Post on 01-Jun-2018
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DRG based payment:the impact on quality and efficiency
Diagnosis-RelatedGroups in Europe:Towards Efficiency
and Quality
Institute for research and information in health economics
Zeynep Or (or@irdes.fr)Institute for Research in Health Economics (IRDES), France
On behalf of the EuroDRG roup
EuroDRG Final Conference, Berlin, 17 No em!er "#11
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! "he most common mechanism for reimbursin hospitals inEurope
! Despite different DRG models# countries share commonob$ecti%es in mo%in to acti%ity&based fundin :! enhancin transparency!
DRGs as a payment mechanism
DRGs as a payment mechanism
! impro%in quality of care
'hat is the theory behind this 'hat is the e%idence
nd *hat are the +ey issues# problems# challen es
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! Establish a transparent lin+ bet*een fundin and acti%ity(described by homo eneous patient roups)
! fi,ed price (ideally set independently of pro%iders- costs) forunit of acti%ity
! DRG payment is a form of yard&stic+/ competition desi ned
DRGs and efficiency: principles
DRGs and efficiency: principles
! Efficiency has different aspects (needs to be defined):technical efficiency# cost efficiency and allocati%e efficiency(optimal output0input mi,)
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Revenues
Incentives of DRG-based hospital payment 11ncenti%es and hospital strate iesunder DRG payment
Number of Patients
Hospital revenues under activity based payments
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Costs/ revenues
Total costs of treating one patientUpcoding
1 R =
2 p
Incentives of DRG-based hospital payment 11ncenti%es and hospital strate iesunder DRG payment
Efficiency gain via bettercare or anisation
LOSReduce LOS
Reduce unnecessary services
Options to avoid deficits under activity based payments
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! 2ro%ide clear incenti%e to increase acti%ity (absent underretrospecti%e lobal bud ets) for the same inputs 3 4etter technical efficiency
! 2ro%ide direct incenti%es to minimi5e cost of hospital stay 3 4etter cost efficiency
DRGs and efficiency: *hat to e,pectDRGs and efficiency: *hat to e,pect
choice of inputs
! 6an promote efficient allocation of outputs if prices reflecttheir relati%e %alue
! O%erall DRG based hospital payment pro%ide stron erincenti%es for efficiency compared to the alternati%es (778 or
retrospecti%e lobal bud ets)Diagnosis-Related Groups in Europe: Towards Efficiency and Quality
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! $ualit% : any aspect of the ser%ice that benefits patientsdurin the process of treatment or impro%es health outcomeafter treatment
! DRGs payment pro%ide incenti%es to reduce the cost per stayirrespecti%e of outcomes
DRGs and quality: *hat to e,pectDRGs and quality: *hat to e,pect
efficiency throu h or anisational chan es
! 4ut they also can s+imp on quality as a *ay of cost sa%in
! "he impact on quality of care is not clear a priori/ 3 1t is difficult to obser%e and quantify the quality of care pro%ided (not
al*ays consensus on *hat is ood quality) 3 Difficult to distin uish *hether a bad medical outcome is attributable
to the underlyin disease or bad quality of care
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Costs/ revenues
Total costs of treating one patientIncrease revenue
1 R =
2 p
Incentives of DRG-based hospital payment 11ncenti%es and hospital strate ies
under DRG payment
Efficiency gain via bettercare organisation
LOS1a) Reduce LOS
Reduce intensity of services
Options to avoid deficits under activity based payments
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! Determined by multiple economic incenti%es pro%ided by thepayment mechanism. 2ro%iders can:
3 Dischar e patients earlier than clinically appropriate 3 O%er&pro%ide certain ser%ices to push the patient into a hi her&payin
cate ory
;uality of treatment is a choice %ariable of pro%iders;uality of treatment is a choice %ariable of pro%iders
3
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! 8tudies of the impact of DRGs on efficiency mostly focus ontechnical efficiency or producti%ity
! =ery fe* lon itudinal studies loo+in at before0after! 7indin s are mi,ed >
3 1mpro%ed technical efficiency (2ortu al# 8*eden# ?or*ay) but nothin
DRGs and efficiency: summary of e%idenceDRGs and efficiency: summary of e%idence
#
! Di%er ent results may be e,plained by the country specificstartin points and conte,ts
! Difficult to isolate the impact of DRG payment *hen it is
introduced as part of a *ider reform pro ramme
