PAYMENT BY RESULTS

1
PAYMENT BY RESULTS

• The Effect of National Tariffs on Coronary
  Revascularisation
• Stephen Holmberg
• Sussex Cardiac Centre

2
PAYMENT BY RESULTS

• What is it?
• Why have it?
• How does it work?
• What are the problems?
• Are there solutions?

3
WHAT IS PAYMENT BY RESULTS ?

• Specific procedures/diagnoses identified as
  Healthcare Resource Groups (HRGs).
• National tariffs determined for HRGs.
• Providers reimbursed for actual work performed.
• So what is the problem?

4
UNDER THE OLD SYSTEM (1)

• Most healthcare delivered as part of block
  contracts.
• Rough agreement on costs and volumes.
• Targets relatively broad and rarely met.
• True costs poorly understood.

5
UNDER THE OLD SYSTEM (2)

• Little control for healthcare commissioners.
• Agreed contracts rarely reflected activity
• Money moved around within Trusts.
• Savings from one area used to fund inefficiencies
  in another
• Funding used for different treatments other than
  those agreed
• Difficult to compare costs between different
  providers

6
PAYMENT BY RESULTS?

• Supports patient choice and encourages hospitals
  to respond to patient preferences
• Encourages commissioners to provide effective
  care in the most appropriate settings
• Rewards hospitals fairly for the work they do
• Increases the transparency of hospital funding
• Imposes a sharper budget discipline on hospitals
• Audit Commission Payment by Results

7
THE POLITICAL GAINS

• PbR creates a universal currency for
  procedures/conditions.
• Dismantles traditional levers of power used by
  Hospitals and Doctors to frustrate NHS control.
• May facilitate the movement of patients to more
  prompt and better quality treatment.
• Guarantees healthcare returns for funding.

8
THE ORIGINS OF PbR

• Diagnostic Related Groups (DRGs) were introduced
  in 1982/83
• Purpose was to measure hospital efficiency
• No intention to use system for finance
• Structure adapted as basis for government
  reimbursement plans as Healthcare Resource Groups
  (HRGs)

9
HOW ARE THE TARIFFS SET?

• Trusts canvassed for prices of procedures
• Based on poor data
• Huge variation in price returns
• e.g. Pacemakers 58 - 30,000 !!
• Tariff based on 2 year retrospective returns
• PCI tariff subject to 20 for medical inflation

10
THE COST OF ELECTIVE PCI
11
WHO CHARGED WHAT?

• THE HIGHROLLERS OF PCI
• 4848 RW3
• 4279 RJ5
• THE POUNDSTRETCHERS
• 167 RKB
• 344 RH8
• 354 RHW
• 374 RXC
• 780 RTE

12
WHO CHARGED WHAT?

• THE HIGHROLLERS OF PCI
• 4848 RW3 Central Manchester
• 4279 RJ5 St. Marys, London
• THE POUNDSTRETCHERS
• 167 RKB Coventry
• 344 RH8 Exeter
• 354 RHW Reading
• 374 RXC Eastbourne
• 780 RTE Gloucester

13
WHAT ARE THE PROBLEMS?

• Is there enough money in the tariff?
• The system should reward best practice.
• Current arrangements may not permit this.
• Casemix
• New Technologies
• Headline Charging

14
THE TARIFFS

• 2003/4
• PCI Elective 3326
• Non-Elective 4357
• CABG Elective 8080
• Non-Elective 9863

• 2004/5
• 3144
• 4849
• 7101
• 9429

15
WHY THE CHANGES?

• Market Forces Factor (MFF) removed.
• Tariff set at lowest MFF
• Providers reimbursed separately for MFF
• MFF 1.0 1.4
• 1.0 West Cornwall
• 1.4 St. Marys, London
• 21 million added for DES
• Assumes 50 use at 700

16
ISSUES OF CASEMIX

• Tariff is probably sufficient for simple PCI
• How is complex PCI funded?
• Risks
• Best Practice NOT followed
• Inappropriate procedures
• Cherry-picking of cases by provider
• Staging of procedures
• Unnecessary surgery

17
NEW TECHNOLOGY

• Tariff based on retrospective costs
• No opportunity to raise charges once PbR is
  running
• NHS decides how to implement funding of NICE
  Guidance e.g. DES
• 2 year passthrough available but at discretion
  of PCTs
• 2005-6 changes at least permit some flexibility

18
HEADLINE CHARGING

• 68 y.o. with AMI
• Medical Treatment, Elective Angio, Elective PCI
• 30298093326 7164
• Medical Treatment i.p. Angio, Elective PCI
• 3672 3326 6998
• Medical Treatment i.p. Angio PCI
• 4849
• Medical Treatment i.p. Angio Transfer for
  urgent PCI
• 3672 4849 8521

19
HEADLINE CHARGING (2)

• 72 y.o. with ACS
• Medical Treatment, Elective Angio, Elective PCI
• 19638093326 6198
• Medical Treatment i.p. Angio, Elective PCI
• 36723326 6998
• Medical Treatment i.p. Angio PCI
• 4849
• Medical Treatment i.p. Angio Transfer for
  urgent PCI
• 36724849 8521

20
WHERE IS REIMBURSEMENT GOING?

• 2003-2004 Indicative tariffs introduced
• 2004-2005 Tariffs apply to certain HRGs
• Including PCI (Marginal Activity)
• All activity in Foundation Trusts
• 2005-2006 Most HRGs covered by tariffs
• Now Elective Procedures only (except FTs)
• 2008-2009 Payment by Results will be funding
  basis for gt90 of healthcare delivery

21
LESSONS FROM OTHER COUNTRIES

• Is the UK simply falling in line with other
  health economies?
• 600 HRG codes cover all activity
• USA
• 400 codes cover 40 of activity
• Multiple reimbursement levels per code
• Truly activity based reimbursement
• Germany

22
COLD FEET?A Slope to the Level Playing Field

• Government acknowledges the threat of Gaming.
• Concern over financial volatility
• PbR NOT to be extended to additional emergency
  care HRGs Waiting List tariffs only
• But this is not going soft on reform.we will
  still be implementing this new system more
  quickly than any other country. (John Hutton)

23
THE UK POLICY TO INTRODUCE PAYMENT BY RESULTS
ACROSS VIRTUALLY ALL HEALTHCARE WITHIN 5 YEARS IS
WITHOUT PRECEDENT FROM ANY OTHER HEALTHCARE
ECONOMY
24
CONCLUSION (1)

• PbR represents both an opportunity and a risk
• Fine detail will determine success or failure
• Reimbursement levels are likely to drive clinical
  practice
• The introduction of PbR is so rapid that major
  problems are highly likely
• System may produce Results by Payment rather
  than Payment by Results

25
CONCLUSION (2)

• The system can be made to work
• Tariffs need to encourage best practice
• Adequate funding
• Casemix acknowledged
• New Coding Systems (NIC)
• Patient pathways identified
• Networks must share financial risk
• Mechanisms must exist to fund new approved
  technology