Importance of Case-Mix in Mental Health and the German Perspective Dr. Frank W. Heimig

Activity-based payment in German psychiatric hospitals (PEPP-System) Improving Quality of Care for Mental Health Patients through Funding Methodologies Toronto, October 11th, 2018 Dr. med. Frank Heimig, CEO InEK GmbH 2

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 3

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 4

Background Payment of mental health care before PEPP (I) For the last 20 years in-patient hospital treatment was financed by a budget-orientated, day-based remuneration system The management of each hospital and representatives of the social health insurance negotiated a hospital budget for in-patient treatment The budget and planned number of in-patient days determined a fixed daily amount for each day of treatment Payment reflected the hospital budget but not the severity of disease or intensity of treatment 5

Background Payment of mental health care before PEPP (II)

Background Payment of mental health care before PEPP (III) Due to individual hospital budgets, similar diagnoses and treatments led to different remuneration in different hospitals Does this reflect differences in severity of disease / intensity of treatment? or different levels of costs due to other factors? 7

Reasons for reform Fundamental question WHO does WHAT, WHEN, WHERE and with which resources ? Transparency regarding Services Quality of treatment Costs Performance-oriented remuneration 8

Reasons for reform Requirements Lawmakers who are willing to bring about change and to enforce a reform Systematic documentation of services (internal documentation) Unified coding of services (external documentation) Description of services (ICD 10 / procedure catalogue) Electronic documentation systems Centralized data collection and data processing 9

Background Number of cases and length of stay (2003-2017)* 10 *Source: Federal Statistical Office, sector healthcare, hospitals by departments

Legal basis (I) 2009 the German Bundestag decided to implement a new “activity- related day-based remuneration system” Patient groups with different levels of treatment intensity have to be differentiated according to medical criteria Goals: Strengthen the focus on performance Introduction of flat rate payment Enhancing transparency and comparability between hospitals 11

Legal basis (II) The Institute for the Hospital Financing System (InEK) was put in charge of developing the system System parameters and the remuneration catalogue are approved by the Association of the German hospitals and the German social health insurances (called Self-Administration) 12

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 13

Data basis Content The development of an activity-related remuneration system is based on extensive hospital data: Mandatory provision of service data, e.g. Age of the patient Date of treatment Diagnosis Medical procedures….. Voluntary provision of calculated day- and case-based cost data 14

Data basis Participants ‘Voluntary’ in this case means by contractual agreement But: The data from the calculation sample provided by the hospitals does not represent all the areas of the cost calculation Thus an enlargement of the calculation sample was needed Random draw of 20 psychiatric hospitals on 22.09.2017 with respect to ‘helpfulness’ of participation in the cost calculation The calculation data from drawn hospitals improved the number of cases and data quality in pretargeted areas, e.g. psychosomatics 15

Data basis Number of cases in the years 2016 and 2017 16

Data basis Number of cases in the years 2016 and 2017 (e.g. psychosomatics) 17

Implementation Medical and patient criteria (e.g. age, diagnoses, procedures) are used to classify patients by differences in average costs per day Classification is case-based, payment is day-based The remuneration is based on the average daily costs in each patient group Accordingly the day-based remuneration differs based on the severity of the disease and the intensity of treatment (in contrast to the previous system) 18

Optional PEPP-Implementation Timeline 2013 – 2017: Implementation optional From 2018: Implementation binding From 2020: Hospital budgets determined by performance-based comparisons of hospitals 2013 2014 2015 2016 2017 2018 2019 2020 2021 Optional PEPP-Implementation Binding PEPP-Implementation 2022 ... Budget determined by hospital comparison 19

Implementation Learning system (I) Transparency The algorithm for the PEPP classification is publicly available The calculation results are accessible to the public Participation External expert knowledge and experiences are taken into account by a structured proposal process Ongoing discussions and feedback between hospitals and InEK during data verification process 20

Implementation Learning system (II) Continuous improvement process Annual update of the PEPP system with newly collected data to represent changes in Morbidity Cost structure Service structure “Visibility” of complex cases (development of codes and coding) 21

Implementation Learning system (III) 22

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 23

Classification Major psychiatric categories (MPC) 24 1) New as of 2018: Treatment of patients at their homes by hospital staff

Classification Major psychiatric categories (MPC) – “Pre”-PEPP Made up of cost-intensive, in-patient cases (irrespective of age) Cases with increased intensity of treatment include One-to-one care Crisis intervention Increased intensity of treatment during discharge Sleep apnea syndrome or cardiorespiratory polysomnography and < 8 in-patient days 25

Classification Major psychiatric categories (MPC) – Child and adolescent psychiatry Consisting of cases with the following characteristics: Age < 14 years Age < 18 years, treated in the department psychosomatics and min. 1 code from the department psychosomatics on > 49% of the in-patient days and min. treatment under the supervision of a child and adolescent psychiatry specialist Treated in the department for child and adolescent psychiatry and min. 1 code from this department on > 49% of the in-patient days 26

Classification Major psychiatric categories (MPC) – Psychosomatics Consisting of cases with the following characteristics: Min. 1 code from psychosomatic complex treatment (adults) on > 50% of the in-patient days Min. 1 code from the department of psychosomatics on > 50% of the in-patient days 27

Classification Major psychiatric categories (MPC) – Psychiatry Consisting of cases with the following characteristics: Psychiatric disorder as the main or secondary diagnosis Cases which neither meet the conditions for psychosomatics nor child and adolescent psychiatry 28

