Payment by Results

Jonathan Storey15 October 2008

Agenda

1. What is PbR?

2. Why is PbR necessary?

3. How was it introduced?

4. How does PbR work?

5. What does it mean for commissioning?

6. What does the future hold for PbR?

What is PbR?

1. A transparent, rules-based system for paying Trusts and other providers– fair and consistent basis for provider funding– payments proportionate to activity levels and adjusted for case-

mix reward efficiency – encourages additional activity for sustainable waiting time

reductions – supports patient choice & promotes diversity of provision

2. A National Price tariff for the most common treatments together with set of rules prescribing how it is to be applied

3. Current scope of Admitted Patient Care (HRG3.5), Outpatients and A&E

Why is PbR necessary?

1. Situation prior to PbR was unsustainable – unregulated market ‘free for all’

2. International examples – similar systems in most other developed economies

3. Support for NHS Reforms – Access (Waiting times), Patient Choice and Plurality of Provision

4. Deliver benefits for patients, clinicians and commissioners and providers– Transparency– Equity– Efficiency– Incentives

How was it introduced?

1. Preparatory phase - 2003/04 - 2004/05 – Rebasing exercise 2005 to assess impact on commissioners &

providers

2. Transitional phase - 2005/06 - 2008/09– Purchaser parity & Provider transition adjustments (+/- 2% pa)– Market Forces Factor (MFF) with central payment by DH

3. Live operational phase - 2008/09 onwards with…

4. Major changes planned for 2009/10– New tariff structure based upon HRG4– MFF payments devolved to PCTs– Increased reliance on SUS

2004/05 2005/06 2006/07 2007/08 2008/09

Introduce Tariff [HRGv3.5]

Rebasing Exercise #1

Change Tariff [HRG4]

Payment by Results fully live

Provider impact 25% 50% 75% 100%

Transitional Phase

Introduction of PbR

Rebasing Exercise #2

2009/10

How does PbR work?

1. National Tariffs derived from actual cost data (annual provider ‘Reference Cost’ data collection exercise) adjusted for…

2. Market Forces Factor (MFF) – unavoidable cost differentials incurred by providers (in terms of excess manpower & estate costs)

3. Payment = Activity x Price + MFF

4. Additional complexity– Short stay – reduced tariffs– Long stay – excess bed day tariffs– Specialist top-ups – service specific uplifts

What is the scope of PbR?

1. General list of services not covered by tariff

– See lists of exclusions on next slide2. Separate tariffs published for:

– Admitted Patient Care - HRG spells• Elective• Short Stay Emergency (<2 days)• Non-Elective (>1 day)

– Outpatients - Attendances• First Attendance• Follow Up Attendance• Procedures (from 2006/07)

– Accident & Emergency – Attendances3. See lists of exclusions on next slide

What are PbR Exclusions?

General Exclusions

– List of general exclusionsAPC exclusions

– List of HRGsOutpatients exclusions

– List of SpecialtiesDrugs and appliance exclusions

– List of drugs and treatments

General PbR Exclusions

• Mental health services• Learning disabilities• Walk in Centres• Primary Care Services• Community services• Continuing/intermediate care• Respite care • Direct access radiology and

pathology • Ambulance services (≠ PTS)

• NSCAG commissioned specialised services

• Critical care - [apart from discrete Coronary Care Units]

• Renal dialysis• Chemotherapy• Radiotherapy• Rehabilitation in discrete

rehabilitation ward or unit (314)

• Private patients in NHS hospitals• Regular day/night attenders• Well babies

– All excluded services continue to be commissioned at locally agreed prices until such time as mandatory tariffs are introduced – Indicative tariff published for some areas

