Nigel Michell (PHS) and Brian Donovan (HSE) Implementing Activity Based Funding – an Irish Experience
Jun 27, 2015
Nigel Michell (PHS) and Brian Donovan (HSE)
Implementing Activity Based Funding – an Irish Experience
Irish Facts
Weather:
Four seasons in one day!
• Can’t predict a thing.
Met Eireann:
• Cool summers, mild winters, consistently humid, overcast half the time
• Rainfall:
– 750-1000mm (East)
– 1000-1250mm (West)
Sports:
Gaelic football
Hurling
First Duty Free Airport:
Shannon – 1947.
Famous Exports:
Guinness
U2
The Cranberries/Boyzone/Wesliffe
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Overview of Ireland – People & Society
Population – 4.6 million (Estimated April 2013)
12% of the population is made up of non-Irish nationals
Avg Life Expectancy – 80.5 year (2011)
Land area: 68,883 sq km
20th largest island in the world
32 Counties (6 Counties in Northern Ireland)
Politics
Constitutional Republic with a Parliamentary system of Government
• Fine Gael (Centre Right) / Labour Party (Centre Left) Coalition
Uachtarán - Head of State - primarily a figurehead with some constitutional powers
Taoiseach (Prime Minister) – Enda Kenny - Head of the Government
Main Political Parties:
• Not the traditional Left or Right wing but have emerged as a result of a split during the 1922-23 Civil War.
• Centralist with a preference for either Left or Right wing ideologies.
3
Overview of Ireland - Economy
Small trade dependent economy, member of the EEC since 1973
GDP €164 billion in (2012)
– 1.5% growth in 3rd Quarter of 2013 (CSO 19/12/2013)
Balance of Payments surplus €7.25 billion (2012)
Financial Crash
Irish GDP fell by 7% from 2009 to 2010 as a result of:
– The global financial crisis
– Bursting of the property bubble (late 2009)
– Bank guarantee (2008)
– Passed burden of Bank losses on to the to the taxpayer
Resulted in very high Debt to GDP ratio in Ireland which led to a series of severe budgets and cutbacks.
Unemployment rate:
13.5% (July 2013)
12.5% (Nov 2013)
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Overview of Ireland – Debt to GDP
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Overview of Ireland – Road to Recovery
Road to Recovery
Challenge was to reduce Government spending from a high of €63B in 2009
2013 Budget - €54B
Reductions in Government spending achieved through:
– Reductions in the Capital budget of 50% since 2009 (€3B)
– Austerity budgets
– No recruitment
– Croke Park / Haddington Road Agreements insured that no industrial action would take place in exchange for no lay-offs
» Public Sector wage reductions of 5-10%
» Pay cut for new Public Sector employees by 10% from Jan 1, 2011
» Redeployment / multi skilling / reorganisation
» Cost avoidance initiatives
» Public Sector Headcount:
» Aim to reduce by 38,000 by 2015; and
» Reduce Pay and Pensions bill by €3.5B by 2015.
» Pension levy on Civil Servants based on salary levels (around 7%)
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Public Sector Health WTEs
96,501
98,724
101,978
106,273
111,505 111,025
109,753
107,971
104,391
101,503
95,000
97,000
99,000
101,000
103,000
105,000
107,000
109,000
111,000
113,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
WTE Totals
WTE Totals
33,766
39,006
34,583
13,838 12,900
9,996
6,792
8,005
8,351
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,000
14,000
19,000
24,000
29,000
34,000
39,000
44,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
WTE - Per Grade Category
Nursing General Support Staff Medical/DentalSource: Health Service Personnel Census (as at 31/12 or 31/10 for 2012 figures)
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Health Services in Ireland
Department of Health and Children Policy Setting
Health Service Executive (HSE) Policy Implementation Service Delivery Funded directly by parliament Currently funder and provider
Acute Hospitals: HSE owned and managed hospitals Voluntary hospitals funded by the HSE
• Hospitals managed by an independent board. They may be privately owned but publicly funded.
