Cost accounting to determine prices: how well do prices reflect costs in the German DRG-system?

Coronary stents and the uptake of new medical devices in the German system of inpatient reimbursement

OBJECTIVES

This study aims to analyze mechanisms for facilitating the uptake of new medical devices in the German system of hospital reimbursement, focusing on the example of coronary stents, including (1) trends in their coding, (2) associated diagnosis-related group (DRG) payments, (3) their integration in the German DRG (G-DRG) system, and (4) their diffusion within the inpatient sector.

METHODS

Published and gray literature provide the basis for analyzing the system of hospital reimbursement. Data on coronary stents were obtained from various regulatory and government bodies and examined in a longitudinal fashion.

RESULTS

Although German Procedure Classification (Operationen- und Prozedurenschlüssel; OPS) codes were created for a range of stent technologies between 2004 and 2009, the regular system of G-DRG reimbursement does not distinguish between different stents by means of unique DRGs. Instead, supplementary payments or extrabudgetary payments are used to ensure that newer technologies are reimbursed adequately. The limitations of extrabudgetary payments restrict the use of some devices to a small proportion of patients. Data on the diffusion of different stents show that factors other than the reimbursement regime likely also play a role in the frequency with which certain technologies are used. Bare metal stents currently account for most stent implantation procedures in Germany, followed by drug-eluting stents.

CONCLUSION

The current system of G-DRG reimbursement and of extrabudgetary payments ensures that even the most recently developed technologies can be used in the German inpatient sector. Nevertheless, certain technologies may not be reaching the broad patient population.

A new accounting system for financial balance based on personnel cost after the introduction of a DPC/DRG system

A hospital director must estimate the revenues and expenses not only in a hospital but also in each clinical division to determine the proper management strategy. A new prospective payment system based on the Diagnosis Procedure Combination (DPC/PPS) introduced in 2003 has made the attribution of revenues and expenses for each clinical department very complicated because of the intricate involvement between the overall or blanket component and a fee-for service (FFS). Few reports have so far presented a programmatic method for the calculation of medical costs and financial balance. A simple method has been devised, based on personnel cost, for calculating medical costs and financial balance. Using this method, one individual was able to complete the calculations for a hospital which contains 535 beds and 16 clinics, without using the central hospital computer system.

Correlation between severity of disease and reimbursement of costs in neonatal and paediatric intensive care patients

AIM

The aim of the present study was to investigate the correlation between neonatal, paediatric and adult disease severity scores and reimbursement by health insurances.

METHODS

The setting was a university hospital's neonatal intensive care unit (NICU) and paediatric intensive care unit (PICU). We performed a prospective study of all patients admitted over the 3-month study period. Data collected included five scoring systems to predict mortality or to quantify disease severity (Paediatric Index of Mortality [PIM], Paediatric Risk of Mortality [PRISM], Simplified Acute Physiological Score [SAPS], Score for Neonatal Acute Physiology [SNAP], Therapeutic Intervention Scoring System [TISS]) on a daily basis, the total reimbursement as calculated by the grouper according to the German diagnosis-related groups (DRG) system, age of the patient, length of stay (LOS), International Classification of Diseases (ICD)-10 and DRG diagnosis. Our intention was to determine the correlation between different neonatal, paediatric and adult scores (PIM, PRISM III, SAPS-II, SNAP, Core-10-TISS), and reimbursement by the health insurance on the basis of the German DRG system in its 2005 and 2007 version.

RESULTS

No positive correlation between any score applied and reimbursement by the health insurance could be identified. Reimbursement was positively correlated to the length of hospital stay. Positive correlations could also be shown for some of the scores among each other.

CONCLUSION

We conclude that other scoring systems or measures of disease severity urgently need to be established to terminate the chronic underfunding of paediatric intensive care medicine in the developed countries.

Adjusting for nursing care case mix in hospital reimbursement: a review of international practice

The purpose of this study was to examine and review the different ways in which nursing care can be accounted for in a general hospital reimbursement system. The study is based on a literature review and a survey of international experts. It provides a typology of nursing care adjustment methods, using current and past practices of 14 Western countries as key examples. The results of our review indicate that it is necessary to take the variability of nursing care within DRGs into account, not from a cost-accounting perspective, but from a management perspective in terms of correct resource allocation. However, further investigation of these complex relationships is urgently needed.

