Implementation of DRG in Europe - TU Berlin2012/04/25 · Implementation of DRG in Europe...

Provider Payment Improvements in Selected

Regions of the Russian Federation: Feasibility

Analysis and Preliminary Recommendations

Implementation of DRG in EuropeImplementation of DRG in Europe

Dipl.-Ing. Alexander Geissler

Research Fellow

Department of Health Care Management (MiG)

Berlin University of Technology

European Observatory on Health Systems and Policies

WHO Collaborating Centre for Health Systems,Research and Management

125 April 2012 The World Bank Workshop | Moscow, Russia

DRG analysis framework

DRG system building blocks

Data collection

Price setting Actual hospital

payment

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

25 April 2012 The World Bank Workshop | Moscow, Russia 2

Patient

classification

system

payment

• Diagnoses• Procedures• Complexity/ Severity• Frequency of revisions

of updates

• Cost weights

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

• Volume limits

• Outliers• High cost cases• Quality• NegotiationsImport

Timelines /purposes of introduction

Country

1980

1985

1990

1995

2000

2005

2010 Original purpose Principal purpose in 2010

Austria Budgetary allocation Budgetary allocation, Planning

England Measuring hospital activity Payment

Estonia Payment Payment

FinlandMeasuring hospital activity, benchmarking

Planning, benchmarking, hospital billing

France Measuring hospital activity Payment

Germany Payment 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

1980

1985

1990

1995

2000

2005

2010

Introduction of DRGs

DRG-based hospital payment

Patient classification system

Copied, further or self-developed?

The great-grandfather

The grandfathers


The grandfathers

The fathers


Classification variables used in Europe

AP-DRG AR-DRG G-DRG GHM NordDRG HRG JGP LKF DBC

Patient characteristics

Age x x x x x x x x -Gender - - - - x - - - -Diagnoses x x x x x x x x xNeoplasms / Malignancy x x x - - - - - -Body Weight (Newborn) x x x x - - - - -Mental Health Legal Status - x x - - - - - -

Medical and management decision variables

Admission Type - - - - - x x - -Procedures x x x x x x x x x


Procedures x x x x x x x x xMechanical Ventilation - - x x - - - - -Discharge Type x x x x x x x - -LOS / Same Day Status - x x x x x x - -

Structural characteristics

Setting (inpatient, outpatient, ICU etc.) - - - x - - - - xStay at Specialist Departments - - - - - - - x -Medical Specialty - - - - - - - - xDemands for Care - - - - - - - - x

Severity / Complexity Levels 3* 4 unlimited 5** 2 3 3 unlimited -Aggregate case complexity measure - PCCL PCCL x - - - - -

PCCL = Patient Clinical Complexity level

* not explicitly mentioned (Major CCs at MDC level plus 2 levels of severity at DRG level)** 4 levels of severity plus one GHM for short stays or outpatient care


Austria England Estonia Finland France Germany Ireland Netherlands PolandSpain

(Catalonia)Sweden

DRG system (origin)

LKF (self de-veloped)

HRG (selfdeveloped)

NordDRG(HCFA-DRG)

NordDRG(HCFA-DRG)

GHM (HCFA-DRG)

G-DRG (AR-DRG)

AR-DRGDBC (self

developed)JGP

(HRG)AP-DRG

NordDRG(HCFA-DRG)

Year Development of DRG amount

2005 883 610 496 831 773 878 665 100000 --- 670 7402008 900 610 496 831 784 1137 665 100000 490 676 9762011 991 1389 786 1020 2297 1194 698 30000 522 684 976

Episode of Care (EoC)^ Number of EoC-specific DRGs*

Breast cancer 3 7 6 7 7 7 3 3 4 7 7Acute myocardial infarction (AMI) 6 7 4 6 16 10 6 7 6 6 7Coronary artery bypass graft (CABG) 5 4 3 6 15 14 7 6 2 8 6Coronary artery bypass graft (CABG) 5 4 3 6 15 14 7 6 2 8 6Stroke 5 2 1 5 10 10 5 6 3 8 2Inguinal hernia surgery 3 4 3 3 6 4 3 4 2 4 4Appendectomy 3 4 4 3 5 8 3 2 2 6 3Cholecystectomy 2 6 5 5 6 2 3 3 2 5 7Hip- replacement 8 14 2 2 10 9 3 2 6 3 2Knee-replacement 5 4 2 3 5 6 2 1 6 3 2Childbirth 3 7 4 4 6 8 5 3 3 5 4

