1. Payment by Results for CHIM
Ask for names, orgs and roles
Explain statistician, no need for finance training
Explain how I got into PbR
Dr Helen Byworth
October 2008

2. Learning Outcomes Understand the principles of PbR and its purpose
Understand the benefits of the system and what changes this means for the NHS
Understand how is links to other NHS reforms
Understand how hospital activity is measured under PbR
Understand how national tariffs are calculated and applied to patient activity
Understand the issues that have arisen and what the future holds

3. What is Payment by Results?
A transparent, rules-based system for paying NHS Trusts for the activity they undertake using a preset price
Preset price = National Tariff
Tariff x the number of patients actually seen = price paid for activity

4. Old Process
Block contracts, usually covering a whole service (e.g. Gynaecology)
One lump sum of money, regardless of numbers seen
Little understanding of content
Next year’s contract based on last year’s activity levels
+ or – new developments
+ inflation

5. What’s Included? And what isn’t?…
Tariff currently applies to most admitted patient care
Outpatient attendances
A&E attendances
And what isn’t?…
Selected Admitted patient Care (E.g. Chemo, specialised procedures…)
Selected specialties (E.g. Mental Health, Rehab…)
Critical Care
Selected Drugs
Community Services To name a few things!

6. Measuring Activity
Inpatient activity previously measured in terms of Finished Consultant Episodes (FCEs)
“The time a patient spends in the continuous care of one consultant using hospital site or care home bed(s) of one health care provider…”
Inpatients under PbR measured in Spells and Excess Bed Days
“The total continuous stay of a patient using a bed on premises controlled by a health care provider during which medical care is the responsibility of one or more consultants…”

7. Spells Patient admitted to Hospital First FCE (FFCE) begins
Patient has subsequent FCEs
Patient Discharged
Spell finishes

8. Spell
FCE 1 (FFCE)
FCE 2
FCE 3
Patient Admitted
Patient Discharged

9. HRGs Inpatient FCEs classified into Healthcare Resource Groups (HRGs)
Around 550 covered by PbR in version 3.5
Definition:
“HRGs are standard groupings of clinically similar treatments, which use common levels of healthcare resource”

10. An Example H47 – Traumatic Amputation
Made up of the following procedures:
S18X Traumatic Amputation at neck level
S780 Traumatic Amputation at hip joint
S981 Traumatic Amputation of one toe
and 20 more individual procedures….
First letter defines group eg A in the nervous system

11. How does it fit together?
Each FCE is coded by the hospital
Each FCE is assigned an HRG based on the procedures and diagnoses that occurred (Using ‘HRG Grouper’)
PbR exclusions removed (E.g. Rehab)
FCEs run through a ‘spell converter’
Calculates the timing of the full spell and dominant episode HRG

12. Pay only for the dominant HRG under PbR
PbR Spell
Spell
D40 – COPD without complications
E28 – Cardiac Arrest
Specialty 314 (Rehab)
Dominant Episode, therefore Spell is an ‘E28’ Spell
Pay only for the dominant HRG under PbR

13. Excess Bed Days Each HRG has a trim point
Calculated based on nationally collected data on Lengths of Stay
Bed days within the PbR spell above the trim point are Excess Bed Days (EBDs)

14. E28 – Cardiac Arrest (Trim point = 12 Days)
Spell
E28 – Cardiac Arrest (Trim point = 12 Days)
Patient Admitted
Day 0
Patient Transferred, New FCE
Day 7
Day 12
Patient Discharged
Day 15
LoS = 15 Days, 3 of which are Excess Bed Days

15. Reference Costs
Each Trust calculates a reference cost for each unit of activity, which is the cost to the Trust for providing the package of care
For example:
2 hours in theatre
5 days stay on a ward including
Food
Heating and lighting
Cleaning
Porters to and from theatre
Medical and Nursing staff time
These form the basis of the National Tariff

16. The National Tariff A separate tariff applies to each HRG
One for elective spells, one for non elective spells and one for excess bed days
Daycases are charged the same as elective inpatients
Excess Bed Days cost the same for both types
See Handout 1

17. Details of the Tariff
Separate Tariff and Trim Points for Elective and Non Elective admissions
Excess Bed Days cost the same for both types
Example:
G22 – Pancreas very major procedures
Elective costs £5077 (Trim point 41 days)
Non Elective costs £7082 (Trim point 69 days)
Excess Bed Days charged at £200 per day

18. Spell is 9 days over the G22 elective trim point
A Simple Example
An Elective admission for G22 staying 45 days would cost:
£4253+(£271 x 9) = £6692
Spell is 9 days over the G22 elective trim point
G22 Elective Tariff
G22 EBD Tariff
Would have only cost 5877 last year, only 4 xbds.

