Payment by Results Payment by Results for CHIMfor CHIM

Dr Helen ByworthDr Helen ByworthOctober 2008October 2008

Learning OutcomesLearning Outcomes

Understand the principles of PbR and its Understand the principles of PbR and its purposepurpose

Understand the benefits of the system and Understand the benefits of the system and what changes this means for the NHSwhat changes this means for the NHS

Understand how is links to other NHS reformsUnderstand how is links to other NHS reforms Understand how hospital activity is measured Understand how hospital activity is measured

under PbRunder PbR Understand how national tariffs are Understand how national tariffs are

calculated and applied to patient activitycalculated and applied to patient activity Understand the issues that have arisen and Understand the issues that have arisen and

what the future holdswhat the future holds

What is Payment by What is Payment by Results?Results?

A transparent, rules-based A transparent, rules-based system for paying NHS Trusts for system for paying NHS Trusts for the activity they undertake using the activity they undertake using a preset pricea preset price

Preset price = National TariffPreset price = National Tariff Tariff x the number of patients Tariff x the number of patients

actually seen = price paid for actually seen = price paid for activity activity

Old ProcessOld Process

Block contracts, usually covering Block contracts, usually covering a whole service (e.g. a whole service (e.g. Gynaecology)Gynaecology)

One lump sum of money, One lump sum of money, regardless of numbers seenregardless of numbers seen

Little understanding of contentLittle understanding of content Next year’s contract based on Next year’s contract based on

last year’s activity levelslast year’s activity levels + or – new developments+ or – new developments + inflation+ inflation

What’s Included?What’s Included?

Tariff currently applies to most admitted patient careTariff currently applies to most admitted patient care Outpatient attendancesOutpatient attendances A&E attendancesA&E attendances

And what isn’t?…And what isn’t?… Selected Admitted patient Care (E.g. Chemo, Selected Admitted patient Care (E.g. Chemo,

specialised procedures…)specialised procedures…) Selected specialties (E.g. Mental Health, Rehab…)Selected specialties (E.g. Mental Health, Rehab…) Critical CareCritical Care Selected DrugsSelected Drugs Community Services Community Services To name a few things!To name a few things!

Measuring ActivityMeasuring Activity

Inpatient activity previously measured in Inpatient activity previously measured in terms of Finished Consultant Episodes terms of Finished Consultant Episodes (FCEs)(FCEs)

““The time a patient spends in the continuous care The time a patient spends in the continuous care of one consultant using hospital site or care of one consultant using hospital site or care home bed(s) of one health care provider…” home bed(s) of one health care provider…”

Inpatients under PbR measured in Spells Inpatients under PbR measured in Spells and Excess Bed Daysand Excess Bed Days

““The total continuous stay of a patient using a bed The total continuous stay of a patient using a bed on premises controlled by a health care provider on premises controlled by a health care provider during which medical care is the responsibility during which medical care is the responsibility

of one or more consultants…” of one or more consultants…”

SpellsSpells

Patient admitted to HospitalPatient admitted to Hospital First FCE (FFCE) beginsFirst FCE (FFCE) begins Patient has subsequent FCEsPatient has subsequent FCEs Patient DischargedPatient Discharged Spell finishesSpell finishes

FCE 1 (FFCE) FCE 2 FCE 3

Patient Admitted

Patient Discharge

d

Spell

HRGsHRGs

Inpatient FCEs classified into Inpatient FCEs classified into Healthcare Resource Groups (HRGs)Healthcare Resource Groups (HRGs)

Around 550 covered by PbR in version Around 550 covered by PbR in version 3.53.5

Definition:Definition:

““HRGs are standard groupings of HRGs are standard groupings of clinically similar treatments, which clinically similar treatments, which use common levels of healthcare use common levels of healthcare

resource”resource”

An ExampleAn Example

H47 – Traumatic AmputationH47 – Traumatic AmputationMade up of the following procedures:Made up of the following procedures:

S18XS18X Traumatic Amputation at neck Traumatic Amputation at neck levellevel

S780S780 Traumatic Amputation at hip jointTraumatic Amputation at hip joint

S981S981 Traumatic Amputation of one toeTraumatic Amputation of one toe

and 20 more individual procedures….and 20 more individual procedures….

How does it fit together?How does it fit together?