Price index range for selected EoCs

Breast cancer 1.00-2.09 0.54-1.91 0.25-1.74 0.72-1.71 0.43-2.60 1.00-4.25 1.0-2.96 0.50-1.49 0.20-3.31 1.00-2.93 0.45-1.80

Acute myocardial infarction (AMI) 0.87-1.92 0.51-1.38 0.81-11.05 0.10-2.79 0.37-3.32 1.00-3.69 0.83-2.03 0.80-2.15 1.00-8.84 0.97-2.64 0.47-2.81

Stroke 1.00-2.27 0.88-1.00 1.00 0.06-3.80 0.21-3.01 0.25-2.55 0.28-8.41 0.12-1.17 0.48-2.10 0.76-2.44 1.00-1.45

Appendectomy 1.00-1.62 1.00-1.48 1.00-2.36 0.82-1.11 1.00-2.73 1.00-1.86 1.00-1.88 1.00-1.17 1.00-1.47 1.00-4.73 0.43-1.43

Knee-replacement 1.00-2.27 1.00-1.89 1.00-2.14 1.00-1.41 1.00-1.24 0.76-1.64 1.00-1.83 1.00 0.39-2.10 1.00-1.71 1.00-1.49

^ EoC definitions: www.eurodrg.eu/EuroDRG_EoCdefinitions.pdf; * DRGs with less than 1% of EoC cases were not considered




Data collection


payment



Patient

classification

system

payment


of updates

• Cost weights


• Volume limits


Data collection

Clinical data

� classification system for diagnoses and procedures

Cost data

� imported (often not appropriate but easy) or

� collected within country (better but needs standardised cost accounting)

Sample size and updatesSample size and updates

� entire patient population or

� a smaller sample

� Regular or irregular updates (e.g. annually)

In practice

Many countries: clinical data = all patients;

cost data = hospital sample with standardised cost accounting system


Clinical data coding across Europe

Country Diagnosis Coding Procedure Coding

Austria ICD-10-BMSG-2001 Leistungskatalog

England ICD-10 OPCS (Classification of Interventions and Procedures)

Estonia ICD-10 NCSP (Nomesco Classification of Surgical Procedures)

Finland ICD-10-FI NCSP-FI (Finnisch NCSP adaption)

France CIM-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)Ireland ICD-10-AM ACHI (Australian Classification of Health Interventions)

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-SE KVÅ-Klassifikation av vårdåtgärder (Swedisch NCSP adaption)


(almost)

standardisedno uniform standard available

DRGs have improved the cost accounting utilization and vice versa

Cost data collection

Cost accounting

Required for self

developed DRG systems

Enables hospitals to detect sources

of resource consumption


Hospital management

- Internal budget planning

- Benchmarking (within and across hospitals)

- Monitoring of service delivery

DRG system development

- Precise (fair) payment rate calculation

- Continuous system updates

- Transparency

DRG coverage

Country

% of hospital revenues

covered by DRG-based

payments

Costs covered by DRG-based payments Costs not covered by DRG-based payments

Austria 96% inpatient-, day- and outpatient care education, research, capital costs and interest

England 60% acute inpatient- and outpatient careeducation, research, psychiatric services, primary

care, community and ambulance servicesEstonia 39% inpatient- and surgical outpatient care education and research

Finland varies by hospitalmost hospital districts: inpatient- and

daycare; remaining districts: inpatient-, surgical day- and outpatient care

education, research, psychiatric services, intensive and emergency care, capital costs and

interest

France 80% acute inpatient- and outpatient care

education, research, psychiatric services, intensive and emergency care, rehabilitation,

neonatology, dialysis, inpatient radiotherapy and expensive drugsexpensive drugs

Germany 80% acute inpatient care

education, research and intensive and emergency care, expensive drugs, capital costs and interest,

allowance for bad debts, taxes, charges and insurance

Ireland <80% inpatient-, day- and outpatient careeducation, research, psychiatric services,

rehabilitation, geriatric services, capital costs and interest, allowance for bad debts and pensions

Poland >60% inpatient careeducation, research and intensive and emergency

carePortugal 80% inpatient- and surgical outpatient care education, research and expensive drugs

Netherlands 84% inpatient- and outpatient careeducation, research, expensive drugs and

commercial exploitationSpain/Catalonia 15-20% inpatient- and surgical outpatient care education and research

