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Moving to activity-based funding for hospital services in Canada:
Linking HTA Decisions and Hospital Payment Policy
Erik HellstenHealth Quality Ontario
CADTH SymposiumApril 8, 2014
Health Quality Ontario: What we do
1
• Public reporting on health
system quality and outcomes
• Support quality improvement
activities
• Health technology
assessment function to
inform coverage and policy
recommendations
(“What should we pay for?”)
• Provide evidence based
advice and analysis to
inform funding policy
(“How should we pay for it?”)
HTA and the Canadian public reimbursement landscape
• Reimbursement decisions are the major lever for enabling / promoting adoption of new technologies following HTA
• Traditionally, most of the focus of HTA-linked reimbursement has been on drug reimbursement and to a lesser extent, physician payment
• New payment concepts drawing attention such as value-based reimbursement limited mainly to drugs
• Physician payment has started to receive more attention – e.g. recent ‘Evidence-Based Fee Schedule Changes’ Ontario:
– De-listing (e.g. arthroscopic lavage for osteoarthritis)
– Limiting patient indications eligible for payment (e.g. Vitamin D, BMD testing)
– Limiting time between services for the same patient eligible for payment (e.g. sleep studies)
• Very little attention on HTA and hospital reimbursement – why?
Hospitals account for the biggest chunk of public health care spending by sector
Outside of the Ministry of Health, hospitals request the most new technology assessments of any sector in Ontario
MAS/ OHTAC, 13%
Hospital, 31%
MOHLTC, 47%
CCAC, 3%
Other Ontario Ministry, 1%
Other Bodies/Advisory Committees, 10%
Hospital funding methods in Canadian provinces
• Still largely allocated through global budgets in most
provinces (implemented in late 1960s)
• Fixed block grant funding; remains the same regardless of
changes in case mix or activities that hospitals undertake
• Current hospital funding levels are largely based on
historical legacy and the success of hospitals in
negotiating annual increases
• Some provinces (e.g. Ontario) have taken steps over the
years to adjust new increases to be more reflective of case
mix, introduce incremental funding for elective procedures
Global budgets and health technologies
• Global budgets offer few levers for the payer to incentivize particular services or technologies – funding is de-linked from activity, hospitals decide their mix of services
• In general, global budgets tend to dis-incentivize elective procedures (higher upfront costs of OR, devices)
– Hospitals can’t turn away emergency (largely medical) admissions and hence manage their costs down through rationing elective procedures, resulting in long wait lists
– Canadian hospitals tend to run at near maximum bed occupancy and manage down their costs per day
• New technologies tend to be expensive and often focused on elective care, upfront costs funded internally by hospitals
• Studies have found hospitals on global budgets tend to have lower rates of new technology adoption than hospitals funded through activity-based payment systems (Capellaro et al. 2011)
• Physicians often put pressure on administrators to adopt new technologies
1992 2000
DenmarkSweden
1993
Australia
1995
Italy
1997
NorwaySpainSouth Korea
200420031998
JapanFinland England
2005
Germany
2002
Switzerland
1983
USFrance
International adoption of activity-based funding for hospitals
Hospital funding evolution: at home and abroad
1969
Hospital global budgeting
system introduced in Ontario
1988
Transitional
Funding introduced
2004
IPBA used to
allocate $240M in
hospital funding
2007
HBAM
development
1992
JPPC
established
First tranche of additional WT
surgical volumes purchased on
price x volume basis
Ontario Case
Costing Project
established
2006
LHINs
created
1995-97
HSRC uses
efficiency-based
formula for hospital
funding reductions
Ontario hospital funding initiatives
What’s changed lately?
British ColumbiaPatient-focused funding
Similar names, different approaches
• Going ‘deep’, funding total costs for selected patient populations
• ‘Made-in-Ontario’ methodology, run mostly in-house within the Ministry
• Key messaging around incentivizing quality and evidence-based practice
• Accompanied by a slew of related programs – performance measures, guidelines, clinical engagement etc.
OntarioQuality-based Procedures
• Going ‘broad’, funding portion
of costs for all acute inpatient
and day surgery activity
• Uses CIHI CMG+ methodology
– model run mostly by CIHI
• Key messaging around access,
throughput, efficiency
• Focus on ‘keeping it simple’
with funding – quality focus left
for other programs (e.g.