Economic and Social Research Institute (ESRI) Independent Government Agency that collects and classifies Hospital Inpatient activity
• HIPE (Hospital In-Patient Enquiry) system records all admitted acute activity
Responsible for developing Clinical Coding Standards and training of health coders. ICD Coding:
• ICD-10-AM - Version 6 • Australian Classification of Health Interventions (ACHI) - Version 6
DRG Classification System: • Australian Refined Diagnosis Related Groups – Version 6.0
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OECD Health Expenditure Growth
Source: OECD Health Data 2012 9
Hospitals in Ireland
Numbers of Hospitals
48 Public Acute Hospitals in ROI
• 12,541 Beds (IP+DC) in 2012 (Source: Health In Ireland – Key Trends 2013:Table 3.1)
38 Hospitals (above) included in Casemix funding
21 Private Hospitals (Acute & Mental Health)
• Providing approximately 2,000 beds (Source www.independenthospitals.ie)
In 2013, start of legislation to create Hospital Groups
• 6 + Paediatric Hospitals (made up of both voluntary and HSE hospitals)
• Will eventually be separate legal entities
Statistics:
Acute Inpatient Discharges – 615,577
• ALOS = 5.38 days
Acute Day Case Discharges – 913,711
ED Attendances – 1.279 million
Outpatient Attendances – 2.355 million (Source: Health In Ireland – Key Trends 2013:Table 3.1)
Funding:
Public Health Expenditure €13.89 billion
2008 (€'000s) 2009 (€'000s) 2010 (€'000s) 2011 (€'000s) 2012 (€’000s)
National Hospitals
Office 5,272,179 5,475,000 5,428,000 4,207,000 3,978,000
Source: Adapted from Health In Ireland – Key Trends 2013 – Table 6.2
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Current Health Funding
Previously Retrospective Funding
Block Grant (The Base)
Plus Inflation / Deflation and new developments
Plus / minus One Off payments
Plus / minus Casemix Adjustment (retrospective - no more than 5% of total Budget)
2010 costs used in 2011 to determine 2012 Funding
Funded on the basis of (all budget neutral):
Inaptients and Day Cases – Coded attendances on Hospital Inpatient Enquiry (HIPE)
• CMI = 1 – Inpatients = €4,580, – Day Cases = €637
CMI = 1 ED – Weightings for First (1) v Return (0.5) visit and CMI of Admitted patients
• New or Return * ED Amount (2013 - €268)
Outpatients – Treatment Resource Groups (TRGs)
• TRG Cost Weight * Outpatient Amount (2013 - €130 )
Co-payments:
Inpatients - €75 / night to €750 per annum. Day Cases - €75 (Public patients only)
Private Patients – any bed can now be designated Private
• Funding €1,000 to €813 per day depending on Shared / Not Shared. Day Case - €407
GP attendance - €50 and ED attendance - €100
Medications – Drugs Payment Scheme – Individual or family - €144 /month
Medical Cards:
Free healthcare to low income or unemployed individuals.
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Drivers for moving from Retrospective to Prospecting Funding
International Experience
Australia, UK, France, Germany, etc
Documentation
Future Health - A Strategic Framework for Reform of the Health Service 2012 – 2015 (DOH 2012)
• A new Money Follows the Patient (MFTP) funding model will be introduced in order to create incentives that encourage treatment at the lowest level of complexity that is safe, timely, efficient, and is delivered as close to home as possible. This shift will be used as an opportunity to use money as a lever to achieve quality and safety objectives rather than simply being a means of paying for activity. Ultimately, the MFTP system will be designed so that money can follow the patient out of the hospital setting to primary care and related services (Source: 2012:iv).
• The core of the Government’s health reform program is a single-tier health service, supported by Universal Health Insurance (UHI) (Source: 2012:iv).
