Classification Failure ~

When the Best Coding

Does Not Describe a Resource

Homogenous Group

Colin McCrow

Manager ABF Costing

Objectives

In this session we will :

• Outline why resource homogeneous

grouping is critical for activity based funding

• Outline the reasons for classification failure

• Use real world examples to outline how to

analyse the causes for classification failure

• Review the key steps in making the case

for grant funding to ensure continuity of care

RESOURCE HOMOGENOUS

GROUPS & ABF

Funding Models &

Classification Systems

• All output based funding models are built

off actual cost data

• Any activity funding system must have a

grouping of like data based on

comsumption of human and material

resources in the production of the unit of

output: ie Resource Homogenous Groups.

• Actual cost data must be grouped to the

classification system so ABF can occur.

Key Assumptions in

Activity Based Funding

• Classification systems are robust enough

to ensure that like patients can be grouped

and identified.

• A similar amount of human and material

resources has been used to create the

final products consumed by the patient.

• Patients will receive similar treatments,

given the same presenting complaints.

Key Assumptions in

Activity Based Funding

• Patient centric costing systems can

provide accurate consumption costing and

provide the basis for building funding

models.

• The introduction of new technology will

occur based on clinical evidence and may

or may not be cost effective even if clinical

outcomes are improved.

Key Assumptions in

Activity Based Funding

• Classification systems cannot for-see the

impact of the introduction of new clinical

procedures and include all potential

permutations in their design.

• There will always be a delay in

classification change.

• To ensure clinical innovation is supported

Funding Models must have mechanisms

for interim grants.

CAUSES OF CLASSIFICATION

FAILURE

Definition • Classfication Failure in an activity based

funding environment may be defined as:

The identification of a sub group of patients

with a similar pattern of presenting

problems, a similar pattern of clinical

intervention, but who are distinctly different

in their use of human and material

resources when compared to the main

classfication group.

Definition

• This subgroup may form the trigger for

classfication review in the future. Normally

this patient grouping will have a higher

consumption of human and material

resources from a cost or volume (or cost

and volume perspective). They will have

an impact on the relative efficiency of the

overall health service.

Definition

• Because of the cost differential to the main

group, adjustments to funding models may

need to be made to ensure service

continuity.Where new technology has

been introduced that provides a better

clinical outcome , a funding strategy is

required to support the introduction of that

technology.

System Causes

• Documentation quality affecting accurate

coding.

• Complexity levels of PCCL / grouper

business rules not reflecting actual patient

acuity.

• Coding accuracy.

• Classfication maturity.

Clinical Causes

• Co-morbid chronic condition clusters

affecting the healing process or requiring

increased intervention.

• New Technology that provides improved

clinical outcomes but higher cost.

• Other clinical factors affecting Rx or length

of stay such as mental health conditions.

CASE STUDY – HYPERBARIC

TREATMENTS

Oveview

• Hyperbaric Treatment has been shown

to have a significant clinical outcome

benefits.

• It however is not cheap technology.

• In a purchaser provider enviornment we

need to ensure that our hosptals have

enough funds to provide for good clinical

outcomes…..

• But is additional funding over the DRG

activity payment required ?

What is ABF Best Practice?

Best

Practice

Least

Intervention

Best Clinical

Outcome

Shortest

ALOS

Lowest

Cost +

+

+

+

Building The Study

Identify Patient

Cost records from

Hyperbaric

Department

Identify DRG for

patient admission

Flag patient records

with HP Rx

Select all patients

with same DRG’s Identify cost for

each episode

Identify Revenue

for each Episode

Build Profit Loss

Statement

Review ALOS Select all other

interventions by

PMI for reference

year Review Variance

to control (No Rx)

group

Review Case for

Funding Grant Identify Further

Areas For Analysis

Has ABF Best

Practice Been

Identified

Data Caveat

• The slides which follow include sample data to

illustrate this process. While these are based on

real world data (you will find similar outputs and

outcomes like this illustrated in real databases),

the examples have been deliberately changed.

