Cost-Effectiveness of Diabetes Pay-for-Performance Incentive Designs

BACKGROUND: Taiwan's National Health Insurance (NHI) Program implemented a diabetes pay-for-performance program (P4P) based on process-of-care measures in 2001. In late 2006, that P4P program was revised to also include achievement of intermediate health outcomes. OBJECTIVES: This study examined to what extent these 2 P4P incentive designs have been cost-effective and what the difference in effect may have been. RESEARCH DESIGN AND METHOD: Analyzing data using 3 population-based longitudinal databases (NHI's P4P dataset, NHI's claims database, and Taiwan's death registry), we compared costs and effectiveness between P4P and non-P4P diabetes patient groups in each phase. Propensity score matching was used to match comparable control groups for intervention groups. Outcomes included life-years, quality-adjusted life-years (QALYs), program intervention costs, cost-savings, and incremental cost-effectiveness ratios. RESULTS: QALYs for P4P patients and non-P4P patients were 2.08 and 1.99 in phase 1 and 2.08 and 2.02 in phase 2. The average incremental intervention costs per QALYs was TWD$335,546 in phase 1 and TWD$298,606 in phase 2. The average incremental all-cause medical costs saved by the P4P program per QALYs were TWD$602,167 in phase 1 and TWD$661,163 in phase 2. The findings indicated that both P4P programs were cost-effective and the resulting return on investment was 1.8:1 in phase 1 and 2.0:1 in phase 2. CONCLUSIONS: We conclude that the diabetes P4P program in both phases enabled the long-term cost-effective use of resources and cost-savings regardless of whether a bonus for intermediate outcome improvement was added to a process-based P4P incentive design.