Policy trends and reforms in the German DRG-based hospital payment system.

A central structural point in all DRG-based hospital payment systems is the conversion of relative weights into actual payments. In this context policy makers need to address (amongst other things) (a) how the price level of DRG-payments from one period to the following period is changed and (b) whether and how hospital payments based on DRGs are to be differentiated beyond patient characteristics, e.g. by organizational, regional or state-level factors. Both policy problems can be and in international comparison often are empirically addressed. In Germany relative weights are derived from a highly sophisticated empirical cost calculation, whereas the annual changes of DRG-based payments (base rates) as well as the differentiation of DRG-based hospital payments beyond patient characteristics are not empirically addressed. Rather a complex set of regulations and quasi-market negotiations are applied. There were over the last decade also timid attempts to foster the use of empirical data to address these points. However, these reforms failed to increase the fairness, transparency and rationality of the mechanism to convert relative weights into actual DRG-based hospital payments.

Hospital payment based on diagnosis-related groups differs in Europe and holds lessons for the United States.

England, France, Germany, the Netherlands, and Sweden spend less as a share of gross domestic product on hospital care than the United States while delivering high-quality services. All five European countries have hospital payment systems based on diagnosis-related groups (DRGs) that classify patients of similar clinical characteristics and comparable costs. Inspired by Medicare's inpatient prospective payment system, which originated the use of DRGs, European DRG systems have implemented different design options and are generally more detailed than Medicare's system, to better distinguish among patients with less and more complex conditions. Incentives to treat more cases are often counterbalanced by volume ceilings in European DRG systems. European payments are usually broader in scope than those in the United States, including physician salaries and readmissions. These European systems, discussed in more detail in the article, suggest potential innovations for reforming DRG-based hospital payment in the United States.

Comparison of hospital costs and length of stay associated with open-mesh, totally extraperitoneal inguinal hernia repair, and transabdominal preperitoneal inguinal hernia repair: an analysis of observational data using propensity score matching.

BACKGROUND: Laparoscopic inguinal hernia surgery is increasingly seen as the superior technique in hernia repair. Compared to open-mesh hernia repair, laparoscopic approaches are often reported to be more cost-effective but incur higher costs for the provider. The objective of this study was to analyze the effect of transabdominal preperitoneal (TAPP) and totally extraperitoneal (TEP) repair of nonincarcerated inguinal hernias in men on hospital costs and length of stay (LoS). METHODS: We used routine administrative, highly standardized, patient-level cost data from 15 German hospitals participating in the national cost data study. We compared TEP, TAPP, and open-mesh repair. We conducted propensity score matching to account for baseline differences between treatment groups and subsequently estimated the treatment effect on costs and LoS. RESULTS: Total costs for both TEP and TAPP surgery were significantly lower than those for open-mesh repair (p < 0.0001 and p < 0.05, respectively). TEP repair also had a slight but nonsignificant advantage in total costs compared to TAPP repair, while TAPP surgery was associated with a significantly shorter LoS than TEP (p < 0.001). CONCLUSION: Results suggest that laparoscopic approaches in hernia repair are not necessarily associated with higher hospital resource consumption than open-mesh repair.

Breast cancer surgery and diagnosis-related groups (DRGs): patient classification and hospital reimbursement in 11 European countries.

Researchers from eleven countries (i.e. Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Spain, and Sweden) compared how their DRG systems deal with breast cancer surgery patients. DRG algorithms and indicators of resource consumption were assessed for those DRGs that individually contain at least 1% of all breast cancer surgery patients. Six standardised case vignettes were defined and quasi prices according to national DRG-based hospital payment systems were ascertained. European DRG systems classify breast cancer surgery patients according to different sets of classification variables into three to seven DRGs. Quasi prices for an index case treated with partial mastectomy range from €577 in Poland to €5780 in the Netherlands. Countries award their highest payments for very different kinds of patients. Breast cancer specialists and national DRG authorities should consider how other countries' DRG systems classify breast cancer patients in order to identify potential scope for improvement and to ensure fair and appropriate reimbursement.

