How should hospital reimbursement be refined to support concentration of complex care services?

The English National Health Service is promoting concentration of the treatment of patients with relatively rare and complex conditions into a limited number of specialist centres. If these patients are more costly to treat, the prospective payment system based on Healthcare Resource Groups (HRGs) may need refinement because these centres will be financially disadvantaged. To assess the funding implications of this concentration policy, we estimate the cost differentials associated with caring for patients that receive complex care and examine the extent to which complex care services are concentrated across hospitals and HRGs. We estimate random effects models using patient-level activity and cost data for all patients admitted to English hospitals during the 2013/14 financial year and construct measures of the concentration of complex services. Payments for complex care services need to be adjusted if they have large cost differentials and if provision is concentrated within a few hospitals. Payments can be adjusted either by refining HRGs or making top-up payments to HRG prices. HRG refinement is preferred to top-payments the greater the concentration of services among HRGs.

[Normative-empirical determination of personnel requirements in psychosomatic medicine and psychotherapy]. / Normativ-empirische Bestimmung des Personalbedarfs in der Psychosomatischen Medizin und Psychotherapie.

OBJECTIVES: There is a high degree of misallocated medical care for patients with somatoform disorders and patients with concomitant mental diseases. This complex of problems could be reduced remarkably by integrating psychosomatic departments into hospitals with maximum medical care. Admitting a few big psychosomatic specialist clinics into the calculation basis decreased the Day-Mix Index (DMI). The massive reduction of the calculated costs per day leads to a gap in funding resulting in a loss of the necessary personnel requirements - at least in university psychosomatic departments. The objective of this article is therefore to empirically verify the reference numbers of personnel resources calculated on the basis of the new German lump-sum reimbursement system in psychiatry and psychosomatics (PEPP). METHODS: The minute values of the reference numbers of Heuft (1999) are contrasted with the minute values of the PEPP reimbursement system in the years 2013 and 2014, as calculated by the Institute for Payment Systems in Hospitals (InEK). RESULTS: The minute values derived from the PEPP data show a remarkable convergence with the minute values of Heuft's reference numbers (1999). CONCLUSIONS: A pure pricing system like the PEPP reimbursement system as designed so far threatens empirically verifiable and qualified personnel requirements of psychosomatic departments. In order to ensure the necessary therapy dosage and display it in minute values according to the valid OPS procedure codes, the minimum limit of the reference numbers is mandatory to maintain the substance of psychosomatic care. Based on the present calculation, a base rate of at least 285 e has to be politically demanded. Future developments in personnel costs have to be refinanced at 100 %.

Do diagnosis-related group-based payments incentivise hospitals to adjust output mix?

This study investigates whether the diagnosis-related group (DRG)-based payment method motivates hospitals to adjust output mix in order to maximise profits. The hypothesis is that when there is an increase in profitability of a DRG, hospitals will increase the proportion of that DRG (own-price effects) and decrease those of other DRGs (cross-price effects), except in cases where there are scope economies in producing two different DRGs. This conjecture is tested in the context of the case payment scheme (CPS) under Taiwan's National Health Insurance programme over the period of July 1999 to December 2004. To tackle endogeneity of DRG profitability and treatment policy, a fixed-effects three-stage least squares method is applied. The results support the hypothesised own-price and cross-price effects, showing that DRGs which share similar resources appear to be complements rather substitutes. For-profit hospitals do not appear to be more responsive to DRG profitability, possibly because of their institutional characteristics and bonds with local communities. The key conclusion is that DRG-based payments will encourage a type of 'product-range' specialisation, which may improve hospital efficiency in the long run. However, further research is needed on how changes in output mix impact patient access and pay-outs of health insurance.

[Cost analysis of radiotherapy provided in inpatient setting -  testing potential predictors for a new prospective payment system]. / Analýza nákladu na radioterapii v luzkové péci - hledání vhodných prediktoru pro potreby nového prospektivního úhradového modelu.

