Reference Costs 200607

1

• Reference Costs 2006-07
• Afternoon Workshop
• Richard Russell, DH
• Ali Connell, DH
• PbR Finance and Costing Team

2
Contents

• Purpose of Reference Costs
• Organisational Roles and Responsibilities
• Key changes since 2005-06
• HRG4
• FCE and Spells
• Unbundling
• Data Definitions
• Collection System
• Known areas of difficulty
• Timetable
• Resources
• Patient Level Costing

3
Purpose of Reference Costs

• Annual national benchmark exercise of average
  unit costs from providers in England
• Also serves to inform
• Payment by Results Tariff Development
• Programme Budgeting
• Efficiency measures
• Organisational Performance Management
• So whilst some changes are to inform an improved
  benchmark we also need to take account of its
  other uses

4
Roles and Responsibilities (1)

• DH, Policy and Strategy, PbR, Operations
• Responsible for developing reference costs
  guidance, costing manual, collection system
• Secretariat for the National Costing Development
  Group who are responsible for quality of costing
  in the NHS
• Responsible for producing, national schedules
  and RCIs
• Information Centre for Health and Social Care
  (IC)
• DH commission trim points, OPCS/ICD10 to HRG
  mapping, HRG grouper

5
Roles and Responsibilities (2)

• Connecting for Health (CfH)
• Data Dictionary
• Coding Guidance
• Strategic Health Authorities
• Coordinating the exercise locally and answers
  queries from Trusts and PCTs (with support from
  DH as required)
• Your own Finance Department
• First source of advice on reference costs

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Reference Costs 2006-07 Communications

• SHA Reference Costs Leads
• IC Roadshows
• FAQs
• Website
• Mailbox
• (Diagram next slide)

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What does the query relate to?
What organisation?
Where should I send?
(Including specific subject header)
PbR technical guidance PbR development / policy
NHS Trusts PCT
SHA
(If SHA cannot answer)
FT
DH
pbrcomms_at_dh.gsi.gov.uk
Reference Costs collection guidance Reference
Costs data returns/results Costing manual
NHS Trusts PCT
SHA
(If SHA cannot answer)
FT
DH
pbrdatacollection_at_dh.gsi.gov.uk
If query is a mixture of PbR and Reference Costs
questions then should go to pbrcomms_at_dh.gsi.gov.uk

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Key changes since 2005-06 HRG4

• HRG4 (note no word version or vn or v)
• Designed by clinicians
• Increased number of lines from approx 560 to
  over 1200
• Setting independent (APC, Outpatients, AE,
  Adult Critical Care, Paediatric Critical Care,
  Neonatal Critical Care)
• Apply equally to Admitted Patient Care and
  Outpatients i.e. Outpatients grouped by HRG

9
Key changes since 2005-06 FCE and Spells (1)

• Providers are paid on a Spells basis and need to
  measure their costs on the same basis
• HRG4 is designed to be Iso-Resource at Spell
  level, not FCE level
• So the future of Reference Costs is Spells level
  costs by HRG
• For year on year comparability need a collection
  of both FCE and Spell costs

10
Key changes since 2005-06 FCE and Spells (2)

• DH issued guidance on how to get from FCE costs
  to Spell based costs
• Point to note
• FCE collection count FCEs that are part of a
  Spell that finishes in the 2006-07 financial year
• Spell level collection, group Spells that finish
  in the year
• HRG4 Grouper assigns each FCE record the
  relevant FCE HRG and subsequent Spell HRG on same
  output file

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Key changes since 2005-06 Unbundling

• For reference cost purposes this means services
  separately identified (by HRG4 Grouper) from FCE
• Chemotherapy
• High Cost Drugs
• Diagnostic Imaging (Radiology)
• Interventianal Radiology
• Renal Dialysis
• Radiotherapy
• Specialist Palliative Care
• Rehabilitation Services
• At a Spell level grouper also separately
  identifies these activities and does not group
  them within the main Spell

12
Key changes since 2005-06 Collection System

• Incorrect Trimpoints used will now fail
  loading process - Vital to use correct ones
• Workbook structures have been made more
  consistent with Guidance
• Software providers
• Mid May Live testing week

