Management im Gesundheitswesen Krankenversicherung und Leistungsanbieter

DRG Systeme in Europa

Reinhard Busse, Prof. Dr. med. MPH FFPH FG Management im Gesundheitswesen, Technische Universität Berlin (WHO Collaborating Centre for Health Systems Research and Management) & European Observatory on Health Systems and Policies

28. November 2013

Krankenversicherung und Leistungsanbieter

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Incentives of different forms of hospital payment

Payment Patient needs mecha(risk nism selection)

Activity Number of services/ case

Number of cases

Expenditure control

Technical Transefficiency parency

Quality

Administrative simplicity

Fee-forservice

+

+

+

―

0

0

0

―

Global budget

―

―

―

+

0

―

0

+

28. November 2013

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Incentives of different forms of hospital payment

Payment Patient needs mecha(risk nism selection)

Activity Number of services/ case

Number of cases

Expenditure control

Technical Transefficiency parency

Quality

Administrative simplicity

Fee-forservice

+

+

+

―

0

0

0

―

DRG based case payment

0

―

+

0

+

+

0

―

―

―

―

+

0

―

0

+

Global budget

28. November 2013

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Incentives of different forms of hospital payment “dumping” (avoidance), “creaming” (selection) and “skimping” (undertreatment) up/wrong-coding, gaming Payment Patient needs mecha(risk nism selection)

Activity Number of services/ case

Number of cases

Expenditure control

Technical Transefficiency parency

Quality

Administrative simplicity

Fee-forservice

+

+

+

―

0 USA 1980s 0 0

―

DRG based case payment

0

―

+

0

+

―

―

European 0 0 + countries ― + 1990s/2000s

Global budget

―

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―

Krankenversicherung und Leistungsanbieter

+

0

4

Empirical evidence (I): hospital activity and length-of-stay under DRGs

Country US, 1983 USA 1980s

Study US Congress - Office of Technology Assessment, 1985 Guterman et al., 1988 Davis and Rhodes, 1988 Kahn et al., 1990 Manton et al., 1993 Muller, 1993 Rosenberg and Browne, 2001

Activity ▼

ALoS ▼

▼ ▼

▼ ▼ ▼ ▼ ▼ ▼

▼ ▼ ▼

Cf. Table 7.4 in Busse et al. 2011 28. November 2013

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Empirical evidence (II) Country Sweden, early 1990s Italy, 1995 Spain, 1996 Norway, 1997 European countries 1990/ 2000s

Austria, 1997 Denmark, 2002 Germany, 2003

Cf. Table 7.4 England, 2003/4 in Busse et al. 2011 28. November 2013 France, 2004/5

Study Anell, 2005

Activity ▲

ALoS ▼

Kastberg and Siverbo, 2007 Louis et al., 1999 Ettelt et al., 2006 Ellis/ Vidal-Fernández, 2007

▲ ▼ ▲ ▲

▼ ▼

Biørn et al., 2003 Kjerstad, 2003 Hagen et al., 2006 Magnussen et al., 2007 Theurl and Winner, 2007 Street et al., 2007 Böcking et al., 2005 Schreyögg et al., 2005 Hensen et al., 2008 Farrar et al., 2007 Audit Commission, 2008 Farrar et al., 2009 Or, 2009

▲ ▲ ▲ ▲ ▼ ▲ ▲ ▲ ▲ ▲ ▲ ▲

▼ ▼ ▼ ▼ ▼ ▼ 6

Reasons for DRGs:

To get a common “currency” of hospital activity for • transparency efficiency benchmarking & performance measurement (protect/ improve quality), • budget allocation (or division among providers), • planning of capacities, • payment ( efficiency)

Exact reasons, expectations and DRG usage differ among countries – due to (de)centralisation, one vs. multiple payers, public vs. mixed ownership. 28. November 2013

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2010

2005

2000

1995

1990

1985

Measuring hospital activity

Payment

Estonia

Payment

Payment

Finland

Measuring hospital activity, benchmarking

Planning, benchmarking, hospital billing

France

Measuring hospital activity

Payment

Germany

Payment

Payment

Ireland

Budgetary allocation

Budgetary allocation

Netherlands

Payment

Payment

Poland

Payment

Payment

Portugal

Measuring hospital activity

Budgetary allocation

Spain (Catalonia)

