Beyond DRG-based hospital payment: funding care …...2019/05/16 · Beyond DRG-based hospital...

Beyond DRG-based hospital payment:

funding care for low-prevalence conditions

PD. Dr. med. Wilm Quentin Department of Health Care Management

Technische Universität Berlin

WHO Collaborating Centre for Health Systems Research and Management

European Observatory on Health Systems and Policies

13 May 2019

13 May 2019

DRG-based payment

• Diagnosis related group (DRG-) based hospital payment has become the

main mechanism for the financing of acute inpatient care in Europe.

• But DRG-based payment differs across countries:

Differen patient classification mechanisms

DRG-based case-payment versus DRG-based budget allocation

Services/costs included in DRG-based payment

Payment adjustments (e.g. for regional factors or market forces) and

Combination of DRG-based payment with other payment components (FFS

and/or global budgets)

Beyond DRG-based hospital payment Seite 3

Background

• Ideally, DRGs contain cases that have

comparable costs in order to allow a reliable

calculation of average costs per DRG.

• Problems: For certain hospitals and/or groups

of patients DRGs do not work because of

different reasons

• Hospital have other functions besides

patient care

• There are too few cases to calculate

average costs per DRG

• Highly complex patients with multiple

comorbidities have unforeseeable costs

• Statistical variation


Problems with DRG-based payment

Diagnosis-related Group (DRG)

Treatment (procedures, technologies,

costs, etc.)

Patient (sex, age,

diagnosis etc.)

How important are these problems?


Different approaches to address these problems

Relationship with the DRG-based payment system

Mechanism

Within the DRG system

split DRG

assign cases to other DRGs

create new DRGs

At the margin of DRG-based payment system

outlier payments (FFS or per diems)

additional payments with fixed prices (FFS or per diems)

DRGs with negotiated prices

Outside DRG-based payment system

additional payments with negotiated prices

separate provider level budgets

reimbursement of provider costs

• All countries in Europe (and beyond) have revised their systems, increasing the number of DRGs to better account for complexity.

• Range of DRG-based payments in Germany:

– Lowest valued DRG: J68B: Dermatological disease, one day treatment, w/o complex dianosis, age > 15 years ≈ €744.

– Average DRG (weight = 1): L16A : Implantation/exchange of neurostimulator and/or –electrodes for disease of urinary organs ≈ €3 545.

– Highest valued DRG: A06A artificial ventilation > 1 799h with high intensity ICU care or with highly complex intervention ≈ €253 814.

13 May 2019

DRG-based payment can be adjusted for highly complex care

Outlier and transfer adjustments

15. December 2015 Strategy for DRG-System Improvement in the Russian Federation

| World Bank Moscow 7

Cost weight

Length of stay (LoS)

Long stay surcharge: 0,071 per day

Upper LoS Threshold

Lower LoS threshold Mean

LoS

DRG Name Cost

weight ALoS

Lower LoS threshold

Upper LoS threshold Transfer

Deduction per day (cost weight) First Day with

deduction Cost weight

per day First Day with

surcharge Cost weight

per day

I47B Hip Replacement or Revision w/o CC 2,240 11,1 3 0,280 17 0,071 0,093

2,240

2,542

3 11,1 17 20 7

1,868

Transfer

Long stay

Transfer deduction: 0,093 per day


Payment options beyond DRGs

Excluded hospitals/departments

Core DRG + outlier

Ho

spita

ls

Patients

Special patients

Products/Services

Special products/services

Sp

ecia

l in

stitu

tio

ns

Excl

ud

ed p

rod

uct

s/se

rvic

es

Exclud

ed p

atien

ts

Usually paid FFS (with fixed or

negotiated prices)

Usually paid with budget or

reimbursement of costs

Paid by DRG (negotiated prices),

FFS, per diem, or reimbursement of

costs

Not assessed: other payments for education, research, general public interest, investment costs


USA – Medicare Part A

Core DRG + outlier

Hospitals

Patients Products/Services

Sp

ecia

l in

stitu

tio

ns

Children‘s hospitals, cancer hospitals, rural hospitals

Org

an a

cqu

isti

tio

n


<1 billion $

88.3 billion $ + 4 billion $ outlier payments

8 billion $

Additional payments

DRG based payment

Hig

h c

ost

dru

gs a

nd

dev

ices

(e.g

. can

cer

med

icin

es, s

ten

ts)

Core GHMs

Hig

h c

ost

ser

vice

s (e

.g. d

ialy

sis,

ICU

)

Org

an a

cqu

isit

ion

an

d m

anag

emen

t

Hospitals

Patients

Special

products/services S

pe

cia

l

institu

tio

ns

Additional payments

DRG based payment

Local hospitals and special hospitals (e.g. for

prisoners)

Products/Services

39.6 billion € (including outlier payments)

5.3 billion € ?