BACKGROUND: As a part of the development of a new prospective payment model for radiotherapy we analyzed data on costs of care provided by three comprehensive cancer centers in the Czech Republic. Our aim was to find a combination of variables (predictors) which could be used to sort hospitalization cases into groups according to their costs, with each group having the same reimbursement rate. We tested four variables as possible predictors -  number of fractions, stage of disease, radiotherapy technique and diagnostic group. METHODS: We analyzed 7,440 hospitalization cases treated in three comprehensive cancer centers from 2007 to 2011. We acquired data from the I COP database developed by Institute of Biostatistics and Analyses of Masaryk University in cooperation with oncology centers that contains records from the National Oncological Registry along with data supplied by healthcare providers to insurance companies for the purpose of retrospective reimbursement. RESULTS: When comparing the four variables mentioned above we found that number of fractions and radiotherapy technique were much stronger predictors than the other two variables. Stage of disease did not prove to be a relevant indicator of cost distinction. There were significant differences in costs among diagnostic groups but these were mostly driven by the technique of radiotherapy and the number of fractions. Within the diagnostic groups, the distribution of costs was too heterogeneous for the purpose of the new payment model. CONCLUSION: The combination of number of fractions and radiotherapy technique appears to be the most appropriate cost predictors to be involved in the prospective payment model proposal. Further analysis is planned to test the predictive value of intention of radiotherapy in order to determine differences in costs between palliative and curative treatment.

Balancing ESA and iron therapy in a prospective payment environment.

Ever since the introduction of EPO, ESAs and iron dosing have been driven by financial incentives. When ESAs were a profit center for providers, large doses were used. With ESAs becoming a cost center, a new trend has appeared, gradually replacing their use with iron to achieve the same therapeutic effect at lower cost. This financially driven approach, treating ESAs and iron as alternatives, is not consistent with human physiology where these agents act in a complementary manner. It is likely that we are still giving unnecessarily large doses of ESAs and iron, relative to what our patients' true needs are. Although we have highlighted the economic drivers of this outcome, many other factors play a role. These include our lack of understanding of the complex interplay of the anemia of chronic disease, inflammation, poor nutrition, blood loss through dialysis, ESAs and iron deficiency. We propose that physiology-driven modeling may provide some insight into the interactions between erythropoiesis and ferrokinetics. This insight can then be used to derive new, physiologically compatible dosing guidelines for ESAs and iron.

Toward population management in an integrated care model.

Under the Patient Protection and Affordable Care Act of 2010, accountable care organizations (ACOs) will be the primary mechanism for achieving the dual goals of high-quality patient care at managed per capita costs. To achieve these goals in the newly emerging health care environment, the nephrology community must plan for and direct integrated delivery and coordination of renal care, focusing on population management. Even though the ESRD patient population is a complex group with comorbid conditions that may confound integration of care, the nephrology community has unique experience providing integrated care through ACO-like programs. Specifically, the recent ESRD Management Demonstration Project sponsored by the Centers for Medicare & Medicaid Services and the current ESRD Prospective Payment System with it Quality Incentive Program have demonstrated that integrated delivery of renal care can be accomplished in a manner that provides improved clinical outcomes with some financial margin of savings. Moving forward, integrated renal care will probably be linked to provider performance and quality outcomes measures, and clinical integration initiatives will share several common elements, namely performance-based payment models, coordination of communication via health care information technology, and development of best practices for care coordination and resource utilization. Integration initiatives must be designed to be measured and evaluated, and, consistent with principles of continuous quality improvement, each initiative will provide for iterative improvements of the initiative.

Potential effects of the new Medicare Prospective Payment System on drug prescription in end-stage renal disease care.

The Centers for Medicaid and Medicare Services have announced a new Prospective Payment System to reimburse the care furnished by dialysis centers to patients with end-stage renal disease (ESRD). As of January 2011, most aspects of the outpatient treatment of patients with ESRD will be included in a single payment. In addition to the items previously included in the Composite Rate, injectable drugs and their oral equivalents will be included in this new capitation payment, as will the laboratory tests required for monitoring maintenance dialysis. As of January 2014, oral-only medications will also be included. Physician payments and payments for inpatient care, as well as for care not directly related to ESRD care will continue to be reimbursed separately. Patterns of medication treatment of ESRD patients will likely be revisited, and one can expect pronounced adjustments. Treatment of anemia will likely shift towards less use of erythropoiesis-stimulating agents and somewhat towards higher use of intravenous iron supplements. Average hemoglobin concentrations will decline. Use of intravenous vitamin D analogues will likely be reduced and substituted with their oral equivalents in many patients. One can also expect a temporary trend towards higher use of calcimetics, since their inclusion in the payment bundle is deferred until 2014. Treatment of problems with vascular access patency and of access infections will likely shift to the inpatient setting, and there may be reluctance to quickly accept recovering patients back to the outpatient setting after vascular access intervention. On aggregate, these changes have the potential to alter patient outcomes, but it is currently unclear how these will be and can be monitored.

