DRG Systeme in Europa · DRG Systeme in Europa Management imGesundheitswesen Krankenversicherungund Leistungsanbieter 20. Dezember 2012 Krankenversicherung und Leistungsanbieter 1

DRG Systeme in Europa

Management im GesundheitswesenKrankenversicherung und Leistungsanbieter

20. Dezember 2012 Krankenversicherung und Leistungsanbieter 1

Reinhard Busse, Prof. Dr. med. MPH FFPHFG Management im Gesundheitswesen, Technische Universität Berlin

(WHO Collaborating Centre for Health Systems Research and Management)&

European Observatory on Health Systems and Policies

Activity

Expenditure

Control

Technical

EfficiencyQuality

Admini-

strative

simplicity

Trans-

parency

Number of

services per

case

Number

of cases

Fee-for-

Hospital payment systemsWhy DRGs? Advantages and disadvantages of

different forms of hospital payment

2

Fee-for-

service+ + - 0 0 - 0

Global

budget - - + 0 0 + -

Krankenversicherung und Leistungsanbieter20. Dezember 2012

Activity

Expenditure

Control

Technical

EfficiencyQuality

Admini-

strative

simplicity

Trans-

parency

Number of

services per

case

Number

of cases

Fee-for-

Hospital payment systems

USA 1980s

Why DRGs? Advantages and disadvantages of

different forms of hospital payment

� “dumping“ (avoidance), “creaming“

(selection) and “skimping“ (undertreatment)

� up/wrong-coding, gaming

3

Fee-for-

service+ + - 0 0 - 0

DRG-

based

payment

- + 0 + 0 - +

Global

budget - - + 0 0 + -

European

countries 1990s/2000s

USA 1980s


Country Study Activity ALoS

US, 1983 US Congress - Office of

Technology Assessment, 1985

▼ ▼

Guterman et al., 1988 ▼ ▼

Davis and Rhodes, 1988 ▼ ▼

Empirical evidence (I):

hospital activity and length-of-stay under DRGs

USA

1980sDavis and Rhodes, 1988 ▼ ▼

Kahn et al., 1990 ▼

Manton et al., 1993 ▼ ▼

Muller, 1993 ▼ ▼

Rosenberg and Browne, 2001 ▼ ▼

4Krankenversicherung und Leistungsanbieter

Cf. Table 7.4

in book

20. Dezember 2012

Empirical evidence (II)

Country Study Activity ALoS

Sweden,

early 1990s

Anell, 2005 ▲ ▼

Kastberg and Siverbo, 2007 ▲ ▼

Italy, 1995 Louis et al., 1999 ▼ ▼

Ettelt et al., 2006 ▲

Spain, 1996 Ellis/ Vidal-Fernández, 2007 ▲

Norway,

1997

Biørn et al., 2003 ▲

Kjerstad, 2003 ▲

Hagen et al., 2006 ▲

European

countries

1990/ 2000s

Cf. Table 7.4

in book

20. Dezember 2012

Hagen et al., 2006 ▲

Magnussen et al., 2007 ▲

Austria, 1997 Theurl and Winner, 2007 ▼

Denmark, 2002 Street et al., 2007 ▲

Germany, 2003 Böcking et al., 2005 ▲ ▼

Schreyögg 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 ▲ 5

So then, why 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,• 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.

6Krankenversicherung und Leistungsanbieter20. Dezember 2012

Country 19

85

19

90

19

95

20

00

20

05

20

10

Original purpose Principal purpose in 2010

Austria LKF (self-developed) Budgetary allocation Budgetary al location, Planning

