Chapter 3.5 reflects on how to use payment mechanisms to support the integration of care. Integrated care is about better management of the care patients receive in different settings (primary, secondary) and from different specialists and teams. It is particularly important for patients with multi-morbidity and chronic long-term needs, and as populations age. Key learning includes that

• Health systems’ payment models can play an important role in incentivizing integrated care.

• Purchasers are now testing innovative payment models (e.g. pay-for-coordination or P4C) which explore how to foster better coordination. These models include

• – Appointing a ‘budget holder’ for a patient so a case manager and /or multidisciplinary team has oversight of all care

• – Bundling payments to single providers so that the multiple services a patient uses are better linked and

• – Bundling payments for patients being treated by multiple providers, creating joint budget responsibility and a need to work together and avoid duplication.

• Policy-makers would do well to focus on careful design of information systems to underpin payment schemes because

• – Information sharing supports clinical effectiveness

• – Quality indicators allow purchasers to tie bonuses or penalties to integration

• – Monitoring activity and health outcomes helps assess value for money

• – Tracking the distributional consequences of incentive schemes is crucial in protecting equity

• – Robust evaluation tools allow immediate lessons to be shared and will capture changes over time and across the healthcare system.

• Health systems need to embed financial incentives as part of a broader system approach. Critical elements include

• – Committed leadership

• – Effective communication among providers

• – Structural integration, either through coordinating mechanisms that link provider roles or by the formation of new entities with single management teams.