Transcript Slayt 1 - ehealth

Using Case-Mix Financing Methods to
Restructure Hospital Payments and
Measure Hospital Production:
DRGs vs. CCPs
Vth National Conference
“ICT In healthcare – The Challenge of the 21st Century”
Sofia Bulgaria, October 15, 2009
Presented by: Jugna Shah, MPH
President of Nimitt Consulting Inc. and Secretary of the Patient
Classification Systems International (PCSI) Organization
Objectives
 Part I: Financing Mechanisms vs. Financing Tools
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General principles
Understanding case-mix is and how to use it for financing
 Part II: Bulgaria’s History with case-mix
 Part III: Review of Case-Mix Around the World
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Primary uses of case-mix outside the United States
Countries using or studying DRG type case-mix systems
 Part IV: The Road Ahead for Bulgaria
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Key questions to guide future decision-making
Final thoughts and discussion
Financing Methods vs. Financing Tools
Fee for service
Methods of
Financing
Capitation
Global Budgets
DRGs, CCPs, bed days,
inputs, outputs,
point system, etc.
Per Case
Payment
Basis or
“Tools” for
Financing
Accurate and Complete Clinical and Cost data Ideally at the Patient Level
is Necessary to Support Any Method of Financing Selected!
Defining Case-Mix
 Case-mix is a concept that describes measuring what a hospital
produces in terms of the “case” rather than measuring the number
of beds, bed-days, discharges, types of procedures, etc.
 Measuring the “mix of cases” a hospital produces involves
looking at both the “number” or volume and the “types” of
patients treated
 This concept was first studied in the United States by researches
at Yale University in an attempt to:
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Use clinically meaningful groups to target “outlier” cases for
quality assurance and utilization review activities
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Hospital management
Defining Case-Mix (continued)
 Yale researchers ended up creating categories called,
Diagnosis Related Groups…DRGs which aim to
catalogue similar types of patients a hospital treats
based on their diagnoses and procedures to the costs
or treatment resources expended by the hospital.
 So, are DRGs and Case-Mix the same?
 Are DRGs and CCPs the same?
Using Case-Mix for Hospital
Financing
What will Case-Mix Based Financing Help Achieve?
This is a great question and everyone should understand and
agree on what case-based financing can achieve.
 A case-mix based financing system can distribute limited
healthcare resources in a fair and equitable manner to providers
 A case-mix-based financing system if implemented with an
appropriate set of rules can create incentives so that:
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the right amount of care is provided (i.e., appropriate length of stay)
in the right setting (i.e., hospital vs. ambulatory),
in the most efficient manner (i.e., appropriate length of stay), and
in the most quality conscious manner (i.e., data allows us to look at
hospitals, departments, and physicians).
 Case-mix based financing will NOT automatically solve broader
system issues such as managing the demand for services or
resolving issues between public and private hospitals
Case-Mix Is…
 A TOOL that catalogues and aggregates hospital cases based on
similar clinical and cost characteristics in order to
 Understand the types of patients hospitals are treating
 Measure how “sick” the patients are
 Understand why one hospital may need more resources based on the cases
treated compared to another hospital
 Finance hospital care
 Benchmark hospitals and compare to international trends
 NOT:
 A method for cutting hospital funding
 A tool to control doctors
 A method of removing clinical decision-making control from doctors and
nurses
Conceptual Framework - Hospitals
Hospital
Operations
Physician
Orders
Inputs
Intermediate
Products
Product = DRG group
Labor
Materials
Equipment
Management
----
Patient Days
Meals
Laboratory Procedures
Surgical Procedures
Medications
----
Appendectomy w/o Complication
Kidney Transplant
G.I. Hemorrhage w/CC
AMI w/CV complications
Efficiency
Effectiveness
DRG-Based Financing Has
Two Main Components
 Component One: Defining the cases treated by hospitals
 Coding
 Data collection
 Grouping
 Analysis
 Component Two: Creating prices based on the costs of
cases treated by hospitals in order to create the basis for
a financing system
 Costing
 Data collection
 Analysis
Component 1: Defining the Case
 Defining the Case:
 Case = type of discharged patient defined primarily by diagnosis
and procedures
 Cases with similar clinical diagnoses and procedures and resource
intensity assigned to similar groups– called Diagnosis Related
Groups (DRGs)
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A minimum basic data set is collected which includes diagnoses,
procedures, gender, age, and other factors that help assign the patient
into a DRG.