Payments in 2015

France


Germany

Core DRG + outlier

Ho

spita

ls

Patients

Un

weigh

ted D

RG

s (e.g. tu

berco

losis, seizu

res with

com

plex d

iagno

stic, mu

ltimo

dal

com

plex treatm

ent fo

r Parkin

son

‘s disease)

Special institutions (e.g. isolation ward, palliative care, epilepsy, tropical

diseases)

Hig

h c

ost

dru

gs a

nd

dev

ices

(e.

g. d

rug

elu

tin

g st

ents

,

can

cer

med

icin

es)

Hig

h c

ost

ser

vice

s (e

.g. h

emo

dia

lysi

s, p

allia

tive

co

mp

lex

care

)

Org

an a

cqu

isti

tio

n a

nd

man

agem

ent

Products/Services

Special patients

Sp

ecia

l in

stitu

tio

ns


2 billion €

65 million €

1.7 billion €

58.3 billion €

Payments in 2015

Additional payments

DRG based payment

Hig

h c

ost

dru

gs a

nd

dev

ices

(e.g

. cac

ner

med

icin

es, s

ten

ts)

Core HRGs + outlier

HR

Gs w

itho

ut a n

ation

al tariff (e.g. heart /lu

ng

transp

lantatio

n, m

ajor b

urn

s) U

nb

un

dle

d H

RG

s (e

.g. h

aem

od

ialy

sis

for

acu

te k

idn

ey in

jury

, p

allia

tive

care

su

pp

ort

)

Hospitals

Patients

Special

products/services Special patients

Sp

ecia

l in

stitu

tio

ns

Additional payments

DRG based payment

Local variations Complex patients

treated at specialised providers

(e.g spinal surgeries)

Products/Services

Pro

ced

ure

s (P

ET C

T, p

elvi

c re

con

stru

ctio

ns)

? ~ £ 300 million

£ 26 billion (including outlier payments)

£ ~ 4 billion

? ? ?

Payments in 2013

England


Denmark

Core DRG + outlier

Hospitals

Patients Products/Services

Sp

ecia

l in

stitu

tio

ns

Special patients

Complex patients treated at special

institutions

(e.g. child heart surgery,

heart transplants)

≈ 10%

≈ 90%

Separate payment of

Cancer treatment England (bone marrow

transplantation)

Estonia (chemotherapy)

Germany (bone marrow

transplantation)

England, France, Germany

(cancer drugs)

USA (certain cancer

hospitals)

Denmark (e.g. kidney cancer

treatment)

Specialized

pediatrics

Germany (certain

neuropediatrics)

England (e.g. neonatal intensive

care)

France (e.g. paediatric intensive

care)

Germany (neuropediatric

diagnostics)

Germany (e.g. child-

rheumatology)

USA (60 children

hospitals)

Denmark (e.g. pediatric

intensive care)

England (top up payments for

several specialized services)

Severe burns England, Germany (major

burns)

Germany (major burns) Denmark (major burns)

Neurological disease

(e.g. multiple

sclerosis, epilepsy)

Germany (e.g. multimodal,

complex treatment against

Parkinson)

Estonia (biologic therapy for

multiple sclerosis)

Germany (e.g. multiple

sclerosis)

Denmark (e.g. atypical

Parkinson)

England (top-up payments for

neuroscientific services)

Intensive care England (e.g. neonatal intensive

care)

France (e.g. intensive care)

Denmark (e.g. intensive care for

children)

Transplantation England (transplantations)

Estonia (transplantations)

Germany, France (only organ

acquisition and management)

USA (transplantation

centers for organ

acquisition and

management)

Denmark (transplantations)

Radiotherapy England (e.g. radiotherapy)

Estonia (brachytherapy)

France (radiotherapy)

Germany (certain

radiotherapies)

Denmark (e.g. particle

radiotherapy)


Overview: examples of excluded medical areas


Summary: exclusion mechanisms

Separate payments for Outliers

Patient Groups Products/Services Hospitals Other

Denmark LOS

England LOS

Estonia Costs

France LOS

Germany LOS

USA Costs

13 May 2019

Implications

DRG-based case payments, DRG-based budget allocation

(possibly adjusted for outliers, quality etc.)

Payments for special departments, treating special patients

(e.g. burns units, pediatric intensive care)

Payments for non-patient care activities (e.g. teaching, research, advisory roles)

Payments for special patients (e.g. epilepsy with complex diagnosis, transplantations)

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

Additional payments for special activities (e.g. expensive drugs, innovations, teleconsultations)

• Regular updates of DRG classification (based on input from providers)

• Refined classification to account for differences in complexity

• Adjusted to account for transfers between hospitals

Combined with other funding mechanism (e.g. budget for

availability function based on hospital plan) to reduce strength of incentives

• Cross-country networking/exchange can provide inspiration for reforms of national hospital payment system.

• There are different options for reimbursement of care/support functions of tertiary hospitals

– Global budgets for availability function/ advisory role/ training function

– Patient-based payment for transfers of individual patients (e.g. casemix adjusted per diem)

– Service-based payments for advisory services (e.g. teleconsultation)

13 May 2019

Implications for ERN hospitals

Seite 18

Thank you very much

Beyond DRG-based hospital payment: funding care …...2019/05/16 · Beyond DRG-based hospital...

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