NSQIP)
• The original idea: a new activity-based funding model for hospital-based services (funding = price x volume, adjusted for case mix)
• Each year, QBPs implemented for an expanding range of patient populations
• For each QBP, historical global budget funding ‘carved out’ for estimated costs of current activityin QBP patient population
• Hospitals are thenre-paid for activityusing standard provincial prices
• The vision: In future, prices will be based on the cost of ‘best practice‘
• QBP Expert Panels established through provincial agencies (HQO, CCO, CCN, UHN) to define patient populations to be funded and define best practice care pathways to be costed
The Ontario plan: Quality-Based Procedures
ABF and new technologies: key issues
Funding systems are only as current as the data that feeds them
The German approach:Bridging the lag between new technology adoption and ABF price setting
• P4P and quality-linked
adjustments to DRG prices (e.g.
process measures, readmission
and mortality rates in US)
• Zero payment for costs of ‘never
events’ – specified
complications (e.g. VAP, CLI)
• ‘Best Practice Tariffs’ in UK –
incremental per-case bonus for
adherence to evidence-based
care pathway
• ‘Bundling’ payments across
providers and settings
(including cost of readmissions)
Integrating quality into ABF funding levers
Patient presents with
suspected exacerbation
of COPD
Usual medical
care (in ED /
outpatient)
NPPV
IMV
Go to usual
medical care
(inpatient)
Go to ventilation
(NPPV or IMV)
Severe Level of care
Usual medical
care (inpatient)
Go to IMV
End of life care
Wean
from IMVDecision on
ventilation
modality or
palliative care
Treatment fails
Recovers
Treatment fails
Assess recovery
ModerateLevel of care
MildLevel of care
Assess recovery
Assess recovery
Assess recovery
Discharge planning
& full clinical
assessment
Assess
level of care
required
Home
Home
Home
Home
Recovers
Recovers
Recovers
Treatment fails
Treatment fails
Discharge planning
& full clinical
assessment
Discharge planning
& full clinical
assessment
Usual medical
care (inpatient)
Discharge planning
& full clinical
assessment
N = 43,215Pr = 1.0
N = 19,337Pr = 0.447
N = 22,054Pr = 0.511
N = 1,824P = .042
N = 773P = .018
N = 1051Pr = .024
Legend
Care module
Assessment node
Episode endpoint
Death
Usual medical
care (inpatient)
HQO’s work informing Ontario’s ABF strategy: Developing ‘episode of care’ models describing ideal care for targeted conditions
Patient presents with
suspected exacerbation
of COPD
Usual medical
care (in ED /
outpatient)
NPPV
IMV
Go to usual
medical care
(inpatient)
Go to ventilation
(NPPV or IMV)
Severe Level of care
Usual medical
care (inpatient)
Go to IMV
End of life care
Wean
from IMVDecision on
ventilation
modality or
palliative care
Treatment fails
Recovers
Treatment fails
Assess recovery
ModerateLevel of care
MildLevel of care
Assess recovery
Assess recovery
Assess recovery
Discharge planning
& full clinical
assessment
Assess
level of care
required
Home
Home
Home
Home
Recovers
Recovers
Recovers
Treatment fails
Treatment fails
Discharge planning
& full clinical
assessment
Discharge planning
& full clinical
assessment
Usual medical
care (inpatient)
Discharge planning
& full clinical
assessment
N = 43,215Pr = 1.0
N = 19,337Pr = 0.447
N = 22,054Pr = 0.511
N = 1,824P = .042
N = 773P = .018
N = 1051Pr = .024
Legend
Care module
Assessment node
Episode endpoint
Death
‘Filling in the boxes’ with evidence-based practices
recommended by clinical expert panels
Usual medical
care (inpatient)
153
CLINICAL ASSESSMENT NODE 1
DECISION TO ADMIT / TREAT IN ED
Risk factorTreat
in ED
Admit
to ward
SaO2 < 90% No Yes
Changes on chest X-ray
No Present
Arterial pH level ≥ 7.35 < 7.35
Arterial PaO2 ≥ 7 kPa < 7 kPa
CARE MODULE: NPPV
ACUTE RESPIRATORY FAILURE
Recommended
Practice
Evidence
ReviewedIndicator
NPPV offered as
first line therapy
OHTAC Recommended
% NPPV vs.