 Purpose of defining cases using DRGs
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Understand the volume of services, which is a picture of what the
hospital produces
Allows a consistent way to begin making comparisons and a basis to
discuss quality of care
Component 2: Creating DRG Prices
 Calculating a cost for each case is necessary to
generate DRG prices
 Financing basis = DRG groups (types of patients)
 Aggregate cost data used to calculate a price for each DRG
 Develop DRG price list and either make payments per
discharged cases or develop budgets for each hospital based on
the expected number and types of cases treated
 Purpose of basing financing using DRGs :
 Distribute limited resources equitably
 Promote hospital efficiency
 Link hospital production or case volume with costs
 Distribute resources based on types and severity of cases
Bringing it Together…
 Once cases are assigned to DRGs, we know the number
and types of cases each hospital produces
 Once the average cost is computed for each DRG,
prices can be established for each hospital product
(DRG) which is used to create a financing system that
reimburses hospitals for what they do “on average”
 Payment system can be created
 Hospital budgets can be created
 Other means of distributing the money using this
underlying information can be used
Number of Cases
Understanding the Link Between Assigning Diagnosis
and Procedure Codes to DRGs and the Price
Avg. Length
of stay = 6
Length
of stay = 2
Length
of stay = 10
Length of Stay or Cost
Using this model for financing can create a fair and equitable basis for the
distribution of resources while creating efficiency incentives for the hospital,
but can pose threats to quality of care if there is no monitoring process.
Bulgaria’s Experience
with Case-Mix
Bulgaria’s History with Case-Mix
 Bulgaria has a long history studying DRGs and other tools
 Bulgaria’s history shares similarities and differences with other
countries
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Study and review began long-ago…early 1990s
Many pilot projects have taken place, but DRGs have never been
implemented
Many trainings have been provided (i.e., coding training, costing
training, hospital management etc.)
Data collection and analyses efforts have been going on for years
Simulations of hospitals budgets have been prepared
Numerous infrastructure development activities
YET, DRGs HAVE NOT BEEN IMPLEMENTED…WHY?
 Could it be because of the development of CCPs
 Could it be because of “imperfect” data
 Could it be due to technical, political, cultural reasons, etc.
CCPs vs. DRGs
 Should CCPs be used as the basis for hospital
financing rather than DRGs?
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Great question
Depends on how CCPs were developed
Are CCP groups clinically meaningful?
Can CCPs measure severity?
Do prices exist for each CCP? How were they created?
Are CCP groups good predictors of the “average” cost
of similar cases or an absolute cost of each clinical
practice/protocol ?
Do CCPs create the same types of efficiency incentives
that DRGs do?
Are international comparisons important?
CCPs vs. DRGs (continued)
 Can CCPs and DRGs be used together?

Great question and it depends on what the goals of
each tool are.
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Could be possible to use CCPs to guide clinical
practice while DRGs are used to finance that clinical
practice on average
DRGs and Case-Mix
Around the World
What Are DRGs Being Used for Around the World?
Primary use is still for financing, but DRGs are being used for
much more in the U.S. and around the world
 As the healthcare industry has evolved there has been a demand
for additional patient classification systems and for systems that
can be used for applications beyond financing
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Establishing standard data sets and definitions
Measurement of clinical activity and other data indicators
Tool for internal hospital management, quality assurance, utilization
review, activity measurement, and benchmarking
Hospital clinical and financial decision-making
Physician comparative statistics and provider profiling
Monitoring and measuring quality of care within and across hospitals
Report card and other education material development for consumers
Support for clinical pathways, protocols and standardizing medical
practice
Contracting and/or payment
Research (epidemiology, economics etc)
Who is Using or Studying DRGs?
 Bulgaria
 Turkey
 USA
 Iceland
 Australia
 Norway
 France
 Sweden
 Portugal
 Denmark
 Canada
 Finland
 Ireland
 Belgium
 Italy
 The Netherlands
 Spain
 Japan
 Germany
 Singapore
 Hungary
 Malaysia
 Czech Republic
 Thailand
 Romania
 Korea
 Slovenia
 Taiwan
 Switzerland
 China
 England
 New Zealand
 Costa Rica
 Many others…
The Latest DRG Classification Systems
 Primary DRG
Systems in the U.S.