19. Non Elective Reductions
In contracts and activity monitoring, non elective admissions are split into Long Stay (LS) and Short Stay (SS)
SS spells have total length of stay of 0 or 1 day
Most HRGs are eligible for a reduction in cost if the stay is <2 days
Discount varies by HRG from 50% to 80%
Reduction applies only if admission is an emergency and the patient is over 16

20. Non Elective Reduction Example
An adult admission via A&E for J45 (Minor Skin Infection) would cost
£ 1280 x 0.35 = £ 448
J45 Non Elective Tariff
Eligible for 65% reduction < 2 days

21. Specialised Top-ups
Spells which take place within certain specialised services are eligible for additional top-ups to the tariff e.g.
Neurosciences, Children under 17, Spinal Surgery
Top-ups range from 9% to 70%
Certain HRGs are not eligible for the top-up – they are already considered specialist activity and reflected in HRG cost
Providers must be designated to receive top-ups for anything other than Children, Orthopaedic and Colorectal

22. Top-up Example Excess Bed Days aren’t eligible for top-ups
An elective minor nose procedure (C56) performed on a child and including 2 excess bed days would cost
(£680 x 1.12) + (2 x £242) = £
C56 Tariff
Eligible for 12% Top-up
C56 XBD Tariff

23. Group Work A patient is admitted under G23 (Pancreatic Disorder)
Group 1 – Assume the patient is an adult admitted electively and stays 25 days
Group 2 – Assume the patient is admitted as an emergency and stays 25 days
Group 3 – Assume the patient is an adult admitted as an emergency and stays 1 day
Group 4 – Assume the patient is admitted electively for 25 days but has colorectal complications

24. Emergency Threshold
A Threshold is applied between each Provider and Commissioner for emergency non electives
Purpose is to share risk between providers and commissioners
Threshold set at calendar year 2007 outturn
Any activity above the threshold will be charged at half tariff
If activity levels are below the threshold, Commissioners still pay half the difference

25. Supposed that 2007 outturn was this…
…and at the end of , outturn was higher
… but if outturn was lower
Pay for activity up to here at 100% tariff
And still pay 50% of this cost
Pay for activity up to here at 100% tariff
And this at 50% tariff
Activity
Activity
2007 Activity (£)

26. Outpatients Counted as attendances Tariff at specialty level
Different tariff for first appointment and follow up appointment
Higher tariff for children
Don’t pay for DNAS
E.g. General Surgery:
Adult
Child
First Attendance
£163
£172
Follow up attendance
£80
£73

27. Outpatient Procedures
New from , coding generally not ready until
Separate tariff for selected procedures performed in an outpatient setting
Aims to discourage Trusts from treating as daycases and provide compensation above standard outpatient tariff
E.g.
Fine needle breast biopsies
Flexible sigmoidoscopy
Coding issues as new counting – a lot of work needs to be done on these

28. A&E Attendances Counted as attendances Fall into 3 categories
Previously ‘hosted’ by local PCTs
De-hosted from
Patients from our area attending A&E within the SHA will be billed to us
Patients using services further afield will still be hosted by local PCTs
High Cost
High cost imaging and investigations
£102
Standard
Lower cost investigations and DOA
£75
Minor Injuries
No investigation, non 24 hr A&E departments/ MIUs
£56
Coding issues as new counting – a lot of work needs to be done on these

29. What Is Unbundling?
Currently allowed to unbundle Rehab and diagnostics
Outpatient tariffs include funding to cover diagnostic tests and inpatient tariffs include some rehab
Reimburses PCTs where they commission these services elsewhere