Payment

Payment, benchmarking

Sweden

Payment

Measuring hospital activity, benchmarking

2010

England

2005

Budgetary allocation, Planning

2000

Budgetary allocation

1995

Austria

1990

Principal purpose in 2010

1985

Original purpose

1980

Country

1980

Timeline and purposes of introduction

Introduction of DRGs DRG-based hospital payment

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For what types of activities? Scope of DRGs (I)

Excluded costs (e.g. for infrastructure; in U.S. also physician services) Payments for non-patient care activities (e.g. teaching, research, emergency availability) Payments for patients not classified into DRG system (e.g. outpatients, day cases, psychiatry, rehabilitation) Additional payments for specific activities for DRGclassified patients (e.g. expensive drugs, innovations), possibly listed in DRG catalogues

Other types of payments for DRG-classified patients (e.g. global budgets, fee-for-service)

DRG-based case payments, DRG-based budget allocation (possibly adjusted for outliers, quality etc.) 28. November 2013

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For what types of activities? Scope of DRGs (II)

DRG system (included in or separate from original DRGs)

Psychiatry

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DRG system (identical or different to original DRGs)

Original DRG systems

DRG system (included in or separate from original DRGs)

DRG system (included in or separate from originalDRGs)

Day cases

Acute inpatient care

Outpatient care

Rehabilitation

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Scope in the Netherlands: DBCs (diagnosis-treatment combinations); examples

Inpatient acute care incl. ICU

Ambulatory specialist care

DBC 1

Ambulatory specialist care DBC 2

Hospitalisation DBC 3 DBC 4 DBC 5

Discharge

DBC 6

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Essential building blocks of DRG systems

Data collection

2

• Demographic data • Clinical data • Cost data • Sample size, regularity

Import

Patient classification system

1

Price setting

Actual reimbursement

4

• Cost weights

• Volume limits

• Base rate(s) • Prices/ tariffs • Average vs. “best”

• Outliers • High cost cases • Quality • Innovations • Negotiations

• Diagnoses • Procedures • Severity • Frequency of revisions

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3

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Choosing a PCS: copied, further developed or self-developed?

Patient classification system • Diagnoses • Procedures • Severity • Frequency of revisions

The great-grandfather

The grandfathers

The fathers

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Basic characteristics of DRG-like PCS in Europe Patient classification system • Diagnoses • Procedures • Severity • Frequency of revisions

AP-DRG AR-DRG

G-DRG

GHM

NordDRG

HRG

JGP

LKF

DBC

DRGs / DRG-like groups

679

665

1,200

2,297

794

1,389

518

979

≈30,000

MDCs / Chapters

25

24

26

28

28

23

16

-

-

Partitions

2

3

3

4

2

2*

2*

2*

-

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Main questions relating to data collection

Clinical data classification system for diagnoses and classification system for procedures Data collection • Demographic data • Clinical data • Cost data • Sample size, regularity

Cost data imported (not good but easy) or collected within country (better but needs standardised cost accounting) Sample size entire patient population or a smaller sample Many countries: clinical data = all patients; cost data = hospital sample with standardised cost accounting system

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Diagnosis and procedure coding across Europe Data collection • Demographic data • Clinical data • Cost data • Sample size, regularity

Country Austria

Diagnosis Coding ICD-10-AT

Procedure Coding Leistungskatalog

England

ICD-10

OPCS - Office of Population Censuses and Surveys

Estonia

ICD-10

NCSP - Nomesco Classification of Surgical Procedures

Finland

ICD-10

NCSP - Nomesco Classification of Surgical Procedures

France

ICD-10

CCAM - Classification Commune des Actes Médicaux

Germany

ICD-10-GM

OPS - Operationen- und Prozedurenschlüssel

Ireland

ICD-10-AM

ACHI - Australian Classification of Health Interventions

The Netherlands

ICD-10

Elektronische DBC Typeringslijst

Poland

ICD-10

ICD-9-CM

Portugal

ICD-9-CM

ICD-9-CM

Spain

ICD-9-CM

ICD-9-CM

Sweden

ICD-10

NCSP - Nomesco Classification of Surgical Procedures

(almost)

standardised 28. November 2013

no uniform standard available

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Data collection

Collection of cost data

Austria England Estonia Finland France Germany Ireland Poland Portugal The Netherlands Spain Sweden 28. November 2013