HSE - National Service Plan – 2013
• The HSE will move to a ‘money follows the patient’ approach on a shadow basis in 2013 and commence funding on this basis in 2014 (Source: 2012:8)
HSE – National Service Plan – 2014
• The phased implementation of a ‘money follows the patient’ (MFTP) approach across acute hospitals. In the first phase, the hospitals currently part of the Casemix program will, from January 2014, have their inpatient and day case activity funded on the basis of activity completed and the achievement of predetermined activity targets subject to an overall budgetary ceiling. A new National Pricing Office will be established on an administrative basis and will have responsibility for the pricing / tariff function (Source: 2013:4)
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What MFTP is and what it isn’t
What is MFTP:
A fairer and more transparent system of resource allocation than the previous Historic Block Grant system
• “Providers will be paid for the needs they address, the quantity and quality of the services they provide and the outcomes they deliver” (Source: Future Health. A Strategic Framework for Reform of the Health Service 2012-2015: DOHC:2012:4)
Hospital budgets are set based on agreed target levels of activity (at the DRG level).
Hospitals are funded as they produce the activity
Will help to drive efficiency and improve quality
It is about the distribution of the ‘pie’ and not the size of the ‘pie’
What MFTP is not:
It is not about increasing the level of funding available to the acute hospital system
It is not a means to carrying out additional unapproved activity to increase the hospital’s budget
It is not a panacea for all the ills of the acute healthcare system
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On the Road to MFTP
Orthopaedic Funding Project
Prospective activity-based approach for 4 elective Orthopaedic DRGs in 2011 and 2012
Aims:
• To identify the issues involved for hospitals and funder (HSE) in moving to a DRG based funding model.
• Study the impact to learn lessons for a wider rollout of MFTP
Undertaken in 2011 (7 hospitals) & 2012 (12 hospitals)
• 4 elective Orthopaedic DRGs - 2 Hip (I03A, I03B) + 2 Knee (I04A, I04B)
• Funding taken out of Budget model at 2009 costs less 15% cost reduction
Key Findings:
• HIPS (I03B)
– ALOS reduced from 7.8 to 6.1 days. DOSA improved from 22% to 58%
• KNEES (I04B)
– ALOS reduced from 7.2 to 5.8 days. DOSA improved from 23% to 62%
• Need for improved engagement between Clinicians and Coders and with all stakeholders
• To be effective for funding purposes coding turn around needs to be improved
• Target determination will be critical (some sites exceeded targets)
• Clinical Leadership is a critical success factor
• Patient Level costing is essential to compare cost versus price
• Training/ Education of all end-users
• Use data and not opinions for discussion, review and planning.
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Orthopaedic Funding Project Results Jan-Jun 2011 versus Jan-Jun 2012
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All Hospitals Phase 1 Hospitals Phase 2 Only Hospitals
Hip Replacement (I03B)
ALOS (Days) -1.7 (7.8 to 6.1) -1.3 (7.6 to 6.3) -3.0 (8.7 to 5.7)
DOSA Rate (%) +164% (22 to 58) +217 % (18 to 57) +71% (35 to 60)
Knee Replacement (I04B)
ALOS (Days) -1.4 (7.2 to 5.8) -1.0 (7.1 to 6.1) -2.7 (7.9 to 5.2)
DOSA Rate (%) +170% (23 to 62) +177% (22 to 61) +110% (30 to 63)
Money Follows the Patient (MFTP)
Background
Program for Government committed to a universal, single-tier health insurance, which guarantees access to medical care based on need, not income supported by Universal Health Insurance (Source: Government for National Recovery 2011-2016: 32)
This separation of purchaser-provider functions will enable the development of a money follows the patient system of purchase of care for people without insurance before the implementation of the UHI system (Source: Government for National Recovery 2011-2016: 36)
Policy Objectives:
Ultimately support a move to an equitable, single-tier universal health insurance system;
Ensure a fairer system of resource allocation;
To drive efficiency in the provision of high quality hospital services; and
To increase transparency in the provision of hospital services (Source: Money Follows the Patient – Policy Paper on Hospital Financing 2013:3)
Policy Features:
Must be driven by principles of ‘comparing like with like’ and encouraging quality care at lowest level of complexity