Each FCE is coded by the hospitalEach FCE is coded by the hospital Each FCE is assigned an HRG based Each FCE is assigned an HRG based

on the procedures and diagnoses that on the procedures and diagnoses that occurred (Using ‘HRG Grouper’)occurred (Using ‘HRG Grouper’)

PbR exclusions removed (E.g. Rehab)PbR exclusions removed (E.g. Rehab) FCEs run through a ‘spell converter’FCEs run through a ‘spell converter’ Calculates the timing of the full spell Calculates the timing of the full spell

and dominant episode HRGand dominant episode HRG

D40 – COPD without complications

Spell

E28 – Cardiac Arrest

Dominant Episode, therefore Spell is an ‘E28’

Spell

Specialty 314 (Rehab)

PbR Spell

Pay only for the dominant HRG under PbR

Excess Bed DaysExcess Bed Days

Each HRG has a trim pointEach HRG has a trim point Calculated based on nationally Calculated based on nationally

collected data on Lengths of Staycollected data on Lengths of Stay Bed days Bed days within the PbR spell within the PbR spell

above the trim point are Excess above the trim point are Excess Bed Days (EBDs)Bed Days (EBDs)

E28 – Cardiac Arrest (Trim point = 12 Days)

Patient Transferre

d, New FCE

Day 7

Patient Admitted

Day 0

Patient Discharge

d

Day 15Day 12

LoS = 15 Days, 3 of which are Excess Bed Days

Spell

Reference CostsReference Costs

Each Trust calculates a reference cost Each Trust calculates a reference cost for each unit of activity, which is the for each unit of activity, which is the cost to the Trust for providing the cost to the Trust for providing the package of carepackage of care

For example:For example: 2 hours in theatre2 hours in theatre 5 days stay on a ward including5 days stay on a ward including

FoodFood Heating and lightingHeating and lighting CleaningCleaning Porters to and from theatrePorters to and from theatre

Medical and Nursing staff timeMedical and Nursing staff time These form the basis of the National These form the basis of the National

TariffTariff

The National TariffThe National Tariff

A separate tariff applies to each A separate tariff applies to each HRGHRG

One for elective spells, one for One for elective spells, one for non elective spells and one for non elective spells and one for excess bed daysexcess bed days

Daycases are charged the same Daycases are charged the same as elective inpatientsas elective inpatients

Excess Bed Days cost the same Excess Bed Days cost the same for both typesfor both types

See Handout 1See Handout 1

Details of the TariffDetails of the Tariff

Separate Tariff and Trim Points for Separate Tariff and Trim Points for Elective and Non Elective admissionsElective and Non Elective admissions

Excess Bed Days cost the same for Excess Bed Days cost the same for both typesboth types

Example:Example:G22 – Pancreas very major proceduresG22 – Pancreas very major procedures

Elective costs £5077 (Trim point 41 days)Elective costs £5077 (Trim point 41 days) Non Elective costs £7082 (Trim point 69 days)Non Elective costs £7082 (Trim point 69 days) Excess Bed Days charged at £200 per dayExcess Bed Days charged at £200 per day

A Simple ExampleA Simple Example

An Elective admission for G22 An Elective admission for G22 staying 45 days would cost:staying 45 days would cost:

£4253+(£271 x 9) = £6692£4253+(£271 x 9) = £6692

G22 Elective

Tariff

G22 EBD Tariff

Spell is 9 days over the G22 elective

trim point

Non Elective ReductionsNon Elective Reductions

In contracts and activity monitoring, non In contracts and activity monitoring, non elective admissions are split into Long elective admissions are split into Long Stay (LS) and Short Stay (SS)Stay (LS) and Short Stay (SS)

SS spells have total length of stay of 0 SS spells have total length of stay of 0 or 1 dayor 1 day

Most HRGs are eligible for a reduction in Most HRGs are eligible for a reduction in cost if the stay is <2 dayscost if the stay is <2 days

Discount varies by HRG from 50% to Discount varies by HRG from 50% to 80%80%

Reduction applies only if admission is an Reduction applies only if admission is an emergencyemergency and the patient is over 16 and the patient is over 16

Non Elective Reduction Non Elective Reduction ExampleExample

An adult admission via A&E for An adult admission via A&E for J45 (Minor Skin Infection) would J45 (Minor Skin Infection) would costcost