The purpose is to illustrate the process and

initiate further discussion & thought.

Base Data

• 87 different DRG’s (version 7)

• 7085 patients reviewed

• DRG’s with minimal volume in the

treatment group where not further

investigated

Final HP RX group

• 1475 patients

• Profit making = 507

• Loss = 968

• ave loss pre patient over $ 400 each

when compared to revenue for straight

DRG activity based funding

Study Group DRG DRG Description hp_rx TotalCount

B82C Chronic and Unspec Para/Quadriplegia W or W/O OR Proc W/O Cat CC N 144

B82C Chronic and Unspec Para/Quadriplegia W or W/O OR Proc W/O Cat CC Y 24

D67B Oral & Dental Disorders, SameDay N 101

D67B Oral & Dental Disorders, SameDay Y 227

F65B Peripheral Vascular Disorders W/O Catastropic or Severe CC N 89

F65B Peripheral Vascular Disorders W/O Catastropic or Severe CC Y 50

G70C Other Digestive System Disorders Sameday N 354

G70C Other Digestive System Disorders Sameday Y 75

I82Z Musculoskeletal Injuries, Sameday N 432

I82Z Musculoskeletal Injuries, Sameday Y 158

L67C Other Kidney & Urinary Tract Disorders, Sameday N 109

L67C Other Kidney & Urinary Tract Disorders, Sameday Y 52

X63B Sequale of Treatment W/O Catastrophic or Severe CC N 139

X63B Sequale of Treatment W/O Catastrophic or Severe CC Y 85

X64B Other Injuries, Poisonings and Toxic Effects W/O Catastrophic or Severe CC N 99

X64B Other Injuries, Poisonings and Toxic Effects W/O Catastrophic or Severe CC Y 46

Z64B Other Factors Influencing Helath Status Sameday N 217

Z64B Other Factors Influencing Helath Status Sameday Y 131

Totals 2532

N Y N Y N Y N Y N Y N Y N Y N Y N Y

B82C B82C D67B D67B F65B F65B G70C G70C I82Z I82Z L67C L67C X63B X63B X64B X64B Z64B Z64B

Ave Profit Loss $(750 $3,50 $(400 $(450 $(100 $(400 $(430 $(870 $(135 $(115 $(420 $(590 $(645 $(620 $(1,4 $(2,3 $(490 $(530

$3,000.00

$2,000.00

$1,000.00

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

Comparing Ave Profit Loss Rx and Control Group

N Y

B82C B82C

Ave Profit Loss $(750.00) $3,500.00

$1,000.00

$500.00

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

$4,000.00

Ave Profit Loss Rx & Control Group- Chronic and Unspec Para/Quadriplegia W or W/O OR Proc W/O Cat CC

N Y

X64B X64B

Ave Profit Loss $(1,475.00) $(2,300.00)

$2,500.00

$2,000.00

$1,500.00

$1,000.00

$500.00

$0.00

Ave Profit Loss Rx & Control Group- Other Injuries, Poisonings and Toxic Effects W/O Catastrophic or Severe CC

N Y

F65B F65B

Ave Profit Loss $(100.00) $(400.00)

$450.00

$400.00

$350.00

$300.00

$250.00

$200.00

$150.00

$100.00

$50.00

$0.00

Ave Profit Loss Rx & Control Group - Peripheral Vascular Disorders W/O Catastropic or Severe CC