Should cover all Inpatient, Daycase and comparable outpatient episodes of care
Single National DRG price independent of setting
Should cover all costs associated with patient treatment
Excludes teaching, research, ED, capital, superannuation and bad debts
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Proposed MFTP Interim Governance Structure
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Department of Health and
Children
Healthcare Pricing Office
Healthcare Commissioning
Agency
Hospital Group Hospital Group Hospital Group
…
Source: Modified from Money Follows the Patient – Policy Paper on Hospital Financing 2013:44
Money Follows the Patient - Process
Healthcare Pricing Office (HPO) sets the National Price using cost and activity data
Minister of Health sets global hospital budget and national service targets and priorities
Healthcare Commissioning Agency (HCA) agrees performance contracts ultimately with Hospital Groups, using capped cost and volume contracts
Also includes quality targets underpinned by financial sanctions
Additional activity must be pre-approved and will be paid at the marginal rate plus any other factors
Hospital Group determines the setting for the activity to be undertaken, eg which hospital
Will encourage quality and effective care
Information on activity provided will be sourced from HIPE (’the bill’)
In addition to payment, hospital information will also be used for performance monitoring, audit and quality assessment, as well setting future prices
System holds itself to account through structured consultation
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Money Follows the Patient - Implementation
Retrospective shadow funding of one hospital in each Group and review ABF against Block Funding in 2013.
Based on experience in other countries, should be phased in over a number of years.
Inpatients / Day Cases – 2014;
Outpatients – 2015 (probably based on Australian Tier 2 Clinic list); and
ED – 2016
Full MFTP – 2017 / 2018?
Phased implementation will reinforce capability development while limiting risk to funder and hospitals
Clear governance arrangements to oversee implementation
Time frame should be incorporated into a high level plan to act as both a roadmap for implementation and a key communication tool
Need to communicate phases and timings, clearly, positively and simply.
Careful Project Management of process, with milestones, deliverables and goals
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Money Follows the Patient – Readiness and Where To From Here
Readiness study undertaken by international expert in 2013. Found that:
Ireland is in a good position to commence the implementation of MFTP in 2014 on a phased basis
Irish casemix tools on which much of the MFTP system will be based, is in a more highly developed state than many of the countries that already have activity based funding systems
Make a start and make it real Immediately
• Don’t let perfection be the enemy of the good!
Where To From Here:
1. Establish Project Management and Implementation Steering Group
2. Develop Implementation Plan
3. Agree on the Phased Implementation approach for 2014 and beyond
4. Develop Funding & Policy Guidelines
5. Introduce Compliance Reports around data collection
6. Establish Data Quality Framework
7. Develop collection timelines and counting rules for Outpatient and ED activity
8. Collect non-coded activity to form check point for MFTP counts and reconciliations
9. Assess staffing and skill sets required for core functions
10. Collect Patient Level data used for MFTP funding decisions in a single data repository
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Moving towards ABF – Patient Costing Studies
PowerHealth Solutions (PHS) were contracted by the HSE, in 2010, to undertake Patient Costing Studies in up to 20 hospitals per year.
Since this date the following individual studies have been completed in between 6 and 16 hospitals (average 15 hospitals per year):
• 2008, 2009, 2010, 2011 and 2012
• 2013 Study commences in February 2014 (will be last Study).
Costing Studies mean that data in standard formats is provided by the Sites to PHS, who process the data in PowerPerformance Manager (PPM). PHS audit the resulting information and return any issues to the Sites, who review their data so that PHS can update the PPM configuration and reprocess..
Standardised Costing Methodology developed in two lead sites and then rolled out to the other hospitals.
