Hospital Financing in Germany The DRG System by liaoqinmei

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									              LSE/NHS Confederation Seminar Series 2010



                 Hospital Financing in Germany:
                       The G-DRG System


                     Wilm Quentin, M.D., MSc HPPF
        Department of Health Care Management, Technical University Berlin
      (WHO Collaborating Centre for Health Systems Research and Management)
                                         &
               European Observatory on Health Systems and Policies




25 May 2010               Hospital Financing in Germany: The G-DRG System     1
 Hospital Financing in Germany: The G-DRG System


1. Diagnosis Related Groups (DRGs): Introduction
     – Options for hospital reimbursement
     – DRGs: Patient classification + hospital payment


2. DRGs in Germany
     – Three phases of introducing DRGs
     – Current developments and options for the future


3. EuroDRG




25 May 2010              Hospital Financing in Germany: The G-DRG System   2
 Hospital Financing in Germany: The G-DRG System


1. Diagnosis Related Groups (DRGs): Introduction
     – Options for hospital reimbursement
     – DRGs: Patient classification + hospital payment


2. DRGs in Germany
     – Three phases of introducing DRGs
     – Current developments and options for the future


3. EuroDRG




25 May 2010              Hospital Financing in Germany: The G-DRG System   3
   Options for hospital reimbursement (I)
Reimbursement Strengths                                  Weaknesses
Global budgets - cost containment                        - no incentives for performance / productivity
               - administratively simple                 - no incentives for efficiency
               - planning security for providers         - incentives to avoid sicker patients

Per diems        - administratively simple               - incentives to increase length of stay
                 - somewhat related to resource          - few incentives for performance / productivity
                 consumption of patients                 - incentives to avoid sicker patients




  25 May 2010                     Hospital Financing in Germany: The G-DRG System                          4
   Options for hospital reimbursement (II)
Reimbursement Strengths                                    Weaknesses
Global budgets -cost containment                           - no incentives for performance / productivity
               - administratively simple                   - no incentives for efficiency
               -planning security for providers            - incentives to avoid sicker patients

Per diems         - administratively simple                - incentives to increase length of stay
                  - somewhat related to resource           - usually not adapted for performance of providers
                  consumption of patients                  - incentives to avoid sicker patients




Fee-for-service   - incentives to increase provision of    - incentives for overvtreatment
                  services                                 - no incentives for efficiency
                  - incentives to provide all              - cost inflation
                  (necessary) care for all patients        - administratively complex
                  - allows incentivising specific
                  services



  25 May 2010                       Hospital Financing in Germany: The G-DRG System                         5
   Options for hospital reimbursement (III)
Reimbursement Strengths                                    Weaknesses
Global budgets - cost containment                          - no incentives for performance / productivity
               - administratively simple                   - no incentives for efficiency
               - planning security for providers           - incentives to avoid sicker patients

Per diems         - administratively simple                - incentives to increase length of stay
                  - somewhat related to resource           - usually not adapted for performance of providers
                  consumption of patients                  - incentives to avoid sicker patients


DRGs              - reimbursement is related to            -administratively complex
                  performance                              - incentives to avoid sicker patients
                  - incentives to increase efficiency      - undertreatment of patients possible
                                                           - up/wrong-coding, gaming
                                                           - tendency to increase admissions


Fee-for-service   - incentives to increase provision of    - incentives for overvtreatment
                  services                                 - no incentives for efficiency
                  - incentives to provide all              - cost inflation
                  (necessary) care for all patients        - administratively complex
                  - allows incentivising specific
                  services



  25 May 2010                       Hospital Financing in Germany: The G-DRG System                         6
DRGs: 1st step = patient classification / grouping



                                           medical and management
       patient variables                      decision variables

  main diagnosis, gender, age,           mix and intensity of procedures,
   other diagnoses, severity                technologies and human
                                                   resource use




                       Group of patients
                       with homogenous
                           resource
                         consumption
                                 = DRG




25 May 2010                         Hospital Financing in Germany: The G-DRG System   7
   DRGs 2nd step = Price setting (I)



                                             medical and management
         patient variables                      decision variables

           gender, age,                  mix and intensity of procedures,
       main diagnosis, other                technologies and human
        diagnoses, severity                        resource use