£ 1280 x 0.35 = £ 448£ 1280 x 0.35 = £ 448

J45 Non Elective

Tariff

Eligible for 65% reduction < 2

days

Specialised Top-upsSpecialised Top-ups

Spells which take place within certain Spells which take place within certain specialised services are eligible for specialised services are eligible for additional top-ups to the tariff e.g.additional top-ups to the tariff e.g. Neurosciences, Children under 17, Spinal Neurosciences, Children under 17, Spinal

SurgerySurgery Top-ups range from 9% to 70%Top-ups range from 9% to 70% Certain HRGs are not eligible for the Certain HRGs are not eligible for the

top-up – they are already considered top-up – they are already considered specialist activity and reflected in HRG specialist activity and reflected in HRG costcost

Providers must be designated to Providers must be designated to receive top-ups for anything other than receive top-ups for anything other than Children, Orthopaedic and ColorectalChildren, Orthopaedic and Colorectal

Top-up ExampleTop-up Example

Excess Bed Days aren’t eligible for Excess Bed Days aren’t eligible for top-upstop-ups

An elective minor nose procedure An elective minor nose procedure (C56) performed on a child and (C56) performed on a child and including 2 excess bed days would including 2 excess bed days would costcost

(£680 x 1.12) + (2 x £242) = (£680 x 1.12) + (2 x £242) = £1245.60£1245.60C56 Tariff Eligible for 12%

Top-upC56 XBD

Tariff

Group WorkGroup Work

A patient is admitted under G23 (Pancreatic A patient is admitted under G23 (Pancreatic Disorder)Disorder)

Group 1 – Assume the patient is an adult Group 1 – Assume the patient is an adult admitted electively and stays 25 daysadmitted electively and stays 25 days

Group 2 – Assume the patient is admitted as Group 2 – Assume the patient is admitted as an emergency and stays 25 daysan emergency and stays 25 days

Group 3 – Assume the patient is an adult Group 3 – Assume the patient is an adult admitted as an emergency and stays 1 dayadmitted as an emergency and stays 1 day

Group 4 – Assume the patient is admitted Group 4 – Assume the patient is admitted electively for 25 days but has colorectal electively for 25 days but has colorectal complicationscomplications

Emergency ThresholdEmergency Threshold

A Threshold is applied between each Provider A Threshold is applied between each Provider and Commissioner for and Commissioner for emergencyemergency non non electiveselectives

Purpose is to share risk between providers and Purpose is to share risk between providers and commissionerscommissioners

2008-09 Threshold set at calendar year 2007 2008-09 Threshold set at calendar year 2007 outturnoutturn

Any activity above the threshold will be Any activity above the threshold will be charged at half tariffcharged at half tariff

If activity levels are below the threshold, If activity levels are below the threshold, Commissioners still pay half the differenceCommissioners still pay half the difference

Supposed that 2007 outturn was Supposed that 2007 outturn was this…this…

2007 Activity (£)

2008-09 Activity

Pay for activity up to here at 100% tariff And this at 50% tariff

2008-09 Activity

Pay for activity up to here at 100% tariff

And still pay 50% of this

cost

… … but if outturn was lowerbut if outturn was lower

……and at the end of 2008-09, outturn and at the end of 2008-09, outturn was higherwas higher

OutpatientsOutpatients

Counted as attendancesCounted as attendances Tariff at specialty levelTariff at specialty level Different tariff for first appointment Different tariff for first appointment

and follow up appointmentand follow up appointment Higher tariff for childrenHigher tariff for children Don’t pay for DNASDon’t pay for DNAS E.g. General Surgery:E.g. General Surgery: AdultAdult ChildChild

First AttendanceFirst Attendance £163£163 £172£172

Follow up Follow up attendanceattendance

£80£80 £73£73

Outpatient ProceduresOutpatient Procedures

New from 2006-07, coding generally New from 2006-07, coding generally not ready until 2007-08not ready until 2007-08

Separate tariff for selected procedures Separate tariff for selected procedures performed in an outpatient settingperformed in an outpatient setting

Aims to discourage Trusts from treating Aims to discourage Trusts from treating as daycases and provide compensation as daycases and provide compensation above standard outpatient tariffabove standard outpatient tariff

E.g. E.g. Fine needle breast biopsiesFine needle breast biopsies Flexible sigmoidoscopyFlexible sigmoidoscopy

A&E AttendancesA&E Attendances

Counted as attendancesCounted as attendances Fall into 3 categoriesFall into 3 categories