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Country Study Activity ALoSUS, 1983 US Congress - Office of
Technology Assessment, 1985
Guterman et al., 1988
Empirical evidence (I):hospital activity and length-of-stay under DRGs
USA1980s
,Kahn et al., 1990
Manton et al., 1993
Muller, 1993
Rosenberg and Browne, 2001
DRGs in Europe: o%in to*ards transparency# efficiency and quality in hospitals
Cf. Table 7.4 in the book
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Country Study Activity ALoSSweden,early 1990s
Anell, 2005
Kastberg and Siverbo, 2007
Italy, 1995 Louis et al., 1999
Ettelt et al., 2006
Spain, 1996 Ellis/ Vidal-Fernndez, 2007
Norway,1997
Birn et al., 2003
Kjerstad, 2003
Empirical evidence (II)
agen e a .,Magnussen et al., 2007
Austria, 1997 Theurl and Winner, 2007
Denmark, 2002 Street et al., 2007
Germany, 2003 Bcking et al., 2005
Schreygg et al., 2005 Hensen et al., 2008
England,2003/4
Farrar et al., 2007
Audit Commission, 2008
Farrar et al., 2009 France, 2004/5 Or, 2009
Europeancountries
1990/2000s
Cf. Table 7.4
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! AO8 enerally declined follo*in the mo%e to the DRG&based payment
! Dischar e rates to post´ institutions increased! On a%era e# recorded se%erity of patients has increased
! 1n most European countries# the introduction of DRG
DRGs and efficiency: summary of common trendsDRGs and efficiency: summary of common trends
paymen ncrease o a osp a cos s# par y ue o eracti%ity le%els
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! 8horter AO8 associated sometimes *ith a rise in li+elihood thatpatients dischar ed in unstable condition (
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! 1n Europe: ?o impact on health outcomes measured by specificmortality and readmission rates (1taly# ?or*ay# 8*eden#
En land)! 6han e in codin practices in 8*eden (more secondary
dia nosis)# 7rance (DRG drift)
;uality: Re%ie* of e%idence (B);uality: Re%ie* of e%idence (B)
! Generally# consensus that quality can be an issue in DRG basedpayment
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1nte ratin quality into DRG payment1nte ratin quality into DRG payment
!
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odels of payment inte ratin qualityodels of payment inte ratin quality
! 9ospital income could be ad$usted on the basis of hospitalle%el quality indicators:! En land quality accounts/! edicare0 edicaid
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odels of payment (B)odels of payment (B)
! more challen in option: ad$ust DRG prices for encoura inmedical practice considered as ood quality/ mo%in a*ayfrom pricin based on a%era e obser%ed costs
! 1n En land# best practice tariffs-! introduced for four areas *here si nificant une,plained %ariation in
quality clear e%idence of *hat constitutes best practice
Diagnosis-Related Groups in Europe: Towards Efficiency and Quality
practice care are met (lo*er payment for non&compliance)
! incenti%i5e day&case acti%ity for cholecystectomy price co%ers theentire path*ay for cataract (streamlined electi%e cataract) etc.
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! Gettin patient classification ri ht: definin a standard pac+a eof care/ on the basis of e,pected resource use is notstrai htfor*ard
! 2otentially unfair reimbursement if systematic differencesacross pro%iders
! Establishin costs0price uncontaminated by inefficient
Fey issuesFey issues
beha%iour! 6ontrollin hospital e,penditure
3 9ospital0macro le%el %olume control mechanisms 3 2ossible to operate DRG&based hospital payment *ithin a Global bud et
frame*or+
! %oid unintended consequences in terms of quality# cost&shiftin # patient selection
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! DRG based payment systems pro%ide opportunities forenhancin efficiency and impro%in quality of care but alsorepresent ris+s
! DRGs ma+es it possible to i%e e,plicit incenti%es forprocedures0treatments considered better quality and hi her%alue/# to penalise bad0inefficient practice/ or to rant
6onclusions6onclusions
financin for impro%in patient outcomes! pplications of DRG based fundin in Europe has e%ol%ed rapidly
to impro%e efficiency and quality
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! DRGs contributed to enhance understandin of the relationshipbet*een resource use and the acti%ity in acute care settin
! ay contribute impro%ed plannin of ser%ice deli%ery0quality! Essential for its success:
3 %ailability of a stron information system for monitorin quality
6onclusions6onclusions
efficiency (*ide aps bet*een countries) 3 7le,ible and transparent o%ernance supportin continuous fine&
tunin of the incenti%e structure
Diagnosis-Related Groups in Europe: Towards Efficiency and Quality