Sweden varies by hospital inpatient-, day- and outpatient careeducation, research, rehabilitation, burn

treatment, expensive drugs and accreditation


Presence of costing guidelines

CountryPresence of mandatory

cost accounting system

Presence of national

costing guidelinesPresence of own cost data

Austria --- --- X

England X X X

Estonia --- --- X

Finland --- --- XFinland --- --- X

France --- X X

Germany --- X X

Ireland --- X ---

Poland --- --- ---

Portugal X X ---

the Netherlands X X X

Spain/Catalonia --- --- ---

Sweden --- X X


Top downgrosscosting

Methods of direct cost allocation

Top downmicrocosting

- Accuracy +

+ A

ccu

racy

-

Specification of hospital services

of

ho

spit

al s

ervi

ces

grosscosting

Bottom upgrosscosting

Bottom upmicrocosting

microcosting

+ A

ccu

racy

Mea

suri

ng

of

ho

spit

al s

ervi

ces


Characteristics of costing methods

Number (share) of cost collecting

hospitals

Overhead

allocation

Indirect cost

allocation

Direct cost

allocation

Data checks on

reported cost data

Austria20 reference hospitals (about 8% of

all hospitals)varying by hospital

varying by hospital

mainly grosscosting

regional authority, regularly

England all hospitals direct methodweighting statistics

top down microcosting

national authority, annually

Estoniahospitals contracted with the national

health insurance funddirect method

mainly mark-up percentage

mainly top down

microcosting


Finland

5 reference hospitals meeting particular cost accounting standards

(about 30% of specialised care)direct method

weighting statistics

bottom up microcosting

no (responsibility of hospitals)

99 volunteering hospitals

France

99 volunteering hospitals participating in the hospital cost

database ENCC (about 13% of inpatient admissions)

step down method


mainly top down

microcosting

regional authority, annually

Germany

about 225 volunteering hospitals meeting InEK cost accounting

standards (about 13% of all hospitals)

preferably step down method




Netherlands

resource use: all hospitals; unit costs: 15-25 volunteering general hospitals

(about 24% of all hospitals)direct method




Swedenhospitals with case costing systems (about 62% of inpatient admissions)

direct methodweighting statistics


national and regional authority, annually


(Ireland, Poland, Portugal and Spain import DRG cost weights from abroad)

Cost- Element Groups

Lab

ou

rco

sts

of

the

oth

er m

edic

al s

taff

Lab

ou

rco

sts

of

the

nu

rsin

g st

aff

Lab

ou

rco

sts

of

the

adm

inis

trat

ive

and

tech

nic

al s

taff

: Dru

g co

sts

: Dru

g co

sts

(in

div

idu

al c

ost

s/ a

ctu

alc

nsu

mti

on

)

: co

sts

of

imp

lan

ts a

nd

gra

fts

: Mat

eria

l co

sts

(wit

ho

ut

dru

gs,

imp

lan

ts a

nd

gra

fts)

: Mat

eria

l co

sts

(in

div

idu

al c

ost

s/

actu

al c

on

sum

pti

on

, wit

ho

ut

dru

gs,

imp

lan

ts/

graf

ts

: Med

ical

infr

astr

uct

ure

cost

s

: No

n-

med

ical

infr

astr

uct

ure

cost

s

Costing example: Germany

Bottom-up microcosting

- Common cost accounting approach in (voluntary) cost data sample participating hospitals across Germany

� Example: DRG I03A (Hip revision or replacement with cc)

