Options for the Future of Payment by

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Options for the Future of Payment by Results
(PbR) Consultation exercise Sebastian Habibi
May 2007
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What is Payment by Results?

• PbR is about linking funding to patient care
• What is being provided? (i.e. currency/product
  definition)
• What information do providers need to collect and
  transmit in order to claim payment?
• What other information is needed to monitor
  quality/outcome?
• What is the price?
• Whats the relationship between price and volume?

Currency and Price
Patient Care
Funding
Information Flows
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Ch. 1 Setting the scene

• Consultation document 16 March
• 14 week consultation, deadline for responses 22
  June
• 3-year development cycle 2008/09 to 2010/11
• PbR is increasing transparency in the dialogues
  between commissioners and providers, managers and
  clinicians
• PbR built with tools that were available at the
  time
• Now that people are using PbR, its strengths, but
  also its weaknesses are becoming clear

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Ch. 2 - Clinical financial data are fundamental
building blocks of PbR
Grouped data
Patient-level data
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Ch.2 - Strengthening the building blocks of PbR
(1)

• Classification system for diagnoses and
  procedures
• Existing system not sustainable for the long-term
• Interim solution - annual updates (2008/09
  2009/10)
• DH and CfH are evaluating systems being used in
  Australia and elsewhere as potential replacements
  (report in July 07)
• Potential replacement in 2010/11
• Currencies (i.e. patient groupings)
• Currencies for 2008/09 tariff will continue as
  now (HRG3.5)
• Improved currencies (HRG4) introduced as basis of
  tariff from 2009/10
• Ongoing refinement informed by international
  experience of Diagnoses Related Groups (DRGs)
• Costing
• Patient-level costing introduced from April 2007
• Will inform tariff calculation from 20010/11

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Ch. 3 - Developing the National Tariff (1)

• Calculating the tariff from a sample of providers
• Accredited patient-level costing sites
• Potential to set prices based on costs of most
  efficient providers
• Normative pricing to reflect best practice
• Best practice models deliver high-quality and
  cost effectiveness
• Targeted approach focussed on high-volume HRGs
• Currently considering 6 treatments based on
  evidence from Institutes initial studies
• Quality premia - but paid at contract level ?

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PbR should support commissioning based on
pathways.
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Getting the right tariff structure is a balance
of bundling unbundling

• Bundling components of care together can help
  reduce variation in cost and outcome for similar
  groups of patients
• But, can also reduce flexibility to tailor
  services around patients needs and individual
  choices..
• Unbundling the tariff
• HRG4 introduces more granularity in tariff
  structure
• Principle is that unbundling should take place
  where
• Service items are commissioned direct from
  primary care or,
• High-cost, low volume items are unevenly
  distributed
• Q. Are there examples of where the tariff acts as
  a barrier to commissioning care pathways and, if
  so, what changes to the tariff structure would
  help overcome these problems (i.e. bundling or
  unbundling)?

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Ch. 3 - Developing the National Tariff (2)

• Specialised services
• Better differentiation under HRG4
• International evidence indicates a continuing
  role for top-ups, exclusions and support for
  single-specialty Trusts
• Applying the tariff to the same service provided
  in different settings
• Potential to group activity delivered in OP and
  community settings from 2008/09, but requires
  coding as per admitted patient care
• Consultation data analysis to inform decision
  on combined vs separate tariffs
• How tariff supports plurality of providers fair
  playing field?

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Ch.4 Future of Tariff-Setting

• Priority is to improve transparency and
  competency in underpinning process
• Costing
• Sampling techniques
• Stakeholder involvement
• Establishment of Clinical Advisory Panel to
  ensure appropriate clinical involvement in
  decision-making
• Chaired by Dr Ian Rutter (GP and clinical advisor
  to DH on health reform)
• No current proposals to devolve responsibility
  for tariff-setting to an independent body

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Ch. 5 Extending the scope of PbR to other services

• 3 generic models
• Local currency, local price
• National currency, local price
• National currency, national price
• Potential to progress through models where
  appropriate and subject to data on activity and
  cost. No assumption of national tariff for
  everything

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Is a national currency appropriate for a
particular service?

• Is it necessary?
• Would a national currency support commissioning
  objectives (e.g. patient choice shifting care
  national benchmarking)?
• Does it make sense?
• Are services sufficiently standardised across
  different local areas?
• Are conditions right?
• Are data collection systems and information flows
  sufficiently standardised?
• If not, are the costs of introducing standardised
  data collections and information flows outweighed
  by the benefits?

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Where are we going?

• New national currencies (HRG4) developed
• Critical Care
• Radiology
• Chemotherapy
• Radiotherapy
• Renal Dialysis
• Specialist Palliative Care
• Ongoing national projects
• Pathology
• Rehabilitation
• Mental Health
• Meanwhile, people are getting on and
  commissioning services using local currencies, we
  are keen to support the development of good
  practice as national exemplar

Potential for use as currencies for national
tariff in 2009/10 (decision in summer 2008)
Potential to introduce national currencies and
indicative tariffs by 2010/11
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Piloting new ideas PbR Development Sites

• Evolutionary approach to developing PbR must
  encourage innovation at local level
• We will work with SHAs/FTN to establish a limited
  number of PbR Development Sites for piloting
• Local currencies for services outside the scope
  of the national tariff
• Alternative currencies or funding models for
  services already covered by tariff (n.b. projects
  would not involve changes to price alone).