Homogeneity of the German diagnosis-related groups.

This study analysed the outstanding homogeneity of the German Diagnosis-Related Groups (G-DRG) using the reduction in variance (R²) of costs. Arbitrary increase in case groups, definition of additional charges and combination of several case groups in one DRG were considered as potential confounders. In 2009, the G-DRG-system offers an outstanding homogeneity with R² of 83.5% in comparison to 2004 with R² of 70.2%. The effect of an arbitrary increase in case groups is negligible. However, a simulation of the other confounders explains three-fourth of the increase in R² between 2004 and 2009. The definition of additional charges attributes in particular to the outstanding homogeneity. The assessment of DRG-systems with R² should be complemented with measures that are independent from a trimming of costs, e.g. relating actual costs with prospective payment. The G-DRGs left medical ground in order to achieve optimal economical homogeneity.

Medicare program; revisions to payment policies under the physician fee schedule, and other Part B payment policies for CY 2008; revisions to the payment policies of ambulance services under the ambulance fee schedule for CY 2008; and the amendment of the e-prescribing exemption for computer generated facsimile transmissions. Final rule with comment period.

This final rule with comment period addresses certain provisions of the Tax Relief and Health Care Act of 2006, as well as making other proposed changes to Medicare Part B payment policy. We are making these changes to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. This final rule with comment period also discusses refinements to resource-based practice expense (PE) relative value units (RVUs); geographic practice cost indices (GPCI) changes; malpractice RVUs; requests for additions to the list of telehealth services; several coding issues including additional codes from the 5-Year Review; payment for covered outpatient drugs and biologicals; the competitive acquisition program (CAP); clinical lab fee schedule issues; payment for renal dialysis services; performance standards for independent diagnostic testing facilities; expiration of the physician scarcity area (PSA) bonus payment; conforming and clarifying changes for comprehensive outpatient rehabilitation facilities (CORFs); a process for updating the drug compendia; physician self referral issues; beneficiary signature for ambulance transport services; durable medical equipment (DME) update; the chiropractic services demonstration; a Medicare economic index (MEI) data change; technical corrections; standards and requirements related to therapy services under Medicare Parts A and B; revisions to the ambulance fee schedule; the ambulance inflation factor for CY 2008; and amending the e-prescribing exemption for computer-generated facsimile transmissions. We are also finalizing the calendar year (CY) 2007 interim RVUs and are issuing interim RVUs for new and revised procedure codes for CY 2008. As required by the statute, we are announcing that the physician fee schedule update for CY 2008 is -10.1 percent, the initial estimate for the sustainable growth rate for CY 2008 is -0.1 percent, and the conversion factor (CF) for CY 2008 is $34.0682.

Financial implications of a model heart failure disease management program for providers, hospital, healthcare systems, and payer perspectives.

Although heart failure disease management (HFDM) programs improve patient outcomes, the implementation of these programs has been limited because of financial barriers. We undertook the present study to understand the economic incentives and disincentives for adoption of disease management strategies from the perspectives of a physician (group), a hospital, an integrated health system, and a third-party payer. Using the combined results of a group of randomized controlled trials and a set of financial assumptions from a single academic medical center, a financial model was developed to compute the expected costs before and after the implementation of a HFDM program by 3 provider types (physicians, hospitals, and health systems), as well as the costs incurred from a payer perspective. The base-case model showed that implementation of HFDM results in a net financial loss to all potential providers of HFDM. Implementation of HFDM as described in our base-case analysis would create a net loss of US dollars 179,549 in the first year for a physician practice, US dollars 464,132 for an integrated health system, and US dollars 652,643 in the first year for a hospital. Third-party payers would be able to save US dollars 713,661 annually for the care of 350 patients with heart failure in a HFDM program. In conclusion, although HFDM programs may provide patients with improved clinical outcomes and decreased hospitalizations that save third-party payers money, limited financial incentives are currently in place for healthcare providers and hospitals to initiate these programs.

Does shifting a physician payment system shift physician priorities? A multi-site evaluation of an alternative payment plan (APP) for gynecologic oncologists in Ontario.

