DRG as a management system and payment system

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DRG as a management system and payment system

• Meeting in Island 16/9 - 2002
• Mona Heurgren, Senior economist
• Federation of Swedish County Councils, Sweden

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Agenda

• The Swedish health care system
• DRG and management
• DRG and reimbursement
• Experiences from working with DRG in Stockholm

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Sweden has a decentralized health care system
- 20 county councils (incl 2 regions) are
responsible for financing and providing health
care services for the entire population
Västra GötalandRegion
Gotland
Skåne Region
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Swedish Health Care System

• The government stipulates basic principles for
  health services
• The County Councils are responsible for the
  provision of health and medical services for the
  people living in the County
• Municipalities (289) are responsible for housing
  and care of elderly and disabled people
• The County Councils and the Municipalities have a
  constitutional right to levy taxes on residents
  income (average 10,2 and 19)

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Gives us different systems in different County
Councils

• The use of DRG-systems is not mandatory, but 17
  of 21 County Councils and Regions are using
  DRG-systems today
• The County Councils decide what kind of
  organisation of health care and what sort of
  reimbursement system they want to use.

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Centre for Patient Classification System (CPK)

• A joint project between the Federation of Swedish
  County Councils and National board of Health and
  Welfare, started in 1999.
• The task
• Maintain and develop the Nordic version of DRG
  (NordDRG) and to develop national standards for
  secondary patient classification systems

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The use of DRG in Sweden 2002
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A DRG-systems two main criteria

• A DRG-system should be medically relevant
• A DRG-system should be cost homogeneous
• Therefore a DRG-system is useful in two
  main aspects, both to describe and reimburse

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To describe performance

• To describe production from a process perspective
  
• To describe case-mix what sort of patients do
  we have? Gives transparency to the system
• To simplify the description of patients with
  10.000 different diagnosis into 500 DRGs gives
  a language that can be understood by others then
  physicians and nurses
• To calculate productivity

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DRG-profile Surgery clinic
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Change 1999-2000
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To measure productivity with DRG
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DRG and reimbursement

• DRG can be used as products in a prospective
  payment system
• A DRG-system is not alone a reimbursement system,
  it is a component
• The performance or impact depends on the whole
  system not only the DRG-system
• DRG can also be used for budgets

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Prospective payment systems in Sweden

• 5 County Councils (around 50 of all cases), use
  NordDRG as prospective payment system for all
  inpatient care. 16 County Councils use NordDRG as
  a payment system for patients from other County
  Councils.
• Most also think that it is important to find
  prospective payment systems for outpatient care,
  ex NordDRG-O and also for medical procedures.

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Who takes the financial risk?
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Why do we want to use DRG for reimbursement?

• Shared financial risk
• Rises productivity
• Decentralized responsibility
• Cost consciousness
• A possibility to compare hospitals and clinics
• Transparency
• A sharp distinction between buyers and providers
  of health care
• Better registrations

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What can be the problem with DRGs as a payment
system?

• Differences in case-mix within DRG-groups
• Competition in a common sense does not work in
  health care. Total costs can therefore rise.
• More administration?
• Cream-skimming
• DRG-creep
• Must be a balance between the buyers and the
  providers
• Can be to imprecise to describe performance

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Decisions

• To what extent should DRG- reimbursement be used?
• Outpatient care
• Limits and rules
• Cost outliers
• Negotiations
• Budgets and results

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Crucial experience when using DRG as a payment
system

• Dont try to save an unrealistic amount of money
  at the same time have realistic expectations
• To many agreements and to much details rules
  must be clear
• To secure quality in data diagnosis, procedures
  and case-costing
• Education
• To keep the insentive

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The future

• DRGs are here to stay
• More tools
• To share knowledge from Not invented here
  syndrome to stolen with pride
• Competence and research
• Focus on the white spots on the map
• Back to the primary data

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Addresses on the web
Centre for Patient Classification
Systems www.sos.se/epc/cpk Information in
English is available