England HRG (self-developed) Measuring hospital activity Payment

Estonia NordDRG (HCFA-DRG) Payment Payment

Finland NordDRG (HCFA-DRG)Measuring hospital activity,

benchmarking

Planning, benchmarking,

hospital bi ll ing

France GHM (HCFA-DRG) Measuring hospital activity Payment

Germany G-DRG (AR-DRG) Payment Payment

Ireland HCFA-DRG AR-DRG Budgetary allocation Budgetary al location

Netherlands DBC (self-developed) Payment Payment

Poland JGP (HRG) Payment Payment

Portugal HCFA-DRG AP-DRG Measuring hospital activity Budgetary al location

Spain AP-DRG

(Catalonia) HCFA/CMS-DRG

Sweden NordDRG (HCFA-DRG) PaymentPayment, measuring hospital

activity, benchmarking

19

85

19

90

19

95

20

00

20

05

20

10

Introduction of DRGs

DRG-based hospital payment

Notes: the name of the DRG system used in countries is shown in bold, in brackets is the (origin of of a national DRG system); LKF=

leistungsorientierte Krankenanstaltenfinanzierung; HRG= Healthcare Resource Groups; NordDRG= common DRG system of the nordic countries;

HCFA= Health Care Financing Administration; GHM= Groupes Homogènes de Malade; G-DRG= German-DRG; AR-DRG= Austral ian Refined-DRG;

DBC= Diagnose Behandeling Combinaties; JGP= Jednorodne Grupy Pacjentów; AP-DRG= All Patient-DRG

Budgetary allocationBudgetary al location,

benchmarking

Krankenversicherung und Leistungsanbieter 720. Dezember 2012

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)

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

DRG-based case payments,

DRG-based budget allocation(possibly adjusted for outliers, quality etc.)

(e.g. outpatients, day cases, psychiatry, rehabilitation)

Other types of payments for DRG-classified patients

(e.g. global budgets, fee-for-service)

Additional payments for specific activities for DRG-

classified patients (e.g. expensive drugs, innovations),possibly listed in DRG catalogues


Original

DRG

DRG system

(included in or

DRG system

(included in or

DRG system

(identical or

DRG system

(included in or

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

Psychiatry Day casesAcute

inpatient careOutpatient care Rehabilitation

DRG

systems

(included in or

separate from

original DRGs)

(included in or

separate from

originalDRGs)

(identical or

different to

original DRGs)

(included in or

separate from

original DRGs)


Scope in the Netherlands:

DBCs (diagnosis-treatment combinations); examples

Inpatient acute care incl. ICU

Ambulatory

specialist

DBC 1Ambulatory specialist

care

care

Hospitalisation

Discharge

DBC 2

DBC 3

DBC 6

DBC 5

DBC 4


Data collection

Price setting

Actual

reimbursement

• Demographic data

• Clinical data

• Cost data

• Sample size, regularity

Essential building blocks of DRG systems

2

34

Patient

classification

system

• Diagnoses

• Procedures

• Severity

• Frequency of revisions

• Cost weights

• Base rate(s)

• Prices/ tariffs

• Average vs. “best”

• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations

Import 1


Choosing a PCS: copied,

further developed or self-developed?

Patient classification

system

• Diagnoses

• Procedures

• Severity


The great-grandfather

The grandfathers

The fathers

20. Dezember 2012 12Krankenversicherung und Leistungsanbieter

Classification variables and severity

levels in European DRG-like PCS

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

Classification Variables

Patient characteristics

Age x x x x x x x x -

Gender - - - - x - - - -

Diagnoses x x x x x x x x x

Neoplasms / Malignancy x x x - - - - - -

Body Weight (Newborn) x x x x - - - - -

Mental Health Legal Status - x x - - - - - -


system

• Diagnoses

• Procedures

• Severity


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

Mechanical 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 - - - - x

Stay at Specialist Departments - - - - - - - x -

Medical Specialty - - - - - - - - x

Demands 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 1320. Dezember 2012 Krankenversicherung und Leistungsanbieter

PCS: the German approach Patient classification

system

• Diagnoses

• Procedures

• Severity


NB: Three partitions

� one for non-

surgical procedures!