Ave Profit Loss Variance drg hp_rx TotalCount Ave Profit Loss

B82C N 144 750.00-$

B82C Y 24 3,500.00$

D67B N 101 400.00-$

D67B Y 227 450.00-$

F65B N 89 100.00-$

F65B Y 50 400.00-$

G70C N 354 430.00-$

G70C Y 75 870.00-$

I82Z N 432 135.00-$

I82Z Y 158 115.00-$

L67C N 109 420.00-$

L67C Y 52 590.00-$

X63B N 139 645.00-$

X63B Y 85 620.00-$

X64B N 99 1,475.00-$

X64B Y 46 2,300.00-$

Z64B N 217 490.00-$

Z64B Y 131 530.00-$

Totals 2,532.00$

9%

11%

23%

6%

17%

23%

1% 1%

1%

8%

Non Treatment Study Group Interventions by Visit Type

Admitted Emergency Presentation

Non Admitted Emergency Presentation

Allied Health/Nursing Outpatient Visit

Diagnostic Outpatient Visit

Medical Outpatient Visit

Other Acute Admission

Other Procedure Clinic

Other Sub-Acute Admission

Outpatient Hyperbaric Rx

Study_Admission

2%

1%

11%

2%

7%

3% 0%

0%

11% 63%

Treatment Study Group Interventions by Visit Type

Admitted Emergency Presentation

Non Admitted Emergency Presentation

Allied Health/Nursing Outpatient Visit

Diagnostic Outpatient Visit

Medical Outpatient Visit

Other Acute Admission

Other Procedure Clinic

Other Sub-Acute Admission

Outpatient Hyperbaric Rx

Study_Admission

Annual Interventions where no study

admission included Hyperbaric Rx HP_RX Study_Record Vol

N Admitted Emergency Presentation 2004

N Non Admitted Emergency Presentation 2393

N Allied Health/Nursing Outpatient Visit 5150

N Diagnostic Outpatient Visit 1232

N Medical Outpatient Visit 3749

N Other Acute Admission 5106

N Other Procedure Clinic 198

N Other Sub-Acute Admission 187

N Outpatient Hyperbaric Rx 124

N Study_Admission 1881

Totals 22024

Annual Interventions where study

admission included Hyperbaric Rx HP_RX Study_Record Vol

Y Admitted Emergency Presentation 30

Y Non Admitted Emergency Presentation 12

Y Allied Health/Nursing Outpatient Visit 157

Y Diagnostic Outpatient Visit 23

Y Medical Outpatient Visit 110

Y Other Acute Admission 46

Y Other Procedure Clinic 1

Y Other Sub-Acute Admission 1

Y Outpatient Hyperbaric Rx 167

Y Study_Admission 926

Totals 1473

Does Hyperbaric Rx

reduce Health Interactions?

Hyperbaric Rx with DRG No Hyperbaric RX with DRG

Volume 1473 22024

0

5000

10000

15000

20000

25000

To

tal H

ealt

h In

terv

en

tio

ns b

y P

MI

Volume Of Health Care Interventions

Conclusions

• From the data the following can be

concluded :

• Hyperbaric treatment does add to the cost

of intervention on a visit by visit basis. It

does not therefore meet the ABF best

practice criteria of lowest cost.

• LOS was not a factor in review between

the RX and non Rx group

Conclusions

• Numerous clinical studies strongly

support improved clinical outcomes so this

criteria is met.

• There was a significant difference in the

total number of other health interventions

when considering the Rx to non Rx group

this ABF best practice criteria was

defintaly met.

Further Analysis Required

• Detailed review of total health care

intevention products utilised by the Rx and

non Rx group should be undertaken to

help build best practice.

• All data should be confirmed for validiaty

and accuracy with the service providers.

• While in the same LHN a number of the

patients in the non Rx group where cared

for in smaller associated facilities.

THE CASE FOR ADDITIONAL

FUNDING

Criteria to be met

• A sub-group of patients with costs

consistently greater than average ABF

reimbursment.

• Improved clinical outcomes (supporting

new technology).

• Reduction in other health interventions

(but this may lead to funding loss in other

areas that would occur if no Rx).

• More efficient use of health resources.

Discussion

• Activity Based Funding is complex …

there will always be winners and loosers

within classfication groups.

• Classfication systems need to be reviewed

where there are changes in clinical

practice but there always will be a delay

• The decision to provide or not provide

additional funding is always an area of

tension in purchaser provider

arrangments.

Questions ?

Questions & Contact

Information

Please direct any questions to:

Colin McCrow

Manager ABF Costing

ABF Model Team

System Policy & Performance Division

Queensland Health

Email : colin.mccrow@health.qld.gov.au