IMV
Oxygen therapy OHTAC Recommended
% receiving
O2
Bronchodilators NICE guidance % receiving
bronchodilator
15
16
Hip Fracture Inpatient
Orthogeriatric Care ProgramPatient presents
with suspected
hip fracture
Assess and
medically
stabilize
No surgery
Home with rehab / follow-up
N = 12,860
Pr = 1.0
Counts and proportions from Discharge
Abstract Database (2011/12) and Hip
Fracture Scorecard (Q1Q2 FY2011-12)
Most responsible diagnosis or comorbidity
diagnosis of S72.0*, S72.1* or S72.2*,
excluding S72.00*
Legend
Care module
Assessment node
Pathway endpoint
Decision to treat /type of surgery /anesthesiaon treatment
Conservative
treatment
Surgery
Decision on post-acute care path
Post-op
stabilization
& early
mobilization
Home-based
rehabilitation
Home withfollow-up
Pr = 0.18
Long-termcare (with rehab)
Long-termcare
Inpatient
rehabilitation
Pr = 0.42 Pr = 0.09 Pr = 0.21
Transfer in
/ out of
hospital for
surgery
Repatriation to
index hospital
CCC / slow
stream rehab
Patient’s pre-fracture level of care
LTCCommunity
‘Healthy’
Community
‘Complex’
N = 7,066
Pr = 0.548
N = 3,557
Pr = 0.276
N = 2,275
Pr = 0.176
Post-acute care to 90 days
following index hospitalization
Pre-op
careSurgery
The hip fracture episode of care model
16
Informing case mix adjustment within the funding system
-10.9%
-2.5%
15.2%
-11.4%
-2.6% -1.6%
17.8%13.8%
-4.8%-7.7%
-35.8%
5.9%
47.2%
-3.4%
3.5%
-3.8%-6.4%
11.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
% D
iffe
ren
ce
in
Res
ou
rce
In
ten
sit
y W
eig
ht
(RIW
)
Patient Characteristics
Hip fracture patient factors associated with variation in acute inpatient costs
Comorbidity
Index = 2
Age >=75
Post-discharge
Activities of Daily
Living > 2
(Severely Impaired)
Comorbidity
Index = 0
17
NICE: GRADE Very Low to Moderate
SIGN: Level A (1+ systematic reviews)
MJA: Level C (Cohort studies)
Rapid Review: High quality evidence
Developing a process for reviewing multiple different forms of evidence:
Using the Expert Panel as the conduit for rapid evidence
contextualization and synthesis
OHTAC: Moderate quality evidence
SIGN: Level B (1+ RCTs)
MJA: Level A (1+ systematic reviews)
Rapid Review: Low quality evidence
SIGN: Level C (Observational studies)
Administrative data on current practice
All patients, especially those at high
risk for pressure ulcers, should be
nursed on a high quality foam mattress
90% of patients should receive
surgery within 48 hours of their initial
hospital presentation
Expert Panel Contextualization
& Synthesis
OHTAC
Care Module:
Pre-operative
management
Recommended practice
NICE: GRADE Low to Moderate
SIGN: Level A (1+ systematic reviews)
MJA: Level B (1+ RCTs)
Rapid Review: Low quality evidence
Supporting evidence
RAPID
REVIEW
For displaced femoral neck fracture in patients over 65, arthroplasty is recommended over internal fixation
Care Module:
Surgery
RAPID
REVIEW
Intramedullary nails are recommended for treatment of subtrochanteric fractures
18
0%
5%
10%
15%
20%
25%
722 696 648 613 574 539 510 482 466 461 452 430 402 401 400 399 396 380 366 362 347 338 333 330 327 321 303 289 284 269
% of total COPD admissions receiving ventilation
Number of COPD inpatient admissions (2010/11)
% of total COPD admissions receivingnoninvasive ventilation
% of total COPD admissions receivinginvasive mechanical ventilation
Use of ventilation modalities in 30 highest COPD
admission volume Ontario hospitals (2010/11)
Identifying areas of practice variation with ‘big ticket’
implications for both quality and cost
HQO COPD Recommendations
