Sepsis in an Activity Based Funding (ABF) Envoirnment Brian Donovan Healthcare Pricing Office, HSE 18th November 2015

Agenda Irish Healthcare – Some Facts an Figures History of Casemix and ABF in Ireland ABF Policy Context What is ABF? Components of ABF ABF Current Status ABF and Quality

Ireland - Some facts and figures 3

Ireland: Some facts and Figures No. of ABF hospitals 38 No. of Hospital Discharges 1.6m No. of Outpatient attendances 3.6m No. of ED attendances 1.3m Public Health Budget circ € 13 billion

Key International Indicator … Health spending as % of GDP, 2010 % GDP 18 17.6 Pu blic Private 16 14 12.0 12 11.6 11.6 11.4 11.4 11.1 11.0 10.7 10.5 10.2 10.1 10 9.6 9.6 9.6 9.5 9.5 9.4 9.3 9.3 9.2 9.1 9.0 9.0 8.9 8.0 7.9 7.9 7.8 8 7.5 7.1 7.0 6.3 6.2 6.1 6 4 2 Note: 1. In the Netherlands, it is not possible to distinguish clearly the public and private share for the part of health expendit ures related to investm ents. 2. Total expenditure excluding investm ents. 3. Inform ation on data for Israel: http://dx.doi.org/10.1787/888932315602 Source: OECD Health Data 2012

Ireland’s Economic Woes!!!! Average OECD health expenditure growth rates in real terms 15% 10% 5% 0% 0.0% -5% 2000-2009 2009-2010 -10% Note: Growth rates for 2009/10 are not available for Australia, Japan, Luxem bourg, Israel, Spain and Turkey. Growth rates for Chile calculated using the Consum er Price Index (CPI). Source: OECD Health Data 2012.

The Picture Since 2008

History of Casemix and ABF in Ireland

Health Funding in Ireland Block Grant Historical with no direct link with activity Incremental +- One off funding +- Inflation / Deflation Casemix Adjustment

Casemix in Ireland Up to 2012 Casemix data was used to make an efficiency based adjustment to hospitals budgets based on data from the previous year Single line item in hospital allocation In 2012 this process was halted in preparation for the introduction of ABF in Ireland Under ABF Casemix data will form the basis of the hospital’s funding

Australian Casemix in Ireland In 2005 Ireland adopted ICD-10-AM & ACHI classification systems AR-DRG system Long standing relationship between Australia and Ireland in terms of Casemix States of Victoria and NSW Much of the Casemix development in Ireland has been informed by Australian experts Outpatients Workshop 28/06/2014

Healthcare Reform and Activity Based Funding Policy Context 12

4 Pillars of Reform Health and Wellbeing Service Reform Structural Reform Financial Reform (ABF)

Policy Objectives To have a fairer system of resource allocation To drive efficiency in the provision of hospital services To increase transparency in the provision of hospital services Any ‘ABF’ system must support and reinforce the delivery of quality care in the most appropriate setting  14

ABF Governance Structures Department of Health Healthcare Pricing Office Healthcare Commissioning Agency Hospital Group 15

ABF Process Pricing Office sets national price list using cost and activity data Minister sets global hospital budget and national service targets and priorities Healthcare Commissioning Agency agrees performance contracts with Hospital Groups - capped cost and volume contracts 16

What is ABF? 17

What is ABF Funding Patient Care € Activity Activity based funding (ABF) is the provision of funding to healthcare providers based on the quantity and quality of services they deliver to patients. Funding patient care rather than hospitals

Bed sheeters +Spreadsheeters Clinical information + Financial information Spreadsheeters and bed-sheeters Doctor made a joke that he thought spreadsheets were a good idea until the accountants got their hands on them If we are producing prices Bed sheeters +Spreadsheeters

What ABF is not ? Not about increasing the level of funding available to acute hospital system Not about carrying out additional unapproved activity to increase size of hospital budget Not panacea for all ills in the health system It is essentially about the distribution of the pie rather than the size of the pie Evaluation Framework

ABF Components Activity Information Costing Information Price Setting HIPE Costing Information Price Setting PRICE Specialty Costs Activity PLC Price setting HIPE Costing

Current Scope of ABF Currently restricted to acute admitted care Covers daycase and inpatient activity All other activity funded in block grant All other hospital costs funded in the block budget Hospital Budget ABF Inpatients Daycases Block Grant OPD ED Other

Activity Information (HIPE)

Activity Information Each patient discharge coded to HIPE Administrative, demographic and clinical data HIPE must reflect the Chart Capture information relevant to episode of care Principal diagnosis All relevant secondary diagnoses Principal procedure All relevant secondary procedures In accordance with coding standards and guidelines All patient discharges are assigned to one and only one DRG based on a combination of the above

DRG’s – What are they? A classification system which provides a means of relating the patients a hospital treats to the costs incurred by the hospital Based on the concept of Casemix complexity Each DRG contains patients with a similar level of resource intensity (Cost) and are similar from a clinical perspective (Specialty).