Number (share) of cost data collecting hospitals 20 reference hospitals (~8% of all hospitals) all hospitals All hospitals contracted by the NHIF 5 reference hospitals (~30% of specialised care) 99 hospitals (~ 13% of inpatient admissions) ~250 hospitals (~ 15% of all hospitals) unit costs: 15-25 hospitals (~ 24% of all hospitals) (~ 62% of inpatient admissions)

• Demographic data • Clinical data • Cost data • Sample size, regularity

Direct cost allocation to patients

Data used for calculation of DRG weights

grosscosting

x

top down microcosting

x

top down microcosting

x

bottom up microcosting

x

mainly top down microcosting mainly bottom up microcosting -

x x -

bottom up microcosting

x

-

-

bottom up microcosting

x

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Data collection

Collection of cost data

Austria England Estonia Finland France Germany Ireland Poland Portugal The Netherlands Spain Sweden 28. November 2013

Number (share) of cost data collecting hospitals 20 reference hospitals (~8% of all hospitals) all hospitals All hospitals contracted by the NHIF 5 reference hospitals (~30% of specialised care) 99 hospitals (~ 13% of inpatient admissions) ~250 hospitals (~ 15% of all hospitals)

• Demographic data • Clinical data • Cost data • Sample size, regularity

Direct cost allocation to patients

Data used for calculation of DRG weights

grosscosting

x

top down microcosting

x

top down microcosting

x

bottom up microcosting

x

mainly top down microcosting mainly bottom up microcosting

x x

Imported DRG systems and weights (or with only minor modifications) unit costs: 15-25 hospitals bottom up microcosting (~ 24% of all hospitals) Imported DRG systems and weights (~ 62% of inpatient bottom up microcosting admissions) Krankenversicherung und Leistungsanbieter

x

x 18

Cost accounting in hospitals: how Germany does it Data collection • Demographic data • Clinical data • Cost data • Sample size, regularity

99 cost categories! 28. November 2013

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How to calculate costs and set prices fairly (I) • Based on good quality data (not possible if cost weights imported)

Price setting • Cost weights • Base rate(s) • Prices/ tariffs • Average vs. “best”

• “Cost weights x base rate” vs. “Tariff + adjustment” vs. Scores (see below)

• Average costs vs. “best practice” (for few HRGs in England) “cost weight“ (varies by DRG) Relative weight (e.g. Germany)

“base rate“ or adjustment

1.0

X

€ 3000 (+/-) (varies slightly by state)

Raw tariff (e.g. France)

€ 3000

X

1.0 (+/-) (varies by region and hospital)

Raw tariff (e.g. England)

£ 3000

X

1.0 – 1.32 (varies by hospital)

130 points

X

€ 30

Score (e.g. Austria) 28. November 2013

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How to calculate costs and set prices fairly (II) Price setting

Country

Germany Ireland

Monetary conversion/ adjustment factors (Implicit) Point value Market forces factor Base rate Base rate (1) Regional adjustment (2) Transition coefficient (until 2012) Base rate Base rates

Netherlands

Direct (no conversion)

State-wide (1) Specific to one of four hospital peer groups (2) Hospital-specific Not applicable

Poland Portugal Spain (Catalonia)

Point value Base rate (1) Direct (no conversion) (2) Base rate Base rate

Nationwide Hospital peer group (1) Not applicable (2) Region-wide (CMS-DRGs) County-specific

Austria England Estonia Finland France

Sweden 28. November 2013

Applicability of conversion rate / adjustment factors Depending on state Hospital-specific Nationwide Hospital-specific (1) Region-specific (2) Hospital-specific

Krankenversicherung und Leistungsanbieter

• Cost weights • Base rate(s) • Prices/ tariffs • Average vs. “best”

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Patient classification system • Diagnoses • Procedures • Severity • Frequency of revisions