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Medicare or HCFA
DRGs
All Patient DRGs
(AP-DRGs)
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All Patient Refined
DRGs (APR-DRGs)
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Medicare Severity
Adjusted (MS-DRGs)
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Others
 Primary DRG Systems Outside
of the U.S.
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Australian DRGs
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NORD DRGs
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HBCs
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German DRGs
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French DRGs
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International Refined DRGs
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Many other variations, but
most stem from HCFA DRGs
or the Australian DRGs
Classification Systems Being Used Around the
World
COUNTRY
SYSTEM
Austria
LKF
Belgium
APR DRG
Bulgaria
IR DRG, AR DRG
Czech Rep.
AP DRG, IR DRG
Denmark
NordDRG-Dm
Estonia
NordDRG
Finland
NordDRG
France
GHM
Germany
G DRG
Greece
HCFA
Hungary
HBCs
From PCSI Summer School
June 2009
Classification Systems Being Used Around the
World (continued)
COUNTRY
SYSTEM
Iceland
NordDRG
Ireland
AR DRG
Italy
HCFA, APR DRG
Lithuania
AR DRG
Netherlands
DBCs
Norway
NordDRG
Portugal
HCFA
Romania
AR DRG
Slovenia
AR DRG
Spain
AP DRG, ACG
Sweden
NordDRG,ACG
Switzerland
AP DRG, G-DRG
Turkey
AR DRG
From PCSI Summer School
June 2009
Classification Systems Being Used Around the
World (continued)
COUNTRY
SYSTEM
USA
HCFA, APR DRG
UK
HRG
Australia
AR DRG
Singapore
AN DRG
Netherlands
DBCs
Canada
CMG
Thailand
IR DRG,HCFA
Malaysia
HCFA
Indonesia
HCFA
Taiwan
IR DRG, HCFA
China
IR DRG, ARDRG
Japan
DPC
PCSI Summer School June
2008
Some Benefits of Using DRG-based Case-Mix Financing
 Government/Central Institutions/Research Institutions
 Understand the types of patients treated, where, how many etc.
 Allocate resources equitably using production/output data based on DRGs by
hospital
 Monitor performance using data, reports, and various indicators
 Efficient resource use/less waste can result in more funding for other care
settings and health initiatives
 Service/care migration to most appropriate settings over time
 Hospitals and Physicians
 Understand types of patients treated, by whom, how many, etc.
 Management tool for hospital, department, physician etc. level
 Efficiency incentives/control of internal costs
 Monitor performance using data, reports, and various indicators
 Knowledge that funding is directly tied to type and volume of patients treated
 Creation of a common language between management and medical staff
 Provision of services in the most appropriate care settings
Some Measurable Outcomes That Can Be Seen
with DRG Implementation
 Transparency of what services are being provided, where, and for how
much - - measurable
 Reduction in Length of Stay - measurable
 Movement of health care services across settings - measurable
 Central level and hospital level decision-makers using data to manage
their environments – somewhat measurable
 Improved health care outcomes/quality of care – somewhat
measurable
 Increased collaboration among all the players in the health care policy
arena – measurable
 Others…
Possible Next Steps for Bulgaria with
Respect to Case-Mix Based Financing
 Are more projects needed? Why?
 Be clear about:
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“Why case-mix?”
“Which case-mix system?”
CCPs, DRGs, neither, or both
 Ask some tough questions:
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What is driving the interest in using DRGs for financing?
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Has a S.W.O.T. analysis been conducted for CCPs and DRGs?
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Can DRGs and CCPs be used at the same time, to achieve
different, yet complimentary objectives, in Bulgaria?
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What are the current inpatient financing reform initiatives and
can a case-mix tool help achieve them?
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What data, infrastructure, and support is available both from a
technical and political perspective?
Final Thoughts
 Remember, case-mix does NOT have to be used for
financing, but if it is, then the classification and payment
system must be developed and implemented carefully
 Classification and payment systems continue to evolve so
each country must determine where it is on its case-mix
journey and implement appropriate mechanisms to
achieve its goals
REMEMBER…
 Case-mix is only a tool, and not a magic solution that can
solve all healthcare problems
Matching your needs with potential tools and then
adapting to your country’s needs or requirements is
critical
Thank You and Discussion
Jugna Shah, MPH
President, Nimitt Consulting Inc. and
Secretary of Patient Classification Systems International
2038 18th Street NW #403
Washington DC 20009
www.nimitt.com
Telephone: 1-215-888-6037
Fax: 1-208-460-6613