Admitted Patient Care Exclusions

D01 Lung Transplant

D17 Cystic Fibrosis

E01 Heart and Lung transplant

E02 Heart Transplant

F01 Oesophagus – Complex procedures

G01 Liver Transplant

G21 Pancreas – Complex Procedures

H07 Primary or Revisional Shoulder, Elbow, or Ankle Replacements

J13-J18 Major Burn > 29% TBSA with/without Significant Graft Procedure

J19 Other Burn with inhalation injury

J22 Other Burn with 1 significant graft procedures

J23-J25 Other Burn with multiple significant graft procedures

J28 Other Burn without significant graft procedures

L01 Kidney Transplant

P02 Cystic Fibrosis

R03 Decompression and Effusion for Degenerative Spinal Disorders

R07 Spinal cord injury with fusion or decompression

R10 Surgery for Scoliosis or Other Spinal Deformity

S09 Bone Marrow Graft

*98 Chemotherapy

Out Patient Exclusions

102 Transplantation Surgery

141 Restorative Dentistry

142 Paediatric Dentistry

150 Neurosurgery

170 Cardiothoracic Surgery

172 Cardiac Surgery

173 Thoracic Surgery

174 Cardiothoracic Transplantation

180 Accident and Emergency

305 Clinical Pharmacology

308 Bone Marrow Transplantation

309 Haemophilia

310 Audiological Medicine

311 Clinical Genetics

314 Rehabilitation

315 Palliative Medicine

316 Clinical Immunology

317 Allergy

319 Respite Care

330 Dermatology

350 Infectious Diseases

352 Tropical Medicine

361 Nephrology

400 Neurology

421 Paediatric Neurology

422 Neonatology

450 Dental Medicine Specialties

560 Midwife Episodes

822 Chemical Pathology

823 Haematology

824 Anti Coagulation Clinics

901 Occupational Medicine

982 Spinal Injuries

984-6 Cystic Fibrosis

987 HIV / AIDS

990 Family Planning Clinics

Drugs and Devices Exclusions

Drugs

AIDS/HIV antiretroviralsAntifungalsAntifibrinolytic drugs/ haemostatics blood productsBetaineCytokine InhibitorsDrugs affecting bone metabolismDrugs affecting the immune responseDrugs used in metabolic disordersDrugs used in neutropeniaGrowth hormone and growth hormone receptor antagonistsHyperuricaemia associated with cytotoxic drugsImmunomodulating drugsIntravenous/subcutaneous human normal immunoglobulinsSomatostatin analoguesTorsion Dystonias and other involuntary movementsVasodilator Antihypertensive drugs/ Primary Pulmonary Hypertension drugsViral Hepatitis (B & C) and Respiratory Syncytial VirusAllergen ImmunotherapyOcular diagnostic and peri-operative preparations and photodynamic treatment

Drugs and Devices Exclusions

Devices

Aortic stentsAneurysm coilsBespoke orthopaedic prosthesesBone anchored hearing aids (BAHA)Carotid, iliac and renal stentsCPAP/BiPAPDeep brain, vagal, sacral and spinal cord stimulatorsGliadel wafersImplantable defibrillators (ICD)Cardiac Resynchronisation Therapy (CRT)ICD with CRT capabilityIIlizarov framesInsulin pumps and pump consumablesIntrathecal drug delivery pumpsImplantable loop recorders3 dimensional navigation system mapping cathetersOccluder septal devices

Drugs and Devices Exclusions

Procedures/other:

Cleft lip and palateDynamic graciloplastyEndoprosthetic replacement for benign bone tumoursGastric bandingHead and neck cancer reconstructive surgeryPDT for wet Age Related Macular DegenerationPelvic reconstruction

A&E Tariff Calculation

Payment

High Cost

Standard

=

depends on

Minor

A&ETariff

V01, V02V03, V04

V07, V08V100MCV100MI

V05, V06and DOA

OP Tariff Calculation

PaymentAdult Tariff

Children’s Tariff

First Attendance

Adult FA Tariff

Follow Up Attendance

Adult FU Tariff

= OR

Child FA Tariff

Child FU Tariff

depends on

Procedure Tariff

OR

Eight Procedures

OP Procedure Tariffs

Procedure OPCS 4.3 CodesColposcopy P27.3, Q55.4Hysteroscopy Q18.1,Q18.8, Q18.9Flexible Sigmoidoscopy H25.1, H25.8, H25.9Rigid Sigmoidoscopy H28.1, H28.8, H28.9Fine needle biopsy of breast B37.1, B32.1, B32.3Needle biopsy of prostate M70.1, M70.2, M70.3Laser Destruction of Lesion of Skin S09.1, S09.2Subcutaneous injection X38.1, X38.2, X38.3, X38.4, X38.5,

