Methods for reducing health inequalities through pricing of health services

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.