Identifying areas of practice variation with ‘big ticket’
implications for both quality and cost
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000Hip Fracture Discharges – 90 Day Post-Acute Care Costs by LHIN of Patient Residence
Home care
Long-term care
Inpatientrehabilitation
Complexcontinuing care
ED Visits
Readmissions -Physician
Readmissions -Hospital
Cost by service
Identifying areas of practice variation with ‘big ticket’
implications for both quality and cost
Sutherland JM, Hellsten E, Yu K. Bundles: An opportunity to align
incentives for continuing care in Canada? Health Policy 2012; 107:
209-217
‘Evidence-based bundled payment’
– an Ontario case study
Acute hospitalization Total cost: $11,858
Hospital services: $9,193
Physician services: $2,665
Re-hospitalizations within 30 days
Total cost: $11,858
3.1%
100%
Inpatient rehabilitation
Total cost: $5,106
Discharge from acute care
53.4%
Home care
Total cost: $904
19.4%
Home with
no services
27.2%
Total expected cost for the episode:
$16,137
Total post-acute care cost: $4,065
LHIN 8
N = 4,807Acute hospitalization Total cost: $11,354
Hospital services: $9,294
Physician services: $2,060
Re-hospitalizations within 30 days
Total cost: $9,416
3.0%
100%
Inpatient rehabilitation
Total cost: $7,062
Discharge from acute care
6.8%
Home care
Total cost: $803
64.0%
Home with
no services
29.2%
Total expected cost for the episode:
$13,147
Total post-acute care cost: $1,794
LHIN 10
N = 2,663
Regional variation in episode costs driven by differing use of
post-acute rehab settings following total joint replacement
Ontario Health Technology Advisory Committee RecommendationJune 17, 2005
…but is there any evidence to suggest this variation is inappropriate?
LHIN
Number
of
Cases
Acute Hospitalization Post-Acute CareAll
Services
Average
Acute
Inpatient
Cost
Average
Physician
Claims
Average
Inpatient &
Physician
Cost
% Rehospital-
ized within 30 days
(Cost)
% Discharged to
Inpatient Rehabilitation
(Cost)
% Discharged
to Home with
Home Care
(Cost)
Post-
Acute
Care
Cost
Total
Episode
Cost
Ontario 26,538 $10,125 $2,409 $12,535 3.6% ($11,040) 28.6% ($5,637) 47.8% ($977) $3,328 $15,863
1 1,537 $10,244 $2,305 $12,549 4.7% ($16,205) 17.8% ($5,503) 56.8% ($975) $3,017 $15,566
2 2,706 $9,773 $2,049 $11,822 4.4% ($7,590) 6.6% ($7,994) 71.7% ($909) $2,097 $13,9203 1,523 $10,177 $2,213 $12,390 3.3% ($10,450) 9.8% ($6,384) 73.3% ($1,057) $2,358 $14,748
4 3,578 $10,488 $2,477 $12,966 3.3% ($10,910) 11.5% ($7,864) 62.7% ($1,007) $2,592 $15,557
5 850 $10,508 $2,731 $13,239 3.9% ($12,444) 59.0% ($5,757) 17.3% ($1,026) $5,113 $18,352
6 1,711 $10,031 $2,631 $12,662 3.7% ($10,221) 35.0% ($6,736) 34.5% ($973) $3,935 $16,597
7 1,836 $10,321 $2,637 $12,958 3.6% ($14,498) 45.9% ($6,174) 32.3% ($988) $4,546 $17,504
8 2,409 $10,035 $2,866 $12,900 3.7% ($13,245) 56.3% ($5,934) 23.2% ($1,012) $5,130 $18,031
9 2,919 $9,935 $2,477 $12,412 4.5% ($11,471) 44.4% ($4,854) 35.7% ($944) $3,936 $16,348
10 1,430 $10,294 $2,129 $12,423 4.1% ($11,865) 9.0% ($7,349) 68.0% ($1,044) $2,486 $14,910
11 2,698 $9,950 $2,363 $12,313 3.9% ($10,970) 45.0% ($3,580) 22.9% ($820) $3,057 $15,370
12 1,105 $10,181 $2,262 $12,442 3.9% ($11,356) 17.5% ($5,520) 64.5% ($986) $2,704 $15,146
13 1,559 $10,106 $2,251 $12,358 8.1% ($8,164) 13.0% ($5,683) 57.6% ($969) $2,630 $14,988
14 546 $9,857 $1,929 $11,786 8.8% ($9,402) 33.5% ($6,964) 59.9% (1,143) $4,518 $16,304
Price based
on provincial
average cost
Price based on
‘best practice’
performer
Evidence-based pricing for episodes of care: an approach