Previously ‘hosted’ by local PCTsPreviously ‘hosted’ by local PCTs De-hosted from 2008-09De-hosted from 2008-09 Patients from our area attending A&E Patients from our area attending A&E

within the SHA within the SHA will be billed to uswill be billed to us Patients using services further afield will Patients using services further afield will

still be hosted by local PCTsstill be hosted by local PCTs

High High CostCost

High cost imaging and investigationsHigh cost imaging and investigations £102£102

StandardStandard Lower cost investigations and DOALower cost investigations and DOA £75£75

Minor Minor InjuriesInjuries

No investigation, non 24 hr A&E No investigation, non 24 hr A&E departments/ MIUsdepartments/ MIUs

£56£56

What Is Unbundling?What Is Unbundling?

Currently allowed to unbundle Rehab Currently allowed to unbundle Rehab and diagnosticsand diagnostics

Outpatient tariffs include funding to Outpatient tariffs include funding to cover diagnostic tests and inpatient cover diagnostic tests and inpatient tariffs include some rehabtariffs include some rehab

Reimburses PCTs where they Reimburses PCTs where they commission these services elsewherecommission these services elsewhere

ExamplesExamples

DiagnosticsDiagnostics

RehabRehab

GP Independent Sector MRI

GP

Referral not Necessary

Referred to Consultant (Outpatient Attendance)

Need to unbundle the cost of this…

… from this.

Patient Spell on Acute Ward Rehab with Other

Provider (e.g. PCT)

Rehab with Same Provider (e.g. Ward 20,

NGH)

…may include

funding for bed days

which actually

take place here.

The cost of this…

Contract MonitoringContract Monitoring

Monitored via monthly Statements Monitored via monthly Statements from Trustsfrom Trusts

Reconciliation with PCT dataReconciliation with PCT data Contracts are cashed-up with Contracts are cashed-up with

providers quarterlyproviders quarterly With PbR comes long delays, e.g. for With PbR comes long delays, e.g. for

Qtr 2Qtr 230th Sep 26th Oct

Qtr 2 Ends

9th Jan

First Data Sent

14th Dec

Freeze Date Payment MadeQtr 3 Finishes here!

PbR and the Big PicturePbR and the Big Picture

Patient ChoicePatient Choice Can only work if money follows the patientCan only work if money follows the patient Independent Sector paid same as NHSIndependent Sector paid same as NHS

Practice Based CommissioningPractice Based Commissioning Creates the necessary incentive to manage Creates the necessary incentive to manage

demand and treat patients in non-acute demand and treat patients in non-acute settingssettings

SUSSUS Replaced the NWCSReplaced the NWCS Purpose is to enable consistent data between Purpose is to enable consistent data between

Commissioners and Trusts – HRGs will Commissioners and Trusts – HRGs will already be attached and data “spelled”already be attached and data “spelled”

Very little confidence in the system nationallyVery little confidence in the system nationally

Benefits to PatientsBenefits to Patients

Encourage management of care in Encourage management of care in non acute settings non acute settings

More preventative measures in More preventative measures in community or GP settingscommunity or GP settings

Choice of provider does not come Choice of provider does not come down to financial incentivesdown to financial incentives

Better quality of care, incentives to Better quality of care, incentives to discharge promptlydischarge promptly

Benefits to Benefits to CommissionersCommissioners

Fairness & transparency – a Trust is Fairness & transparency – a Trust is paid for what is actually delivered as paid for what is actually delivered as payment is linked to activitypayment is linked to activity

Know exactly what you’re getting for Know exactly what you’re getting for your money – data quality better than your money – data quality better than everever

Demand management has immediate Demand management has immediate financial benefitsfinancial benefits

Benefits to ProvidersBenefits to Providers

Improve and reward efficiency and Improve and reward efficiency and qualityquality

Don’t lose out if demand increases in-Don’t lose out if demand increases in-year, receive payment for anybody year, receive payment for anybody treatedtreated

Incentive to attract patients through Incentive to attract patients through ChoiceChoice

Costs for unavoidably long stays, Costs for unavoidably long stays, complications etc. are compensated complications etc. are compensated

The Difficulties…The Difficulties…

More financial risks to health More financial risks to health economyeconomy

Contract monitoring uses Contract monitoring uses muchmuch more more resourceresource

Difficult to reconcile dataDifficult to reconcile data Improvement in data quality results Improvement in data quality results

in loss in timelinessin loss in timeliness Not as much local control/flexibilityNot as much local control/flexibility Potential for gaming by both parties Potential for gaming by both parties