Size of bubble: number of DRGs

Price setting • Cost weights • Base rate(s) • Prices/ tariffs • Average vs. “best”

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Range: DRG weights (index case = 1)

DRGs in Europe - Basics and implications for care

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Actual classification differs: appendectomy

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Example AMI episode

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DRGs in Europe - Basics and implications for care

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AMI: relative DRG payments

€ 2601

€ 4533

€ 2189

€ 1837

€ 2926

€ 7933

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IncentivesBeing of DRG-based payment 1 aware of hospital incentives and hospital strategies in times of DRGs Costs/ revenues

pˆ 2

2) Increase revenue Total costs of treating one patient

R1 = pˆ1

1b) Reduce intensity of services

1a) Reduce LOS

LOS

Options to avoid deficits under activity based payments

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Incentives and hospital strategies Incentives of DRG-based hospital payment 1. Reduce costs per patient

2. Increase revenue per patient

Strategies of hospitals a) • • b) • • c) • • a) • • b) •

3. Increase number of patients

28. November 2013

a) • • b) • •

Reduce length of stay optimize internal care pathways inappropriate early discharge (‘bloody discharge’) Reduce intensity of provided services avoid delivering unnecessary services withhold necessary services (‘skimping/undertreatment’) Select patients specialize in treating patients for which the hospital has a competitive advantage select low-cost patients within DRGs (‘cream-skimming’) Change coding practice improve coding of diagnoses and procedures fraudulent reclassification of patients, e.g. by adding inexistent secondary diagnoses (‘up-coding’) Change practice patterns provide services that lead to reclassification of patients into higher paying DRGs (‘gaming/overtreatment’) Change admission rules reduce waiting list admit patients for unnecessary services (‘supplier-induced demand’) Improve reputation of hospital improve quality of services focus Krankenversicherung efforts exclusively und Leistungsanbieter on measurable areas 28

How European DRG systems reduce unintended behaviour: 1. long- and short-stay adjustments Revenues

Actual reimbursement

Short-stay outliers

Inliers

Long-stay outliers

• Volume limits • Outliers • High cost cases • Quality • Innovations • Negotiations

Deductions (per day) Lower LOS threshold 28. November 2013

Krankenversicherung und Leistungsanbieter

Surcharges (per day)

LOS

Upper LOS threshold 29

How European DRG systems reduce unintended behaviour: 2. Fee-for-service-type additional payments

Actual reimbursement • Volume limits

England

France

Germany

Netherlands

Payments per hospital stay

One

One

One

Several possible

Payments for specific highcost services

Unbundled HRGs for e.g.: • Chemotherapy •Radiotherapy •Renal dialysis •Diagnostic imaging •High-cost drugs

Séances GHM for e.g.: • Chemotherapy •Radiotherapy •Renal dialysis

Supplementary payments for e.g.: • Chemotherapy •Radiotherapy •Renal dialysis •Diagnostic imaging •High-cost drugs

No

Yes

Yes

Yes

Yes (for drugs)

• Outliers • High cost cases • Quality • Innovations • Negotiations

Innovationrelated add’l payments

28. November 2013

Additional payments: • ICU • Emergency care • High-cost drugs

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How DRG systems reduce unintended behaviour: 3. adjustments for quality Type of adjustment

Mechanism

Examples

Hospital based

DRG/ disease based

• • Patient based •

Payment for an individual patient is adjusted upwards or downwards by a certain amount No payment is made for a case

28. November 2013

•

Certain readmissions within 30 days are not paid separately but as part of the original admission (e.g., in England and Germany) Complications (that is, certain conditions that were not present upon admission) cannot be used to classify patients into DRGs that are weighted more heavily (e.g., in the United States)

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How DRG systems reduce unintended behaviour: 3. adjustments for quality Type of adjustment

Mechanism

Examples

Hospital based

• DRG/ disease based

•

• Patient based •

Payment for all patients with a certain • DRG (or a disease entity) is adjusted upwards or downwards by a certain percentage • DRG payment is not based on average costs but is awarded to those hospitals delivering ‘good quality’ • Payment for an individual patient is adjusted upwards or downwards by a certain amount No payment is made for a case