Patient-level hospital costs and length of stay after conventional versus minimally invasive total hip replacement: a propensity-matched analysis.

OBJECTIVES: A current trend in total hip replacement (THR) is the use of minimally invasive surgery. Little is known, however, about the impact of minimally invasive THR on resource use and length of stay. This study analyzed the effect of minimally invasive surgery on hospital costs and length of stay in German hospitals compared with conventional treatment in THR. METHODS: We used patient-level administrative hospital data from three German hospitals participating in the national cost data study. We conducted a propensity score matching to account for baseline differences between minimally invasively and conventionally treated patients. Subsequently, we estimated the treatment effect on costs and length of stay by conducting group comparisons, via paired t tests and Wilcoxon signed-rank tests, and regression analyses. RESULTS: The three hospitals provided data from 2886 THR patients. The propensity score matching led to 812 matched pairs. Length of stay was significantly higher for conventionally treated patients (11.49 days vs. 10.90 days; P < 0.05), but total costs did not differ significantly (€6018 vs. €5986; P = 0.67). We found a difference in the allocation of costs, with significantly higher implant costs for minimally invasively treated patients (€1514 vs. €1375; P < 0.001) in contrast to significantly higher staff and overhead costs for conventionally treated patients. CONCLUSIONS: Minimally invasive surgery was compared with conventional THR and was found to be associated with a reduced length of stay. Total hospital costs, however, did not differ between the two treatment groups, because of higher implant costs for minimally invasively treated patients.

How well do diagnosis-related group systems group breast cancer surgery patients? Evidence from 10 European countries.

We analysed patient-level data (n = 72,235) from 563 hospitals in 10 European countries to assess the ability of national diagnosis-related group (DRG) systems to account for patient-level variation in cost or lengths of stay of breast cancer surgery patients against a standard set of patient characteristics, treatment and quality variables. We find that European DRG systems use very different types of classification variables and numbers of DRGs (range: 3-7) to classify these patients. In 6 of 10 countries, the set of patient characteristics, treatment and quality variables, which we were able to define across countries, perform better than the set of national DRGs in accounting for patient-level variation in resource consumption. Moreover, there appear to be factors that are consistently significant determinants of cost/length of stay of breast cancer surgery cases but are not, or at least not fully, considered in European DRG systems. Our results therefore raise concerns as to whether all systems rely on the most appropriate classification variables. In several countries, policymakers should reevaluate the appropriateness of their DRG algorithm for breast cancer surgery and of specific DRG weights.

Do diagnosis-related groups appropriately explain variations in costs and length of stay of hip replacement? A comparative assessment of DRG systems across 10 European countries.

This paper assesses the variations in costs and length of stay for hip replacement cases in Austria, England, Estonia, Finland, France, Germany, Ireland, Poland, Spain and Sweden and examines the ability of national diagnosis-related group (DRG) systems to explain the variation in resource use against a set of patient characteristic and treatment specific variables. In total, 195,810 cases clustered in 712 hospitals were analyzed using OLS fixed effects models for cost data (n=125,698) and negative binominal models for length-of-stay data (n=70,112). The number of DRGs differs widely across the 10 European countries (range: 2-14). Underlying this wide range is a different use of classification variables, especially secondary diagnoses and treatment options are considered to a different extent. In six countries, a standard set of patient characteristics and treatment variables explain the variation in costs or length of stay better than the DRG variables. This raises questions about the adequacy of the countries' DRG system or the lack of specific criteria, which could be used as classification variables.

Appendectomy and diagnosis-related groups (DRGs): patient classification and hospital reimbursement in 11 European countries.