Classification Major psychiatric category (MPC) – Distribution of the costing data 29 1) New as of 2018: Treatment of patients in their homes by hospital staff

Classification Description (I) 30 1) New as of 2018: Treatment of patients at their homes by hospital staff

Classification Description (II) PEPP is determined by the following parameters Major psychiatric category Diagnoses Procedures Patient characteristics (e.g. age, gender) Grouper PEPP 31

Classification Description (III) Examples of grouping (in-patient): 32

Classification Examples 33

Classification Procedures – Regular care Regular care: Based on therapist’s activity, e.g.: One-to-one conversations Physiotherapy and exercise therapy Psychotherapy Grouptherapy 34

Classification Procedures – Intensive care Intensive care: Based on patient attributes, e.g. Use of safety measures Acute tendency to self harm Acute tendency to harm others No independent fluid and food intake Danger to life by somatic complications Serious avolition 35

Classification Procedures – Example 1 Depending on the form of treatment, length of stay and amount of intensive care 13 days of intensive care with min. 3 attributes on 50% of the in- patient care days (24) Grouping in PEPP PA14A Personality and behavioral disorder […] with high therapy intensity 36

Classification Procedures – Example 2 9 days of intensive care with min. 3 attributes not on 50% of the in- patient care days (24) Grouping in PEPP PA14B, Personality and behavioral disorder […] without high therapy intensity 37

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 38

Calculation method Basics Collection of daily-based costs Average daily costs depend on the length of stay The shorter the length of stay, the higher the average daily costs Degressive costing curve 39

Calculation method Degression of cost over time (I) At case level (Example 1 – Case in PA04C with 40 days of stay) Trend 40

Calculation method Degression of cost over time (II) At case level (Example 2 – Case in PA04C with 10 days of stay) Trend 41

Calculation method Degression of cost over time (III) At PEPP level (e.g. PA04C): Cases discharged on day X How can the remuneration optimally reflect the costs? Average daily costs of the cases, discharged on day X Trend 42

Remuneration Basics Smoothing of data through linear regression The best possible smoothing is determined by the method of least squares approximation Weighting of the days of discharge on the basis of care days within the data set (acc. §21KHEntgG) Calculation of the degression endpoint (Point at which constant remuneration within the PEPP sets in) Adjustment of each PEPP so that for the smoothed daily costs applies: Cost volume equals compensation 43

Remuneration Day-based (I) Calculation of the remuneration on the basis of the average daily costs of the cases, discharged on day X Average daily costs of the cases, discharged on day X 44

Remuneration Day-based (II) Calculation of the remuneration curve so that it corresponds better with the curve of average daily costs The best possible smoothing is determined by the method of least squares approximation Remuneration Average daily costs 45

Remuneration Reminder Payment of mental health care before PEPP – examples Reminder 46

Remuneration Payment day-based with PEPP – examples 47

Remuneration Payment day-based – Calculation (I) 48 Affective, neurotic stress and somatoform disorder, insomnia, age < 65, without complicated diagnosis, without considerable need for care 48

Remuneration Payment day-based – Calculation (II) Affective, neurotic stress and somatoform disorder, insomnia, age < 65, without complicated diagnosis, without considerable need for care Case with 13 days of hospital stay 49

Remuneration Payment day-based – Calculation (III) = = = Base rate (e.g.): 257,40 € = = = 13 X 0,9612 X 257,40 € Total remuneration for the case: 3.216,37 € 50

Remuneration Additional activity-based For highly complex cases the case-based classification has its limits Cost-intensive days can occur in the middle or at the end of the stay Particularly cost-intensive treatments with high personnel requirements are thus reimbursed additionally Individual care/supervision (1:1) Treatment in small groups (up to 3 patients) “Intensive treatment” (e.g. for patients with tendency to self harm, heavy withdrawal, etc.) 51

Remuneration Additional activity-based – Example 52 Payment 1:1 treatment 12-18 h Payment 1:1 treatment > 18 h 52

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 53

Quality assurance Psychiatric Staff Ordinance (Psych-PV) (I) Effective since 01.01.1991 Valid until 31.12.2019 Minimum requirements for the staffing of in-patient facilities Stipulated by the case severity of the treated patients (outlined by OPS 9-980 to 9-983) Currently the only criteria for the quality of care 54

Quality assurance Psychiatric Staff Ordinance (Psych-PV) (II) 55

Quality assurance Minimum requirements for staffing by G-BA* In effect as of 01.01.2020 Goal (as before): Ensuring the quality of the psychiatric and psychosomatic care No instructions for the practical implementation up till now Until full implementation, Psych-PV will remain valid in psychiatric hospitals 56 *Gemeinsamer Bundesausschuss

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 57

Summary PEPP classifies patient-groups by medical criteria like age, diagnosis and medical procedures representing their different daily costs PEPP considers disease severity and intensity of treatment PEPP also reflects phases of highly expensive treatment by an additional remuneration PEPP is calculated on a comprehensive data basis made up of service data and day-based cost data As a “learning system” PEPP is developed further annually. It considers changes of the data basis and includes external proposals 58

Agenda Background and legal basis Data basis and implementation Classification Calculation method and remuneration Quality assurance Summary Outlook 59

Outlook Comparison of psychiatric hospitals (I) Goes into practice in 2020 Instrument to Determine the budget of a psychiatric hospital Enhance the transparency of in-patient services between hospitals Taking regional and structural features into account Proof of staffing necessary in order to provide the respective services 60

Outlook Comparison of psychiatric hospitals (II) 61

Thank you for your attention! 62