     DRG                                                        X
reimbursement
                   =           cost weight                                             base rate




  25 May 2010                        Hospital Financing in Germany: The G-DRG System               8
   DRGs 2nd step = Price setting (II)
                                      determinants of hospital costs


                                                                                       structural variables on
                                             medical and management                      hospital/ regional/
         patient variables                      decision variables                         national level

           gender, age,                  mix and intensity of procedures,              e.g. size, teaching status;
       main diagnosis, other                technologies and human                       urbanity; wage level
        diagnoses, severity                        resource use




     DRG                                                        X
reimbursement
                   =           cost weight                                                    base rate
                                                                                                   +
                                                                                        adjustment factors




  25 May 2010                        Hospital Financing in Germany: The G-DRG System                                 9
 Hospital Financing in Germany: The G-DRG System


1. Diagnosis Related Groups (DRGs): Introduction
     – Options for hospital reimbursement
     – DRGs: Patient classification + hospital payment


2. DRGs in Germany
     – Three phases of introducing DRGs
     – Current developments and options for the future


3. EuroDRG




25 May 2010              Hospital Financing in Germany: The G-DRG System   10
    Background: German hospital sector


•     Key figures (2008):
     –        2100 Hospitals (1780 reimbursed through DRGs)
     –        17 mio. inpatient cases
     –        57 bill. € financing sum


•     Dualistic way of hospital financing
     –        Sickness funds pay running costs
     –        States pay investment costs




25 May 2010                   Hospital Financing in Germany: The G-DRG System   11
         DRGs in Germany

2000-2002                    2003    -   2004            2005      -   2009                             2010     -    2014
                             2) Budget-neutral         3) Phase of convergence                     4) Current developments and
                                  phase                to state-wide base rates                        options for the future

                                                 Hospital specific base rate                 • Nationwide base rate
                             Historical Budget
   1) Phase of preparation




                                                   15 %
                                  (2003)                  20%                                • Dual Financing or Monistic
                                                                20%
                                                                      20%                    • Introduction of DRG-like

                                                       Statewide                   25%
                              Transformation                                                 reimbursement for psychiatric hospitals
                                                       base rate                   25%
                                                                           20%               •Selective or uniform negotiations
                                                                   20%
                               DRG-Budget                   20%                              • Quality Assurance (adjustments)
                                 (2004)             15 %
                                                 Hospital specific base rate




   25 May 2010                                   Hospital Financing in Germany: The G-DRG System                              12
1) Phase of preparation: Responsibilities



              Health Policy                                                         Administration


                                                                         Self-Administration (DKG, GKV,
      Health Ministry
                                 Goals                  Forming          PKV)

      (federal, state)              and                 the Legal
                              Monitoring                Framework
                                                                                Other Institutions (HTA, quality)

                                           G-DRG
                                           System
   Variety of Institutions                                                       InEK (German DRG Institute)
   (Professional medical      Contribution            Technical
   associations,                   of               Management
   industry groups)                                                      DIMDI (German Institute of Medical
                               Expertise                                 Information and Documentation)




          Consultation                                                                  Development




25 May 2010                      Hospital Financing in Germany: The G-DRG System                                    13
1) Phase of preparation: How to construct a system?




 Patient                                             Price setting
 classification      Data collection                                         Reimbursement
 system                                                                      rate
      • Diagnoses         • Clinical data                 • Average prices       • Outliers
      • Procedures        • Cost data                     • Cost weights         • High cost cases
      • Severity          • Sample size




25 May 2010              Hospital Financing in Germany: The G-DRG System                         14
    1) Phase of preparation: Patient Classification
Patient
classification
system
     • Diagnoses
     • Procedures
     • Severity




   25 May 2010          Hospital Financing in Germany: The G-DRG System   15
     1) Phase of preparation: Data collection
Data collection

     • Clinical data
     • Cost data                                                          InEK
     • Sample size                                            • Development of case fee
                                                                   catalogue annually
                                                                • checking data content

                                                           Checked and
                            DIMDI                        anonymised data
                   • Development and update
                   of classification base (ICD -
                     10 GM and OPS codes)                       Data Centre
                                                                • Collecting datasets
                                                                • Checking case and
                                                                cost data technically
                                                                 • Anonymising data