50% unsplitOn average 3

levels (but up

to ca. 10)20. Dezember 2012 14Krankenversicherung und Leistungsanbieter

Actual classification differs: appendectomy


Basic characteristics of DRG-like PCS in Europe


system

• Diagnoses

• Procedures

• Severity


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* -


MDC

differences

across DRG

systemssystems


system

• Diagnoses

• Procedures

• Severity



Main questions relating to data collection

Clinical data� classification system for diagnoses and

� classification system for procedures

Cost data� imported (not good but easy) or

� collected within country (better but needs

Data collection

• Demographic data � 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

• Clinical data

• Cost data

• Sample size, regularity


Diagnosis and procedure coding across Europe

Country Diagnosis Coding Procedure Coding

Austria ICD-10-AT 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

Data collection


• Clinical data

• Cost data

• Sample size,

regularity

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)

standardisedno uniform standard available


Number (share) of cost

data collecting hospitals

Direct cost

allocation to patients

Data used for calculation of

DRG weights

Austria20 reference hospitals

(~8% of all hospitals)grosscosting x

England all hospitals top down microcosting x

EstoniaAll hospitals contracted by

the NHIFtop down microcosting x

Finland5 reference hospitals

(~30% of specialised care)bottom up microcosting x

Data collection


• Clinical data

• Cost data

• Sample size,

regularity

Collection of cost data

(~30% of specialised care)

France99 hospitals (~ 13% of

inpatient admissions)

mainly top down

microcostingx

Germany~250 hospitals

(~ 15% of all hospitals)

mainly bottom up

microcostingx

Ireland - - -

Poland - - -

Portugal - - -

The Netherlandsunit costs: 15-25 hospitals

(~ 24% of all hospitals)bottom up microcosting x

Spain - - -

Sweden(~ 62% of inpatient

admissions)bottom up microcosting x


Number (share) of cost

data collecting hospitals

Direct cost

allocation to patients

Data used for calculation of

DRG weights

Austria20 reference hospitals

(~8% of all hospitals)grosscosting x

England all hospitals top down microcosting x

EstoniaAll hospitals contracted by

the NHIFtop down microcosting x

Finland5 reference hospitals

(~30% of specialised care)bottom up microcosting x

Collection of cost dataData collection


• Clinical data

• Cost data

• Sample size,

regularity

(~30% of specialised care)

France99 hospitals (~ 13% of

inpatient admissions)

mainly top down

microcostingx

Germany~250 hospitals

(~ 15% of all hospitals)

mainly bottom up

microcostingx

Ireland

Imported DRG systems and weights (or with only minor modifications)Poland

Portugal

The Netherlandsunit costs: 15-25 hospitals

(~ 24% of all hospitals)bottom up microcosting x

Spain Imported DRG systems and weights

Sweden(~ 62% of inpatient

admissions)bottom up microcosting x


Cost accounting in hospitals: how Germany does itData collection


• Clinical data

• Cost data

• Sample size,

regularity

22Krankenversicherung und Leistungsanbieter

99 cost categories!

20. Dezember 2012

“cost weight“

(varies by DRG)

“base rate“ or adjustment

Price setting

• Cost weights

• Base rate(s)

• Prices/ tariffs


How to calculate costs and set prices fairly (I)

• Based on good quality data

(not possible if cost weights imported)

• “Cost weights x base rate”

vs. “Tariff + adjustment” vs. Scores (see below)

• Average costs vs. “best practice” (for few HRGs in England)

(varies by DRG)

Relative weight

(e.g. Germany)1.0

€ 3000 (+/-)

(varies slightly by state)

Raw tariff

(e.g. France)€ 3000

1.0 (+/-)

(varies by region and hospital)

Raw tariff

(e.g. England)£ 3000

1.0 – 1.32

(varies by hospital)

Score (e.g. Austria) 130 points € 30

X

X

X


X

Country Monetary conversion/

adjustment factors

Applicability of conversion

rate / adjustment factors

Austria (Implicit) Point value Depending on state

England Market forces factor Hospital-specific

Estonia Base rate Nationwide

Finland Base rate Hospital-specific

France (1) Regional adjustment

(2) Transition coefficient (until

2012)

(1) Region-specific

(2) Hospital-specific

How to calculate costs and set prices fairly (II)