BACKGROUND: As part of the EuroDRG project, researchers from 11 countries (i.e., Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Sweden, and Spain) compared how their diagnosis-related groups (DRG) systems deal with appendectomy patients. The study aims to assist surgeons and national authorities to optimize their DRG systems. METHODS: National or regional databases were used to identify hospital cases with a diagnosis of appendicitis treated with a procedure of appendectomy. DRG classification algorithms and indicators of resource consumption were compared for those DRGs that together comprised at least 97% of cases. Six standardized case vignettes were defined, and quasi prices according to national DRG-based hospital payment systems were ascertained. RESULTS: European DRG systems vary widely: they classify appendectomy patients according to different sets of variables (between two and six classification variables) into diverging numbers of DRGs (between two and 11 DRGs). The most complex DRG is valued 5.1 times more resource intensive than an index case in France but only 1.1 times more resource intensive than an index case in Finland. Comparisons of quasi prices for the case vignettes show that hypothetical payments for the most complex case vignette amount to only 1,005 in Poland but to 12,304 in France. CONCLUSIONS: Large variations in the classification of appendectomy patients raise concerns whether all systems rely on the most appropriate classification variables. Surgeons and national DRG authorities should consider how other countries' DRG systems classify appendectomy patients in order to optimize their DRG system and to ensure fair and appropriate reimbursement.

DRG-based hospital payment systems and technological innovation in 12 European countries.

OBJECTIVES: To assess how diagnosis-related group-based (DRG-based) hospital payment systems in 12 European countries participating in the EuroDRG project pay and incorporate technological innovation. METHODS: A standardized questionnaire was used to guide comprehensive DRG system descriptions. Researchers from each country reviewed relevant materials to complete the questionnaire and drafted standardized country reports. Two characteristics of DRG-based hospital payment systems were identified as particularly important: the existence of short-term payment instruments encouraging technological innovation in different countries, and the characteristics of long-term updating mechanisms that assure technological innovation is ultimately incorporated into DRG-based hospital payment systems. RESULTS: Short-term payment instruments and long-term updating mechanisms differ greatly among the 12 European countries included in this study. Some countries operate generous short-term payment instruments that provide additional payments to hospitals for making use of technological innovation (e.g., France). Other countries update their DRG-based hospital payment systems very frequently and use more recent data for updates. CONCLUSIONS: Generous short-term payment instruments to promote technological innovation should be applied carefully as they may imply rapidly increasing health-care expenditures. In general, they should be granted only if rigorous analyses have demonstrated their benefits. If the evidence remains uncertain, coverage with evidence development frameworks or frequent updates of the DRG-based hospital systems may provide policy alternatives. Once the data and evidence base is substantially improved, future research should empirically investigate how different policy arrangements affect the adoption and use of technological innovation and health-care expenditures.

The wider determinants of inequalities in health: a decomposition analysis.

BACKGROUND: The common starting point of many studies scrutinizing the factors underlying health inequalities is that material, cultural-behavioural, and psycho-social factors affect the distribution of health systematically through income, education, occupation, wealth or similar indicators of socioeconomic structure. However, little is known regarding if and to what extent these factors can assert systematic influence on the distribution of health of a population independent of the effects channelled through income, education, or wealth. METHODS: Using representative data from the German Socioeconomic Panel, we apply Fields' regression based decomposition techniques to decompose variations in health into its sources. Controlling for income, education, occupation, and wealth, we assess the relative importance of the explanatory factors over and above their effect on the variation in health channelled through the commonly applied measures of socioeconomic status. RESULTS: The analysis suggests that three main factors persistently contribute to variance in health: the capability score, cultural-behavioural variables and to a lower extent, the materialist approach. Of the three, the capability score illustrates the explanatory power of interaction and compound effects as it captures the individual's socioeconomic, social, and psychological resources in relation to his/her exposure to life challenges. CONCLUSION: Models that take a reductionist perspective and do not allow for the possibility that health inequalities are generated by factors over and above their effect on the variation in health channelled through one of the socioeconomic measures are underspecified and may fail to capture the determinants of health inequalities.