Based on National Specialty Costing processes;
Methodology included:
GL Costing Manual;
Standard Area Prefixes;
Standard Cost Outputs; (Rollup of like Account Codes)
Submission Templates;
Training on the completion of GL and Patient Level Templates;
Mapping Tables for Account Codes;
Inpatient data sourced from HIPE;
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Moving towards ABF – Patient Costing Studies .. 2
Methodology (cont.):
Outpatients, ED and Feeder files sourced from local hospital systems;
Standard HIPE codes used for all files, eg Specialty, Admit & Discharge Codes, Gender, etc;
Integrity Checking applets;
Detailed processing reports and identification of issues to be addressed;
QlikView and other reporting tools to allow drill down to the Patient and Service Level.
Deliverables:
Annual Patient Costing results;
• Feed into the development of localised AR-DRG Service Weights developed by Laeta Pty Ltd;
Reporting Tools; and
Vision Report (where to from here with Patient Costing).
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Costing Studies Feedback Loop
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Hospital Sites
GL Data Patient Level Data
Integrity Checking Applets
PHS
Process in PPM
Results Analysis
QlikView and other Reporting Tools
Cost Output Distribution by Site - 2011
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Feeder Files By Site - 2011
Hospital HOS01 HOS02 HOS03 HOS04 HOS05 HOS06 HOS07 HOS08 HOS09 HOS10 HOS11 HOS12 HOS13 HOS14 HOS15 HOS16 HOS017
Admitted
Diagnosis
Procedure
Transfer
Outpatient Clinic Attendances
Emergency Department
Imaging
Pathology
Theatre
High Cost Drugs
Blood Products
Allied Health
Pharmacy
High Cost Consumables
ICU / NICU
Cardiology
Endoscopy
Anaesthetics
Recovery
Blood Transfusions
Radiotherapy
Neuro Referral
DC Procedures
Cystic Fibrosis
Plaster Bay
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% Indirect to Direct Costs
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
HOS04 HOS16 HOS03 HOS14 HOS02 HOS13
2009
2010
2011
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Inpatient Average Cost per Case and ALOS
6,968
6,218
6,421
5,580
9.16
8.17 8.28
7.28
5.00
5.50
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
5,000
5,500
6,000
6,500
7,000
7,500
2008 2009 2010 2011
Avg Cost LOS
Source: Patient Costing Study Results Databases
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Avg Cost per Case Day Case / Emergency / Outpatient
517
560 551 575
235 247 242 245
148 154 152 137
-
100
200
300
400
500
600
700
2008 2009 2010 2011
DC Emergency Outpatient
Source: Patient Costing Study Results
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Renal Dialysis Average Day Case Costs
274.74
326.40
302.57
272.15
112.53 105.35
81.40 93.36
387.27
431.76
383.97 365.51
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
500.00
2008 2009 2010 2011
Direct Cost Indirect Cost Total Cost
Source: Patient Costing Study Results
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Appendicectomy Average Costs and ALOS
Source: Patient Costing Study Results
4,042.71 4,015.73
3,660.21 3,676.68
1,020.80 881.77
754.40 802.40
5,063.50 4,897.50
4,414.61 4,479.08 3.88
3.34
3.14
2.92
2.50
2.70
2.90
3.10
3.30
3.50
3.70
3.90
4.10
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
5,000.00
5,500.00
2008 2009 2010 2011
Direct Cost Indirect Cost Total Cost LOS
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Conclusion
Ireland recognises the need to more effectively fund quality healthcare
There is a commitment at all levels to move towards activity based funding and structural change of the health system
Whilst, knowledge of some of the concepts is not developed this will come with time
A lot of work has been undertaken developing robust prices over the last five years
The gradual uplift in the economy, commitment to eHealth strategies and the desire to implement an Universal Health Insurance system mean that now is the right time to make this health funding sea change.
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Thank you!
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