1: L

abo

ur

2: L

abo

ur

3: L

abo

ur

tech

nic

al

4a: D

rug

4b: D

rug

cost

s (i

nd

ivid

ual

co

sts/

act

ual

c n

sum

tio

n

5: c

ost

s o

f im

pla

nts

an

d g

raft

s

6a: M

ater

ial c

ost

s (w

ith

ou

t d

rugs

,im

pla

nts

6b: M

ater

ial c

ost

s (i

nd

ivid

ual

co

sts/

ac

tual

im

pla

nts

7: M

edic

al

8: N

on

Labour Material Infrastructure Total

Co

st-

Ce

ntr

e G

rou

ps

01: Normal ward

Ho

spit

al

un

its

wit

h

be

ds

654 1744 80 156 41 ---- 131 19 371 1358 4554

02: Intensive care unit 152 360 10 45 11 ---- 60 1 64 179 881

03: Dialysis unit ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 0

04: Operating room

Dia

gn

ost

ic a

nd

tre

atm

en

t a

rea

s

623 ---- 401 23 32 1282 286 109 264 360 3380

05: Anaesthesia 356 ---- 236 30 2 85 5 50 112 875

06: Maternity room ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 0

07: Cardiac diagnostics/ therapy 2 ---- 2 ---- ---- ---- 1 2 1 1 8

08: Endoscopic diagnostics/ therapy 3 ---- 3 ---- 1 ---- 2 ---- 2 2 12

09: Radiology 46 ---- 67 1 ---- 2 14 41 24 45 240

10: Laboratories 18 ---- 110 6 339 ---- 75 82 12 50 694

11: Other diagnostic and therapeutic areas 36 2 271 1 ---- ---- 14 16 15 111 468

Total 1890 2106 1180 261 424 1283 669 276 803 2219 11 112


(Hip revision or replacement with cc) Cost weight: 4,192



Data collection


payment



Patient

classification

system

payment


of updates

• Cost weights


• Volume limits


Price setting (examples)

• Based on good quality data (not possible if cost weights imported)

• “Cost weights x base rate” vs. “Tariff + adjustment” vs. Scores

• Average costs vs. “best practice”

“cost weight“ (varies by DRG) “base rate“ or adjustment


Relative weight(e.g. Germany)

1.0€ 3000 (+/-)

(varies slightly by state)

Raw tariff(e.g. France)

€ 30001.0 (+/-)

(varies by region and hospital)

Raw tariff(e.g. England)

£ 30001.0 – 1.32

(varies by hospital)

Score (e.g. Austria) 130 points € 30

Price setting (examples)

Calculation of hospital payment

England France Germany Netherlands

Payment

calculationDirect (price)

Indirect (cost-weight)

Indirect (cost-weight)

Direct (price)

Nationwide (but Nationwide (with adjustments and

Cost-weights nationwide; List A: nationwide


Applicability

Nationwide (but adjusted for

market-forces-factor)

adjustments andseparate for public

and private hospitals)

nationwide; monetary

conversion state-wide

List A: nationwideList B: hospital

specific

Volume/

expenditure limits

No (plans exist for volume cap)

Yes YesList A: Yes

List B: Yes/No



Data collection


payment



Patient

classification

system

payment


of updates

• Cost weights


• Volume limits


Hospital behaviour and strategy

Revenues/Costs Total costs

DRG-based paymentReduce costs (personnel,

cheaper technologies)

Increase revenues (right-/ up-coding;

negotiate extra payments)


Length of stay (LoS)

cheaper technologies)

Reduce LoS

Hospital behaviour and strategy

Incentives of DRG-based

hospital paymentStrategies of hospitals

Reduce costs

per patient

a) Reduce length of stay

• optimize internal care pathways

• inappropriate early discharge (‘bloody discharge’)

b) Reduce intensity of provided services

• avoid delivering unnecessary services

• withhold necessary services (‘skimping/undertreatment’)

c) Select patients

• specialize in treating patients for which the hospital has a competitive advantage

• select low-cost patients within DRGs (‘cream-skimming’)

a) Change coding practice


Increase revenue

per patient

a) Change coding practice

• improve coding of diagnoses and procedures

• fraudulent reclassification of patients, e.g. by adding inexistent secondary

diagnoses (‘up-coding’)

b) Change practice patterns

• provide services that lead to reclassification of patients into higher paying DRGs

(‘gaming/overtreatment’)

Increase number

of patients

a) Change admission rules

• reduce waiting list

• admit patients for unnecessary services (‘supplier-induced demand’)

b) Improve reputation of hospital

• improve quality of services

• focus efforts exclusively on measurable areas

a) Long and short stay adjustments

How DRG systems try to face

Revenues/Costs Total costs

DRG-based paymentReduce costs (personnel,

Increase revenues (right-/ up-coding;

negotiate extra payments)

Short-stay outlier(Deductions)

Long-stay outlier(Surcharges)

Upper LoSthreshold

Length of stay (LoS)

Lower LoSthreshold

Reduce costs (personnel, cheaper technologies)

Reduce LoS

Inliers



b) Fee-for-service-type additional payments

England France GermanyNether-

lands

Payments per

hospital stayOne One One

Several possible

Unbundled HRGs for Séances GHM for e.g.:• Chemotherapy Supplementary


Payments for

specific high-cost

services

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

• Chemotherapy•Radiotherapy•Renal dialysis

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

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

No

Innovation-

related additional

payments

Yes Yes YesYes

(for drugs)

c) Adjustments for quality


Type of

adjustmentMechanism Examples

Hospital

Based

• Payment for entire hospital activity is

adjusted upwards or downwards by a

certain percentage

• Hospital receives an additional payment

unrelated to activity

• Predefined quality results are met/not met (for example, in England)