– performance monitoring is crucial– performance monitoring is crucial

GovernanceGovernance

National programme of PbR audits by National programme of PbR audits by Audit CommissionAudit Commission

Inpatients in second year, outpatients Inpatients in second year, outpatients just going livejust going live

2007-08 audit found 9.4% error rate in 2007-08 audit found 9.4% error rate in HRG coding, ranging form 0.3% to 52%HRG coding, ranging form 0.3% to 52%

Financial error of £3.5m, but close to Financial error of £3.5m, but close to zero as a net errorzero as a net error

No evidence of under/over charging or No evidence of under/over charging or gaminggaming

Source documentation was largest Source documentation was largest cause of errorscause of errors

HRG4HRG4

Over 1,200 HRGsOver 1,200 HRGs Much more detailed than v3.5Much more detailed than v3.5

Include Rehab, Critical Care, Drugs, Include Rehab, Critical Care, Drugs, Outpatients to name a few thingsOutpatients to name a few things

Trust’s coding needs to be changed to Trust’s coding needs to be changed to accommodateaccommodate

Reference costs from 2006-07 data used Reference costs from 2006-07 data used HRG4HRG4

Supposed to be basis for payment from Supposed to be basis for payment from April 2009, but…April 2009, but…

LA03LA03BB

NumberNumberChapterChapter

SubchapterSubchapter SplitSplit

What’s Next?What’s Next?

2009-10 road testing has not gone to 2009-10 road testing has not gone to planplan

Tariff has been delayed (December Tariff has been delayed (December 2008?)2008?)

All kinds of rumours – yes or no to HRG4? All kinds of rumours – yes or no to HRG4? Next to no guidance about Next to no guidance about

implementationimplementation Patient Transport Service (PTS) is coming Patient Transport Service (PTS) is coming

out of acute tariff, another big changeout of acute tariff, another big change

PbR For AmbulancePbR For Ambulance

North East Ambulance Service is one of the North East Ambulance Service is one of the national pilot sitesnational pilot sites

Ambulance encouraged to go down local routes, Ambulance encouraged to go down local routes, no national tariff or structure planned as yetno national tariff or structure planned as yet

Developing currencies that will provide Developing currencies that will provide incentives as well as penaltiesincentives as well as penalties

For example, if paramedics treat on scene For example, if paramedics treat on scene rather than convey to hospitals for an expensive rather than convey to hospitals for an expensive admission, tariff reflects thisadmission, tariff reflects this

Commissioners need to ensure it delivers their Commissioners need to ensure it delivers their expectations, e.g. Trust encouraged to improve expectations, e.g. Trust encouraged to improve quality and efficiency rather than ‘clocking up’ quality and efficiency rather than ‘clocking up’ more and more activitymore and more activity

PbR For Mental HealthPbR For Mental Health

Local Trusts also pilotsLocal Trusts also pilots Work commenced in 2005 to develop currencies, Work commenced in 2005 to develop currencies,

reports on Stage 1 published in 2006, but delays reports on Stage 1 published in 2006, but delays around national implementationaround national implementation

National PbR consultation in 2007 identified MH as National PbR consultation in 2007 identified MH as a priority for PbR developmenta priority for PbR development

Also referred to in “High Quality Care for All” (DH Also referred to in “High Quality Care for All” (DH June 2008)June 2008)

Currencies should be available for use from 2010-Currencies should be available for use from 2010-1111

Further information at Further information at http://www.dh.gov.uk/en/Managingyourorganisation/Financeandplanning/NHSFinancialReforms/DH_41Financeandplanning/NHSFinancialReforms/DH_413776237762

SummarySummary

Principles of PbRPrinciples of PbR Counting and measuringCounting and measuring National TariffsNational Tariffs Fitting in the Big Picture Fitting in the Big Picture BenefitsBenefits Issues that have arisenIssues that have arisen The futureThe future

Where to Get HelpWhere to Get Help

Contact MyselfContact Myself

Helen.Byworth@northoftyne.nhs.ukHelen.Byworth@northoftyne.nhs.uk

0191 21726210191 2172621 Department of HealthDepartment of Health

www.dh.gov.uk www.dh.gov.uk

and type PBR into the search boxand type PBR into the search box Includes worked examples, full Includes worked examples, full

technical guidance and FAQstechnical guidance and FAQs