Payment by Results PbR

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Payment by Results (PbR) Sebastian Habibi Payment
by Results Strategy PCTs working with NHSFTs 5
October 2005, Sheffield
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Contents

• 2005/06 Roll-out of SUS
• Post 2005/06 Context
• Incentives and Risks
• Tariff Scope and Structure
• Assurance Framework
• Code of Conduct

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PbR Secondary Users System (SUS)

• A key deliverable of the National Programme for
  IT (Connecting for Health (C4H))
• Single, authoritative information basis for PbR
  payments
• Automated, consistent application of PbR rules
• Embedding of national reporting timescales
• Web-based, real time access

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SUS Testing

• Testing identified problems that delayed SUS
  roll-out
• Central assurance of SUS prior to roll-out
• Assurance involved testing a block of 500,000
  episodes of real NHS data
• Testing shows SUS now operating as required
• SUS roll-out can commence

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SUS Roll-Out
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Post 2005-06 Context

• Patient Led NHS and System Reform
• Practice Based Commissioning
• New Contracting Arrangements
• Greater Plurality of Provision
• More NHS FTs
• Extended Choice

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Incentives and Risks

• Incentives
• Attracting patients
• Demand management
• Service redesign
• Increasing capacity
• Increasing productivity
• Reducing costs
• Improved coding and counting

• Risks
• Unplanned growth
• No elective caps
• Supplier induced demand
• Upcoding
• Destabilisation
• Deficits
• Clinical disengagement

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Tariff Scope and Structure (2006/07)

• Scope
• AE
• Non Elective Admitted Patient Care
• Outpatients
• Critical Care
• Structure
• Need to address issues raised by NHS
• Exclusions
• Specialist top ups
• Stability is important

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Outpatient Procedures

• Aligning financial incentives (i.e. quality care,
  right place, right time)
• New reference cost data on 14 Outpatient
  Procedures
• Mostly Oscopies
• Building on the approach to day cases
• Tariff incentivises increases in day case rate
• Create incentives for shifting services into
  Outpatients
• Avoid perverse incentives to upcode

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Short Stay Admissions

• Short stay emergency admissions continue to rise
• Much of this activity in observation
  wards/units
• Current rules on short-stay tariff reductions
  dont apply to much of this activity
• Exploring options to achieve better coverage

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Volatility in non-elective activity

• Volatility of demand is causing financial risk
  and potential destabilisation under PbR
• Range of options for smoothing the volatility
  risk
• Caps?
• Fixed and variable funding?
• Differential rate for overperformance?
• Advice to Ministers will be informed by
  discussions with NHS representatives

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Mitigating the Volatility Risk
Differential Rates
Fixed and Variable
Trust income
Activity
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Unbundling - Diagnostics
First Outpatient
A
Outpatient Tariff (e.g. 133)
GP Practice
Practice Based Budget ()
B
Outpatient Tariff (e.g. 133)
MRI (e.g. 224
Financial Incentives support behaviour A and not
behaviour B
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Future Developments

• Continue to Learn the Lessons
• Normative Pricing?
• Quality Premiums?
• HRGs V4
• Extended Scope
• Mental Health?
• Long Term Conditions?
• Other Services?
• Tariff for Independent and Voluntary Sector?

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PbR Assurance Framework - Objectives

• Provide assurance on the appropriateness of
  payments made to providers under PbR
• Limit opportunities for manipulation or abuse of
  the system, and interface with existing fraud
  framework
• Support improvements in data quality and costing
• Inform refinements of the policy and technical
  framework (eg. coding standards, HRG
  classification) and,
• Promote appropriate behaviour under PbR, in line
  with good practice.

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PbR Assurance Framework Core Components
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Audit Commission Draft Recommendations (1)

• Strengthen local assurance through
• Provider self-assessment on data quality, subject
  to external validation and peer review and,
• PCT self-assessment against minimum standards for
  local monitoring, subject to external validation.

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Audit Commission Draft Recommendations (2)

• Establish a coordinated programme of independent,
  external audits comprising
• Central analysis and benchmarking of data to
  identify anomalies requiring further
  investigation and,
• A random and targeted programme of external audit
  to investigate data quality issues, utilising
  unexplained variations/anomalies in provider
  activity identified above.

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Audit Commission Draft Recommendations (3)

• Actions to fall out of the assurance framework to
  include
• Improvement reviews at bodies performing poorly
  in self-assessment
• Payment reconciliation
• Penalties for poor data quality
• Policy refinement and,
• Referral to fraud (i.e. Counter Fraud Service)

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PbR Assurance Enforcement

• Range of Possible Penalties for Poor Data Quality
• An additional fine of, say, 10 of the value of
  the error levied by the PCT in addition to
  payment reconciliation
• Reflection in the Healthcare Commissions
  assessment against standard C9 (Information
  Standard)
• A requirement for a Trust to fund the cost of a
  supplementary audit where an initial audit
  indicated poor performance
• A staged approach, for example, where error gt 5
  would attract a financial penalty lt 5 would not

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PbR Code of Conduct Consultation Exercise