quality or the U.S.
Department of Health and Human Services is intended or should be inferred.
a. Go to
Author Affiliations above.
b. Baker L,
Bundorf K, Royalty A, et al. Consumer-Oriented Strategies for Improving
Health Benefit Design: An Overview. Technical Review 15 (Prepared by
the Stanford University–UCSF Evidence-based Practice Center, Stanford
CA, under Contract No. 290-02-0017). AHRQ Publication No. 07-0067.
Rockville, MD: Agency for Healthcare Research and Quality; July 2007.
Available at
http://www.ahrq.gov/downloads/pub/evidence/pdf/consumer/consorient.pdf.
Accessed on October 11. 2007.
c. Powers PE,
Painter MW. A Checkup on Health Care Markets. Princeton, NJ: Robert
Wood Johnson Foundation; April 2007. Available at
http://www.rwjf.org/pr/product.jsp?id=18651&topicid=1053&gsa=pt1053.
Accessed on October 11. 2007.
d. Rosenthal
MB. Pay for Performance: A Decision Guide for Purchasers.
Rockville, MD: Agency for Healthcare Research and Quality; April 2006.
AHRQ Publication No. 06-0047. Available at
http://www.ahrq.gov/qual/p4pguide.htm.
Accessed October 11, 2007.
e. Toward a Research Agenda
on Quality-Payment Alignment: Findings from an Invitational Colloquium.
Rockville, MD: Agency for Healthcare Research and Quality; May 2007. AHRQ
Publication No. 07-0055-EF. Available at http://www.ahrq.gov/qual/qpayment.htm. Accessed October 11, 2007.
Return to Contents
Proceed to Next Section
Current as of November 2007
AHRQ Publication No. 07(08)-0059
Internet Citation:
Final Contract Report. Consumer Financial Incentives: A Decision
Guide for Purchasers. AHRQ Publication No. 07(08)-0059. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/qual/value/incentives.htm
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