                                              Additionally case-related         Case-related performance and
                                             cost data from a sample of         hospital-specific structural data
                                              hospitals until March 31        from every hospital (§21 KHEntgG)
                                                                                         until March 31


                       Sickness              Case data for
                                                                                                                Federal
                                            reimbursement
                        funds                (§ 301 SGB V)                                 Until July 1
                                                                                                               Statistical
                        • Checking data                          Hospitals
                       via their medical                                                                         Office
                         review board                                                                         • Publication of data
                       • Paying hospital




    25 May 2010                                      Hospital Financing in Germany: The G-DRG System                                  16
 1) Phase of preparation: Price setting mechanism
                                                                                                 Price setting


• Calculation of cost weights: based on average costs
                                                                                                      • Average prices
  of cases                                                                                            • Cost weights


• Data sample:
 Year                                  2003            2005             2007           2009          2010
 Hospitals participating in cost
                                       125              148             263            251            253
 data collection
 - excluded for data quality            9                0               38             33             28
 - actual                              116              148             225            218            225
 - included university hospitals        0                10              10             10             10
 - number of cases available for
                                     633,577        2,909,784        4,239,365       4,377,021    4,539,763
 calculation
 - number of cases used for
                                     494,325        2,283,874        2,863,115       3,075,378    3,257,497
 calculation after data checks



    Cost weight of each DRG = Average costs of DRG inliers / Reference Value


25 May 2010                        Hospital Financing in Germany: The G-DRG System                               17
1) Phase of preparation: Reimbursement
                                                                                      Reimbursement
                                                                                      rate
Revenues                                                                                  • Outliers
                                                                                          • High cost cases




               Short-stay                    Inliers                      Long-stay
                outliers                                                   outliers




              Deductions                                                        Surcharges               LOS
               (per day)                                                         (per day)
                     Lower LOS                                  Upper LOS
                     threshold                                  threshold


25 May 2010                 Hospital Financing in Germany: The G-DRG System                               18
         DRGs in Germany

2000-2002                    2003    -   2004            2005      -   2009                             2010     -    2014
                             2) Budget-neutral         3) Phase of convergence                     4) Current developments and
                                  phase                to state-wide base rates                        options for the future

                                                 Hospital specific base rate                 • Nationwide base rate
                             Historical Budget
   1) Phase of preparation




                                                   15 %
                                  (2003)                  20%                                • Dual Financing or Monistic
                                                                20%
                                                                      20%                    • Introduction of DRG-like

                                                       Statewide                   25%
                              Transformation                                                 reimbursement for psychiatric hospitals
                                                       base rate                   25%
                                                                           20%               •Selective or uniform negotiations
                                                                   20%
                               DRG-Budget                   20%                              • Quality Assurance (adjustments)
                                 (2004)             15 %
                                                 Hospital specific base rate




   25 May 2010                                   Hospital Financing in Germany: The G-DRG System                              19
2) Budget neutral phase: Transfer to DRG budgets

   Hospital Budget 2002                                Hospital Budget 2004




    Reimbursement unit = per diem                        Reimbursement unit = case (DRG)



25 May 2010               Hospital Financing in Germany: The G-DRG System            20
2) Budget neutral phase: Hospital-specific base rate




 Relative cost weight
   Patient characteristics
                                                 Base rate
        Gender, Age,
                                                                                       G-DRG
    Diagnoses, Severity      X          Hospital-specific                      =
                                                                                   reimbursement
    Treatment options
 Procedures, Technologies,
         Intensity




25 May 2010                  Hospital Financing in Germany: The G-DRG System                  21
         DRGs in Germany

2000-2002                    2003    -   2004            2005      -   2009                             2010     -    2014
                             2) Budget-neutral         3) Phase of convergence                     4) Current developments and
                                  phase                to state-wide base rates                        options for the future

                                                 Hospital specific base rate                 • Nationwide base rate
                             Historical Budget
   1) Phase of preparation




                                                   15 %
                                  (2003)                  20%                                • Dual Financing or Monistic
                                                                20%
                                                                      20%                    • Introduction of DRG-like

                                                       Statewide                   25%
                              Transformation                                                 reimbursement for psychiatric hospitals
                                                       base rate                   25%
                                                                           20%               •Selective or uniform negotiations
                                                                   20%
                               DRG-Budget                   20%                              • Quality Assurance (adjustments)
                                 (2004)             15 %
                                                 Hospital specific base rate