30. Examples Diagnostics Rehab Need to unbundle the cost of this…GP
Independent Sector MRI
Referral not Necessary
Referred to Consultant (Outpatient Attendance)
Need to unbundle the cost of this…
… from this.
…may include funding for bed days which actually take place here.
Patient Spell on Acute Ward
Rehab with Other Provider (e.g. PCT)
Rehab with Same Provider (e.g. Ward 20, NGH)
The cost of this…

31. Contract Monitoring Monitored via monthly Statements from Trusts
Reconciliation with PCT data
Contracts are cashed-up with providers quarterly
With PbR comes long delays, e.g. for Qtr 2
30th Sep
26th Oct
14th Dec
9th Jan
Qtr 2 Ends
First Data Sent
Freeze Date
Payment Made
Qtr 3 Finishes here!

32. PbR and the Big Picture Patient Choice Practice Based Commissioning
Can only work if money follows the patient
Independent Sector paid same as NHS
Practice Based Commissioning
Creates the necessary incentive to manage demand and treat patients in non-acute settings
SUS
Replaced the NWCS
Purpose is to enable consistent data between Commissioners and Trusts – HRGs will already be attached and data “spelled”
Very little confidence in the system nationally

33. Benefits to Patients
Encourage management of care in non acute settings
More preventative measures in community or GP settings
Choice of provider does not come down to financial incentives
Better quality of care, incentives to discharge promptly

34. Benefits to Commissioners
Fairness & transparency – a Trust is paid for what is actually delivered as payment is linked to activity
Know exactly what you’re getting for your money – data quality better than ever
Demand management has immediate financial benefits

35. Benefits to Providers Improve and reward efficiency and quality
Don’t lose out if demand increases in-year, receive payment for anybody treated
Incentive to attract patients through Choice
Costs for unavoidably long stays, complications etc. are compensated

36. The Difficulties… More financial risks to health economy
Contract monitoring uses much more resource
Difficult to reconcile data
Improvement in data quality results in loss in timeliness
Not as much local control/flexibility
Potential for gaming by both parties – performance monitoring is crucial

37. Governance National programme of PbR audits by Audit Commission
Inpatients in second year, outpatients just going live
audit found 9.4% error rate in HRG coding, ranging form 0.3% to 52%
Financial error of £3.5m, but close to zero as a net error
No evidence of under/over charging or gaming
Source documentation was largest cause of errors

38. HRG4 Over 1,200 HRGs Much more detailed than v3.5
Include Rehab, Critical Care, Drugs, Outpatients to name a few things
Trust’s coding needs to be changed to accommodate
Reference costs from data used HRG4
Supposed to be basis for payment from April 2009, but…
Number
Chapter
LA03B
Subchapter
Split
Give H71 example here

39. What’s Next? 2009-10 road testing has not gone to plan
Tariff has been delayed (December 2008?)
All kinds of rumours – yes or no to HRG4?
Next to no guidance about implementation
Patient Transport Service (PTS) is coming out of acute tariff, another big change

40. PbR For Ambulance
North East Ambulance Service is one of the national pilot sites
Ambulance encouraged to go down local routes, no national tariff or structure planned as yet
Developing currencies that will provide incentives as well as penalties
For example, if paramedics treat on scene rather than convey to hospitals for an expensive admission, tariff reflects this
Commissioners need to ensure it delivers their expectations, e.g. Trust encouraged to improve quality and efficiency rather than ‘clocking up’ more and more activity

41. PbR For Mental Health Local Trusts also pilots
Work commenced in 2005 to develop currencies, reports on Stage 1 published in 2006, but delays around national implementation
National PbR consultation in 2007 identified MH as a priority for PbR development
Also referred to in “High Quality Care for All” (DH June 2008)
Currencies should be available for use from
Further information at

42. Summary Principles of PbR Counting and measuring National Tariffs
Fitting in the Big Picture
Benefits
Issues that have arisen
The future

43. Where to Get Help Contact Myself Helen.Byworth@northoftyne.nhs.uk
Department of Health
and type PBR into the search box
Includes worked examples, full technical guidance and FAQs