OBJECTIVE: The objective of this study was to attempt to understand how changing the mode of reimbursement alters physician behavior from the physician's perspective. METHOD: Individual interviews were conducted with 14 Ontario gynecologic oncologists. Each interview was analyzed using grounded theory. RESULTS: The move to an alternative payment plan (APP) significantly shifted physician clinical and personal priorities. This resulted in improvements in recruitment and retention. A model was developed to explain the link between the shift in the payment system and physician perceptions of their behavior. The model is comprised of two themes: (a) need for change: site similarities and differences, (b) effects of change: shifting priorities and time management. Even when the same compensation package was offered to four sites, the interpretations and motivations differed from site to site. We identified two types of situations: sites that were operating in 'survival mode' and those that were 'meeting core clinical and academic requirements'. They experienced the APP very differently. CONCLUSION: This study presents a model that depicts how and why a funding shift has variable effects on physician behaviors, depending on the individual physician, site, and multi-site perspectives. It offers one of the few qualitative evaluations of a funding change.

[Prospective payment system of medical cost and surgical cancer treatment].

The process of introducing a prospective payment system after DRG or DPC in Japan was reviewed. The effect of DPC/PPS on surgical practice was discussed. Many problems resulted in the USA by introducing the DRG/PPS system. The rapid introduction of DPC/PPS in Japan only to reduce the total medical costs may bring about undesirable results for cancer patients.

[The role of the critical path in a new hospital payment system according to a diagnosis procedure combination in Japan].

Implementation of the critical path in the healthcare system facilitates standardization of medical practices, which improves both quality and safety management, shortens the length of hospital stays, and economizes on medical resources. In a new payment system introduced to university hospitals in Japan, hospital fees are charged by the day according to the diagnosis-procedure combination (DPC). To prepare for DPC, standardization of medical care, shortening the average length of stay within all hospitals, cost reduction, establishment of hospital networks, and an increase in new patients are critical issues. Cost management can be achived effectively by using the critical path.

Dopamine transporter imaging and SPECT in diagnostic work-up of Parkinson's disease: a decision-analytic approach.

As a diagnostic test for patients with suspected Parkinson's disease (PD), single photon emission computed tomography (SPECT) using [(123)I]FP-CIT tracer has better sensitivity but is more expensive than regular clinical examination (CE). Our objective was to evaluate the clinical and economic impacts of different diagnostic strategies involving [(123)I]FP-CIT SPECT. We developed a decision tree model to predict adequate treatment-month equivalents (ATME), costs, and incremental cost-effectiveness ratio (ICER) during a 12-month time horizon in patients with suspected PD referred to a specialized movement disorder outpatient clinic. In our cost- effectiveness analysis, we adopted the perspective of the German health care system and used data from a German prospective health care utilization study (n = 142) and published diagnostic studies. Compared strategies were CE only (EXAM+), SPECT only (SPECT+), SPECT following negative CE (SINGLE+), and SPECT following positive CE (DOUBLE+). Costs of SPECT amounted to euro;789 per investigation. Based on our model, expected costs (and ATME) were euro;946 (52.85 ATME) for EXAM+, euro;1352 (53.40 ATME) for DOUBLE+, euro;1731 (32.82 ATME) for SINGLE+, and euro;2003 (32.96 ATME) for SPECT+; performance of SPECT was induced in 0%, 54%, 56%, and 100% of the patients, respectively. DOUBLE+ was more effective and less expensive than SINGLE+ or SPECT+; thus these two do not offer reasonable choices. The ICER of DOUBLE+ compared to EXAM+ was euro;733 per ATME gained. In sensitivity analyses, the ICER of DOUBLE+ versus EXAM+ ranged from euro;63 to euro;2411 per ATME gained. Whether the diagnostic work-up of patients referred to a specialized movement disorder clinic with a high prevalence of PD should include [(123)I]FP-CIT SPECT depends on patient preferences and the decision maker's willingness to pay for adequate early treatment. SPECT should be used as a confirmatory test before treatment initiation and limited to patients with a positive test result in the clinical examination. These results should be adjusted to the specific setting and individual patient preferences.

Financial success under PPS: how to beat the odds.

Whether you are a publicly held company or a small mom and pop agency, you have to maximize both efficiency and productivity while maintaining patient satisfaction and staff morale. In the new world of home care, this is a tall order. In this first installment of a two part series, the author reviews the dimensions of financial success, issues of length of stay and episode of care, resource utilization planning, and reducing overhead. The second part will cover overall productivity, clinical productivity, and management strategies to synergize financial success under the prospective payment system.