13
Key changes since 2005-06 Data Definitions and
Collection structures

• The reference cost guidance now links to the
  data dictionary wherever possible
• Biggest change is Outpatients, it is now a
  pre-booked appointment at a clinic i.e. setting
  independent NB possibly big impact for PCTs?
• Other key changes are
• Outpatients by Staff Type
• Observation wards/assessment units clarification
• Critical Care counting, Periods and ACP
• Renal now HRG4
• Digital Hearing Aids
• Mental Health Mental Health Specialist Teams
  (Child/Adult/Elderly)
• Pre-processing of data - Annex 1
• Accounts reconciliation in reconciliation
  statement

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Known areas of difficulty (1)

• With the new definition PCTs are now doing
  Outpatients, but generally do not using
  OPCS/ICD10 coding
• A number of organisations have not collected
  OPCS 4.3 since the start of the year (1 April
  2006)
• Collection files are larger due to HRG4
  introduction
• Data Collection issues for some of the areas of
  unbundling

15
Known areas of difficulty (2)

• Updated definitions in line with data dictionary
  and PbR requirements may require more local
  solutions than normal
• PAS systems not able to fully utilise all HRG
  groups at this time
• PCTs post reconfiguration need to include
  activity and costs relating to pre configuration
  organisations

16
Timetable

• Tools
• Ref Costs Final guidance available 16th Feb
  (DH)
• Costing Manual updates March
• Final Collection Files - March
• ICD10/OPCS to HRG code to HRG mapping available
  Feb (IC)
• Toolkit documentation available March (IC)
• Grouper available end April (IC)
• Trim Points available early May (IC)
• Deadlines..
• First submission to DH 29th June, Noon
• Final submission to DH 31st July, Noon
• RCIs produced before end 2007 (DH)

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Resources and useful links

• Reference Cost Guidance www.dh.gov.uk/refcosts
  
• NHS Costing Manual www.dh.gov.uk/refcosts
• HRG4 Toolkit www.ic.nhs.uk/casemix
• HRG4 Documentation www.ic.nhs.uk/casemix
• OPCS/ICD10 to HRG Mapping (code to group in
  excel) www.ic.nhs.uk/casemix
• SHA leads contacts
• (details In pack and at www.dh.gov.uk/refcosts)
• Reference Cost Discussion Forum
• (this is a users resource and whilst promoted by
  DH it is not used by the DH as a way of receiving
  queries the route for queries is via SHA
  Reference Cost Leads)

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The Future of Costing

• Response to Lawlor Review
• National Costing Development Group Support
• Patient Level Costing

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Patient Level Costing (PLC) 1

• Historically reference costs tend to be
  calculated by finance, on a top down basis, with
  little clinical validation
• one hospital provided 1526 Diabetic Adult Face
  to Face Contacts for a total cost of 1,678 (avg
  of 1.10 each)
• another provided 16 Intermediate Pain Procedures
  for a total cost of 80 pence - 5 pence each
• As reference costs have been used to calculate
  tariff then this undermines the credibility of
  the tariff

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Patient Level Costing (PLC) 2

• PLC is a change in costing methodology to a
  bottom up approach.
• Will allow for improved clinical engagement as
  discuss actual patients rather than averages
• Will allow for better understanding of costs as
  will be able to compare cost buckets rather than
  just average costs
• Will better support tariff development as allows
  for greater level of detail to be collected
• Will support any future classification changes
  as simply sum up patient costs into whatever
  classification the organisation is using

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Patient Level Costing (PLC) 3

• There are already 5 sites implementing PLC
• Up to a years implementation time and then a
  further year to properly bed in
• Makes better use of the existing investment in
  place to support PbR implementation
• Will be supported by
• Updated costing definitions and standards will
  be written by NHS experts
• Process of peer review of quality of costing
  data in providers

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The short term

• PLC is a forward looking medium to long term
  solution.
• There is plenty that can be done now
• Service level costing
• Clinical validation of costing results
• Benchmarking groups
• Other ideas?

23
WRAP UP

• Large scale change for 2006-07 to support HRG4
  tariff and costing development
• FCEs and Spells
• Unbundling
• OPCS4.3
• Organisations need to start planning for the
  reference cost collection now
• Any Questions?