DRG Classification Australian AR DRG’S – No of DRG’S –Inpatients (695) & Daycases (340) – Areas Covered – Inpatients and Daycases –Up to 4 Severity Levels for certain DRG’S – A = Multiple Major problems or catastrophic problems – B = Major problems – C = Other problems – D = Without problems – Z = Standalone DRG

Complexity counts Complexity increasing with additional diagnoses Age 82 years - length of stay 51 days Principal diagnosis I639 Cerebral infarction unspecified (stroke) Complexity increasing with additional diagnoses   Additional diagnosis I48 Atrial fibrillation and flutter I10 Essential (primary) hypertension DRG B70C Stroke without catastrophic/severe complications/comorbidities ABF Price €5,159 G819 Hemiplegia unspecified B70B Stroke with severe complications/comorbidities €9,410 L891 Decubitus ulcer and pressure area B70A Stroke with catastrophic complications/comorbidities €23,261

Case Study: B70 Strokes DRG Description Price 2014 cases 2014 % ABF hosps B70A Stroke and other cerebral disorder with catastrophic complications/co-morbidities €23,261 15 4% 16% B70B Stroke and other cerebral disorder with serious complications/co-morbidities €9,410 79 22% 27% B70C Stroke and other cerebral disorder without catastrophic or severe complications/co-morbidities €5,159 226 62% 47% B70D Stroke and other cerebral disorder died/transferred within 5 days €1,707 46 13% 10%   366 100%

If it is not on the chart it did not happen Clinician and Coder Coding information is critical to ABF Ensure that the documentation supports the assignment of Diagnosis codes Secondary and additional diagnoses are critical to DRG hierarchy of severity If it is not on the chart it did not happen Evaluation Framework 29

Costing Information

Typical Hospital General Ledger Cost centre ---> Specialty ED Ward ICU Labs Radiology Theatre Physio Procedure room Overheads Total Cost element €000 Medical pay 300 500   450 400 1,950 Nursing pay 2,000 2,500 4,000 2,250 11,050 Paramedical pay 1,000 900 750 150 2,800 Admin pay 35 75 100 50 1,585 TOTAL PAY 2,650 2,535 4,375 1,550 1,400 2,325 800 17,385 Drugs 250 600 M&SS 25 575 Lab supplies 1,500 Radiology supplies Heat power light Office expenses 15 20 1,835 TOTAL NON PAY 175 340 770 1,625 1,725 3,500 8,410 TOTAL GROSS COST 2,825 2,875 5,145 3,175 3,125 975 550 4,500 25,795 Cost centres matching physical locations Budget holders in these physical locations responsible for managing their expenditure versus budget

Allocation of Costs Gross Costs €200m What Where IP €120m DC €30m IP Cardiology Cost €36m Discharges 4,000 Cost per discharge €9,000 Weighted units 7,500 Cost per WU €4,800 DC €30m DC Cardiology Cost €10m Discharges 8,000 Cost per discharge €1,250 Weighted units 10,000 Cost per WU €1,000 OPD €20m Cardiology OPD Chest pain Cost €3m Attendances 30,000 Cost per attendance €100 Weighted units 20,000 Cost per WU €150 Hypertension ED €10m Attendances 40,000 Cost per attendance €250 Extern €20m What Labs €10m X-ray €7m Medical pay €3m Where GPs €14m Other hosps €5m Comm care €1m

Costing requires connecting HIPE Types of patients GL Expenditure on patients Cost per patient Hosp systems What happened to patients

ABF Current status Evaluation Framework

Healthcare Pricing Office (HPO) HPO established on the 1st of Jan. 2014 on an administrative basis Merger of the Coding team from the ESRI and the Case-mix team from the HSE Setting prices for all episodes of care so that care can be ‘purchased’ Commencing with hospitals Within Hospitals commencing with Inpatient and Daycases Evaluation Framework

Change in language No longer talk about hospital budgets Talk about hospital revenue Hospital unit-costs Evaluation Framework

2015 Conversion year No financial effect from ABF Each hospital benchmarked against the national average price for the work they do Hospitals which are operating above the national average and below the national average are now visible within this process ABF Implementation will be on a phased basis Evaluation Framework

Issues that can impact on the Benchmarking Exercise Poor quality chart documentation/ coding. Poor quality costing. In-efficient or sub-optimal use of resources. Availability of community care.  High-cost drugs. Structural disadvantage Effect of delayed discharges. Varying levels of expenditure on agency-staff.. Skill-mix and staffing levels.

ABF -Quality Evaluation Framework

ABF and Quality of Care How can we use DRG payments to incentivise prevention, hospital avoidance, quality and safety, care pathways and appropriate patient outcomes ? Aim to improve patient access to care together with the overall quality and safety of care they receive The funding mechanisms should encourage quality care in the most appropriate setting This will involve working closely with the clinical programmes to align pricing with clinical objectives

Coding of Sepsis -New Codes Jan 2015 = 8th edition ICD-10-AM/ACHI/ACS New category for SIRS including R65.1 Systemic inflammatory response syndrome [SIRS] of infectious origin with acute organ failure includes Severe sepsis New code for Septic shock R57.2 Septic shock Revised Sepsis Coding Guideline for HIPE Coders

Classification of Sepsis There are two specific DRG’S for Sepsis within the Australian DRG system T60 A Septicaemia + CCC T60 B Septicaemia - CCC Sepsis can also appear as a Secondary Diagnosis in other DRG’S which can cause an impact on DRG assignment Obvious question is should you pay the additional cost of a more complicated DRG caused by the Sepsis? Should you pay if it is Hospital Acquired? Can you determine if it was hospital acquired?

Funding of Sepsis –Some Issues Should there be an additional payment for following an agreed clinical pathway? Should there be a reduction for not following the pathway? How do you collect the information to determine whether an agreed pathway has been adhered to? Is this administratively feasible? Is the data verifiable and auditable? Do you have a sliding scale ie if 70% of pathway adhered to you get 70% of additional payment? Is it 100% adherence or nothing?

Thank You Any Questions? Evaluation Framework 44