• Overall readmission rate is below/above average or below/above

agreed target (for example, in the United States)

• Hospitals install new quality improvement measures (for example, in

France)

DRG/disease

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’

• Insurers negotiate with hospitals that DRG payment is higher/lower

if certain quality standards are met/not met (for example, in

Germany and the Netherlands)

• DRG payment for all hospitals is based on ‘best practice’; that is,

costs incurred by efficient, high-quality hospitals (for example, in

England)

Patient

based

• Payment for an individual patient is

adjusted upwards or downwards by a

certain amount

• No payment is made for a case

• Readmissions within 30 days are not paid separately but as part of

the original admission (for example, 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 (for example, in the United States)



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 AnnualMinor revisions annually; irregular

overhauls about every 5–6 yearsAnnual

3 years (but adjusted for

inflation)

EstoniaIrregular (first update

after 7 years)1–2 years Annual 1–2 years

Finland Annual 1 year Annual 0–1 year

France Annual 1 year Annual 2 years

d) Frequent revisions


France Annual 1 year Annual 2 years

Germany Annual 2 years Annual 2 years

Ireland Every 4 yearsNot applicable (imported

AR-DRGs)

Annual (linked to

Australian updates)1–2 years

Netherlands Irregular Not standardizedAnnual or when

considered necessary

2 years, or based on

negotiations

PolandIrregular – planned

twice per year1 year

Annual update only of

base rate1 year

Portugal IrregularNot applicable (imported

AP-DRGs)Irregular 2–3 years

Spain (Catalonia) BiennialNot applicable (imported

3-year-old CMS-DRGs)Annual 2–3 years

Sweden Annual 1–2 years Annual 2 years

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 – 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


Thank you very much foryour time and attention!

All slides are available on:www.mig.tu-berlin.de


Provider Payment Improvements in Selected

Regions of the Russian Federation: Feasibility

Analysis and Preliminary Recommendations

Capacities for DRG maintenance Capacities for DRG maintenance

in Germany

Dipl.-Ing. Alexander Geissler

Research Fellow

Department of Health Care Management (MiG)

Berlin University of Technology

European Observatory on Health Systems and Policies

WHO Collaborating Centre for Health Systems,Research and Management


The G-DRG system

Tasks and stakeholders of the DRG system development

Health Ministry (federal, state)

Self-Administration (DKG, GKV, PKV)

AdministrationHealth Policy

Goals

and

monitoring

Forming

a legal

frameworkOther Institutions (HTA, quality)

Consultation Development

DIMDI (German Institute of Medical Information and Documentation)

InEK (German DRG Institute)

monitoring framework

Technical

managementContribution

of expertise

Other Institutions (HTA, quality)

Variety of Institutions(Professional medical associations, industry groups)

G-DRG

System


Medical department (13 staff incl. administration)

− Developing, updating and maintainance of the DRG system

− Definition of groups

− Maintainance of Base-DRGs

− Maintainance of severity level system

− Developing and updating coding guidelines

− Cooperation with institutions/organisations

− Cooperation with other countries regarding development, implementation andmaintainance of DRG-based payment systems

InEK – German DRG Institute

maintainance of DRG-based payment systems

Economics department (16 staff incl. administration)

− Calculation

− of relative weights

− of surcharges and deductions

− Calculation of supplementary payments

Administration (4 staff) TOTAL�� 43

IT and statistics (10 staff)


Source: InEK website www.gdrg.de

InEK – German DRG Institute

Financing of InEK (2008)

- DRG system fee paid by hospitals for each DRG related case

� € 0.90 per case � Total budget : ~ € 13.5 M

Expenditures of InEK (2008)

- payments for cost collecting hospitals based on the number of accurate delivered cases

� Total: ~ € 9 M

- Staff cost: ~ € 2.1 M

- Infrastructure and overhead costs: ~ € 0.8 M- Infrastructure and overhead costs: ~ € 0.8 M


DRG InstituteCost data collecting hospitals

Source: InEK annual statement 2008

Thank you very much foryour time and attention!

All slides are available on:www.mig.tu-berlin.de


Implementation of DRG in Europe - TU Berlin2012/04/25 · Implementation of DRG in Europe...

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