28. November 2013

•

Insurers negotiate with hospitals that DRG payment is higher/lower if certain quality standards are met/not met (e.g., in Germany and the Netherlands) DRG payment for all hospitals is based on ‘best practice’; that is, costs incurred by efficient, high-quality hospitals (e.g., in England) Certain readmissions within 30 days are not paid separately but as part of the original admission (e.g., in England and Germany) Complications (that is, certain conditions that were not present upon admission) cannot be used to classify patients into DRGs that are weighted more heavily (e.g., in the United States)

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How DRG systems reduce unintended behaviour: 3. adjustments for quality Type of adjustment

Mechanism •

Hospital based

•

• DRG/ disease based

•

• Patient based •

Examples

Payment for entire hospital activity is adjusted upwards or downwards by a certain percentage Hospital receives an additional payment unrelated to activity

• • •

Payment for all patients with a certain • DRG (or a disease entity) is adjusted upwards or downwards by a certain percentage • DRG payment is not based on average costs but is awarded to those hospitals delivering ‘good quality’ • Payment for an individual patient is adjusted upwards or downwards by a certain amount No payment is made for a case

28. November 2013

•

Predefined quality results are met/not met (e.g., in England) Overall readmission rate is below/above average or below/above agreed target (e.g., in the United States) Hospitals install new quality improvement measures (e.g., in France) Insurers negotiate with hospitals that DRG payment is higher/lower if certain quality standards are met/not met (e.g., in Germany and the Netherlands) DRG payment for all hospitals is based on ‘best practice’; that is, costs incurred by efficient, high-quality hospitals (e.g., in England) Certain readmissions within 30 days are not paid separately but as part of the original admission (e.g., in England and Germany) Complications (that is, certain conditions that were not present upon admission) cannot be used to classify patients into DRGs that are weighted more heavily (e.g., in the United States)

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4. Frequent revisions of PCS and payment rates Country

PCS

Payment rate

Frequency of updates Time-lag to data

Frequency of updates

Time-lag to data

Austria

Annual

2–4 years

4–5 years

2–4 years

England

Annual

Minor revisions annually; irregular

Annual

3 years (but adjusted

overhauls about every 5–6 years Estonia

Irregular (first

for inflation)

1–2 years

Annual

1–2 years

update after 7 years) Finland

Annual

1 year

Annual

0–1 year

France

Annual

1 year

Annual

2 years

Germany

Annual

2 years

Annual

2 years

Ireland

Every 4 years

Not applicable (imported AR-DRGs)

Annual (linked to

1–2 years

Australian updates) Netherlands Irregular

Poland

Irregular – planned

Not standardized

1 year

twice per year

Annual or when

2 years, or based on

considered necessary

negotiations

Annual update only of

1 year

base rate

Portugal

Irregular

Not applicable (imported AP-DRGs)

Irregular

2–3 years

Spain

Biennial

Not applicable (imported

Annual

2–3 years

Annual

2 years

(Catalonia) Sweden

3-year-old CMS-DRGs) Annual

28. November 2013

1–2 years

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How do DRG systems deal with innovations?

Actual reimbursement • Volume limits • Outliers • High cost cases • Quality • Innovations • Negotiations

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How do DRG systems deal with innovations?

Actual reimbursement • Volume limits • Outliers • High cost cases • Quality • Innovations • Negotiations

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List B–DBCs as basis for price negotiations in the Netherlands

Actual reimbursement • Volume limits • Outliers • High cost cases • Quality • Innovations • Negotiations

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Conclusions • DRG-based hospital payment is the main method of provider payment in Europe, but systems vary across countries – Different patient classification systems – DRG-based budget allocation vs. case-payment – Regional/local adjustment of cost weights/conversion rates

• To address potential unintended consequences, countries – – – – – – –

implemented DRG systems in a step-wise manner operate DRG-based payment together with other payment mechanisms refine patient classification systems continously (increase number of groups) place a comparatively high weight on procedures base payment rates on actual average (or best-practice) costs reimburse outliers and and high cost services separately update both patient classification and payment rates regularly

• If done right (which is complex), DRGs can contribute to increased transparency and efficiency – and possibly quality 28. November 2013

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28. November 2013

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