   25 May 2010                                   Hospital Financing in Germany: The G-DRG System                              22
3) Phase of convergence: Adaptation of base rate




 Relative cost weight
   Patient characteristics
                                                Base rate
        Gender, Age,
    Diagnoses, Severity
                                                                                       G-DRG
                             X           Hospital-specific                     =
    Treatment options
                                                                                   reimbursement
                                         Uniform statewide
 Procedures, Technologies,
         Intensity




25 May 2010                  Hospital Financing in Germany: The G-DRG System                  23
     3) Phase of convergence: Five year process

            €
                                                                                                                          Reduction limit
Hospital-                                                                                                                  (related to pre-
specific                                                                                                                vious year‘s budget)
base rate                                                                                                                     2005: 1%
                                -15%
                            (of difference)                                                                                   2006: 1,5%
                                                  -20%
                                              (of difference)                                                                 2007: 2%
                                                                    -20%
                            Losers                              (of difference)
                                                                                      -20%
                                                                                                                              2008: 2,5%
                                                                                  (of difference)       -25%                  2009: 3%
                Statewide                                                                           (of difference)
                base rate
                                                                                                       +25%
                                                                                     +20%
                         Winners                                   +20%
                                                 +20%

Hospital-                       +15%
 specific
base rate

                  2004         2005              2006              2007              2008              2009           2010

    25 May 2010                           Hospital Financing in Germany: The G-DRG System                                        24
3) Phase of convergence: Changing cost weights
  Relative cost weight
   Patient characteristics
        Gender, Age,
    Diagnoses, Severity
    Treatment options
 Procedures, Technologies,
         Intensity




Year                              2003             2005            2007          2009   2010
DRGs total                        664              878             1082          1192   1200
Inpatient DRGs total              664              878             1077          1187   1195
Range of cost weights: min.-
                               0.12 - 29.71 0.12 - 57.63 0.11 - 64.90 0.12 - 78.47 0.13 - 73.76
max.(rounded)
Day care DRGs total                 0               0                5            5      5
Supplementary fees                  0               71              105          127    143




25 May 2010                    Hospital Financing in Germany: The G-DRG System                    25
         DRGs in Germany

2000-2002                    2003    -   2004            2005      -   2009                             2010     -    2014
                             2) Budget-neutral         3) Phase of convergence                     4) Current developments and
                                  phase                to state-wide base rates                        options for the future

                                                 Hospital specific base rate                 • Nationwide base rate
                             Historical Budget
   1) Phase of preparation




                                                   15 %
                                  (2003)                  20%                                • Dual Financing or Monistic
                                                                20%
                                                                      20%                    • Introduction of DRG-like

                                                       Statewide                   25%
                              Transformation                                                 reimbursement for psychiatric hospitals
                                                       base rate                   25%
                                                                           20%               • Selective or uniform negotiations
                                                                   20%
                               DRG-Budget                   20%                              • Quality Assurance (adjustments)
                                 (2004)             15 %
                                                 Hospital specific base rate




   25 May 2010                                   Hospital Financing in Germany: The G-DRG System                              26
 DRGs in Germany: Main facts



1. Central role of self-governing bodies

2. Data driven system with annual updates

3. Detailed analysis of hospital costs

4. Ten-year process of introduction




25 May 2010          Hospital Financing in Germany: The G-DRG System   27
 Hospital Financing in Germany: The G-DRG System


1. Diagnosis Related Groups (DRGs): Introduction
     – Options for hospital reimbursement
     – DRGs: Patient classification + hospital payment


2. DRGs in Germany
     – Three phases of introducing DRGs
     – Current developments and options for the future


3. EuroDRG




25 May 2010              Hospital Financing in Germany: The G-DRG System   28
EuroDRG project

• EuroDRG: project partner institutions from 13 countries

• Book on DRGs in Europe

• Mapping of grouping algorithms

• Analyses of determinants of hospital costs




                                                   http://www.eurodrg.eu/

25 May 2010         Hospital Financing in Germany: The G-DRG System         29
   Thank you very much!


25 May 2010   Hospital Financing in Germany: The G-DRG System   30

								
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