X38.6, X38.7,X38.8, X38.9

APC Tariff Calculation

Payment HRG TariffEmergency Short Stay Adjustment

Specialised /Children’s Adjustment

Long Stay Adjustment

Elective EL TariffNot

applicableTariff x

Specialised or

Children’s Supplement

%

LOS > trim[EL]:x days @ HRG Bedday Rate

Non Elective

NEL TariffLOS > trim[NEL]:

y days @ HRG Bedday Rate

= +x +

depends on and where applicable

Tariff [alos] 50% [2] 35% [3-4] 20% [5+]

What does it mean for commissioning?

1. Service level agreements are in the form of cost and volume contracts based on planned activity levels – now using the new standard NHS contract

2. Contract payments (made monthly ‘on account’) are subsequently adjusted (initially quarterly but now increasingly monthly) in order to reflect the volume and case-mix of treatments actually delivered

3. This calculation is increasingly being delivered through data submitted to the National Care Records Service (NCRS) - Secondary Uses Service (SUS). Single authoritative source from 2009/10.

What are the checks and balances?

1. Who Pays? - Establishing the Responsible Commissioner (from 2005/06 - revised Oct 2007)

2. PbR Code of Conduct (since 2005/06 - revised Feb 2008) – sets out expected behaviours of providers & commissioners

3. Clinical Coding Assurance (from 2007/08) – Audit Commission’s continuing targeted review of providers’ clinical coding standards

4. New Standard NHS Contract (from 2008/09) – mandates a consistent set of (legally enforceable) commissioning rules applicable to all providers

What does the future hold for PbR?

1. Large scale public consultation during Spring 2007 on the ‘Options for the Future of PbR’

2. Conclusions drawn:– Confirmed introduction of HRG4 tariffs from 2009/10– Established extensive network of PbR development

sites including: • Mental Health & Ambulance• Cardiac examples

3. Next Steps….HRG4

Features of HRG4

1. Updated procedure codes (OPCSv4.3, 4.4, 4.5…)

2. Improved procedure hierarchy

3. Introduction of diagnosis hierarchy (for non procedure driven HRGs)

4. Introduction of paediatric age splits

5. Improved grouper logic

6. Greater granularity and specificity

7. Better able to differentiate true resource variation

Impact on Chapter E

1. 72% more HRGs across two sub chapters– EA – Cardiac Procedures (46 from 14)

• Grouping based primarily on procedure – but also influenced by diagnosis

• No age splits or ccs– EB – Cardiac disorders (16 from 22)

• Grouping driven by primary diagnosis – removal of age 70 split

• Different levels of ccs dependent upon subsequent diagnoses

2. 98% of activity contained within new sub chapters

HRG4 Examples

Sub Chapter EAOPCS = K652 Catheterisation of right side of heart NEC

HRG35 = E14 Cardiac Catheterisation and Angiography without complications

HRG4 = EA36Z Catheter 19 years and over

Sub Chapter EBOPCS = R073 Other chest pain

HRG35 = E36 Chest Pain <70 w/o cc

HRG4 = EB01Z Non interventional acquired cardiac conditions 19 years and over

Sub Chapter EBOPCS = I210 Acute transmural myocardial infarction of anterior wall

HRG35 = E12 Acute Myocardial Infarction w/o cc

HRG4 = EB10Z Actual or Suspected Myocardial Infarction

Sources of further information

1. Department of Health www.dh.gov.uk/pbr– PbR Homepage– Costing Guidance– Reference Costs Collection

2. Connecting for Health– Clinical Interventions Coding systems (OPCS)– Summary Care Record Service (CRS)

3. Information Centre– Currencies (HRGs)– Secondary Uses Service (SUS)

4. Audit Commission