Price setting

• Cost weights

• Base rate(s)

• Prices/ tariffs


24

2012)

Germany Base rate State-wide

Ireland Base rates (1) Specific to one of four hospital

peer groups

(2) Hospital-specific

Netherlands Direct (no conversion) Not applicable

Poland Point value Nationwide

Portugal Base rate Hospital peer group

Spain (Catalonia) (1) Direct (no conversion)

(2) Base rate

(1) Not applicable

(2) Region-wide (CMS-DRGs)

Sweden Base rate County-specific


Costs/

revenues

Total costs of treating one patient

2) Increase revenue

1

1p̂R =

2p̂

Incentives of DRG-based hospital payment 1Being aware of incentives and hospital strategies

in times of DRGs

LOS1a) Reduce LOS

1b) Reduce intensity of services1p̂R =

25

Options to avoid deficits under activity based payments


Incentives of DRG-based

hospital payment

Strategies of hospitals

1. 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’)

Incentives and hospital strategies

20. Dezember 2012 Krankenversicherung und Leistungsanbieter 26

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

2. 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’)

3. 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

How European DRG systems reduce unintended

behaviour: 1. long- and short-stay adjustments

Revenues

Short-stay

outliers

Long-stay

outliers

InliersActual

reimbursement

LOSDeductions

(per day)

Surcharges

(per day)

Lower LOS

threshold

Upper LOS

threshold

• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations



behaviour: 2. Fee-for-service-type additional payments

Actual

reimbursement

England France Germany Nether-

lands

Payments per

hospital stay

One One One Several

possible

Payments for

specific high-

Unbundled

HRGs for e.g.:

• Chemotherapy

Séances GHM for

e.g.:

• Chemotherapy

Supplementary

payments for e.g.:

• Chemotherapy

No

• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations

specific high-

cost services • Chemotherapy

•Radiotherapy

•Renal dialysis

•Diagnostic

imaging

•High-cost drugs

• Chemotherapy

•Radiotherapy

•Renal dialysis

Additional

payments:

• ICU

• Emergency care

• High-cost drugs

• Chemotherapy

•Radiotherapy

•Renal dialysis

•Diagnostic imaging

•High-cost drugs

Innovation-

related add’l

payments

Yes Yes Yes Yes (for

drugs)



behaviour: 3. adjustments for quality

Actual

reimbursement

• England & Germany: no extra payment if

patient readmitted within 30 days

• Germany: deduction for not submitting quality• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations

• Germany: deduction for not submitting quality

data

• England: up 1.5% reduction if quality

standards are not met

• France: extra payments for quality

improvement (e.g. regarding MRSA)


Actual

reimbursement

How DRG systems try to counter-act such behaviour:

quality

• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations


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

overhauls about every 5–6 years

Annual 3 years (but adjusted for

inflation)

Estonia Irregular (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

Germany Annual 2 years Annual 2 years

Ireland Every 4 years Not applicable (imported

AR-DRGs)

Annual (linked to

Australian updates)

1–2 years

Netherlands Irregular Not standardized Annual or when

considered necessary

2 years, or based on

negotiations

Poland Irregular – planned

twice per year

1 year Annual update only of

base rate

1 year

Portugal Irregular Not applicable (imported

AP-DRGs)

Irregular 2–3 years

Spain (Catalonia) Biennial Not applicable (imported

3-year-old CMS-DRGs)

Annual 2–3 years

Sweden Annual 1–2 years Annual 2 years


How do DRG systems deal with innovations?

Actual

reimbursement


• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations

How do DRG systems deal with innovations?

Actual

reimbursement


• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations

List B–DBCs as basis for price

negotiations in the Netherlands Actual

reimbursement

• Volume limits

• Outliers

• High cost cases

• Quality

• Innovations

• Negotiations


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



Documents

DRG Systeme in Europa · DRG Systeme in Europa Management imGesundheitswesen Krankenversicherungund Leistungsanbieter 20. Dezember 2012 Krankenversicherung und Leistungsanbieter 1