Chapter 3.6 addresses how payment mechanisms can foster value for money and quality in long term care. Payment and resource allocation mechanisms for long-term care (LTC) are distinct from those for health care for a number of reasons. Key learning includes that

• LTC is particularly prone to poor quality or inadequate care, under-provision, overmedicalization and to delivery in sub-optimal settings.

• The challenges for LTC reflect its differences from conventional health care markets, including that:

• – In health care the focus is on curing disease whereas, once an individual needs LTC, that need for care is permanent and the emphasis shifts to maintaining quality of life

• – LTC is often provided by low-paid or informal (often unpaid) caregivers rather than professionals.

• – LTC markets are generally fragmented, with a multitude of funding sources and purchasers involved.

• – Collecting data on LTC quality is difficult and makes value-based payments particularly challenging.

• Well-designed economic incentives can influence the type, setting, volume and quality of care offered, particularly when

• – Payments are adjusted to reflect cost variations between patients

• – Payment types are combined and include mechanisms to reward quality and cost containment.

• Informal caregivers may be compensated either with cash or non-monetary benefits. Although these do not normally cover the full costs of providing care, they acknowledge carers’ contributions and to some extent address issues such as working hours lost.