Variations in hospitalisation costs for acute myocardial infarction - a comparison across Europe

The aim of this study was to determine whether between-country variations in hospital costs are larger than within-country variations and, furthermore, to explore reasons for this variability. For this purpose, we chose the primary treatment of patients with acute myocardial infarction (AMI) as an episode of care. We obtained hospitalisation costs and reimbursement rates from 45 hospitals in nine different EU member states (i.e. Denmark, England, France, Germany, Hungary, Italy, Netherlands, Poland, and Spain) for the year 2005. To further analyse the variations in hospital costs, we employed a hierarchical random effects model based on treatment and hospital characteristics and using purchasing power parities (PPPs) as a proxy for country-specific price levels. The between-country standard error was estimated at 2473 euros, whereas the within-country standard error was estimated at 1242 euros. Our regression analysis showed that percutaneous coronary intervention was associated with significantly increased hospitals costs compared to other treatment strategies. We were able to distinguish between three groups of countries with different cost levels based on the number of hospitals that were able to provide these services (i.e. percutaneous transluminal coronary angioplasty (PTCA) with intracoronary stenting). Excluding Hungary, Poland, and Spain, where none of the participating hospitals were able to provide these procedures, the between-country standard error decreased to 1632 euros, whereas the within-country standard error increased to 1416 euros. Finally, we observed exogenous price-level effects between countries and within countries for hospitals located in urban areas.

Challenges of rehabilitation case mix measurement in Ontario hospitals

Case mix classification systems have been adopted in many countries as a method to manage and finance healthcare in acute care settings; the most popular systems are based on diagnosis related groups. The most successful of those case mix systems differentiate patient types by reflecting both the intensity of resources consumed and patient acuity. Case mix systems for use with non-acute hospital activity have not been as wide-spread; other than in the United States, little attention has been directed towards case mix classification for rehabilitation activity. In a province with over 13 million inhabitants with 2496 rehabilitation beds, inpatient rehabilitation is an important component of hospital care in Ontario, Canada, and consists of the spectrum of intensive rehabilitation activities intended to restore function. Although case mix adjusted activity has been the currency in Ontario's Integrated Population Based Allocation hospital funding formula, rehabilitation activity has not been subjected to case mix measurement. A project to examine case mix classification for adult inpatient rehabilitation activity was initiated by the Ontario Ministry of Health and Long-Term Care whose outcome was a case mix system and associated cost weights that would result in rehabilitation activity being incorporated into the hospital funding formula. The process described in this study provides Ontario's provincial government with a case mix classification system for adult inpatient rehabilitation activity although there remain areas for improvement.

Activity based financing in England: the need for continual refinement of payment by results

The English National Health Service is introducing activity based tariff systems or Payment by Results (PbR) as the basis for hospital funding. The funding arrangements provide incentives for increasing activity, particularly day surgery, and, uniquely, are based on costing data from all hospitals. But prices should not be based on average costs and the potential of PbR to improve the quality of care is yet to be exploited. Without refinement, PbR threatens to undermine expenditure control, to divert resources away from primary care, and to distort needs based funding.

[A method for reassessment of cost-intensive cases in visceral surgery. Results of project by the German Society for Visceral Surgery]

Since the introduction of diagnosis-related groups (DRGs) many surgical departments report inappropriate reimbursement for complex cases and a shift in costly cases. To evaluate this situation, the German Society for Visceral Surgery inaugurated the present cost calculation project. In three university hospitals for 50 cases each, we depicted possible cost separators and utilized the complete cost calculation data (so-called Paragraph 21 data set) to test these separators. We identified "admission from another hospital", "severe surgically relevant concomitant disease", and "reoperation during the same hospital admission". The last was considered the economically most significant and medically most valid factor and was submitted as a possible modification to the german DRG system. The proposed cost separator "reoperation during the same hospital admission" was introduced into the DRG system after validation and leads to better allocation of reimbursements to complex and costly cases.

Methods to determine reimbursement rates for diagnosis related groups (DRG): a comparison of nine European countries

Over the past 20 years, most European countries have introduced DRGs or similar grouping systems as instruments for hospital reimbursement. This paper compares and analyzes the methods used to determine prices for inpatient care within DRGs or similar grouping systems employed in nine EU member states (i.e., Denmark, France, Germany, Hungary, Italy, Tthe Netherlands, Poland, Spain and England). It categorizes the systems of patient classification used in these nine countries and compares them according to the three steps necessary in order to set prices: 1.) definition of a data sample, 2.) use of trimming methods and plausibility checks and 3.) definition of prices. It concludes with a discussion on the typical development path of DRG systems and the role of additional reimbursement components in this context.